Companies Amendment Bill Insolvency Amendment Bill — Third Readings 
Companies Amendment Bill Insolvency Amendment Bill — Third Readings 
[Volume:616;Page:11938] 
Companies Amendment Bill 
Insolvency Amendment Bill 
Third Readings 
MARK PECK (Labour—Invercargill) 
: 
 I move  
That the Companies Amendment Bill and the Insolvency Amendment Bill be now read a third time 
. Initially I want to point out what the bills do not do. The bills do not say to employers that they have to have a redundancy agreement. The bills do not require 80 percent of New Zealand employers who have fewer than 15 staff members working in their workplace to have a redundancy agreement. The legislation does not say to employers who do not have a redundancy agreement that they must have a redundancy agreement. 
What has been extraordinary during this debate as the legislation has progressed is the misinformation that has come from the other side of the House about what the legislation does. If there is one thing I want to do for the employers of this nation it is give them one simple message—this legislation imposes nothing upon them that they have not already agreed to. 
I shall spend a moment at the commencement of my speech thanking Mr Peter Brown for the way in which he has conducted himself during the course of this debate and for the way in which he has attempted to educate the National Party and the ACT party in particular on what the legislation does. The best defence the National Party has put up against these bills as they have progressed through the House is that employers do not have the strength to stand up to the might of the unions. Prior to coming into this place I was a union official for 17 years. One of the things I know is that employers never gave anything away lightly at all. Mr Brown said on numerous occasions during the debate that if the employing class of this country has lost so much gumption that it no longer has a backbone then he when he retires from this place will be quite happy go back and steel it again. 
I want to tell the House what the legislation actually does. I thank my colleague Rick Barker who drafted the original bill in the first place as a result of the way in which workers were treated after the closure of the Tomoana Freezing Works in the Hawke’s Bay. Those workers got not a cent of the redundancy payments that had been agreed between the employer and that particular workforce—not a cent. The only group of people who got anything out of the closure of Tomoana were the banks. The farmers missed out on their stock and the workers missed out on getting the redundancy payments they were entitled to. The effect on the Hawke’s Bay economy was $35 million. When I first moved the legislation the wife of a former freezing worker came to my office to thank me. Her husband out of desperation as a result of the loss of his job and income had committed suicide. Nothing would bring him back. Nothing could bring him back. That was the effect of the loss of that man’s job security and of his inability to provide for himself and his family. The stress got so much for him that he was unable to deal with the issues that we would normally deal with on a day-to-day basis. That woman was delighted that at last somebody was doing something to recognise that particular problem. 
What else does the legislation do? It does not attempt to do a lot of the work that the Government is still working on through its reviews of insolvency law. Indeed in working this matter through with my colleague Lianne Dalziel the Minister at the time it was made very clear to me that there were areas we could work within such as the idea of raising the cap to $15000 to bring it to a more realistic level. The particular level of wages and holiday pay and we now add in the issue of redundancy payment that had been protected in the case of an insolvency had not been amended for a number of years. Fifteen thousand dollars the level at which the cap is now set simply recognises the fact that there has been inflation over time and that things have moved on as far as that is concerned for workers. There is nothing magic or new about that. Most certainly it will not provide those workers who lose their jobs with a pot of gold. However it is a little bit of recognition of the fact that they were employed in an industry they had negotiated a redundancy agreement with their employer and by doing so in the consideration of that they had probably given up a percentage or so along the way in their pay increase so that the employer could make provision for that particular evil day. 
Something else we need to be aware of is that those provisions in these bills kick in only in the case of a company that has negotiated a redundancy agreement becoming insolvent. Nobody wants to see that. Nobody wants to see companies becoming insolvent but whether or not we like it there are industries within New Zealand that will in the course of time become sunset industries. We have seen it with the introduction of new technologies and new work methods and the classic example of the meat industry is quite clear. There are no longer the numbers of chains processing that there were in the 1980s and the 1990s. We no longer need those numbers of chains. Now at the Alliance freezing works in my electorate there are two 12-hour shifts operating. Southland has the shortest season it has had in generations. People have had a 10-week season this year; they have now got through the lambkill in Southland. We know that those industries are not seeking protection—far from it. The meat industry is one of the most competitive industries in the country. It is not seeking protection. The workers are entitled to a level of dignity and consideration as their industries do restructure. Therefore we are raising the cap. 
The second thing we are doing in this situation is saying that redundancy payments should be treated like wages and holiday pay. I come back to that—by including them as wages and holiday pay those particular amounts of payments get the same consideration as wages and holiday pay. There is nothing new about that. It simply means that the way to work out the employee entitlement now includes a new component the redundancy entitlement at the time of an insolvency—I come back to that; at the time of an insolvency—so that the workers get something and the banks do not get everything and so that there is a little bit of consideration for those workers and their families as they struggle to put their lives back together and try to get into some form of gainful employment in the future. 
The legislation does one final thing which I think is important as well. It will future-proof the figure. We will not sit back and wait another decade or so before we revisit the figure of $15000. This figure will be reviewed on a 3-yearly basis and it will be increased in line with cost of living adjustments. I come back to the things the legislation will do. It will provide a cap at $15000 it will ensure that that cap is regularly reviewed and it will raise the priority status. When others stand up in this House and say this will be an impost on all employers—as they will do; they will say that banks will no longer lend for employers to get set up—people will understand that for what it is—just so much cant. This is a modest bit of reform to give a level of decency to workers. I say to the workers of Tomoana and others who missed out on their redundancy payments as a result of restructuring that this should have been done decades ago so that as they tried to put their families’ lives back into some order there was at least something to help them—not a grand sum of money but a small nest egg that could be used to pay a bit of the mortgage perhaps or pay a few of the bills or help with their job search. These are two good pieces of legislation and I commend them to the House. 
BRIAN CONNELL (National—Rakaia) 
: 
 I have heard some self-righteous drivel since I have been in this House but that lot from Mr Peck would have to take the cake. That is the worst drivel I think I have heard since I have been here. Let us be clear. These bills that Mr Peck is taking the initiative for are simply union bills. He wants to take the credit for them so he can big-note himself. He is fooling nobody. We over here know that they are union bills and nothing he can say or do will disguise that. The bills have had a change of name but the issues are exactly the same. Mr Peck is the errand boy for the unions. We established that in the last debate. How do I know this? Because no one in this House other than the crazies on the other side really wants this legislation—not the thinking workers of this country and in particular not the hard working Kiwis who risk everything to start a business just so that this Government can come along and bash them up. 
This legislation will have a huge and negative impact on business confidence right across New Zealand. Just when the hard times are starting to really bite just when people in this country want this Government to take its foot from their throats what does it do? Mr Peck comes in with a sledgehammer. That is how he treats people in this country. Insolvency practitioners in this country have lined up with business people to oppose this bill. But were their concerns listened to? Of course they were not. Throughout the course of this debate we have been told that lots of submitters supported this legislation. That is not strictly true. These bills were opposed by Business New Zealand Financial Services Federation New Zealand Business Roundtable and the Joint Insolvency Committee of the New Zealand Law Society and the Institute of Chartered Accountants. I put it to members of this House that that is a pretty broad cross-section of taxpayers in this country. I ask members to compare that with the people who favoured the legislation: the New Zealand Council of Trade Unions—there is not much science in that—the Rail and Maritime Transport Union the New Zealand Nurses Organisation the National Distribution Union and the Service and Food Workers Union. In other words the union movement favours the bill—the very party that will be employing Mr Peck next because after this election there will not be a role for him here in this House. 
These bills will radically impact on the pecking order of creditors when a business goes belly up. I do not think Mr Peck and his union buddies have thought this through. The big losers will be secured creditors business suppliers contractors and—here is a novel concept for members on the other side—shareholders. Employee redundancy claims will take precedence over people who have provided labour unpaid suppliers and contractors people who have in good faith provided services for a particular business. What are Mr Peck and the Labour Government telling them? They are saying: “Naff off we don’t care about you. We do not care that you have worked hard that you have risked your money. The only things we stand for in this country are unions.” My good friend Mr Mark knows that with an absolute passion despite what Mr Brown will say next. 
Let us be clear about this—employees have rights. No one is arguing that they should not have rights and entitlements to holiday pay and wages. But let us be clear about redundancy—it is for money they have not yet earned. The definition of redundancy is for lost wages and these people will not be in that position. Within 1 or 2 weeks they will be re-employed or on the dole but the point is that they will not be disadvantaged in any way. Employees will be given preference over customers who have already prepaid for services and put things on deposit but this Government just does not care. It just says that it is too bad. The message for mainstream Kiwis is this: “The Government cares only about unions and to hell with the rest of you.” 
Auckland insolvency practitioner Bernie Montgomerie sounded a warning that banks and other secured creditors would simply pass the risk on to unsecured creditors. He said: “This will just be another rod for the unsecured creditors particularly contractors who get ripped off every time.” Does this Government care about that? No it does not. Do members know why the Government does not care about it? Government members have been ticket clippers all their lives. They have never been in business and they do not understand. The implications are significant. The implications for business development and expansion particularly in areas where that growth is needed most means that credit will not be available. It will simply dry up and areas that would have had active employment opportunities development opportunities in business will not have them. But Mr Peck and his mates are so myopic that they just simply cannot see that. 
The cost of credit will increase. I know my colleague Mr Key will take a call next. He will talk about the cost of credit because he understands this very well. The cost of credit will simply increase because banks price for risk. Where there is good security the cost of credit is less. Interest rates will be lower. Of course the converse applies. Where there is low or poor security offered then the risk is greater and banks will price for it. I fear that banks and lending institutions will simply say: “We are not going to lend—full stop.” They will become risk-averse. That will be an absolute tragedy for this country. Typically only those organisations with good balance sheets will get the money—and that is not the mums and dads who run most of the businesses in this country. They will be the great losers. 
It might interest members of this House to learn that 92.5 percent of companies in this country employ 10 or fewer people. They are the mums and dad of this country who have risked everything to run a business but this Government simply does not understand that. They are the people whose homes will be sold up when their businesses go belly up. They have mortgaged their properties and they cannot now meet Mr Peck’s new payments regime so they will be out on the street. They will be left with nothing but a sour taste in their mouths and that will dramatically change the landscape for development and for putting money into the economy. 
 Finally this bill goes against the recommendations of the discussion documents released by the Government in 2001 entitled  
Insolvency Law Review Tier 1 Discussion Document 
—and I quote it—“After wide consultation the review did not recommend any increase in the $6000 or $1500 limit for entitlements. Nor did it recommend that redundancy payments should be afforded priority over other unsecured creditors.” So why is it being done? That is the question. Why is it being done when the Government’s own advisers said: “Don’t do it.” The answer is it is payback time. It is payback time for the unions—that is the answer. Mr Peck and his buddies really do not care about the productive sector of this country. 
National does not support this legislation. We never would; we never could. The New Zealand public has sounded the warning to this Government. The poll results should be putting it on notice that if it continues with this anti-business type of legislation then it will be out on the street. I say to Mr Peck and his colleagues that they should keep doing it—they should keep passing this type of legislation because the next poll result will have the National Party sitting on 60 percent my good friends in the ACT party will be on 10 percent and the Government will be languishing on about 20 percent. 
Hon Richard Prebble 
: That’s very kind of you. 
BRIAN CONNELL 
: Well I thought I would give the members a bouquet. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 Listening to that member’s contribution I have to say that he is better at a Peter Sellers type of imitation than Peter Sellers was himself. Peter Sellers issued a record some years ago now and spoke for 4 minutes saying nothing. This guy spoke for 10 minutes and effectively said nothing. 
Hon Richard Prebble 
: What about the workers? 
PETER BROWN 
: I do not think the honourable member would know one even if he fell over one. 
A few years back there was a system of awards which meant that every plumber in the country was paid effectively the same. It was a minimum wage for plumbers carpenters watersiders or whoever. There were local agreements and there was some difference between areas but basically it was structured around a national award. Now there are employment contracts either collective or individual. There is a good argument and I am amazed that Government members have not picked this up to have the priority for the contract—not for part of it but the whole contract—in other words for the total redundancy package. 
So this is just a middle step in many ways because if one buys a house and there is something wrong with the kitchen one wants the carpenters or whoever to come back to fix it. If there is something wrong with the kitchen and the dining room it is not acceptable to just come back and fix the kitchen and leave the dining room ahead of someone else. So there is a good argument in contractual law to have the employment contract raised to a higher priority. But this bill provides for people who are made redundant when a company keels over in insolvency to receive a maximum of $15000. That sum is to embrace wages holiday pay and any redundancy payment the person is owed. 
I am absolutely appalled at the National Party after listening to those members’ speeches. Lindsay Tisch referred in the Committee to people being made redundant in the flood-stricken area. Does the member recall saying that? Mr Tisch argued that because a business went under as a result of the flood a person working in perhaps a local workshop who lost his or her job and maybe even his or her home should be a lower priority than a creditor supplying that workshop—possibly from Auckland or Wellington. That is what they in the National Party think is fairness. That is not the National Party I was once a member of. The National Party I was once a member of had a fair attitude to individuals—including working individuals. 
I am surprised at Paul Adams. He is prepared to support this bill and will go to his people— 
Paul Adams 
: We are not supporting this bill. 
PETER BROWN 
: Sorry—my correction. He is prepared to oppose this bill and go to the people who work in his car yard or whatever he has and say: “If there is an earthquake in Auckland and I have to make you all redundant I will pay the creditors before I pay you the redundancy agreement I have negotiated with you.” 
Paul Adams 
: You don’t understand workers. 
PETER BROWN 
: I bet that member does not have a redundancy agreement with his staff. Does he have a redundancy agreement with his staff? Will the member tell me whether he has a redundancy— 
Hon Richard Prebble 
: No that’s an improper question. 
PETER BROWN 
: That is an improper question the honourable member says. I would like to hear it when he makes his contribution because there is no compulsion in this bill for any employer to have a redundancy agreement with his or her people and folk over on this side of the Chamber have lost sight of that. I say to employers that if they are fearful of having to make a redundancy payout then they should not sign up to the agreement. But I also remind employers and indeed the National Party that there is no extra money from this; it is just the priority of where it is being paid out and to whom it is being paid out. 
New Zealand First if members have not concluded that already will support this bill. We believe that working people who are employees—and before the honourable Paul Adams corrects me I recognise the point I know he will challenge me on which is that self-employed people are also working people—have had a raw deal in some circumstances. So we are supportive of the priority for redundancy to a maximum level coming into legislation. 
If the National Party were so strong on it though why did it sign up to this sort of clause in the commentary to the bill that came back to the House? It states: “We recommend that redundancy entitlements be included within the employee priority.” “We” includes the National Party. This is the party that is going out on the hustings now and saying that when it comes to superannuation and social things it can keep its word. Those members cannot keep their word between a select committee and coming back to the House. Their deputy leader Gerry Brownlee was on the Commerce Committee and I am waiting for his contribution to this House to explain why he has changed his mind. I think Parliament and the public at large are entitled to know why the National Party changed its mind between the select committee process and coming back to the House. 
Indeed I welcome the chance to learn from the Hon Richard Prebble who will no doubt tell the House why Rodney Hide changed his mind. Rodney Hide supported this bill when it was in the select committee. He does not have a reputation for being slow in echoing what he believes or in sounding off on what he believes. 
Ron Mark 
: He’s a good Rangiora boy. 
PETER BROWN 
: He is a good Rangiora boy and he knows what he believes. 
New Zealand First supports this bill. We think it has been a long time coming. It came before this House some years ago we opposed it and I would like to record that fact. We now know a lot more about the effects of the type of situation this bill is meant to address so in effect we have changed our minds and are supporting this bill. 
I have spoken to several small employers many of whom employ fewer than 10 people many of whom are not union members and have no redundancy agreements. There is nothing in this bill that affects them and they are not showing any concern. I have spoken to employers who employ more than 10 people and who do have union members in their workforces and they are not showing the least bit of concern. In fact the words used to me were that it is fair to raise it up the scale of priority. 
In fairness to them perhaps they would have preferred the legislation to remain as it was but when I mentioned that this move was likely to take effect they said: “It’s one of fairness Peter.”They are the words they used. So I invite Paul Adams to reflect on that because I know he is a man who likes to be fair. In this country if one does not put people first then the country will go backwards. This bill is aimed at looking after people who are quite often in dire circumstances to give them some sort of carry-over until they get their next job. 
The final point I want to make is that it is my understanding that a person who gets a redundancy package such as he or she might receive under this bill cannot get the dole until part of that payment is exhausted. In many ways this relieves the taxpayer of some financial burden albeit small. 
Paul Adams 
: Rubbish! 
PETER BROWN 
: The member shakes his head and says: “Rubbish rubbish” but if the dole is not being paid out then it is saving the taxpayer some money that can go into others areas of social concern. 
New Zealand First supports this bill. We know it will be passed and we congratulate the member for bringing it to the House. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 I want to start by congratulating Peter Brown. What a passionate well-informed speech! He displayed common sense and integrity. That contrasts with the National Party. I am appalled. This is yet another case of that party not letting the facts get in the way of a good story—just like its leader follow the leader—by claiming that Maori get more bereavement leave than anyone else. That is absolutely untrue but do not let the facts get in the way of a good story. 
The National Party makes “union” a dirty word. I have news for you—it is not. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member will not bring me into the debate. 
LYNNE PILLAY 
: I have news for the National Party—“union” is not a dirty word. That party indulges in dirty politics to the max. Unions are on that party’s hit list along with Maori and anybody else who does not fit its mould. I am proud of unions. I am proud of workers in New Zealand who advocated many of the good improvements that this Government has delivered. I am talking about things like increases to the minimum wage paid parental leave improved health and safety 4 weeks’ holiday and fairness at work—all those things that the National Party would dump if it could. 
Returning to the bill I want to make it clear again to the slow learners that itrefers to an insolvency situation. It imposes no more cost—read my lips no more cost—on employers. It is simply about making creditor status fairer for workers by making them preferred creditors. That was another example of misinformation. I am pleased to stand in support of this bill and I commend my colleague Mark Peck for his work on it. I commend him for producing this bill because he has seen—as I have—the heartache of redundancy for workers and their families and for employers and their families. 
It is devastating for anybody to be deprived of their livelihood through no fault of their own. The stress both financial and emotional is far-reaching. For some workers the security of redundancy compensation goes some way to assist them and their families at the difficult time of the loss of their job and income the loss of their self-esteem and the loss of their dreams for the future. That redundancy compensation I stress has been negotiated in good faith by employers and unions. It can provide hope whether to tide things over until another job is found whether for financial support while training or studying or whether restarting a work career through a small business—which this Government is happy to support. 
Imagine the double whammy if a worker learns that redundancy compensation is at best at risk but more likely worthless and simply not worth the paper it is written on. I have seen this situation most recently with Qantas New Zealand employees. The uncertainty for those skilled professional employees who were looking toward a career that would basically be their job for life was devastating. They were now in a job market that had severely diminished and they had the challenge of finding employment in their chosen field. Added to that was the harsh reality that their long-standing negotiated redundancy deal was worthless. It was an extremely difficult time for those employees and their families. It was unjust and unfair. 
This bill goes a long way to address those injustices in that it gives employee redundancy claims priority over other unsecured claims and gives some claims preference in an insolvency situation. It removes the current limit of $6000 paid to a worker by an employer in a corporate insolvency and raises the cap to $15000 and I think that too is good and fair to workers. A new priority is to provide an incentive to creditors to financially assist a liquidator to recover or preserve business assets. That is one way to help the overall return to creditors. 
This bill is about common sense fairness and balance and builds on Labour’s election policy to improve the protection of workers’ conditions when businesses are transferred and sold—as will be addressed in the Employment Relations Act amendments. Labour will continue to reform laws relating to redundant workers. If we look at the impetus for this bill the Weddel Crown collapse we see that workers had to line up with other unsecured creditors for their redundancy pay—compensation that had been negotiated in good faith between workers their union and their employer. They were collectively owed $35 million but they had to line up with other unsecured creditors for their money. It is unlikely that any of those creditors will ever see a cent of what is owed to them. This Government looks forward to workers not being in that situation again. Although there is no guarantee of full redundancy there is considerable comfort for workers in having a fairer position in the queue. 
I say “shame on you” to those on the other side of the House who oppose this legislation. It is the same sad group that revels in opposing anything relating to fair pay whether it is to do with workers’ rights women’s rights students’ rights or superannuitants’ rights and so on. It is consistent with their support for the Employment Contracts Act and their opposition to the Employment Relations Act the improved Health and Safety in Employment Act and the improved Holidays Act. It is consistent with their inability to accept or even comprehend the idea of work/life balance or to comprehend the win-win situation of investing in employees by providing healthy and safe working conditions by family-friendly approaches to employment by the principle of a fair day’s work for a fair day’s pay and by ensuring a degree of certainty with fair compensation in redundancy situations. 
I repeat that this will not add any cost whatsoever to the employer. I am tired of sitting in the House and hearing or reading in the newspaper outlandish claims about what is happening. Those things are simply not true. It is simply not credible. We cannot make allowances even for stupidity for those outlandish claims in this House. 
Again I commend my colleague Mark Peck. He had the foresight the compassion the sense of justice and the intelligence to bring this bill to the House and to build on this Government’s delivery of fairness and justice so that we as a nation can hold our heads high on the world stage and can look people in the eye and say that we are committed to being fair and do not want to see good working people ripped off. 
The Government is also committed to saying to employers that it wants to be fair to them in supporting their businesses but it insists that it is fair that in insolvency situations workers have a fair place in the queue. I say to the National Party that this bill is supported not only by Labour supporters workers and unions but also by fair-minded business people in New Zealand. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 Speaking on behalf of the ACT party which probably represents far more fair-minded business people than the honourable member’s party ever has I want to say that this bill is unjust bad economics and bad for the country. Let me explain. The bill is now broken into two halves but basically what is being proposed is that in the event of insolvency when it follows that there is not enough money the law sets out who should get what money there is when a company goes bankrupt. The bill proposes that the people who work for the company should get it. It follows—though the member did not mention it—that some other people who up till the passing of this bill would have received some money will now lose out. 
Who are the people who will lose out? Why do we not just take the case of Weddel Crown that was mentioned? We are told that workers there should have got whatever money was available and other unsecured creditors should have lost. Who were the unsecured creditors? They were farmers who had supplied stock to the freezing works. They had not actually been paid for that stock which had been slaughtered and sold. As a result of this bill the money that would otherwise have gone to those farmers or small businesses will now go to workers—not as compensation for work they have done but as redundancy. 
Redundancy of course is by definition not payment for work done. Redundancy is a compensation payment not payment for work done and that is a very big shift proposed by the bill. When there is not enough money we are now going to say to a small business which has done the work and supplied the goods that it should not be paid so that workers can be paid. It is a bit of class legislation. The notion is put up that workers should always get the money. I say to members that yes I have seen cases where companies have gone into liquidation through no fault of any of the employees and management but those cases are the exception. 
The reports made by the Society of Accountants point out that the vast majority of insolvencies are the result of errors and sometimes of foolishness of the people who work for the company. So this bill is saying that the people who actually had an opportunity to change the situation should have their rights prioritised ahead of the people who had no opportunity of saving the company—those small businessmen who supplied it. 
So I ask the Government where the support is for that. I ask that for a very good reason because we all know that the Government asked the civil service to do a review of this law. It did and it did a review of the protection given to workers because workers actually are protected under present insolvency laws. The civil servants confident after having done a review came back and said there should be no alteration to the $6000 figure. Why did they say that? They pointed out that $6000 was a reasonable amount of money to be given which for the average worker is at least 3 months’ work. 
They would also have realised that workers unlike small businesses can get payments from Work and Income if they are out of work. If people try going along and saying: “I am an owner-operator plumber and the business I have been supplying for the last 6 months hasn’t paid me. I’m not going to get paid because the workers are going to get payment ahead of me.” they should see how they get on when they put that forward in front of Work and Income. I suppose they might try a bit of social enterprise or whatever those hip-hop people got their money for but I suspect that an ordinary small business would get short shrift from this Government. In this bill the interests of small businesses are being put behind that of workers. 
But then if we look at the bill—and if members read it they will see it is very badly drafted—we see that the definition of “workers” includes the manager. Providing a manager is not a director he or she gets that $15000. So a manager could realise that a business was to be put into liquidation the next day. Under this bill the manager could write himself or herself a redundancy agreement for $15000 and the next day be a priority creditor. That is what the bill says. 
Hon Rick Barker 
: Rubbish! 
Hon RICHARD PREBBLE 
: It most certainly is rubbish. It is in his bill. He drafted it and that is what it shows. I raised it at the select committee. I pointed out to the member the very clauses where that was possible—and it most certainly is. 
That brings me to another point. I say to the House that this is a member’s bill—on a day that is really for the Opposition and other parties to put forward bills. What we have here is a Government bill that Ministers themselves know is a piece of class legislation so that someone like Lynne Pillay who was speaking previously and who used to be an organiser for the Engineers Union can give the sort of class hate speech she gave in the House today so she can claim that a Labour Government is somehow “for” the workers. I point out that the bill is actually going to help managers—managers who have been so incompetent they have driven their businesses into liquidation and who are probably going to bankrupt other small businesses. Under this bill they will then be able to write themselves a protected cheque for $15000—and the Labour Party tells us that that is fairness. 
But Lynne Pillay told us something else. She asked why we were objecting because there was no cost to this matter. Of course there is a cost. As Mr Rick Barker wanted to point out—apparently this is an advantage from his point of view—banks are one of those that will lose out. He pointed out to us that they are all overseas owned so why did we care. The reason we care is that banks are in business. They are not giving money away and they are going to have to load these provisions into their costs. Who will the cost fall on? It is not going to fall on the bad businesses; it will fall on every business. So the costs of doing business for people who were never going to go bankrupt—who were always going to be prudent and who always looked after their workers—will rise. Admittedly they will rise marginally but they will rise as a result of this bill. 
I say to Lynne Pillay that yes there is a cost in this bill. It will fall upon the 250000 small businesses in New Zealand who need to borrow money and who are prepared to go into business and hire their fellow citizens with their own money. They have to make wages each week. They mortgage their own homes to do it and this Labour Government against the advice of its own officials—for pure class politics—has introduced a bill to let “the workers” get priority over small business. And the Government tells us that that is electorally popular. Perhaps it is but it is still wrong. It is unfair it is unsound economics and this House should vote against this bill. The ACT party will. 
PAUL ADAMS (United Future) 
: 
 I rise on behalf of United Future which is also not supporting this legislation. This is bad legislation and it is a bad-news bill as far as I can see. I will pick up on a point made by Peter Brown that concerned me. It was that there seems to be only one type of worker in this world and that is a worker who is on wages. That is so sad because in United Future’s book everybody who puts a hand to the plough to earn a dollar in this country is a worker. I respect the workers who want to work for a wage because there are many types of natures and personalities and some people are adverse to risk. I do not have a problem with that. I am someone who was a failure in the school system because I was not interested in study but I was interested in working with my hands. What I have discovered over these many years is that in many ways those people with an academic background have a disadvantage because they are taught that life is either pass or fail and they therefore tend to avoid failure whereas many who leave school earlier such as myself are probably too silly to recognise that life can be a great risk so we press on anyway. We take chances and we learn by our mistakes. 
What concerns me about bad legislation is that if it is brought in to deal with a problem that is not fair and just we have another more serious problem. Peter Brown also picked up on whether I have staff and whether I have a redundancy agreement. Yes I do have staff and no I do not have a redundancy agreement. But in the motor industry where I have been working for many years of my life I have seen much bad legislation come through. Let us look at road safety and at all the laws that were brought in whereby we had to replace seat belt after seat belt that worked fine in many countries of the world where there were absolutely thousands of cars on the road. Yet somehow the cars come to this country and the seatbelts have to be replaced. The question I ask is: how many people have died on New Zealand roads because the cars failed? It would be very few but there would be many instances where the drivers failed. 
We are talking about legislation that deals with when a business fails. It has been brought up that people do not have to choose to have a redundancy agreement and I concede that point. But what people fail to recognise is that employers not only have to compete for the jobs they are tendering for—and let us look at the number of small businesses in this country which everybody in this House acknowledges are the backbone of this country—but likewise they also have to compete for the workers who will do those jobs. If many of the large companies choose to put in redundancy agreements it will not be too long before those same small businesses if they want to attract staff will be forced to put in those same redundancy agreements. But if these large companies go belly up and they have been so wise as to put in a redundancy agreement I would wonder about that wisdom when they can easily go into redundancy. 
The main reason we are voting against this legislation is that I heard somebody ask—and I forget which speaker it was—if members had ever spoken to the wife of somebody who has been made redundant. I would ask whether they have ever spoken to the wife of a small-business owner who has put her signature on the form for the bank and her home on the line because she has an entrepreneurial husband who chose to take a risk. What many people do not recognise is that most of these small-business owners have a heart and real compassion for their staff as I do. There are many times in the week when a small contractor is looking at those businesses that have not paid for services and the contractor knows it is a Wednesday and there are five or six families that are relying on that little business to pay money so that the workers can feed their families. 
Yet this legislation is standing against the risk-takers in this nation by saying that we will pay workers who have chosen to work for wages and not to take the same risk in life—which I do not have a problem with. However this legislation states it will pay workers for work that has not yet been done before the small contractor gets paid for work that has been done. I cannot vote for legislation like that. I cannot stand with a clear conscience in front of men and women who have laid everything on the line to take a risk build a business and to contract out for a job then through no fault of their own when the work is complete and has been done according to plans and specifications they will not be paid because the money will be taken from them and given to somebody who has the inconvenience of having to find another job. 
As I understand it—and it has been said during this third reading debate—because the workers will have been paid a redundancy they will now have to stand down and wait for the unemployment benefit. If they did not have a redundancy agreement they would be able to apply for the unemployment benefit. But if a self-employed contractor goes bankrupt let me assure the House the process before the contractor sees his or her next payday is considerably longer than for anybody who is working on a PAYE basis. 
For these reasons United Future believes that this bill is discriminatory. As I said in my earlier speeches it discriminates between workers which we would not support. Because someone has chosen to be one type of worker rather than another this bill discriminates against that. Therefore United Future is voting against this very unfair legislation. 
DAVID PARKER (Labour—Otago) 
: 
 The first point I will make is that these bills do not create an entitlement to redundancy. Whether a person has a right to redundancy under his or her employment agreement depends upon the terms of that agreement as negotiated between the employer and the employee. We do not have compulsory redundancy in New Zealand and this law does not create it. Neither does it affect the owner of a business directly as Mr Adams referred to. If the business has an obligation to pay redundancy because by contract the owner of the business has agreed to pay redundancy then it is that agreement that creates the liability for redundancy and this bill does not affect it. 
What this bill does is give priority to redundancy payments which together with wages and holiday pay due can total $15000. That amount is given preference over secured creditors. Secured creditors are normally banks which secure their indebtedness by way of a debenture or mortgage over a company’s assets. We heard Mr Prebble say that the $15000 was equivalent to 6 months’ earnings. It may have been— 
Hon Richard Prebble 
: I said $6000. 
DAVID PARKER 
: The member said the $6000 was equivalent to 6 months’ earnings? 
Hon Richard Prebble 
: Three months. 
DAVID PARKER 
: Three months’ earnings. So 6 months’ earnings on the member’s figures would be $12000. I think Mr Prebble just corrected— 
Hon Richard Prebble 
: Four sixes are 24. 
DAVID PARKER 
: That would be a year. Four sixes are 24 but two sixes are 12. On Mr Prebble’s figures he says that the average wage is equivalent to $24000 per annum. It may have been when he was last in Government but because of the economic prosperity of the nation under the wise stewardship of this Government it is a lot more than that now. It is $39600 per annum. So one can discount the figures that Mr Prebble has given to us in this debate—as often happens. It does not directly affect the owner of the business. It does not create a liability for redundancy payment but it does give preference to it ahead of secured creditors. 
We have heard claims that this legislation is unfair to other creditors—other than secured creditors—who wait in line. Members opposite shed crocodile tears because during their period of stewardship they changed the laws relating to securities and wiped completely the ability of small businesses to protect their own interests against secured creditors by wiping the effectiveness of retention of title clauses—also called Romalpa clauses. Those members who shed crocodile tears now try to say that this is unfair to other unsecured—not secured—creditors. 
In respect of those other unsecured creditors—with whom we all have sympathy if they lose in the event of an insolvency—it is interesting to compare the position of normal business creditors and the waged or salaried worker. The normal trade supplier or deliverer of goods or services to the business has a number of customers. Their risk is spread. If one of their buying customers goes broke before it pays the supplier the supplier loses money. However it is unusual for someone to lose a large percentage of the total business because it would be unusual for the majority of debtors to be any one particular debtor. Those suppliers spread their risk. 
It is different for an employee. An employee generally has a duty to work full-time for the employer and not to moonlight for others. Employees do not have other sources of income or redundancy payments or wages due from other employers. They have only the one employer to rely upon. That is why redundancy payments and wages are a bit different from the debts that are owed to suppliers of goods and services. They can spread their risk. 
I would like to make one other point. The $15000 increase from $6000 in large part relates to inflation since the figure was introduced in the 1980s. There has been inflation since that period that would require considerable upward adjustment of the $6000 figure probably close to $10000. So $4000 the difference from $6000 to $10000 is due just by virtue of inflation anyway. We are now in this harsh world that we live in acutely aware that when people are made redundant there is a considerable dislocation to their lives. The individuals who we all want to stay with their shoulder to the wheel as long as possible to make their great efforts in order to avoid the insolvency of a business should be encouraged. If I were an employee of a business that was looking a bit shaky and I was aware that my redundancy provisions were not going to be worth the paper they were written on I would dive out of that business sooner than I would if I knew that my redundancy entitlements which were giving me some insurance against the consequences of that business going broke would be paid in priority to secured creditors. That is not in the interests of the bank it is not in the interests of the business owner and it is not in the interests of the economy. We do want to encourage employees to feel secure that their contractual entitlements will be met. 
In respect of the suggestion that the day before a business goes broke someone might write himself or herself a very generous redundancy contract I am told by my colleague Mr Peck that he responded to that issue during the Committee stage and sought advice from officials who said it was unlikely that would be sustainable. I did not hear the reason but I suspect it would be that it would be a voidable preference negotiated at the eleventh hour which could be set aside by the receiver acting for the bank. 
Hon Richard Prebble 
: So it’s OK. Just do it 3 months before? 
DAVID PARKER 
: I hear the 3-month figure again but I tell Mr Prebble we have already been through that and we worked out that his maths was wrong on that occasion too. Without further ado I recommend this bill to the House. 
Hon ROGER SOWRY (National) 
: 
 The National Party totally opposes this Insolvency Amendment Bill—a bill that Labour members would have New Zealanders believe is a relevant little bill that will protect workers by giving them redundancy payouts when businesses they have been working for are made bankrupt. Labour members conveniently ignore that paying for redundancies out of a business that has become insolvent means that a whole lot of other small businesses will not get paid. The small electrician the small plumbing business the guy who owns the digger doing the earthworks—all miss out when a large firm goes bung. The workers in that large firm get redundancy payments but the small-business guy gets nothing and his staff get nothing. That is the tragedy of this bill. 
Labour members just sit there with their mouths open wide and say that that is OK. They do not give a toss about small business—not a jot. John Tamihere the Minister for Small Business has not said a thing on this bill. I expect he will come into the House and say he has let small business down—just like he did on the Holidays Bill. Once that was passed he came down to the Chamber and said: “I guess I should have said something on it. I’ve let them down.” Where is he on this bill? We have not heard a word from him. Where is the new business friendly we are told Minister of Labour on this bill? Where is Paul Swain? Why is he not standing up and saying to the business community that this bill is good? He has not said a word about this bill. In fact when he is challenged on it by business he says: “Oh it’s a member’s bill not a Government bill.” He is voting for it but he will not speak on it. Where is the Prime Minister on this bill? “Bring it on!” says Helen Clark. Where is she? What is she saying about this bill to business around the country? She says nothing about it at all. 
I say to Labour members that when a big business gets into trouble and is made insolvent it will be no good any Labour member prancing around the town saying: “I’m here to look after people. Don’t worry I’m here to watch out for them.” because now there will be a whole lot of small creditors who used to get their money or a portion of it having to line up behind the redundancy payments. So the workers not only will get their holiday pay and any wages they are due—and they should get those—but will now get a redundancy payment over and above payments due to someone who has supplied goods and services. That supplier is left to go under. The small businesses are left to go under. The fact they have done the work and supplied the materials counts for not a jot in the minds of these Labour members. 
I bet by the time we reach Christmas that there will be Labour members out in their electorates saying they are very concerned and worried about a business that is going into receivership and that they will do all they can. I tell those members that we will be saying to those businesses that suffer and lose out under this bill that the Labour Government has passed legislation to make sure they miss out. How many Labour members have been to the small - business love fests Labour has been running around the country? They have not talked about this. I have talked to business people who have fronted up at those meetings and they say that Labour members tell them: “We’re really interested in your views. Yes we understand the Holidays Act is an imposition on you but you know it had to be changed. It was a long time coming. We had old legislation.” When they are challenged about the Employment Relations Law Reform Bill they tell them to make a submission. Just this afternoon I had in my office some people from a business that has a staff of 9000 nationwide. 
Darren Hughes 
: Who was it? 
Hon ROGER SOWRY 
: It was Spotless Cleaning. Does the House know how long the Labour Party has given that business to make a submission? It has given it 5 minutes—and that business has a staff of 9000. That is outrageous. Quite frankly that business should not bother to come and make a submission. 
Hon Member 
: That’s an insult. 
Hon ROGER SOWRY 
: I am glad New Zealand First members are outraged by it because they voted for the bill—and I hope we can change their minds about it. They will not talk to their Labour members who are telling them: “Make a submission and we’ll look at it afterwards. We’re too busy to see you now.” What arrogance! If a firm that Spotless Cleaning is doing any cleaning for goes into receivership staff members of that firm will get their redundancy payments and Spotless Cleaning will get zilch. Spotless Cleaning will have to stand in line behind the redundancy payouts. So who will miss out? The staff of Spotless Cleaning will miss out. 
Hon Rick Barker 
: Not true! 
Hon ROGER SOWRY 
: I ask Mr Barker how they get paid. He does not know. Those staff do not get paid. 
Hon Rick Barker 
: Will the member yield? 
Hon ROGER SOWRY 
: Has the Minister taken a call? No he has not. He should take a call. Those people will not be paid. Redundancy payments will be made before the cleaning staff who work for a contractor get anything. That will not help the cleaning staff at all. 
So how can this bill help any of the people the Labour Party purports it will help? I bet that the first time this is pointed out to Labour members in the community they will say: “Well Parliament voted for it.” Everything is always in the third person with the Prime Minister and with Labour members. It is always other people who have done things and they just happen to be swept along. New Zealanders can see through that. They are sick of the arrogance. They are sick and tired of being told: “9000 staff 5 minutes to make your case—but we really care about you.” 
People are sick of the fact that the Minister for Small Business never talks about small business and they are sick of the fact that the Prime Minister is too busy ever to come out to justify the Government’s programme. She never speaks in favour of Government bills in this House. She never comes down here to say a word about them. It is all a bit beneath her. She is so regal. She never has the time to come down to this Chamber to debate issues. That is outrageous; it is arrogance from this Government and it is arrogance from this Prime Minister and the public can see through it. She will take a poll on it not guided by principles but by a couple of public relations opinion polls. This legislation is even worse. I agree with what Richard Prebble said. This is Government legislation that it is too gutless to bring in. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member is a longstanding member. He knows that he cannot use that phrase. Would he please withdraw and apologise? 
Hon ROGER SOWRY 
: I withdraw and apologise. The Government is too weak to bring in this legislation under its own steam; instead it has a member’s bill to bring in its programme so that its Ministers can say they did not do it. They are voting for it and that is outrageous. We oppose it. 
Hon RICK BARKER (Minister for Courts) 
: 
 It is a pleasure to speak after the three-time loser from a little bit north of Wellington—or should I say four-time loser? It is obvious from that speech why that member no longer plays a leading light in the National Party. The speech was all whinge whinge and grizzle grizzle. The member was short on facts poor on analysis and incorrect with regard to deductions. He said that where people work for their wages and are owed wages they should get them in a redundancy situation. He also said that when they were due to be paid holiday pay they should get it in a redundancy situation. That is exactly one of the issues that this legislation will fix. In the previous legislation passed by National the maximum amount that was claimable in the case of the closure of a business was $6000. National had reduced it to just $6000. In the closure of Tomoana Freezing Works many workers were owed more than $6000 in outstanding wages and holiday pay and they never got it. If Mr Roger Sowry says that he agrees that workers should receive all of their outstanding wages and holiday pay he should support this bill because to say that he supports people getting their entitlements to due wages and holiday pay and does not support this bill is contradictory. 
The second important thing about this bill is that to have a redundancy agreement is not a right. It is not an entitlement as of right; it is the result of a negotiation. I would have thought the National Party would have stood up for the sanctity of contracts. If an employer argues for and agrees to a contractual arrangement that in the event of a redundancy occurring the persons made redundant will be paid a redundancy pay then National should support that contract being fulfilled. Are the National Party and United Future now saying that they do not support the sanctity of a contract? To vote against this legislation is to say that members do not support the sanctity of a contract. That is what they are saying. Let the United Future members take a call and try to argue to the contrary. They are saying that they oppose this legislation and that when someone has willingly freely and by agreement signed up to a redundancy agreement that person should be able to wriggle out of it if he or she feels so desirous. I say to the United Future members that that is double-dealing and we will have none of it. 
Mr Richard Prebble raised another issue when he said that this legislation would enable managers to write themselves a redundancy agreement on the eve of a company collapse to ensure that they got the maximum $15000 payout. Theoretically that is possible but it is extraordinarily unlikely. This information has been made known to Mr Prebble on other occasions but for the record let us make it clear yet again so there can be no mistake. It is unlikely that the manager or chief executive of a company would be able to convince a liquidator that he or she had had a negotiation to reach a redundancy agreement. Mr Prebble may be able to negotiate with himself if he has two personalities; I do not know about that. But most of us have only one personality and if we are to have a negotiation we cannot negotiate with ourselves. For Mr Prebble that may be possible but it is certainly not possible for the average person. I doubt whether he would be able to convince anybody other than himself I guess that it is possible to have a negotiation with oneself. That is the first failure in Mr Prebble’s argument. The second failure is that that would be quite easily seen as a device to get around the law. And on that point it is quite clear that this tactic raised by Mr Prebble as one way of casting aspersions upon this bill is a very dubious claim. 
Now let us get back to the reason for this bill which was initiated by myself. 
Hon Roger Sowry 
: Do you support it? 
Hon RICK BARKER 
: Yes I tell Mr Sowry that I am quite happy to say that I support this legislation. This legislation came into being because of the gross unfairness I saw following the closure of the Tomoana Freezing Works. The workers at Weddel Tomoana lost approximately $35 million in outstanding wages holiday pay and redundancy. The first point I would make about the redundancy agreement is that the workers had paid for the redundancy agreement out of their own wages. They paid for it in this way. Some time prior to the closure the workers went to the company and asked whether they could get a redundancy agreement. The company said that it was interested in negotiating a redundancy agreement but would not agree to a pay increase and a redundancy agreement. The workers had the choice between the two and in lieu of a wage increase they took a redundancy agreement. They paid for that redundancy agreement year after year after year. I tell Mr Prebble Mr Sowry and Mr Adams that those people were in a completely different circumstance to that of a casual creditor who turned up to do some plumbing or a bit of wiring or to put some bread into the kitchen out the back. That redundancy agreement was paid for by years of work. The workers wanted to have an agreement that in the event that Weddel Tomoana went under they would be paid redundancy to tide them over. The company agreed to that. 
Weddel Tomoana had also entered into a Stg£100 million guarantee for its outstanding loans. That was a substantial guarantee. At the particular time that Weddel Tomoana went under every freezing company in New Zealand was heavily into debt to the banking industry. The banks could have turned over any company in New Zealand by stopping its credit. They chose one company because they needed to reduce the exposure they had. The banks needed to reduce the number of freezing works operating in New Zealand and they deliberately chose one company to turn over. Several freezing companies in New Zealand were in a far worse state than Weddel but they were not chosen because Weddel had a Stg£100 million guarantee. The banks knew that if they turned Weddel over they would get all their money out which they did. The people who lost $35 million were the workers. They lost it in wages in holiday pay and in a redundancy agreement that they had paid for. They lost it simply because a former Tory Government—National—had reduced the amount of money that workers were entitled to claim from whatever it was down to $6000. 
This bill lifts that figure up—[ 
Interruption 
] The figure is not limitless; the bill lifts it up to $15000. That is a modest increase. Mr Prebble may wish to cast and portray Labour’s speeches as class-conscious speeches or whatever. But I tell him that in retrospect his speeches are all about the interests of the banking industry. The banks got all their money out of Weddel Tomoana. Without a shadow of a doubt they lost nothing. The other interesting thing is that if Mr Prebble is correct that protecting the banks from these sorts of things will give ordinary customers in New Zealand—because this is what his argument was—a benefit then we should look at the practice. Mr Prebble argued that if the banks have to pick up the cost of redundancy or their share of it because they are not able to claw as much money out of a company then banking costs will go up. I have to tell Mr Prebble that our experience and our intuition take us in exactly the opposite direction of that. The banks have so far been protected by a maximum exposure of $6000 yet everybody in this country knows that for the last 10 years banking fees have been going up dramatically and interest rates have been held at artificially high levels. Our interest rates are higher than almost anywhere else in the world. Bank fees have become an important part of banks’ revenue and banking profits in New Zealand are extraordinarily high. That shows by logic that restricting the amount people receive in redundancy payments to a maximum of $6000 will be of no benefit at all to ordinary people who use the banks—it is quite the contrary. 
The only reason banking charges have come down is that Kiwibank is operating—and the National Party want to sell it off! 
Hon Richard Prebble 
: Ha! 
Hon RICK BARKER 
: Mr Prebble scoffs and laughs but that is what people understand. When Kiwibank came on the scene fees and charges went down and interest rates went down. When Kiwibank started to offer competitive home loans to low-income people the other banks decided to get into that as well. So that is where the situation is with regard to the New Zealand ownership of New Zealand banks—and the National Party wants to sell them off. 
This is a very good bill. I congratulate Mark Peck on doing what I could not do which is to shepherd it through this House. Mark Peck did a fantastic job on this bill and he deserves every credit for that as do all the Commerce Committee members. I want to close with one last word which is Peter Brown’s advice to this House and to the business community that if companies do not want to be involved with a redundancy agreement they should not agree to one. But if they do then they should expect to have to pay redundancy. 
JOHN KEY (National—Helensville) 
: 
 In 17 months there will be an election in New Zealand. After it the former Prime Minister of New Zealand Helen Clark will have tears in her eyes as she speaks to the former Minister of Finance of New Zealand Dr Michael Cullen. When that day comes in 17 months— 
Hon Member 
: Not before then? 
JOHN KEY 
: I doubt it. When that crushing defeat is delivered to the Labour Government in 17 months’ time its members will look back on today 24 March 2004. I doubt that they will look back to the Insolvency Amendment Bill or the Status of Redundancy Payments Bill as it was known and apportion any blame whatsoever to that bill. It is a small bill. It truly is a Government bill; it has been dressed up by Mr Peck as some sort of member’s bill but really it is a Government bill. So why should they in 17 months’ time after a crushing defeat has been delivered to them reflect on this day? Because this bill tells us two things about the Labour Party and gives us two reasons why this Government will lose for sure. 
The first of those is quite simple. Labour members simply do not understand business. They do not understand what drives the economy. I know that good economics is not always easy to understand. I know that good economics can be a little counter-intuitive. But what the Government has done in allowing this bill in sanctioning this bill as it travels through the House is to demonstrate the first principle—that they do not understand good economics and they do not understand how to run the economy. For 4½ years Labour members have come into the House and paraded all sorts of reasons why the economy is doing so well and why they are the cause of such a strong period of growth in New Zealand. But they have forgotten the whole way through that the real reasons for the growth have nothing to do with them. The growth has happened in spite of them not because of them. 
Why do I say that? Well the answer is very simple. This legislation changes the balance of power in corporate New Zealand. When this legislation goes through tonight—not with the support of the National Party the ACT party or the United Future party—thousands of small businesses will be in a worse position not just because they are susceptible to a loss if they are interacting with a company that has a supreme redundancy position as will be the case because of this legislation but because their businesses are fundamentally weakened by this legislation. Their business is now more vulnerable. The banks will ultimately look at the security that is required. They will ultimately look at those businesses and draw the conclusion that they are a greater risk and the banks’ propensity to want to be involved support and grow those businesses will change. That is the first reason why in 17 months’ time the former Prime Minister of New Zealand Helen Clark will be lamenting her great defeat to the former Minister of Finance Michael Cullen. 
Hon Richard Prebble 
: No she’ll be heading off to Cambridge University. 
JOHN KEY 
: She will be heading off to her real job—at the United Nations. It is quite a joke that she came down to the House yesterday and told the people of New Zealand that she is in the House debating issues all the time. She is not. The public of New Zealand know that she is around the world pursuing her real agenda. But I go back to the Insolvency Amendment Bill. 
The second reason that the Government will lose the next election is very simple: this bill picks winners and the winners in this bill are the employees who will get a preferential redundancy deal. The losers are the small businesses that will interact with it and the many other people involved in those companies. That is no different from the way the Government runs its normal economic agenda. It picks winners. This is a Government that knows best. It knows when the exchange rate is too high and when it is too low it knows when a company should be invested in and when it should not be and this legislation is just another example of that. When things really turn to custard as they truly will—and the Minister of Finance has already told the country we need to tighten our belts because we are heading into an economic recession and that he has no answers as to how to produce higher levels of growth so we are on our own; that was the message he gave the Labour Party a couple of weeks ago—this is the kind of legislation that will cause all sorts of problems. 
There is no need for this bill. There is absolutely nothing stopping employees in New Zealand from having this kind of contract with their employers nothing whatsoever but they do not do it. Why do they not do it? Because either they do not think it is important or they do not actually want to go their employers and talk to them about why they want to have it because they know that their employers will recognise the weakness of the position. There is nothing stopping them. If it is such a great idea if it is no big deal and nobody cares about it as Rick Barker and various other members have said then let us just let employees out there go and negotiate today. It is a free world; there is nothing stopping them. We do not need this legislation. 
The second point I want to pick up on is the point that Mr Prebble quite eloquently outlined in his speech and it is very simple. A redundancy payment is a payment for a future activity that would have taken place. That is the issue. The real people who will be hurt by this bill have already delivered their goods. The Labour Party members do not care about the fact that those people have actually undertaken work and done the hard yards. I am referring to the guys who have fixed up the lighting in the factory for example or swept the floors; the guys who have changed the broken light bulbs and fixed the broken window frames. They have done the work but apparently they do not deserve to be paid because they are entrepreneurs—because they have had the guts and the gumption to get out there and get a small business going. They do not deserve the support of the benevolent Labour Government which wants to pick winners. They are not worthy of support because they are prepared to get off their butts every day get out there and toil hard for New Zealand. They do not deserve support and they do not get it in this legislation. What they do get is a far weakened position as a result of this legislation. 
But the very people whom the Insolvency Amendment Bill will support do have options. There is nothing stopping them from getting a job in the future. They do not necessarily lose because of being made redundant. I was involved in a number of commercial companies in a 20-year period that made people redundant and within days they were in a new job. Some of them were really grateful that we had made them redundant. They were very happy to have moved on. They had plenty of opportunity to find a new job. It is not a sad story everywhere. If the Government were prepared to have pro-growth initiatives there would be plenty of opportunities for the employees of the odd company that fails to find another job. That will not be the case for the small-business person who has delivered the goods; that will not be the case for the builder who has worked for months and months on end and whose family needs the money to pay for the kids’ school shoes. That is not the situation for them. If employees cannot find another job they can get and enjoy the benefits of the welfare system which we know the Labour Government loves and develops and continues to cherish. They have lots of options but not the people who will be disadvantaged by this system—they do not have options. 
Lastly I want to talk a little bit about the point that Mr Prebble picked up on which is that a manager who is not a director could in fact write himself or herself a contract. 
Hon Richard Prebble 
: Maybe he should write it anyway and put it in the top drawer. 
JOHN KEY 
: That is exactly the point I was going to make. Managers might choose to have contracts at any time. They do not have to do it within a few days. Most managers can see a redundancy coming years ahead of when it really takes place and there is absolutely nothing stopping them from making sure they have a cosy little deal for themselves and the managers who work with them. There is absolutely no reason why they would not have a contract. Rob Muldoon used to have a letter of resignation already signed from every member of his Cabinet— 
Opposition Members 
: That was Holyoake. 
JOHN KEY 
: Holyoake—OK. If he can do it the managers of New Zealand can do it. This legislation is terrible. 
DAVE HEREORA (Labour) 
: 
 I take pride in taking a short call to speak on this legislation. I want to say first of all that I commend the sponsor of the Insolvency Amendment Bill. I think the National Party has lost the plot basically because the bill represents justice and fairness for workers. I think that is something those members might not recall. I do think we need to acknowledge another group of stakeholders in this debate and that other group is the employers. I do know my having negotiated with employers in my previous occupation that many of them have agreed to insert redundancy provisions into their collective employment contracts. I think that is a positive sign that most employers accept the liability of redundancy. Throughout this debate I have not heard Opposition members compliment that group of people—the employers. I think they need to be acknowledged simply because as I said they do accept that they have liability to protect their workers. There is a group of employers who do take on that liability and at the end of the day it is about justice for their workers and giving them security. I thought it was important to make that point very clear as I have not heard it throughout the debate today. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: We actually have two bills here. Shall I put them as one question? There is no objection to that course of action being taken? There appears to be none. 
A party vote was called for on the question  
That the Companies Amendment Bill and the Insolvency Amendment Bill be now read a third time. 
Ayes 74 
New Zealand Labour 52; New Zealand First 13; Green Party 9. 
Noes 44 
New Zealand National 27; ACT New Zealand 8; United Future 8; Independent: Awatere Huata. 
Bills read a third time.