Fenton Darien: Minimum Wage (Starting-out Wage) Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Fenton Darien: Minimum Wage (Starting-out Wage) Amendment Bill — First Reading 
[Sitting date: 18 October 2012. Volume:684;Page:6006. Text is incorporated into the Bound Volume.] 
DARIEN FENTON (Labour) 
: 
 I rise on behalf of the Labour Party to strongly oppose this bill the Minimum Wage (Starting-out Wage) Amendment Bill. In fact it could be called the “Minimum Wage (Starting-out and Starting-out Again Again and Again) Amendment Bill. The Minister of Health is wrong when he compares this bill to Labour’s previous policy and amendments to the Minimum Wage Act around young workers. We had a one-off 3-month or 200-hours new entrants rate for a 16 or 17-year-old. It was a one-off whereby in their very first job an employer could employ them on 80 percent of the adult minimum wage. What this bill does of course is extend the unfair discriminatory practices of this Government when it comes to workers generally and it takes us back to last century. This is a last-century piece of legislation. Not since the last century have we had youth rates for 18 and 19-year-olds. They are old enough to vote old enough to go in the army and fight old enough to get married and old enough to have families and have responsibilities. Yet here we are saying that 18 and 19-year-olds under this bill will be worth only 80 percent of the adult wage—for the first time since the last century. 
What happened last century when we had minimum wages youth rates for 16 to 20-year-olds? When Labour came into power in 2000 the youth rate was just $4.20 an hour for a 19-year-old. For goodness’ sake! Did that fix the problem of youth unemployment? No it did not. We had some of the highest youth unemployment we have ever seen in this country. It is a very very old-fashioned last-century idea—the idea that this Government seems to have that if you cut wages that if you compete on cheap wages then that somehow creates jobs. We know from years of experience of trying that that it does not work. We need to do better by the workers of New Zealand but also by our young people. 
This bill will add to the disappointment of our young people that John Key’s Government is letting them down. It is letting them down and it is failing to give them hope. Numbers of them are getting on the plane to Australia numbers are already saving up their airfare to Australia because they know that even if there is a youth minimum wage in Australia it is going to be higher than here. They need a Government that will provide them with a future that provides decent secure jobs not the low wage any job is a good job kind of approach that we have seen from the Minister of Labour from John Key from Paula Bennett and from others. It is a very backwards-looking policy and it gives one message to young workers. It says to them: “You’re not worth much.” It says to them: “This Government does not believe in young people. It does not like young people. In fact we dislike you so much we are going to give you a pay cut. There is going to be a pay cut.” If you are 16 or 17 not only will you be on 80 percent of the minimum wage—$10.80 an hour—once for your first 6 months of employment but if you go to a new job you are going to have to start all over again. That is why it is called the “starting over and over and out” kind of bill. 
Many 16 and 17-year-olds work part-time jobs they work casual jobs they work to supplement their income while they study. They do not actually have a permanent job that goes for 6 months. So every 6 months or every time they start a new job if they are working in the holidays back they go down the snakes and ladders ladder back down to the youth minimum wage. They feel like they are just getting to be treated like an adult and respected for the work they do and down the ladder they go back to $10.80 over and over and over again. It is even worse in some ways—in many ways actually—for young people who have been on a benefit. As I said before 18 and 19-year-olds have not been on a youth rate since the 1990s and we know that made no difference. But what the Government is planning to do under this bill and under its policy is to say to 18 and 19-year-olds: “If you’ve been on a benefit for 6 months you’re so hopeless”—even though that benefit might be an invalids benefit or a sickness benefit—“you’re going to get punished if you get a job by being on a youth rate for 6 months. You’re so hopeless you don’t deserve to get paid an adult wage.” What we will have is people going into the workforce who are 18 and 19 working alongside other 18 and 19-year-olds who are getting the adult rate. That is going to cause mayhem in the workplace. I think it is going to continue to cause real problems. 
There are very deep flaws in the thinking of this Government around the process of 18 and 19-year-olds. They were raised in question time today by me but were not particularly well answered by the substitute Minister of Labour the Minister of Health. First of all how will employers know if an 18 or 19-year-old has been on a benefit for 6 months? How are they going to know? The Minister said that oh they will have a conversation. That just says to me that he has no idea what it is like for a young worker going into a job interview and having a discussion a so-called discussion with an employer about their job prospects. What it will mean in my view is that employers are going to be led into a trap. They are already telling older workers that they do not want them. I have had three cases of that in the last week—three cases in the last week—where older workers have been told: “No we don’t need you because we can get younger workers on cheaper wages.” Employers are going to be led down the path of believing that they can advertise and say they want 18 and 19-year-olds who have been on a benefit on a starting-out wage. It may be that Work and Income refers young people but I have deep concerns about the privacy around that and around the discrimination that arises in the workplace—not only the discrimination for those young people who may have been on a sickness benefit or an invalids benefit or a young parent payment but also the privacy of their information. Why should that disclosure have to happen? They should be judged on their merits. They should be judged on their merits as to whether they are the best person for the job. If they are the best person for the job they should get paid at least the adult minimum wage. 
The other question I asked today was about the Minister’s claim in her Q and A that she put out with her bill that this is not compulsory. That is just simply rubbish. What she said was that it is not compulsory; the worker will have to agree. If a worker is somebody who has been on a benefit goes along and applies for a job is sent by Work and Income is offered a starting-out wage of $10.80 an hour and says: “No I can’t afford that. I can’t live on that. I’m going to have to turn that down.” they will be punished. They will be punished by having a sanction of a 13-week stand-down from Work and Income which is part of the whole sanction approach to beneficiaries from this Government. So saying that it is not compulsory is quite simply ridiculous. A worker in that situation has no power to negotiate to reach an agreement with an employer and say: “Actually I think I’m worth a lot more than the starting-out wage.” when they know that if they turn it down they are going to have their benefit cut and they are going to be punished by this Government which does not like young people. 
It is a very backwards-looking policy. The regulatory impact statement freely admits that the Ministry of Business Innovation and Employment did not consult with external groups such as the Council of Trade Unions and Business New Zealand. It did not bother. Treasury suggested that this could apply to other groups of workers so we might see in the future other vulnerable workers—we might see other groups of workers like Maori and Pasifika who have high unemployment—on a starting-out wage. How disgraceful. Of course it is going to have an impact. We are trying to keep young people at school. We are trying to keep them in training. What this does is discriminate against those who choose to study and make a bit extra while they are studying. It will impact on their incomes and make it more difficult for them to study. This bill is a disgrace.