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Murray McCully – Forest Owners Association Speech

Murray McCully – Forest Owners Association Speech



5 OCTOBER 1999 11AM


(embargoed until delivery)

Thank you for inviting me to open your safety conference.

I am pleased to be able to talk to you about the ACC reforms and the principles that underlie them.

These are big issues which will make a big difference to the sort of New Zealand we will have into the next millennium.

The transition from monopoly provision of workplace accident insurance to a competitive market has been remarkably smooth.

More than 121,000 employers chose an insurer in time for 1 July, with an estimated maximum of 30 - 40,000 working employers ending up allocated to the SOE @Work.

In fact, what I‘ve been dealing with lately have been calls from scandalised business people who have been talking to the Labour Party and have just discovered what it plans to do about ACC if elected.

But I’ll get onto that later.

The ACC reforms have been very good news for New Zealand.

Thousands of employers are better off because of lower premiums, and thousands of New Zealand employees are less likely to be injured or killed in the workplace.

Government expects that employers could save as much as half a billion dollars over the next two years, with the insurance and broking industry forecasting savings of between $250 - $300 million for the first year alone.

Government agencies alone are saving more than $50 million, with an estimated $11.5 million savings for hospitals and savings in education of around $8.2 million.

But it’s not just the big enterprises that are saving.

Chambers of Commerce in Auckland, Wellington and Canterbury, and the Employers and Manufacturers Association in Southland/Otago have surveyed their members about their premiums.

All report around 80 percent are making savings and most of the respondents were small and medium sized businesses ‘ those with fewer than 20 employees

That’s great.

I expect that those savings will help businesses expand, creating jobs and opportunities for more New Zealanders.

For us, the ACC reforms are not about ideology, but about real, tangible improvements being delivered to employers and employees alike.

The reason the Government went down this track was not just to help businesses save money ‘ although we will of course take full credit for that.

We wanted to set in place strong incentives for employers to focus on workplace health and safety.

There’s no better way of focussing a business person’s mind than to offer them a way to save money on business costs.

How hard is it to weigh up the options’

Safer workplace:lower premium.

Unsafe workplace:higher premium.

Giving employers the opportunity to share risk, a concept violently opposed by Labour and the Alliance, is a key benefit of the reforms.

Rather than providing the right incentives, Labour and the Alliance would create an army of bureaucrats swarming around New Zealand business, biros and clipboards in hand.

It is a key point of difference between us.

And we couldn’t be happier about that.

Introducing competition to workplace accident insurance means that an individual employer’s circumstances ‘ good or bad - can be taken into account and premiums set accordingly rather than all being lumped into an industry classification.

As you know, forestry is a high risk industry and premiums reflect that.

The base ACC premium rate for 1998/99 is $6.32 per $100 of wages compared with the average $1.47.

The residual claims levy collected to fund the ongoing entitlements of those injured in the past is $2.61 compared with the average 67cents.

But under the old system, those employers who took care, who attended conferences such as this, had strong health and safety policies and helped injured employees back to work saw limited benefits in terms of reduced premiums for doing so.

Meanwhile, those who did none of those things kept the overall industry rating high.

With proper risk rating in the new environment, those who are careful employers are being rewarded with lower premiums, and those who are not are hit with higher premiums.

I expect that the experience in the forestry industry is similar to that in other industries ‘ that there has been a substantial reduction in premiums overall, with those who can show their insurer that they are one of the good employers saving even more.

Your colleagues in the Timber Industry Federation say the seventy companies in their group scheme are making savings of at least 40 percent.

They have made what the media has described as ‘an impassioned plea’ for Labour and Alliance to rethink their ACC policy.

National Business Review hit the nail on the head in a recent editorial where it said ‘It is difficult to find among Labour’s antediluvian policies anything loonier than that on accident compensation’.

Their policy would see ACC as once more the monopoly provider of accident insurance ‘ once more the cheque writer with little incentive to focus on health and safety in the workplace because in the end, employers will pay and they have no choice.

That’s bad enough, but here’s the big news ‘ and it hits everyone, not just employers.

Labour and Alliance think that they can re-introduce lump sum payments while retaining the independence allowance, include illness in the cover and nationalise the already flourishing accident insurance market ‘ all without increasing premiums.

Here are some rough costings of those particular policies done by my officials:

1. Re-introducing lump sums similar to 1992 entitlements · $144 million per annum

2. Including cover for illness by increasing the sickness benefit to cover 80% of earnings (calculation based on average wage of $682.22) · Increase of $572 million a year

3. Nationalising insurers’ policies (returning policies to ACC, returning to pay-as-you-go funding)

· Minimum $100 million (insurers loss of set up costs) · Loss of savings to employers of around $200-300 million

That adds up to around a billion dollars.

And somehow Labour thinks that this won’t affect premiums.

Again, it’s not just the straight monetary cost - that’s bad enough.

But Labour wants to remove experience rating.

Until the new legislation came into force on 1 July and competition was allowed, that was the only tool ACC had to adjust premiums to reflect health and safety practices and accident rates.

(At the same time, by the way, Labour wants to expand the successful Accredited Employers Programme ‘ although that was based on experience rating.

Something missing in the logic department there.)

Labour’s policy as I have just outlined has a remarkable similarity to an ancient piece of legislation drafted when Michael Cullen was Social Welfare Minister way back in 1990 called the Rehabilitation and Incapacity Bill.

It looks like that’s been dusted off and injected with some loopy policy from those former trade unionists and now ACC spokespeople, Labour’s Ruth Dyson and Alliance’s Laila Harre.

Well as far as I can see, it is scaring people - and it should.

Ruth Dyson was described in that editorial I mentioned earlier ‘ insightfully I think - as ‘as sympathetic to business as the Indonesian army is to East Timorese independence’.

And that’s another reason I’m pleased to have this opportunity today, because it is my own judgement that the business community generally is taking far too relaxed a view of what may happen after November’s election.

Over recent months we have seen the Labour Party outline positions on key business issues which should be sending more shivers down your spines.

They plan to scrap the Employment Contracts Act.

They have a Workplace Relations Bill drafted for the CTU by Labour’s number nine list candidate, Margaret Wilson.

Helen Clark has promised that a Labour government would pass legislation that would ‘bear a very close resemblance to this Bill’.

They have promised, in substance, to reintroduce compulsory unionism.

The have promised, in substance, to make secondary or sympathy strikes lawful.

But it’s not a policy that’s likely to appeal to employees let alone their employers.

The findings of a recent A.C. Neilsen survey on attitudes toward the ECA showed that among a group of 1000 employees:

· three-quarters were satisfied with their working conditions and with their employers

· more than eight in ten were satisfied with their job.

· seven out of ten were satisfied with their job security.

· well over half appreciated the ability to negotiate directly with their employers.

· only 20 percent wanted an outside party such as a union brought into the negotiations; and importantly

· two thirds wanted no change.

It’s no wonder they don’t want change.

People remember the way things were, compared with the ways things are now.

In 1990 Labour left an environment where strikes accounted for 331,000 lost workdays ‘ or $55 million in 1998 dollars lost from the wages and salaries of New Zealand working families.

By 1998, with a National Government and the ECA, those figures were down to just 12,000 lost days or $1.8 million lost from pay packets of New Zealand employees.

Labour fought tooth and nail against the ACC reforms.

They said costs would increase for employers.

Now there is irrefutable proof that employers are saving more than $200 million this year alone and Labour have hardened their commitment to scrap the ACC reforms.

How can this be’

Well, it’s fairly simple really.

It’s got a lot to do with politics, and absolutely nothing to do with what is good for New Zealand, what is good for our collective wealth, or what is good for job opportunities.

It’s got everything to with the make-up of the Labour Party and fundamental prejudices that drive the bulk of their caucus.

Just check the numbers.

In Labour’s caucus there are 21 unionists and 18 teachers or university lecturers.

These are people who carry all of the prejudices of the so-called ‘class struggle’, all of the adversarial baggage, all of the underlying suspicion of and dislike for the business community.

The only good thing I can say about the Labour Party in this respect is that the Alliance is dramatically worse.

But at least the Alliance is honest.

At least they tell you they are going to slit your throat.

The Labour Party on the other hand, have been dispatching a few of their least scary looking MPs to ooze business-friendliness amongst business groups.

The staggering thing to me is that some business groups have been taken in ‘ that they have started to believe that there isn’t that big a difference between the major parties.

I have mentioned today just a few of the major policy issues that differentiate us.

But there are many smaller, informal differences too.

I well remember such backdoor devices for lavishing taxpayers’ cash on trade unions as the Trade Union Education Authority and the Trade Union Incentives Trust.

During the late 1980s, millions of dollars of taxpayers’ money found its way into union coffers through these devices.

And if they won, it would all happen again.

The policies of the National Party and those of the parties of the left could not be more different on ACC, because our fundamental views about New Zealand’s future could not be more different.

The choice people make in November will make a difference.

The National Party has no need to do any scaremongering in this campaign.

We simply want to make sure that you read what the Labour Party says, and draw your own conclusions.

This is a free country; people get to decide who they intend to vote for.

The Labour Party and the Alliance are promising a very different New Zealand to the one which I believe has achieved so much in the last decade.

The choice is yours.


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