ACC bill passes first reading

Last updated 17:46 27/10/2009

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The Government's ACC bill passed its first reading in Parliament today after a tense debate and opposition claims that the scheme would eventually be replaced by private accident insurance.

The bill raises levies and cuts some entitlements, measures ACC Minister Nick Smith says are essential to deal with huge deficits.

That is fiercely disputed by Labour and the Greens but it was the Government's clear intention to open the work account to private competition, announced last week, that raised the most strenuous complaints.

"This is such a fundamental assault on the principles of the ACC scheme that its future is now at serious risk," said Labour's ACC spokesman David Parker.

"It is the best accident insurance scheme in the world. . .it is cheaper than Australia's and has wider scope."

Green MP Sue Bradford said ACC was holding more assets than at any time since its inception and the Government's arguments about its viability were based on a false premise.

"The Government is creating the notion of impossibly huge deficits. . .in almost every respect this bill is a shocker."

Dr Smith opened the debate, saying that in the 2008/09 financial year ACC showed a loss of $4.8 billion on top of a $2.4b loss the previous year.

"Over the past four years ACC's unfunded liabilities – the difference between its liabilities and assets, has grown from $4b to $13b," he said.

"The underlying problem is that ACC has drifted from being a state insurer to a welfare provider."

Dr Smith said the bill wound back the previous Labour government's "add-ons" to gain genuine savings and the Government remained committed to the core concepts of a 24/7, no fault insurance scheme.

"What we do say, though, is that to secure ACC's future it has to be affordable and financially sustainable."

ACT MP Sir Roger Douglas said the bill didn't go far enough.

"All it does is manage the pay out system and little differently," he said.

"There's nothing substantial in this."

Sir Roger said ACC was flawed from the outset, a pay-as-you-go scheme which worked until long-term entitlements started to increase.

"If insurance companies had books like ACC they would be declared bankrupt," he said.

Maori Party MP Rahui Katene said the changes in the bill would have a serious impact on low income families and Maori who worked in high-risk occupations.

She said her party would vote for it on its first reading so people could have their say on it during select committee hearings.

The bill passed its first reading on a vote of 69 to 53. National, ACT, the Maori Party and United Future supported it. Labour, the Greens and the Progressive Party opposed it.

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The Injury Prevention, Rehabilitation and Compensation Amendment Bill was referred to the transport and industrial relations select committee for public submissions.

- NZPA

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