Connell Brian: Status of Redundancy Payments Bill — Instruction to Committee In Committee 
Connell Brian: Status of Redundancy Payments Bill — Instruction to Committee In Committee 
[Volume:615;Page:11566] 
BRIAN CONNELL (National—Rakaia) 
: 
 Normally I start my speech in these debates by saying that I am pleased to take a call but I am not. I feel compelled to take a call because I think that this legislation is some of the worst that has been perpetrated in this House. 
In my last call I was speaking about insolvency and working through an example that I did not conclude so I will take the opportunity to do that now. Members will remember that I was saying that the receivers had moved in and that there was $35000 in the bank that was owed to creditors. Under this legislation the employees are owed $75000 not to mention their superannuation holidays and wages owing—and I would have made that point more carefully had Mr Barker allowed me to. Thirty-five thousand dollars does not cover the redundancy liability so mum dad and the kids have their house sold from underneath them. It is worth $150000. The employees who did none of the risk taking will divide up the spoils. They will get their wages holiday pay etc. and now they will get $15000 to boot. Wages holiday pay and redundancy sees them get $17000 each and on a rough calculation a grand total of $85000. There is a shortfall of $50000 owed to the employees so they will be working to sell up mum and dad as well. It will pit Kiwi against Kiwi and mum and dad against mum and dad. The bank takes the balance to cover the loan of $70000 and that is fair and reasonable because it is protecting shareholders’ funds—the same people the mums and dads who make deposits. Seventy thousand dollars plus $50000 for the quicker people in the House is $120000 a positive balance of $30000 with regard to the value of the house. Moneys owed to other creditors amount to $35000; therefore mum and dad are now left penniless if not bankrupt and the employees have the option of either going on to the dole or working elsewhere. That sounds really fair does it not? It sounds very fair indeed. Well I do not think it does. 
I shall now respond to the comments made by Mr Field. I thought that his contribution was very level headed and I commend him for it. I tell Mr Field that the workers and the mums and dads who run a business are equal. Why should we cherry pick? Why should some be more equal than others? Because mum and dad form a business or incorporate they are just workers who are deriving their income in a slightly different way. This legislation will not encourage people to take risks. Essentially we will end up getting a very risk-averse culture where it is just not seen as being worthwhile to put up one’s house as a stake in order to raise money to get into business. 
Mr Key raised the issue of the cost of capital. I ask Mr Peck: what will this do to the cost of capital? I would like him to take a call to answer that question. I do not think he really knows the answer so it is probably unfair to ask him. However I will give him the answer. This bill will increase the cost of capital because banks will not have the same level of security—and banks price for risk. The other thing the bill will do is remove capital out of the marketplace. Banks will simply say: “The deal is going to be shorter so we’ll call up money sooner or we’re just not prepared to risk at all.” 
This legislation will do immense harm and for the life of me I cannot understand why Mr Peck and his Government colleagues cannot heed these warnings. They are not coming just from me. The Status of Redundancy Payments Bill was opposed—and Mr Peck says by just a few—by Business New Zealand the Financial Services Federation the New Zealand Business Roundtable the Joint Insolvency Committee of the New Zealand Law Society and the Institute of Chartered Accountants of New Zealand Federated Farmers and I shall stop there. Does anyone in the Chamber actually support this legislation other than unionists? Interestingly enough the Council of Trade Unions submission was one of six in favour of the bill. Others expressing similar sentiments came from the Rail and Maritime Transport Union from the New Zealand Nurses Organisation—