Parker DavidHon DAVID PARKER (Labour): May I respond to some of the points that have already been made. I will start with those that have most recently been made by Alastair Scott. Piece-rates already exist for employees. You cannot get the minimum wage for picking an apple an hour. There is a piece-rate that applies and is agreed by the employer and the employee that is reasonable and if after having agreed that piece-rate you actually go out there and pick an apple an hour you do not get the piece-rate and you do not get the minimum wage. So let us not pretend that somehow this would be different. The same logic and legal language is implied here in respect of a contractual arrangement as it is for a piece-rate so I think that argument is a nonsense. In respect of the idea that the problem does not exist we know there is a gap in the law. The only question is how often are people being abused. There is no doubt that some people are being abused and indeed the Transport and Industrial Relations Committee conceded that. The select committee conceded that some people are being abused in this relationship; we do not know how many. I am personally convinced it is rising. I think we are seeing more exploitative practices especially in Auckland. Some of them are associated with desperate people. Some of those desperate people are here on student visas and you know they are more open to exploitation than people who have other support structures around them if this is their own country. There is no doubt this is happening; it is just a question of how much. What were some of the instances that we heard at the select committee? We heard an instance of a gym that had fitness trainers who were employees who were put off as employees and taken on as contractors and they did not think they were getting the minimum wage. We had some other examples in other industries that had been given to me by law centres. Why do we not see this coming forward? Well in virtually every one of these instances the person who gets the payment is a party to tax fraud. If they are getting paid less than the minimum wage and the tax is not being deducted at source you can bet your bottom dollar that they are not going to the tax department and paying their tax so they are complicit in tax fraud. They are never going to come forward and say: Ping me for the tax I didn't pay on the payment that I got that was less than the minimum wage." The idea that people have remedies in practice because they might be an employee rather than a contractor—and here I want to concede the point that Alastair Scott made which was that for some of the people who are being abused even if the pretence is that they are a contractor at law they probably are an employee if the legal test is applied properly but in reality they have no effective remedy. They have no effective remedy for a number of reasons. The old guardians of these things are not their guardians now. Most of these practices never occurred in yesteryear because we had high rates of union coverage and the unions were effectively the police that stopped this happening. You did not actually have to rely upon labour inspectors. We had advice from the department of labour as to whether labour inspectors are active in this space. It readily conceded that labour inspectors actually go after bigger issues that are systemic rather than in respect of the issues of one person. The number of prosecutions we see that come into that category every year throughout New Zealand would be able to be recorded on my fingers—I would not have to go to my toes. They are ones like the Masala prosecution last year where people were being paid $2 an hour—$2 an hour. I think that is disgraceful. I am sure everyone in this Committee thinks it is disgraceful. But we have other instances. One of my colleagues in light of this bill came up to me just a couple of weeks ago and said that another one had come into his office. Again this person had come into his office and said: "I'm being offered remuneration where effectively I've got to take it. It is a contractual rate for a fixed-dollar amount per day that is much less than the minimum wage." My own secretary in my office Deb Thornton whom I have worked with for 10 years recently came to me about her son's flatmate in Auckland—again the same thing and this time it is in the hospitality industry. Doing dishes or waiting at tables—$50 for the night no matter whether you are there for 5 hours or 8 hours. This is happening. And when I hear the National members saying "Well it might not be that bad. It's not that often it's happening."' it sounds to me a bit like the people—and I am not saying that it is quite this bad but in the old days you know when they tried to get rid of slavery the people who ran those businesses said "Oh it'd be a terrible cost for me to have to pay for people rather than to employ them as slaves." And then I am sure that there would have been some people who at that stage said: "Well it doesn't matter if there are only a few slaves"—because that is effectively what we are saying here—"so long as the number of people who are in this vulnerable position is not huge so long as the number of people being exploited is not large it is OK." That is not right. The principle here is that people ought not to be able to get around the minimum wage by taking people on in contractual relationships and that is what is at the heart of the ILO rule that Jonathan Young read out. The bit at the end about saying you should not stop non - employment relationships—this does not stop non - employment relationships. You can still have contractual relationships; you just cannot pay them less than the minimum wage. That is all this bill does—nothing more. In respect of the pamphleteers I agreed to that amendment because you know I really value the support of New Zealand First. I am not sure it is right. Maybe we need to tidy up the issues around piece-rates for people—Jonathan Young: Yes they're the most vulnerable according to them.Hon DAVID PARKER: What was that?Alastair Scott: They're the most vulnerable.Hon DAVID PARKER: No what Clayton Mitchell said was that there are people who are elderly and who choose to do this for a bit of pin money and a bit of social experience and they should be able to take longer than a piece-rate would allow. I personally think a piece-rate would protect that situation but I agreed to that in order to get the support of New Zealand First. I do think that might be an area of law that we need to tidy up because I think a piece-rate should be able to be used in that situation. What about the competitive effects? What about the radio station that also sells advertising instead of using the pamphleteer? If the radio station has to pay the minimum wage to all its employees why should the competing advertiser who is stuffing pamphlets through letterboxes not have to pay the minimum wage? We are on a race to the bottom in New Zealand because we still think we are the fair country that we were 30 years ago. We are not that country now and we have not updated our laws to reflect it. We need to update our laws to reflect it so that the most vulnerable people cannot be abused by toe-rags—and they are toe-rags—who will employ people for less than the minimum wage in order to improve their profitability or to sustain their business. Some of them will say: "We'll go broke." Well that is true of any business that cannot afford to pay someone the minimum wage. You do not drive down wages in a high-income society by allowing less than those minimums. The final thing I would say in respect of the idea that people can go to the Employment Relations Authority and get a remedy is that I have spoken to labour barristers who operate in this area. They say that in the rare cases—because most of these people as I have said are vulnerable and have not got the skills or the money to do it and they have probably been complicit in tax fraud because they have not paid their tax on the money that they have earned—when they do go if they have got a written agreement the Employment Relations Authority understandably puts a lot of weight on the written form of the agreement. And even though you might think that it is an employment relationship if it is written up as a contract it is very hard to get over the written form of the contract in practice even though theoretically at common law an underlying test should be applied. So I think that there are people being abused by these sorts of relationships. I think it is on the rise in New Zealand. I think this sort of corruption should be stamped out and I think this bill would be a good way to do it."