3.4 National occupational health and safety budget
Section 3.4 outlines the national-level budget provided for occupational health and safety activities. Discussion is restricted largely to the funding of the two main government agencies involved in delivering occupational health and safety-related services: the Department of Labour and ACC. Most of the information in this section is sourced from Budget 2005 (Treasury 2005) and from the Department of Labour. All figures quoted in this section are GST-exclusive unless otherwise noted.
The funding discussed in this section represents the majority of public funding provided to occupational health and safety; however, some estimates are used in lieu of actual figures for other agencies when it was not possible to unbundle the proportion of funding from a wider pool. Information on private expenditure on occupational health and safety is not included because neither actual figures nor estimates of the amount spent in the market were available. As New Zealand has an active private consultancy market for such services, expenditure in this category is likely.
3.4.1 Funding received by the Department of Labour
The compliance and enforcement system is funded by Crown revenue (through Vote: Labour), and specific fee-for-service or fines revenue. The HSE Levy is collected by the Treasury and used to indirectly fund health and safety activities through Vote: Labour. Some of the funding discussed in this section is spent on education and information services (as discussed in section 3.7).
The total amount of funding allocated to the Department of Labour from these sources in 2005/06 was approximately $37 million per annum. About $400,000 of this funding was provided to Maritime New Zealand for activities undertaken as part of its delegation under the HSE and HSNO Acts. A further $440,000 was provided to the CAA for the fulfilment of its responsibilities under the HSE Act.
3.4.1.1 The HSE Levy
Section 59(2) of the HSE Act enables the Crown to recover the expected cost of administering the Act. These costs are recovered through a levy paid by:
- all employers (based on the amount of earnings paid to any employees)
- every self-employed person (based on the amount of earnings earned by the person in their self-employed capacity)
- every shareholder-employee [s.OB 2(2) of the Income Tax Act 2004 refers].
The Funding Levy is set through the HSE (Rates of Funding Levy) Regulations 1994 at a rate of five cents for every $100 earned. The Act requires that the Funding Levy be collected by ACC through the Residual Claim Levy [section 59(3) refers]. The HSE Levy is then passed from ACC to the Treasury and not used to directly fund the Department of Labour’s services.
Budget 2005 indicates approximately $29,067,000 is expected to be collected in levies that year. ACC’s fee for providing the collection service amounts to $978,000 (which is funded through the Vote: Labour output class).
3.4.1.2 Crown revenue (Vote: Labour)
In 2005/06, the Department of Labour received approximately $37 million for occupational health and safety through the Vote: Labour output class. A breakdown of this funding is provided in Table 6:
| TABLE 6 | Vote: Labour appropriation for occupational health and safety services | |||
| FUNDING CATEGORY | AMOUNT (GST EXCL) | |||
| Policy advice: | ||||
|
$2,289,000 | |||
|
$833,000 | |||
|
$896,000 | |||
Subtotal | $4,018,000 | |||
| Services to promote and support safe and healthy workplaces: | ||||
|
$16,723,000 | |||
|
$12,627,000 | |||
|
$ 477,000 | |||
|
$1,768,000 | |||
Subtotal | $29,750,000 | |||
| Services to promote the safe management of hazardous substances in the workplace and amusement devices: | ||||
|
$2,200,000 | |||
Subtotal | $2,200,000 | |||
| Additional funding for occupational health | $730,000 | |||
Total | $36,698,000 | |||
3.4.1.3 Other funding
Under the HSE Act, the Department of Labour can collect specific fees for services and impose infringement fees for instances of non-compliance.
Budget 2005 estimates that the Department of Labour will collect $33,000 in fees. This funding is significantly less than the fees-generated funding of previous years when fees and licences for the use of explosives and dangerous goods were processed through the Department of Labour: for example, $157,000 was collected in 2002/03 before these functions were transferred to ERMA New Zealand.15 Budget 2005 estimates that the Department will collect $39,000 in infringement fines in 2005/06.
3.4.2 Funding received by ACC
ACC receives Vote: ACC funding to provide services in respect of rehabilitation, compensation and injury prevention. The actual cost of claims for injury and disease assessment, treatment, rehabilitation and compensation made to ACC is paid for through employer and self-employed levies. This makes the assessment, treatment, rehabilitation and compensation system self-funding as discussed in section 3.6.
The total amount of funding for work-related injury prevention activities is approximately $10 million for the 2005/06 financial year.
3.4.2.1 Crown revenue (Vote: ACC)
Crown revenue received through Vote: ACC covers the costs of operating the rehabilitation and compensation system (such as providing policy advice, managing the accounts, processing claims, injury prevention programmes, and education and information services). A breakdown of this funding includes:
| – Work-related injury prevention budget: | $ 7,103,000 |
| – ACC incentives programmes cost: | $ 2,150,000 |
| – Health and safety representatives training: | $ 1,621,000 | Total: | $10,874,000 |
The work-related injury prevention budget covers a range of activities, including the Safer Industries programmes, programmes run to address specific issues such as acute lower back pain, occupational-overuse syndrome and noise-induced hearing loss, and funding for health and safety representatives training.
The incentives programmes’ cost relates to the cost of running the Workplace Safety Evaluation Programme and Workplace Safety Management Practices. (The Accredited Employers’ Partnership Programme is self-funded.) The discounts provided through ACC incentives programmes are discussed in section 5.1.
3.4.2.2 ACC levies collected from employers and the self-employed
The IPRC Act requires that employers and the self-employed pay levies to cover the cost of claims arising from work-related injuries including injury and disease. The collection and expenditure of these levies is managed through a range of accounts (as required by the IPRC Act). Three accounts have been established to provide funding for ACC cover provided for work-related disease and injury. These accounts and the income and expenditure in 2004/05 are outlined in Table 7.
| TABLE 7 | Income and expenditure for ACC Accountsxxxvii | ||
| ACCOUNT | INCOME FOR 2004/05 | EXPENDITURE IN 2004/05 | |
| Employers’ Account | $475,128,000 | $316,410,000 | |
| Self-Employed Work Account | $93,834,000 | $86,911,000 | |
| Residual Claims Account | $200,905,000 | $293,146,000 | |
Total | $769,867,000 | $686,467,000 | |
| Source: ACC Annual Report (2005a) | |||
3.4.3 Other funding
The Ministry of Health is responsible for enforcing a small number of workplace health and safety regulations made under legislation now revoked (see section 3.3.4). The Ministry advised that it was not able to unbundle this funding from the total amount provided for environmental health services. As such, an estimation of funding cannot be provided.
3.4.4 Stakeholder comments about national resourcing
Resourcing was one of the stakeholders’ key concerns, although most of these concerns were directed at the resourcing allocated to or spent on compliance and enforcement programmes or activities (such as resourcing of the Department’s Professional and Specialist Services Group, perceptions of how this funding is spent and concerns that occupational health appears to receive less funding than work-related injury prevention). Specific concerns about the resourcing of the compliance and enforcement system are discussed in sections 3.5 and 3.10 of this report.
3.4.5 Comments and conclusions
Access Economics6 found that work-related injury and disease cost New Zealand approximately $5 billion in 2004/05. This represents approximately 3.4 percent of GDP. This compares to approximately $48 million (or less than 0.0033 percent of GDP) budgeted for preventing workplace harm through compliance, enforcement and injury prevention means.xxxviii This indicates a sizeable difference between the financial magnitude of work-related injury and disease, and the funding available for activities to prevent or mitigate this.
3.4.5.1 Funding trends over time
Graph 1 indicates that the funding of the appropriation for HSNO enforcement has increased since the 2001/02 financial year, possibly due to increased funding for the transition from the previous regime. The Vote: Labour appropriation for HSE implementation has remained relatively steady, with only a small increase in funding at the time of the implementation of the HSE Amendment Act 2002 but otherwise constant.
An inflation-adjusted comparison of the resources transferred to the Department of Labour during the reforms of the 1980s and 1990s with the resources available to the Department today provides an interesting contextual point for the resourcing issue. The amount identified as being for occupational health and safety resources in 1989 equates to approximately $42 million when adjusted for inflation.xxxix This compares with approximately $35 millionxl allocated for the provision of a similar range of services in Budget 2005. This means that over time, funding for health and safety activities has declined in spite of a considerable increase in economic performance and an average annual increase in inflation of 2.2 percent per annum for this period. It is assumed that an expanding economy requires a commensurate increase in the number of health and safety professionals to ensure compliance is achieved by the greater number of businesses in operation. The resulting economic growth that New Zealand has experienced in the recent past and the static nature of funding for health and safety services may mean that the system is functioning with fewer resources but is required to meet a greater demand for service delivery.
Two stakeholders suggested that funding for occupational health and safety services should be tagged to economic growth in order to ensure that a sufficient level of funding is available for occupational health and safety services when the economy expands. This assumes that the economy will continue to expand. If all funding for occupational health and safety activities were tagged in such a way, less funding would be available in times of economic decline.