09/ 84890

Executive summary

1 This paper categorises possible amendments to facilitate a discussion, and then decisions, on the scope of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill 2009 (the Amendment Bill). It provides advice on the likely content of the Amendment Bill so that decisions can be made in time to secure Cabinet decisions and a draft Bill in time for introduction in July. The proposals are a slightly truncated package of the original proposals you received in the previous briefing [BP 83889].

2 The following categories of amendments are suggested:

• amendments that are changes to the full-funding regime for residual claims and must be made in time for levy decisions
• amendments that improve future flexibility for the motor vehicle levy collection
• amendments that repeal changes made in 2008 and offer cost containment opportunities
• amendments that rationalise ministerial advisory committees
• amendments that require no further policy work and enable cost savings.

3 The proposed amendments are set out in Table 1. Items 1-5 are easy to make decisions on and need little further discussion. You have already made decisions on most of these. You still need to decide on the final date for fully-funding residual claims. The discussion of this date from BP 09/83889 is attached.

4 Items 6 to 12 in the table are in the category of 2008 changes that can be rolled back easily for cost savings. These require discussion in order to understand what they mean in a practical sense so you can then make a decision whether they are included or not. Items 13 and 14 are simple cost-savings measures that have been proposed by ACC and require minimal discussion and your decision. We have also attached the relevant pages from BP 09/83889 for items 6 to 14 in Table 1 as a prelude to our discussion with you.

5 The total estimated savings of the amendments proposed here are $67 million.

6 Four further proposals that you asked to be considered for the 2009 Amendment Bill are discussed:

1. disentitlement for wilfully self-inflicted injuries
2. introducing a threshold for work-related hearing loss
3. WITHHELD UNDER s9(2)(f)(iv) OF THE OFFICIAL INFORMATION ACT 1982
4. a strengthened 'repugnant to justice' provision.

7 We recommend that proposals a, b, and c are deferred for consideration in the ACC Reform Bill in 2010 because the policy work required is more complex. A separate briefing on proposal d will be provided to you.

8 For the Amendment Bill to be introduced to the House in July, a Cabinet policy paper needs to go to the Social Policy Committee (SOC) by the end of May or early June to allow time for drafting. We have put a placeholder on SOC's agenda for 27 May.

Recommended action

It is recommended that you:

1. note that proposals for inclusion in the 2009 Amendment Bill have been considered using the following parameters and categories:
   1. 1.1 must be made in time for levy decisions
   2. 1.2 will improve flexibility for motor vehicle levy collection
   3. 1.3 are repeals of changes made to the IPRC Act in 2008 that present cost containment opportunities
   4. 1.4 will rationalise advisory committees
   5. 1.5 does not require further policy work.
2. agree that the scope of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill 2009 covers the amendments proposed in the following table. (relevant pages are also attached to this briefing).

No.	Amendment type	Agree/Disagree
	Amendments that must be passed in time for levy decisions later this year
1	Funding ACC's residual liabilities [page 24 of BP 09/83889] Incorporate the Residual Claims Account into the Work Account and remove the separation of residual claims from current claims in the Earners' and Motor Vehicle Accounts require a final valuation of the residual liabilities as at 30 June 2009, which would become the total amount to be paid by residual levy payers allow the Minister for ACC to set in regulations the portion of the levies to be allocated to the residual portion for the relevant Accounts each year set a final date further out than 2014 by which the estimated outstanding claim liability associated with residual claims must be paid off (you still have to decide this date)
	Amendments to improve flexibility in motor vehicle levy collection
2	Add a provision enabling the Motor Vehicle Account Residual Levy to be funded from the Motor Spirit Levy [Page 26 of BP 09/83889]
3	WITHHELD UNDER s9(2)(f)(iv) OF THE OFFICIAL INFORMATION ACT 1982
	Amendments to rationalise advisory committees - no drafting required
4	Remove the requirement to have the Injury Surveillance Ministerial Advisory Panel. [Page 30 of BP 09/83889]
5	Remove the requirement to have the Ministerial Advisory Panel on Work-related Gradual Process, Disease, or Infection. [Page 31 of BP 09/83889]
	Amendments that rescind changes made in 2008 and present cost containment opportunities (straightforward drafting)
6	Return eligibility for weekly compensation for workers who are injured between jobs or on unpaid leave, to 14 days after stopping work, rather than the current 28 days [Page 12 of BP 09/8388]
7	Reinstate the pre-2008 calculations for long-term (after four weeks) weekly compensation for non-permanent employees [Page 13 of BP 09/83889]
8	Abatement of holiday pay - return to the provision that claimants' leave entitlements, after their employment ends, are considered as part of weekly earnings when calculating weekly compensation [Page 15 of BP 09/83889]
9	Return to eligibility for payment of the minimum weekly compensation amount from the fifth week of incapacity instead of the second week for employees [Page 17 of BP 09/83889]
10	Reduce weekly compensation for loss of potential earnings (LoPE) claimants from 100% to 80% of minimum weekly earnings [Page 18 of BP 09/83889]
11	Remove cover for mental injury that has been wholly or substantially caused by direct exposure to a sudden and traumatic event during the course of a person's employment [Page 19 of BP 09/83889]
12	Reinstate the test for workplace gradual process, disease or infection that applied before the 2008 amendment [Page 23 of BP 09/83889]
	Other cost containment initiatives that require no further policy work and are straightforward to draft
13	WITHHELD UNDER s9(2)(f)(iv) OF THE OFFICIAL INFORMATION ACT 1982
14	Change the Vocational Independence threshold from capacity to work for 35 hours per week to capacity to work full-time as defined by Statistics New Zealand [Page 33 BP 09/83889]

3. note that the total projected cost savings of the package set out above are $67 million
4. agree that the following proposed amendments should be deferred and included in the ACC Reform Bill to be considered in 2010 because they require further detailed policy work:
   1. 4.1 a provision disentitling those who wilfully self-inflict their injury
   2. 4.2 a provision setting a threshold for cover for hearing loss
   3. 4.3 WITHHELD UNDER s9(2)(f)(iv) OF THE OFFICIAL INFORMATION ACT 1982

Agree / Disagree

5 note that a separate briefing will be sent to you on the 'repugnant to justice' provision, recommending an administrative solution be progressed

Craig Armitage
Deputy Secretary - Workplace
for Secretary of Labour

Hon Dr Nick Smith
Minister for ACC

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