Ryall Tony: Minimum Wage (Starting-out Wage) Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Ryall Tony: Minimum Wage (Starting-out Wage) Amendment Bill — First Reading 
[Sitting date: 18 October 2012. Volume:684;Page:6004. Text is incorporated into the Bound Volume.] 
Hon TONY RYALL (Minister of Health) 
 on behalf of the Minister of Labour: I move  
That the Minimum Wage (Starting-out Wage) Amendment Bill be now read a first time. 
 I nominate the Transport and Industrial Relations Committee to consider the bill. At the appropriate time I will move that the Transport and Industrial Relations Committee report to the House on the Minimum Wage (Starting-out Wage) Amendment Bill by 28 February 2013. 
Nothing can be more sapping for the spirit of a young New Zealander than to be on welfare at such an early part of their life. Everything that Governments can do to assist those people to get into meaningful work is important and that is why this Government is bringing in this piece of legislation in order to assist those young people. What is quite clear is that this is intended to assist three groups of people through the starting out wage. They are: 16 and 17-year-olds in their first 6 months of work with a new employer; 18 and 19-year-olds who have been paid a benefit for 6 months or longer and have not yet completed 6 months of continuous work with any employer; and 16 to 19-year-olds in training in a recognised industry training course involving at least 40 credits a year. The starting out wage is voluntary and it must be agreed to by both the employer and the employee. 
As I said we want to help young New Zealanders get their foot on the first rung of the job ladder and we want to make sure that they have an opportunity to get that job. This was recognised by the previous Labour Government which introduced a proposal when it was in Government that would see people paid the same amount as they will get on this starting out wage but it was called something else and it was limited roughly only to about 3 months. We are extending this to 6 months and we are making it apply across a wider group of these younger people. So there is nothing mystical or magical about the starting out wage. There is nothing mystical about it nothing magical about it and nothing mean about it because it is the rate that Labour put in place when it was in Government in 2008. But we want to make sure that that starting out wage is there to support young people who are new to the workforce so that they can get into long-term sustainable employment. 
We want to give them an opportunity to take advantage of the labour market to gain the necessary skills and work experience to assist them through their working lives. Indeed this is what Mrs Dyson and Mrs Fenton said when they spoke in 2007-08 when the previous Labour Government introduced its equivalent of this legislation. What they said was that there was a good argument to recognise that for many young people the first few months of their employment were a training period when they were learning skills getting experience and providing skills so that they could add value to businesses in terms of their long-term sustainable employment. Labour thought it was right that young people be given that opportunity and that is what we are proposing in this legislation—to give them their first foot on the rung of the job ladder. So this bill limits the period for an employer who can use the starting out wage for a young person who works for them to 6 months unless they are training or supervising others and after this time the young person is entitled to be paid at the adult rate by that employer. 
The starting out wage also addresses the issue for many young people who have been on a benefit and who face difficulty re-entering or gaining a foothold on the workforce ladder. What we know is that the longer someone stays on welfare the harder it is to get into work— 
Dr Cam Calder 
: That’s right. 
Hon TONY RYALL 
:—and as Dr Calder would say the worse it is for their health. What we know is that the longer people are on welfare the worse it is for their health. In fact Dame Carol Black would say that being on welfare is equivalent to smoking a significant number of cigarettes every day. It has the same impact on your health. If we can provide every opportunity for young people to get into work it is good for their future prospects but also for their health. The starting out wage provides an incentive for employers to take these young people on. Those who have been out of the workforce for a while may lack skills and experience and this provides an opportunity for them to get what is necessary. 
As the Minister of Labour said in her press statement the Government recognises there is also a need to provide more vocational training opportunities for 16 to 19-year-olds. It is important that these young people are able to engage in training for industry and employers so far have indicated that they are not using the minimum training wage. So this bill changes the status quo by providing for young people between 16 and 19 employed under contracts of service that require them to undergo training to have a minimum starting rate rather than the minimum training wage. So we have reduced the number of training credits from 60 to 40 for 16 to 19-year-olds to give them the flexibility to choose a range of courses without having such a heavy load. 
I think that the response to this has been really quite remarkable. Large numbers of employers around the country have said that this makes a lot of sense. I think there has been a pretty muted response from the union movement really. I think it knows that the previous Government brought something in on this at the same rate for a large number of young people. We are extending that to a wider group. The rate is the same. After 6 months they move on to the minimum wage that is currently legislated. But what is so important here is that we give these young people a chance and an opportunity so that when they go and apply for jobs they are able to discuss their eligibility for this support with the employer. The employer can take that into consideration when they make their employment decision. 
But people must know that these young people are being supported by the Parliament to get their foot on the first rung of the employment ladder. Just under 25000 young people have already benefited from subsidised work placements and pre-employment training. The Government’s plan is working. There are around about 60000 more jobs in the economy today than there were a little while ago and despite the uncertainty in so many parts of the world the latest GDP figures show that New Zealand grew by 1.6 percent in the last 6 months. That is very very significant. Economic growth is forecast to increase to 2 to 3 percent and that is what drives real jobs in the New Zealand economy. Getting the private sector up and running creates the wealth and the jobs and the economic growth that creates more jobs and economic growth for New Zealanders. 
This Government has taken a number of important steps under the leadership and auspices of the Minister of Labour Kate Wilkinson. The 90-day trial period for new employees is deemed to create around about 13000 new jobs. The lower company tax rate is really competitive with Australia at 28c. Hundreds of millions of dollars are being put back into the economy through lower ACC levies. Hundreds of millions of dollars are being saved by removing 170 unnecessary red-tape compliance measures. We have got one of the lowest inflation rates we have had since 1999. Interest rates are at their lowest level in 45 years. This Government is putting in place the platform that provides the incentive and the encouragement for business to invest and grow jobs and create wealth in New Zealand. The people who are benefiting from that investment will be the young New Zealanders who will get increased opportunities under this change that is being provided by this Government. We promised to do it in the election. We have got a mandate to do this. We have got a mandate from New Zealanders to do this because it helps put the incentives in the right place to give businesses the confidence to grow to invest in their workforces and to compete in the world economy. 
I am very pleased to be able to move the first reading motion for this bill on behalf of Minister Kate Wilkinson who works tirelessly with our other Ministers to create opportunities for New Zealanders and this is a big opportunity for young New Zealanders to get their foot on the first rung of the job ladder to independence and a better life which we would want for all of them.