Employment Relations Amendment Bill — In Committee 
Employment Relations Amendment Bill — In Committee 
[Volume:633;Page:5084] 
Employment Relations Amendment Bill 
In Committee 
Clause 1 Title 
KATHERINE RICH (National) 
: 
 I rise to speak to clause 1 the title in our discussion of the Employment Relations Amendment Bill. When we look at the words “employment relations” and think about them we know that the relationship we have with our employers is among some of the most important relationships we have in our lives. But this bill single-handedly makes it easier for an employer to get out of the Mafia than to move on and change an employment relationship with a staff member. 
I would like to remind members in the Chamber of the reasons we are here debating this bill. It results from the case of a Dunedin firm actually Crest Commercial Cleaning Ltd which was taken to court because it wanted to take on a cleaning contract for the Dunedin Kindergarten Association. That association had loyally stood by a number of cleaning staff members for some years but over a period of time the standard of cleaning had become so appalling that the association felt that the health of the children who attended those kindergartens was at risk. It complained that some of those kindergartens were left in an unsanitary situation so in certain circumstances the association was almost at the point of having to close those kindergartens because the cleaning was so bad. 
But on the issue of employment relations the Government is telling New Zealanders that the relationship is of greater importance than the standard of the work. The Government is saying that for a kindergarten to have such substandard cleaning is OK and that the employment relationship is far more important. Crest Commercial Cleaning wanted to take over the contract after that contract had been terminated. The kindergarten association did not break the contract; it waited loyally until the end of that contract. The association thought it was fine and hired a new company. The new company came in took over but—hello—the staff members took it to court backed by the union movement. 
This is telling Kiwis that it is OK for people not to do their work well and to put other New Zealanders’ health at risk yet still they will keep their jobs. If we look at the cleaning business we see that about 90 percent of what is important in that business is the standard of work done by individuals. If the individual cannot work well then the Government is saying that that is OK—that that is not the important point there. Under this new legislation a cleaner could be the worst cleaner in the world the worst staff member in the world but still have what equates to a fixed employee/employer relationship. The Dunedin Kindergarten Association did not want to be in a position where it hired staff members; that is why it got contractors in. And it was a total shock to the association to find itself in the situation where effectively it was the employer of those cleaners. 
The Government wants to paint a picture that this bill is all about vulnerable workers and if we look at the rhetoric around it we can see that it is basically a whole bunch of euphemisms. It talks about vulnerable workers and about restructuring when in fact we are looking at ending fixed-term contracts and moving on to new business. 
If the Government were really serious about employment relationships it would be thinking about the mums and dads who run those cleaning franchises. The Government wants to give the impression that this is all about big nasty corporate cleaning companies. Well it is not. The average value of a cleaning contract in this country is around $8000 and mums and dads take on franchise opportunities earning only $20 an hour if they are working for themselves. They have independent businesses. They go out and get those small contracts and use that work to put bread and butter on their own family’s table. This bill effectively makes them responsible for somebody else’s staff. 
If the aim is to retain the positions of those staff members who do not have work as a result of a contract then they should be allowed to stay with the companies involved. That would make sense. If the Government is serious about employment relationships then why does it not keep the employment relationship between the staff member and the initial employer? Why force that staff member to be taken on by a company the staff member does not know and why should a firm take on staff it does not know if the quality of service is to be maintained? Lianne Dalziel gave us a lecture about business compliance costs; this bill adds the biggest compliance cost for those businesses. 
The CHAIRPERSON 
: Before I take the next speaker I say that I should have given some guidance at the outset. This bill is a clause by clause bill. It is in clauses so therefore the discussions should relate strictly to those clauses. Clause 1 is about the title which has four words in it. I ask that members confine themselves to the title on its own from here on. 
LINDSAY TISCH (National—Piako) 
: 
 Thank you for that clarification. I know that my colleague has a lot of expertise and experience in various businesses and she has been able to articulate that and show how the impact of employment relationships has affected the viability of businesses. When we look at the title and the words “employment relations” one of the questions one needs to ask is whether those relations are favourable relations for the staff who are to be employed. Are they relationships that will cause a business possibly to have to retrench or even to close down? It is all very well talking about vulnerable workers but in terms of this bill—and I know that over the years there have been a number of amendments to employment relations legislation—we really have to look at the impact of what the bill means and whether the title is applicable and says what the bill means. 
We often judge a book by its title. Maybe we should not do that but when I go into a news agency and want to buy a magazine I will be looking at what the title is in order to see whether it sparks an interest for me to say I will buy the magazine—or newspaper or book—and read it. That is so when I go to the library or whatever. So the title in itself is a marketing tool. It is one of those things that grabs the imagination. With that in mind the title of the bill should really reflect in essence what the bill is about because if it does not then it is misleading. 
When I look at the Employment Relations Amendment Bill provisions I see that although it is meant to protect vulnerable workers what will happen is that businesses that may be contracting may be disadvantaged. We used the cleaning example because the National Party minority view on page 4 of the report of the Transport and Industrial Relations Committee which I draw the Minister’s attention to is very clear. It gives practical examples of a cleaning contract whereby if a business was to win a contract it would have to take on the staff of the outgoing contractor. Is that fair? I would say that is grossly unfair because the terms and conditions of a new contract arrangement between the business that is being contracted for by the provider of a service will be affected very much by the calibre of those people who are there. 
So when I look at the title of the bill I would say that this bill should be called the “Employment Relations to Undermine Businesses Amendment Bill”. We are a nation of small businesses. In fact 80 percent of all businesses in New Zealand employ fewer than five people. So to my mind when I read through this bill—and I have looked at it very closely I can assure members of that—I see that it does not do the worker any good whatsoever because it puts shackles on the employer. 
I see that the Chairman is keen that I talk more about the bill in this particular area and I am happy to do that. The bill makes it difficult for employers to say they will go for a contract knowing that when they are to take over a new contract—let us say in the cleaning industry—there are existing staff. As we are a nation of small businesses a lot of family-owned businesses will be affected by that. I believe that a lot of workers whom we are trying to protect with this legislation will actually be disadvantaged. So another name for this bill could be the “Employment Relations Heading to Redundancy Bill”. 
Paula Bennett 
: That’s a good name. 
LINDSAY TISCH 
: I think it is quite a good name: the “Employment Relations Heading to Redundancy Bill”. With that in mind when we look at how businesses work we see that the problem with this Government is that it has never got its feet on the ground. It does not know what makes businesses tick. It has never put an investment in business. It has never taken the risks. Yet it is telling businesses here that this is what they have to do. It is not about employment relations. Employment relations should encompass not only employees but employers. If we want a win-win situation to get the best and to add to productivity—although this Government knows absolutely nothing about productivity in the workplace— 
Paula Bennett 
: How much do they know? 
LINDSAY TISCH 
: Well they do not know very much at all. That is why the Labour Party is on its way out and its members will all be looking for new employment opportunities themselves looking at the polls today. 
PAULA BENNETT (National) 
: 
 I rise to talk to the title of the Employment Relations Amendment Bill. I feel it is appropriate to come up with a suggestion myself for a title to this bill. Looking back to the year 2000 when the Employment Relations Act was introduced I see this is the 14th amendment to it since then. So my suggestion is that we call this bill the “Employment Relations Too Many Amendments Bill”. The reality is that time has been taken up by the Government on those amendments. There has been so much wrongdoing going on that we have to look at employment relations amendments because the Government could get them right the first second third fourth fifth sixth seventh eighth ninth 10th 11th 12th or 13th time. The bill should be called the “Employment Relations 14th Amendment Bill”. The reality is that this Government and this Parliament are having their time taken up by trying to continually fix the mess that was made the first time round. In fact how many times have we been trying to fix it? It is 14 times now. This is the “Employment Relations 14th Amendment Bill”. 
Of course the reason we are here to discuss the title of the “Employment Relations 14th Amendment Bill” is that we have a situation where employment relations are not being fixed at all. How can Labour members call it employment relations when what they are actually doing is to undermine businesses? When will this Government understand that by undermining a business it undermines its employees as well? The issue is about the employees at the end of the day just as it is about the business owners as well. 
The title of this bill makes a mockery of what we should try to accomplish for our people in terms of employment relations. When we look at what is happening in the relationship between employees and employers we see that they wish to talk to each other. Constantly through these amendments we have regulations that set in practice law that stops people from communicating. We have unions stepping up and saying they can do better than the poor employees can. The unions say employees cannot advocate for themselves and had better let the unions do that. 
We are about empowering people to have that obligation. On reading the entire bill—as I was unfortunately doing this morning in order to look at the amendments and at how the title would fit in with the bill—I was absolutely gobsmacked yet again to read the sort of language used about good faith and about the imbalance of power between employers and employees. I wonder what sort of world we are living in when we have unemployment levels at 3.9 percent and employees are in a position now where they can advocate for themselves and stand up and say what they are worth. But instead the Labour Government constantly turns round and says it knows what is best for them—that they do not know that. It says it knows where they should be working and what they are worth—that they do not know that. 
The National Party says yes employees do know that and they are actually worth a lot. National says employees have a lot to offer and a lot to give not just to business but to this country. We turn around and ask employees to let us empower them to make decisions that are right for them instead of turning around and saying they are too thick to advocate for themselves which is the constant message the workers of this country receive from the current Government. 
 So when we turn round and look at a title like “Employment Relations (This is the Fourth) Amendment Bill”— 
Hon Members 
: 14th. 
PAULA BENNETT 
: How many? 
Mark Blumsky 
: 14. 
PAULA BENNETT 
: There have been 14 amendments? I did say “4”. 
Mark Blumsky 
: Because you couldn’t believe it. 
PAULA BENNETT 
: I could not believe there have been 14 amendments. I had to sit there and count them up again. I had to get someone else to count them for me because I could not believe that we were on the 14th amendment to the principal Act. When we look at those sorts of amendments we have to ask how much we are going to continue to regulate a workforce that does know what is best for itself. There is room we say for the bigger employers—and we were looking at cleaning companies and so on—to have in place legislation that helps them to achieve what they want to do. We believe in employees’ rights. They do have a right to work in safe environments and to be treated fairly—all those sorts of things. But employees have strength now. They have strength in their numbers and strength in the fact that they are needed. No one knows that better than the business owner. 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 51 
New Zealand National 48; United Future 3. 
Motion agreed to. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 68 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 51 
New Zealand National 48; United Future 3. 
Clause 1 agreed to. 
Clause 2 Commencement 
Hon RUTH DYSON (Minister of Labour) 
: 
 I would like to draw members’ attention to my Supplementary Order Paper 54 where there is an amendment to the commencement date in relation to some provisions in that Supplementary Order Paper. It reads: “To omit all the words in lines 4 and 5 on page 2 and substitute the following subclauses: (1) The following provisions come into force 3 months after the date on which this Act receives the Royal assent: (a) subpart 1A of Part 6A of the principal Act (as inserted by section 4 of this Act); and (b) sections 5A and 5B of this Act. (2) The rest of this Act comes into force on the day after the date on which it receives the Royal assent.” 
The primary legislation which we are debating this evening will come into force the day after the date on which it receives the Royal assent. That is appropriate given that the sole purpose of the primary legislation is to ensure that the law is clear and reflects the original policy intent as it was designed to do. That was not the case in reference to the appeal that my colleague Katherine Rich referred to earlier. That appeal overturned the original policy intent of the legislation and that is why we are looking at an amendment before the Committee today. 
However in my Supplementary Order Paper I am proposing a new procedure under the vulnerable workers legislation by which we ensure that employers are not tendering blind. Because this is a new provision it has not been before a select committee but it has certainly been raised before the Transport and Industrial Relations Committee. My colleague from New Zealand First Peter Brown has made representations to me on this very issue. But the fact that it was not notified as an amendment prior to the Supplementary Order Paper in my view warrants the consideration of the “3 months” date and that is why it is set out on my Supplementary Order Paper. 
KATHERINE RICH (National) 
: 
 I am very interested in the Minister Ruth Dyson’s passing comments about vulnerable workers because section 69E(5) in clause 4 of this bill talks about airport workers cleaners and food workers being vulnerable workers. But if a Thai tiler is paid less than the average wage to tile someone’s house somehow that person is not a vulnerable worker but a professional person who is able to establish whether he or she enters into a contract. A lot of the comments that we have just heard about vulnerable workers do not ring true when day after day we have seen the Minister defend the indefensible in terms of the treatment of those particular workers. She can dance on the head of a pin all she likes but it does not look good. 
We are talking about the commencement date in this part of the debate. The Minister has just outlined some changes to certain parts of the commencement date for certain provisions and that is just another indication that this bill was not properly drafted in the first place. We have seen time after time this Parliament being asked to turn back to the Employment Relations Act of 2000 to amend it—not just once or twice. I heard before that it has been amended 14 times. These last-minute changes to the commencement date just show the lack of rigour that has been used in the development of the Government’s legislation. 
Most of the small cleaning businesses I have spoken to would say that regardless of when the commencement date is it does not matter to them one iota—they do not want any commencement date. They do not want to be put in a position where they fall heir to somebody else’s shoddy workers. Usually cleaning contracts change hands because the cleaning is substandard—as we saw in the Dunedin kindergartens. Those kindergartens were so badly cleaned that in some cases the management considered closing them because it had received parental complaints and some teachers were concerned about the safety of children in those kindergartens. Well that is not good enough. I do not think that putting this bill which is nothing more than a vendetta against small business before the House is good enough. 
Clause 2 “Commencement” states: “This Act comes into force on the day after the date on which it receives the Royal assent.” Most small businesses I have spoken to think that is far too soon. Some of the provisions might be coming in some 3 months later but what this legislation does—regardless of the commencement date—is to impose a bigger compliance cost on some of those mum and dad operations than any other regulation the Government has brought in. 
Lianne Dalziel stood in the House today and said that the Government is business-friendly. Well nobody believes that because on the one hand she is trying to make warm fuzzy comments to business and on the other the Government is bringing in laws like this one which make it harder not easier for business people to conduct their business. These people are not wealthy individuals; they are small-business operators—mum and dad operations—which in most cases earn no more than $20 an hour. But they go out and they do the cleaning. They clean our schools our kindergartens our offices and other businesses and they do it to put bread and butter on the table for their kids and their families. This Government is making it harder not easier for those people to do that. 
So although we can sit here and have an academic argument about the commencement date out there in real-life land businesses do not want it at all. The Government should be ashamed of this legislation because this is where ideology does not match common sense. What the Government is doing—making small businesses fall heir to shonky workmanship—does not make sense. Those contracts change hands largely because of the quality of the cleaning or the quality of the food. One of the examples in this bill is that of food workers in retirement homes. Well if the food is horrible day in day out in a retirement home why should that contract continue? Why should that retirement home be forced to keep that contract in place even after it has been terminated? The Government should be ashamed of itself—forcing old people in retirement homes to eat rubbishy food. 
DAVID BENNETT (National—Hamilton East) 
: 
 Just while we look at the commencement date of the Employment Relations Amendment Bill and at Supplementary Order Paper 54 I would like some clarification with regard to clause 2(1)(b) on the Supplementary Order Paper which states: “(b) sections 5A and 5B of this Act.” Would the Minister or officials be able to advise me because it seems to me that clause 5 of the new Employment Relations Amendment Bill soon to become an Act actually has clauses 5(1) and 5(2) not “sections 5A and 5B”. Is there a drafting error or is it supposed to be like that? 
John Hayes 
: Fifteen changes. 
DAVID BENNETT 
: So if that is the case then I think we are on to our 15th amendment. It is important that we look at those kinds of details when we are drafting legislation like this because they send an important signal to New Zealanders about the care and integrity we apply to our legislation. So if I could have some kind of guidance from the officials at some stage on that point that would be great. 
The main part of clause 2 is now in the amendment in the Supplementary Order Paper. Clause 2 of the bill states: “This Act comes into force on the day after the date on which it receives the Royal assent.” The words “Royal assent” take on a new meaning in New Zealand now because a couple of weeks ago we were very fortunate to witness the swearing-in of a great new Governor-General for New Zealand. He is somebody who will represent this country very well in that position. 
Chris Tremain 
: Anand Satyanand. 
DAVID BENNETT 
: Yes—Mr Satyanand—and I believe that the speech he gave that day was a great speech for all New Zealanders. It showed enough nous and political knowledge but at the same time it was supportive of our people and our opportunities. 
This legislation does not fulfil the comments the Governor-General made about our history and our future which is why it is important when we look at the legislation coming into force on that commencement date that it should actually reflect the intention that the Governor-General has provided for New Zealand. In his speech the Governor-General very much emphasised the ability of New Zealanders to achieve and to attain their full goals. We do not have that intention in this legislation. This legislation takes away the ambition and achievement of ordinary New Zealanders. It is just part of Labour’s idea of hierarchy: keeping people under its thumb and saying that it knows best what is best for these people. 
John Hayes 
: Anti-competitive. 
DAVID BENNETT 
: That is right; it is anti-competitive. But it is more than that—it is anti the Kiwi spirit—the spirit of going out there and making the most of our opportunities. 
That is why we in National stand against this legislation today because we back New Zealanders. We back not just legislation that has the right numbers or letters in it; we back New Zealanders. We want to see legislation that gives them the opportunities to achieve their goals to be successful and to build on their successes. And that is the big problem with this legislation especially if we look at a commencement date that has been tied in with our great history and future—as the new Governor-General’s speech showed. The driving intention of that speech is the ability of people to take an opportunity. 
This legislation has been proposed by unions—that is what it is; it is a union payback. It is all part of the Labour equation of employment rights. Labour does not do it all in one fell swoop; that is why there are 14 amendments. And we will have another 20 amendments by the end of this term because the Government has taken an incremental approach to employment law in this country. The Government knows that it cannot get a decent employment law passed that would achieve all its goals but it believes that it can do so incrementally. 
Lindsay Tisch 
: By stealth. 
DAVID BENNETT 
: It can do so by stealth—with members’ bills and by bringing parties on board to help it achieve certain little goals. 
That is why the commencement date is relatively important. If we look at that date we go back to the heart and intention of what New Zealand workers want. They want a fair go and that is what the Governor-General said. They want to have a chance to be the best they can be. Are we giving them that chance today? No I do not think we are. We are doing the opposite: we are actually telling them what to do; we are setting the rules that they must abide by. That is not good enough and it is not what they want. Workers want the Royal assent to be granted to legislation that gives them the ability to make the most of their opportunities. That is what this Parliament should stand for. We have an MMP Parliament and that is a great thing in some regards. 
PAULA BENNETT (National) 
: 
 I raise a point of order Mr Chairperson. I wish to correct a statement I made earlier to the Committee. I have just been passed papers that inform me that this bill is actually the 15th amendment to the Employment Relations Act not the 14th. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak to the commencement date of the Employment Relations Amendment Bill. I assure the Committee that the commencement date of this bill was not on the Prime Minister’s mind this morning when she opened the new Hague building at Napier Girls High School—I would like to congratulate the school on the opening of that fine new building. This commencement date was also certainly not on the mind of Prime Minister Helen Clark in 1995 when she gave a speech to the New Zealand Employers Federation conference. She said: “Labour knows the economy now is more competitive innovative and dynamic than the economy of 10 years ago. In fact we would go so far as to suggest that a large part of that is due to the changes made by the last Labour Government.” 
Let me assure members that the commencement date of this legislation was far from her mind at that point in time. She was talking about the Labour Government of the late 1980s and early 1990s that had the courage to plot a new track for this country with the introduction of GST the privatisation of public assets such as Telecom and Air New Zealand the cutting of agricultural subsidies and trade barriers and the control of inflation. The commencement date of the Employment Relations Bill or the changes to employment relations legislation are a long way away from those hurly-burly days of that Labour Government which was looking to drive this country forward. 
From that point in time the National Government came in and launched the Employment Contracts Act in the early 1990s which is where the present bill came from. The Employment Contracts Act has evolved into the Employment Relations Act of 2000 and into the 15th amendment of that Act going forward. This country has benefited hugely from the innovative policies of those early years and has grown at an average rate of 3 percent since the 1990s—until now when inflation is rampant growth is stagnant domestic debt has skyrocketed and our balance of payments is dismal. 
What is the Government doing about it? Well we are debating the commencement date of the Employment Relations Amendment Bill right here and now. We are winding back the clock. The Government talks a big book on economic transformation—it talks a huge book. What are we doing about economic transformation? We are debating the Employment Relations Amendment Bill and its commencement date. Yes this Government is winding back the clock. 
Here is a quote from Ms Clark’s Speech from the Throne last year: “My Government’s overall objective for the next three years is to continue New Zealand’s transformation to a dynamic knowledge-based economy and society … . In the last six years my government has sought to lay the foundations for this transformation.” And what are we doing? We are debating the commencement date of the Employment Relations Amendment Bill. I ask members to tell me what that has to do with economic transformation. 
Hon Members 
: Nothing. 
CHRIS TREMAIN 
: Not one iota. This Government talks a big book about Government transformation and it introduces new laws. The commencement date we are discussing today is designed to protect certain categories of employees in restructuring situations. As we will see later on when we discuss different parts of the bill when we get past the commencement date we will be discussing particularly Subpart 2—how Labour has actually wound this in to include all employees. I am talking about Subpart 2 “Other employees”. 
This Government is engaged in economic transformation all right. It is economic transformation that is squeezing out innovation and entrepreneurial spirit and kicking risk takers in the guts. And here we are debating the commencement date of the Employment Relations Amendment Bill which is seeking to kick entrepreneurs like Shane Jones in the guts. The bill is seeking to kick Mr Jones’ fishing businesses across the floor. Such employers depend on innovative business practices on merging businesses on changing the business to meet the market—entrepreneurial activities that will take this country forward. So here we are debating the Employment Relations Amendment Bill commencement date which will do nothing to transform this country or improve its economic growth. This bill is a total waste of time. 
GEORGINA BEYER (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 51 
New Zealand National 48; United Future 3. 
Motion agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 54 in the name of the Hon Ruth Dyson to clause 2 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 68 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 51 
New Zealand National 48; United Future 3. 
Amendment agreed to. 
A party vote was called for on the question  
That clause 2 as amended be agreed to. 
Ayes 68 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 51 
New Zealand National 48; United Future 3. 
Clause 2 as amended agreed to. 
Clause 2A Principal Act amended 
A party vote was called for on the question  
That clause 2A be agreed to. 
Ayes 68 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 51 
New Zealand National 48; United Future 3. 
Clause 2A agreed to. 
Clause 3 Purpose 
KATHERINE RICH (National) 
: 
 Thank you Mr Chairman. I rise to speak to the purpose clause of the Employment Relations Amendment Bill. I went into the lobby and referred myself to the principal Act itself and I must say that in looking at it I am gobsmacked. A member who goes to get this Act from the lobby shelves will find it riddled with red pen markings and flimsy tissue paper additions. It is almost totally impossible for a member to get a good overview of exactly what the law in the principal Act is at this time because so many changes have been made to it since it came into force. 
Paula Bennett 
: Fifteen amendments. 
KATHERINE RICH 
: The Act has had 15 amendments which is just outrageous. If we look through the Act itself we find flimsy bits of paper added at various points and markings from a red pen all over the place. It just shows the Committee that when this legislation was first brought into the House it was done at great speed. It was done without rigorous work being done on it and without attention being paid to detail. Those are the reasons the House comes back time and time again to deal with the changes that need to be made. It would be interesting for members to know exactly how much it costs us to have to turn our attention to patching the mistakes made in the original drafting. 
The purpose clause in this bill states that its aim is to clarify the application of a particular clause especially in respect of specified categories of employees—or vulnerable workers as this Government likes to call them. As I said when I spoke on this bill previously this Government thinks that people are vulnerable workers if they work in the food service industry if they work at the airport and if they undertake cleaning. But if a Thai immigrant does some tiling—or is charged with tiling half of Samoa by all accounts—then he is vulnerable in no way. 
Members on that side of the Chamber continue to stand there and defend the treatment of that tiler saying that he was not vulnerable at all but that he was a professional person entering into a professional contract. We all know that it takes great skill to be a tiler but I do not know how members on the other side of the Chamber can continue day after day to defend what has been done then when they come into this Committee in their next breath go on and on about their concern for vulnerable workers in New Zealand. As members on that side like to say there is an “h” word for that. Certainly on this side of the Chamber we are getting sick of that kind of rhetoric because it does not ring true in terms of what they are actually doing. 
We are also hearing here a discussion about how the treatment of these employees can change and the purpose clause refers to a change of application to succession contracts. It is designed to give one the impression that that is a contract that has been going for some time and will naturally roll over and be renewed. But what this bill does is exactly the opposite. This bill basically negates fixed-term contracts so that people can enter into a contract for service and although they receive the worst service they have ever experienced in their life they are not able to enjoy the termination of the contract when it finishes. 
That is exactly what the Dunedin Kindergarten Association faced. It loyally waited until the end of its contract before deciding to go out and get a new firm to come and do the cleaning. That makes sense to us on this side of the Chamber. The association waited until the end of the contract. It did not break the contract; it loyally decided to stick with the cleaners until it had the legal right to say: “See you later.” But this Government is saying no that they can look beyond a fixed-term contract and in fact force that employment relationship to keep going even after a contract is terminated. If people cannot enter into a fixed-term contract then that makes it very difficult for small businesses to be able to undertake the kind of work they do. 
In 2004 the Prime Minister stood up at the New Zealand Franchise Awards beside CleanTastic Commercial Cleaning a business franchise that was franchisee of the year. That franchise oversees over 300 mum and dad operations that run very small businesses. They have small contracts and go out and clean our schools and kindergartens. The Prime Minister had her photo taken got all the credit and now is ruining its business. 
MARK BLUMSKY (National) 
: 
 I am speaking to clause 3 “Purpose” of the Employment Relations Amendment Bill. The purpose of the bill is to substitute a new Part 6A. The title of new Part 6A is “Continuity of employment if employees’ work affected by restructuring”. If people are going to continue employment they have to work somewhere. If they work somewhere in New Zealand then “somewhere” is mostly in small business. I think it is important that in order to understand the purpose of this legislation we hear what real small business has to say about the Government and its attitude to business in New Zealand. I have had a lot of correspondence from small business because of my role in economic development and I have randomly chosen one of the notes I have from a small business. I quote from the communication: “We have operated our small business for the past 14 years employing over 60 staff. The past 4 years have been a nightmare for our business and we believe the reason is partly due to the overall climate and tone that now exists in this country created by a Government intent on pushing employment policies that are not necessary and are politically correct; and that is way over the top and crazy.” That is a direct quote from a small business that cares. The bit I particularly like—and I will share with members—states: “We believe the only way to get New Zealand back on track is to get rid of the current Government.” 
Lindsay Tisch 
: Say that again! 
MARK BLUMSKY 
: I will because it is exceptionally enlightening: “We believe the only way to get New Zealand back on track is to get rid of the current Government.” That person believes employment relations are a nightmare. That person has been in business 14 years and employs over 60 staff and believes doing business in New Zealand under the current climate with the current Government policies is a nightmare. 
So I suppose we have to look at what the real purpose of this bill is. Well it just makes it harder and harder for business in New Zealand and in particular small business. So many small businesses in New Zealand work hard. They want to grow. They do the growing in many cases by winning a contract. They tender and they win a contract. They get excited because it is a successful opportunity for them to grow. But unfortunately this bill just puts those small businesses when they win those contracts into a very real risk position; in fact it will set small business up to fail. When small businesses win contracts they take over all the current liabilities that existed under the previous employer. Those businesses will have no idea about those current liabilities. They will have no idea about what holiday pay is due. They will have no idea about what sick pay has been accumulated. They will have no idea about whether other contract inducements or payments have been put in because they will not know what was done in the last week or two before the business was purchased. I repeat small businesses have no choice at all as to what that is. 
Peter Brown 
: Read the Minister’s amendments. 
MARK BLUMSKY 
: Regarding the Supplementary Order Paper that the gentleman is talking about I say that someone can come along and make a change a week before and there is no protection for the purchaser so the purchaser is buying blind. For a small business that becomes incredibly hard. 
When will this Government stop telling business that it does not like business? As the small business operator said in that correspondence to me it has been a nightmare doing business under the current Government. Signal upon signal that business is not important is being sent. The purpose of this bill is just to continue with another signal that business is not important. Why is that? In their entire working careers before being MPs nearly all the members on the Government side of the Chamber have been fighting the employer. The employer was the enemy. “Employer” was a horrible word—a very evil word. The tragedy for New Zealand is that that exact same state of mind has transferred through in their role as MPs. 
NICKY WAGNER (National) 
: 
 I understand that the purpose of the Employment Relations Amendment Bill is to protect vulnerable workers who are employed when a company is restructured and who are concerned about the security of their jobs. I sympathise with their position but it is a position that is very common in small companies which tend to come and go. In those companies the feeling of insecurity when a contract changes hands is similar for employees the self-employed and small owner-operators. I want to consider for a moment what this bill will do for very small companies and for the self-employed. 
I come from a small-business background and I know just how important that sector is to our economy. But I also know just how tough it is for someone who is running a small business to make a living. As Mr Tisch and Mr Blumsky have told us New Zealand is a country of small business. Over 300000 people are self-employed or owner-operators 80 percent of our businesses have fewer than five employees and 97 percent of our businesses have fewer than 20 employees. Those people work enormously long hours often in substandard conditions and they cannot claim overtime or redundancy or holiday pay. Their jobs and their incomes are totally exposed to local and global economic shifts and their risks and responsibilities continue regardless of ill health or misfortune. 
The group of small-business people includes men and women of all ages and races. Many of them are new immigrants or women with children or people who have been made redundant. Many are naturally entrepreneurial but have low levels of education and all worry from day to day about their future and the future of those who depend on them. They absolutely qualify for the definition of “vulnerable workers” and they are just as frightened of changes in the workplace as are those whom this bill protects. They tend to have a heads down bums up style of operating and most of their businesses stay small and vulnerable. Often they are family companies and their real strength is their ability to work hard to be flexible and to make the most of opportunities. The real weakness of small businesses is their size. It is almost impossible to make a decent living without some economy of scale. One of the main reasons that New Zealanders work longer and harder for their money than people in almost any other developed country in the world is that our economy is so dominated by such small businesses. 
Most small businesses have pretty low aspirations. If small-business people can earn enough to buy a house and a car—and maybe a boat—and get a decent holiday at Christmas that is enough. The main reason that they do not grow their businesses bigger than that is that it is too hard to do so under this Government. They buckle under the compliance costs and the huge number of rules. Now this Government in the name of protecting the vulnerable is making it even harder for them to grow their businesses. 
Small businesses tend to have limited resources and they tend to have small teams of very hard-working and focused employees—often the owner’s own family. They have to be smart to survive and one of the best ways to grow is to take on a new contract. But the only way small businesses can have any security in that arrangement is to be able to deliver the service more efficiently and more effectively than the contractor who went before them. Otherwise the new contractor will be out the door too. It may be that a new contractor can use some or even all of the existing staff and do something differently from the previous contractor to produce a better service but it is much more likely that the original contract was terminated because of a flaw in the existing system. 
So the requirement of this bill that new contractors take over the existing staff is a real problem. We all know that one cannot get a different result if one keeps on doing the same thing. What is more the main reason that many small businesses believe they can deliver on a new contract is that they know their capabilities and their workers. But this bill demands that sole traders or small owner-operators dump their own loyal employees and pick up those from the previous failed contractor. 
SHANE JONES (Labour) 
: 
 I move  
That the question be now put 
. 
JOHN HAYES (National—Wairarapa) 
: 
 I can see very clearly that the Employment Relations Amendment Bill has been drafted by people who have not the slightest idea about business or running a business. The first thing that I want to draw the Committee’s attention to is that this legislation will impose further bureaucracy red tape and costs on small businesses. The legislation simply will not work. Any law passed in this House has to be capable of working irrespective of whether one agrees with the policy intent. This bill is not going to work. For example the bill assumes that one employer will give commercially sensitive information to its competitor. That is simply not going to happen. 
A contractor who wins a tender for a contract is forced to take on the employees of the company that lost the tender. The contractor has to make redundant his or her own employees who may have worked for that contractor for many years and to take on the staff of the business that previously held the contract. Contractors cannot keep both sets of employees. Under this amendment bill they are forced to keep the new employees. 
I see this bill as a very high cost on small businesses in the Wairarapa electorate. The Wairarapa electorate has many small businesses and this bill is simply adding red tape and cost on to them. It comes on the back of this Government’s intention that every employee have 4 weeks’ leave. Let us work through that issue. I know of a company for example in Pahiatua that has 30 employees. Having to provide 4 weeks’ leave a year means that it needs to employ another staff member to cover the extra 30 weeks’ leave it has to provide under the framework being imposed by this Government. Where does that money come from? It will come from the bottom line. It is simply a cost being imposed on the business. 
This sort of legislation which is being imposed by the members opposite—who just laugh and would not know a business if they tripped over one—will simply send our small companies to the wall. Let us take the example of a shearing contractor in the Wairarapa. He buys up an existing contractor and he has to take over the staff. What use is that to him? How is that fair to his own employees who may have worked for him for years? He has to chuck them out. It is absolute nonsense. Where is the value added from this legislation? There is none. The legislation is simply red tape and adding costs to business. That is very very unsatisfactory. 
Let us come back to the situation of a company taking over a contract. A businessman who has a cleaning contract in a retirement village may decide that as he is about to lose the contract he will fix the new guy by doubling trebling or even quadrupling the pay rates of his employees. How does the buyer know that that will not happen? Suddenly the buyer might be faced with paying cleaners $100 an hour because of some smart work by the outgoing contractor that would be entirely plausible and possible under this legislation. 
I do not believe that this legislation makes the slightest bit of sense whatever. The National Party is going to oppose every clause in this bill. We are very very concerned that employees will lose their jobs because the companies they have been working for simply are thrown out of business because of impossible conditions being imposed by people who have never been in business. I think companies have the right to decide whom they will contract to provide their services. They have a right to decide what is best for their business. It should not be imposed by central government. This legislation is a total nonsense. It does not support our workers who need the protection of a free and open market. 
GEORGINA BEYER (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 51 
New Zealand National 48; United Future 3. 
Motion agreed to. 
A party vote was called for on the question  
That clause 3 be agreed to. 
Ayes 68 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1. 
Noes 51 
New Zealand National 48; United Future 3. 
Clause 3 agreed to. 
LINDSAY TISCH (Senior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I think it would be appropriate that we have a debate covering all clauses 3A 4 5 and 6. The substantive nature of the debate is in clause 4 new Part 6A and I seek leave for that purpose. 
The CHAIRPERSON (Hon Clem Simich) 
: Leave has been sought for that course to be followed. Is there any objection? There appears to be none. There will be a wide-ranging debate on clause 3A clause 4 clause 5 new clause 5A new clause 5B new clause 5C and clause 6 with relevant amendments. 
Clauses 3A to 5 new clauses 5A to 5C and clause 6 
CRAIG FOSS (National—Tukituki) 
: 
 Even though this is a wide-ranging debate I have quite a narrow speech ready to talk to the purpose of the bill. There were demands from Mr Jones on the other side for me to get up and talk some sense. We have actually had a lot of sense spoken about this bill because interestingly again similar to the KiwiSaver Bill which was rushed and bulldozed through the other night no Labour speakers have been speaking to the bill in this Committee stage apart from of course the Minister in the chair who had some words earlier on. 
I wanted to get up earlier to talk about the purpose of the bill so I will just touch on that right now. Quite frankly I think this bill obviously is purposeful. But I actually think its purpose is quite racist. I was listening to some of the speeches last night particularly Mark Gosche’s. He was talking about the cleaners and how they were mostly Maori Pacific Island etc. I actually think the intent of this bill is from what we have seen from Labour about its dependency culture basically a bit of a Labour mantra: “If they’re brown keep them down keep them dependent.” Because actually that is what this bill does. I find that quite disgusting in New Zealand in 2006 in spite of the rhetoric we constantly hear from them and the various placards and nonsense that they are putting out. 
Why is this amendment necessary? Well quite frankly it is payback time—payback time for the unions. I believe this is amendment No. 15 we are up to—the fine speakers earlier pointed that out. It is payback time and I guess those unions are shouting something at the Labour Party that it has heard a lot in the last few weeks. Those three words are “pay it back”. We asked the Labour Party to pay back the taxpayers’ money that it allegedly illegally spent on its pledge card during the election. I guess the unions are now saying “pay it back” for the hundreds of thousands of dollars they donated. Some of the amounts are in dispute according to an  
Investigate 
 magazine. But they are looking for a return—a payback—for the money they poured into the Labour Party to pull it up that last 3 to 4 percent in the last week of the election. The Hon Bill English pointed out earlier today in a very interesting press release how much—I think it was $1.1 million—the Labour Party spent to buy the last election. 
There has been a lot of talk and a few heart-rending stories about vulnerable workers. It kind of misses the point. All workers are vulnerable. All management is vulnerable. All companies are vulnerable. This is the world in which we live unless we want to stick a great big fence around New Zealand want to not import one iota want to not export one iota and want to have an average living age that goes back to something like 35-years-old. Either we participate in the world or we do not. That means we have to compete; we have to compete hard. 
The only way we can grow the economy is through productivity so that the workers can be paid more—particularly the cleaning and service workers who I will be fair and admit are at the bottom of the wage chain. For some of the work they do they deserve an awful lot more. I feel incredibly sorry at the moment for the cleaners in the Beehive—I heard all sorts of nonsense from various speakers last night about this—who I believe are currently having to work double time and double shifts to try to clean up some of the mess and nonsense that has been going through the Beehive in relation to the various scandals right at the moment. 
From reading the purpose of this bill it is clear that Labour assumes we are stuck in Yorkshire textile mills in 1906. Well it should get with the programme; this is 2006. There is not a constant battle between labour and capital. We have moved on from there—it was a long time ago. I guess if one looks in a rear-view mirror—as the Labour visionaries do—one would therefore keep trying to resurrect what the environment and conditions were like back in 1906. That is exactly where the medium to long term impacts of this amendment bill will take us. In the short term the amendment bill will make some nice headlines—good on it—but over the medium to long term this will drag New Zealand back. 
If we need more evidence then we should think about where our unemployment rate was when we had rigid labour laws and contracts in the 1970s. Unemployment was nudging 10 12 13 14 15 percent—it went very very high. Now we are suddenly in a virtually full employment period thanks to high commodity prices etc. yet the rigidity of labour market regulations in this bill will suffocate New Zealand and strap it down as we look longingly across to Sydney to Australia and to all our friends and whanau who have moved over there. 
SHANE JONES (Labour) 
: 
 I rise to take a brief call—far be it for me to say I was goaded to do so by my colleagues on the Transport and Industrial Relations Committee—to pose the question that underlies the Employment Relations Amendment Bill: what are the qualities that comprise a fair and decent society? And why do we not hear anything about them from our colleagues on the Opposition side of the Chamber? Let us think about what some of them might be. 
One of those qualities is equity. How are we to give expression to or recognise equity? One of the quickest ways to do so and one of the most enduring qualities of equity is the manner in which it is to be found in human relationships. I think it is very disappointing and backward looking for the Opposition to constantly force human relationships and human interaction in the context of the labour force through a very narrow miserly opening. No our approach is to build on what was picked up by that very important judicial institution the Employment Court which found a loophole and identified a failing. The Government in its usual vigilant and thoughtful way will not let that loophole continue because the loophole diminishes the status of vulnerable employees and also undermines their capacity to maintain a fair and reasonable level of earnings. 
We can have lots of debates as to whether this legislation will make us more like Australia than we have been. I think that scratched record has long since lost its appeal in terms of the broader public sentiment. No the public are not interested in that. They all know that every time a member from the Opposition side of the Chamber talks about how good Australia is he or she is actually diminishing the status of those New Zealanders who are prepared to buckle down and make this country a great place—possibly the greatest place in the world—in which to live. 
What else underlies this particular approach? Well we need to have premier legislation. In order to advance premier legislation one needs power. To attract and sustain power so that one enjoys the benefits of the Treasury benches one needs appeal. And in order to ensure that one’s appeal penetrates all areas of the electorate one needs to have vision which is precisely what underlies this thoughtful piece of legislation. We envision a time when both the owners of businesses—the providers of capital—and the providers of labour meet and seek an accommodation. Why should vulnerable displaced and possibly even marginalised workers in large institutions be tossed aside like chaff in the wind of change that is driven by very short-sighted business decisions? No people need to have their respect and esteem needs to be accorded to them. That is what we say about vision. 
How do we actually create a nation where all people can feel that their particular talents contribute to a deep abiding and very embracing concept of identity? Well we have to respect their rights not only as consumers and not only as the fortunate few who have a handsome array of property rights but also as the providers of labour. That is what this brilliant piece of legislation seeks to do. 
Laundry workers up and down the electorate offices of this country know who is looking after them. In addition to that in terms of age-related residential care not only is this bill a contribution to that whole sector—we have already contributed to it by means of our very thoughtful and handsome policies that address the concerns of the aged—but we are now ensuring that there is a platform of security and safety underneath those whom we charge with looking after some of the most vulnerable people in society. What about the caretakers in education? The caretakers in education are obviously schoolteachers and principals but they are also the people who do the work that goes unseen and often unheralded. Why on earth should they live in the context of a set of contract negotiations in a state of fear that their entire lives will be turned upside down and that their families will be in a state of upheaval? Anyone who supports that is actually focused on a very destructive way forward. 
COLIN KING (National—Kaikoura) 
: 
 I was listening to that member Shane Jones across the other side of the Chamber talking about what Labour believes it knows best. I have to say the member was talking pure ideology that was so detached from the market that we live in that it was hard to swallow. He referred to members on this side of the House narrowing down their thinking; when one stops to think about it from what I have seen of the process while being in this House and listening to the debates around the Employment Relations Amendment Bill one can only ask where on earth this legislation is taking us. What is its purpose? It is hugely concerning. Where is this Government taking us? What is it trying to do? We are doing nothing more than taking a backwards step. 
I would just like to draw the member’s attention to what hard-working New Zealanders aspire to. We are aware that there have been some hard-fought realities inside our economy. Back when the Labour Government of the 1980s was in power some severe steps were taken that were necessary; it was the freeing up and opening up of the primary sector to market forces. We had to learn to stand on our own two feet. When we look at the Employment Relations Amendment Bill I am afraid we see that it is a step backwards from that. In actual fact when we look at the growth achieved in the primary sector we see that it has been upward of 4 percent per year which is absolutely outstanding. Unfortunately when we look at the domestic economy we see that it has been performing poorly at only 1.1 percent. 
What happens in the rural areas with our shearing gangs and various other contractors—whether they are pruning grapes in Marlborough or Martinborough or shearing sheep throughout the country—is that their situation is performance based. I believe that is something we must celebrate. As I come into the House having been a shearer myself I find it very very hard to comprehend that we— 
Progress reported. 
Report adopted.