Status of Redundancy Payments Bill — Second Reading 
Status of Redundancy Payments Bill — Second Reading 
[Volume:615;Page:11120] 
Status of Redundancy Payments Bill 
Second Reading 
Debate resumed from 3 December 2003. 
BRIAN CONNELL (National—Rakaia) 
: 
 I have been warning Government members for the last 12 months that if they continue with this type of anti-business legislation they will be history at the next election. However they have been so entrenched in their views that they would not listen to what members of the Opposition have been telling them; they have been so in bed with their union mates that they could not or would not listen. And what has happened? They are now coming down like a pack of cards. It is not just their race-based policies that have got up people’s noses; it is also their anti-business socialist claptrap and people have suddenly said: “Enough is enough!” Raft after raft of this type of anti-business legislation has been directed at the very people who generate the money those people so irresponsibly spend. 
Now the party is over. I say to members of the Government that they should dust off their CVs because they are out of a job—or they soon will be—and they will certainly be out of luck. I could also ask those of them who have a job to stand up but that would embarrass them. For some of this crowd dusting off their CVs will not help. I have gone through a few of them: union stirrer union stirrer failed lawyer union stirrer Government gofer history teacher union stirrer and so on. Boy employers will be lining up to employ that crowd! 
Phil Heatley 
: That’s just the front bench. 
BRIAN CONNELL 
: That was just the front bench. They will be lining up to take on this crowd will they not? The great irony is that when these people come knocking on the door with their hands out asking: “Will you give me a job please?” employers will remember that they were the crowd who tried to bring down their businesses with the type of anti-business legislation they are trying to foist through with this bill. That is why I said right at the beginning of this speech that the Status of Redundancy Payments Bill is garbage. It is ill considered and has not been thought through. The relationship between employer and employee should end on the day the pay cheque stops and the relationship between a fair-day’s pay and a fair-day’s work should not be forgotten. It will force employers to become risk-averse. 
There is a view on the Government side of the House that the employers are the bad guys. They are essentially the mums and dads who risk everything who mortgage their houses to give hard-working New Zealanders a job. But this crowd is trying to force them out of business. That is why I say that this type of legislation will do more harm than good and it must be brought to a stop. The National Party is very strongly opposed to the bill. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 It is a pleasure to stand to support the Status of Redundancy Payments Bill. I would say something about that member who just resumed his seat if I knew his name but I do not know his name. He has been here about 18 months I believe. He did take over a seat from the former National Party leader the Rt Hon Jenny Shipley and he is— 
Rod Donald 
: Which previous leader? How many previous? 
Hon MARK GOSCHE 
: Oh it is a while ago but I think most New Zealanders whether or not they liked her knew who she was. But could anybody in this country say who her replacement was? No. I do not know his name and that is because he is a totally—[ 
Interruption 
] 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I am sorry to interrupt the honourable member. Could I just say to the member on my left that under Speaker’s ruling 56/1 interjections are acceptable. However we do not have running commentaries and we have that at the moment. So I ask the member to please restrain himself. 
Brian Connell 
: I raise a point of order Mr Speaker. The member is at least a minute into his speech and he has not even addressed the bill yet. If he is going to make controversial statements I think it is only reasonable to expect some response from members in the House. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Can I just say to the member again quoting  
Speakers’ Rulings 
 that under Speaker’s ruling 43/3 a member is allowed a little bit of leeway in responding to a previous member’s speech. 
Brian Connell 
: I raise a point of order Mr Speaker. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I have already ruled on that point. 
Brian Connell 
: Yesterday you might recall that I raised these very concerns with you and you made a ruling that now seems to me to be in conflict with the one you have just made. You ruled yesterday that it was reasonable for a member to interject if the member had been sitting in his seat for some time and he had not moved specifically to that seat to cause a disruption. I put it to you I have been sitting in this House for an hour in this seat and according to your ruling yesterday I am entitled to make interruptions. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: There seems to be some confusion. The reason I asked the member to desist was that his interjections were becoming a running commentary and under  
Speakers’ Rulings  
that is not permitted. 
Brian Connell 
: I raise a point of order Mr Speaker. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I have already ruled on this Mr Connell. It had better be something new. 
Brian Connell 
: It is. You have ruled on that matter but the other matter I raised with you yesterday was a running commentary and you said that was in order. We will go to the  
Hansard 
 record if we have to. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I know what I said yesterday Mr Connell and if the member continues to challenge the Chair in the way he is then I will have no option but to ask him to leave. 
Hon MARK GOSCHE 
: It is rather odd that the member who continually takes points of order does not like it when he gets a bit back. It is OK for him to stand there and point the finger and say: “Union stirrer this failed lawyer that.” When he gets a little bit back the hanky comes out and he starts to wipe the tears from his eyes—the poor wee soul whom nobody in this country knows and who has made a useless speech about the purposes of this bill. The purposes of this bill are in fact to protect the rights— 
Phil Heatley 
: I raise a point of order Mr Speaker. To be fair and reasonable I think the member has had enough lead-in time now—it would be well over a minute—and it would be good if he started to get into the substance of the bill. So to be fair I think the lead-in time has been taken. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Can I thank the honourable member. I am sure that the honourable member will be coming to the point very shortly. 
Hon MARK GOSCHE 
: I have taken about as much time in my speech denigrating that member as he did denigrating this side of the House. He did not know anything about the bill and he proved that when I listened to what little he had in his speech about this bill. 
He made some wild accusations that this bill was about putting New Zealand businesses out of business. I have to tell that member that the bill is about protecting people after the businesses have failed. They are the people who worked solidly and loyally to make that business a success and did not end up in jail after the business went under—unlike some of the people who ran big companies like Fortex Group who had to spend some time at the pleasure of Her Majesty at a jail near the member’s electorate. No we are talking about the workers who put their lives on the line when working in many of those industries because they were dangerous. There are a great many people who worked in the freezing industry for instance who were injured seriously or killed and then the companies went bust and did not pay up what was due to those people. On some occasions the people who ran those companies were found to have broken the law and ended up paying with the loss of their liberty. 
So that member on the Opposition benches who I understand comes from the farming industry should go back and talk to some of those farmers who also lost an awful lot to those businesses. They understand the need to protect their interests and they do their very best using the law to do so. What this bill seeks to do is to offer some small protection to the workers who make that industry and many other industries successful and profitable for most companies in this country. It is fortunate that we have had a strong economy with good management by this Government and there have not been the terrible redundancies of the past that have hit many industries. 
 We also know that quite a number of workers in the public health sector for instance work day and night. For 7 days a week 24 hours a day they are out there cleaning hospitals cooking the food shifting things around the hospital—which is what the orderlies the cleaners and the kitchen staff do. Many of them are contracted out not to New Zealand companies owned by mums and dads—which that member over there said this bill is targeted at—but to big multinational companies that have come here and cleaned up quite nicely in more ways than one in our public health system. Some of them did not consist of particularly nice and wonderful people. One of them here in the Wellington region went bust. What protection was there for those workers who had cleaned cooked and worked in those hospitals looking after the elderly the sick and children for very low wages year in and year out? What did they get when that big multinational company went bust here in New Zealand? It still operates in the rest of the world but it went bust in New Zealand. What happened to the loyalty that those workers were owed in terms of protection of their earnings and their redundancy entitlements? 
I know what happened because I represented them as a union official at the time. It was shocking that they missed out on so much that they were owed. Anybody who knows about the way in which redundancy agreements have been negotiated into employment contracts in the past knows that generally employees—workers—take less in terms of a potential increase in their earnings so that they can have the protection of a redundancy agreement. So they pay for it in their own way by accepting a lower wage increase. In some cases they took no wage increase in order to secure some protection against their job disappearing overnight. 
Of course those redundancy agreements by law were not enforceable and that is what this bill seeks to do. It seeks to give some level of enforcement for people who are entitled to a redundancy agreement so that they have some chance of getting redundancy pay. I would like to look not at the effect that this will necessarily have on the small business that goes bust but at some of those glaring examples of large businesses that have gone bust. In the bill we see that redundancy entitlements are included within the employee priority and that such entitlements form part of a contractually negotiated package for employees. The committee recognised that there had to be an actual negotiated package for employees and their entitlement in terms of the priorities for that money is recognised in this bill. 
Some very valid points are made in the commentary on the bill and by the committee in its report in terms of other people who would like to be treated better in terms of that priority. I can understand that but what we have to realise is that in most cases it is the only source of income for the employees in these businesses. Some of the other creditors that line up may not be completely devastated and wiped out because they have other sources of income. The committee obviously had to take that into account and has supported in its report what the bill seeks to do for employees. 
The cap on employee priority has been moved to $15000 which again is an improvement on the past figure. I believe that needs to be reviewed regularly so that it is a figure that makes some sense 5 to 10 years from now. The level of the cap will in fact be looked at on a 3-year basis as a result of the select committee report. 
There will be other people taking part in this debate who will be able to recall for members and those listening to the debate some of the awful situations that a lot of workers found themselves in as their companies went bust over the last 10 or 15 years in particular. We saw significant restructuring in the economy. As a result we saw quite a number of business failures and it did tend to be the very large-scale ones that were taken note of. But there will be smaller businesses that will have to take this legislation into account. I am sure that they will understand the necessity for it. Nobody wants to see businesses go bust particularly the people who work for those businesses—who generally give their hearts and souls to the places they work for so that that does not happen. We know that many of them may even forgo wages for weeks on end to try to help out their employers. This bill seeks to give a little bit of redress if possible when all the washing-up is done. 
I absolutely support this bill and I congratulate both the member whose name it is in now Mr Peck and the original author the Hon Rick Barker. Both of them come from areas of New Zealand that have been hit drastically by large-scale redundancies and I know that the workers they stood alongside and the managers of those companies will appreciate the intent of this bill and why it is necessary. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I raise a point of order Mr Speaker. Peter Dunne’s microphone light appears to be on. It may just be an accident but if it is on— 
David Benson-Pope 
: They’re all on. 
Hon RICHARD PREBBLE 
: No they are not all on. Ours are not. I just want to make sure that Mr Brown’s speech will actually be recorded not some sigh from a ghost of Peter Dunne. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I thank the honourable member. I am sure those things can be checked out. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 New Zealand First will support this bill for a number of very good reasons. I listened to the National Party contribution a little while back and I found it inconsistent with what is reported in the commentary on the bill: “We recommend that redundancy entitlements be included within the employee priority. We consider that such entitlements form part of a contractually negotiated package for employees which may have included trade-offs in relation to wages or salary.” That seems to imply that at the select committee level everybody was in agreement so I found out who the members of the Commerce Committee were. Among those members were Gerry Brownlee—the deputy chairperson of the committee at the time and now the deputy leader of the National Party—Rodney Hide and the Hon Maurice Williamson. Therefore I find it a little bit unusual that members of those parties come to the House now and take the exactly opposite stance to their members on the select committee. 
A redundancy agreement in a contract is not compulsory; it is negotiated. It is agreed to by both parties—the employer and the worker the employer and the union or the employer and a group of workers. There is nobody with a gun to anybody’s head saying that there must be a redundancy clause in a worker’s agreement. There might be some pressure and I understand there is but as the Hon Mark Gosche said very often redundancy packages are negotiated at the expense of a wage rise—sometimes in total and sometimes in the acceptance of a lesser level of increase. Redundancy is part of a contractual agreement exactly as wages and holiday pay are. All this bill does is raise the priority of redundancy in the circumstance of a company going into liquidation when the receiver has to determine who gets what and who is paid out first. 
There is a cap which is currently $6000 and embraces holiday pay and wages or salary. That cap will be increased to $15000 which will still embrace wages holiday pay and now the redundancy entitlement. 
 I say to my National Party colleagues in particular that working people need to be looked after to the degree that it is not acceptable to sign a contract with people and then try to walk away from it. It is not acceptable to sign a redundancy agreement and then try to avoid paying it out or try to put it at a lower priority. I always had a saying when I was in business. I used to say to my staff: “Make your handshake count. Keep your word.” If there is a redundancy agreement in an employment contract then it should stack up with some degree of priority. That is what this bill does. 
When people have been made redundant in the circumstances we are talking about—where the company has folded and is in the hands of a liquidator—it is a desperate situation for many. When people get this package depending on their financial wealth income or what have you they either get the unemployment benefit or they do not. If they are sufficiently well off—if the redundancy package is reasonably generous—they get a stand-down time of I think up to 10 weeks or thereabouts and they do not get taxpayers’ money. So it is not exactly a golden handshake in every sense of the word. There are some savings for the taxpayer when redundancies are paid out in many circumstances. I say to the National Party which advocates that unemployed people should queue outside post offices that to some degree now those queues will be a little bit shorter. 
On many occasions prior to my coming to Parliament—in my role as a shipping management consultant—I sat in many boardrooms gave many senior executives a piece of advice and was paid handsomely for it. That piece of advice was very simple. Basically it was: “Look after your people because people are the most important component of a company. Be straight with your employees; don’t beat around the bush. If you are inclined to sign a redundancy agreement make it count. Be fair.” New Zealand First has looked long and hard at this legislation. We looked at it when it came before the House in 1996 at the time New Zealand First signed the coalition agreement and we were persuaded by our then National coalition partner not to run with it. I regret that because there have been people who have suffered since. But I am glad we have now not changed our minds but re-looked at the legislation and taken a positive attitude. 
I was quite upset by United Future. It claims to be the party for the family but what about the family person who will go home having been made redundant and who will be put low on the list? We are talking about several people in those sorts of circumstances. They will face their families effectively with nothing—with little more than their wages for the last week and their holiday pay entitlement under the current legislation. 
Hon Richard Prebble 
: How do people earn 6000 bucks a week? 
PETER BROWN 
: That is the maximum cap. 
Hon Richard Prebble 
: And you are now saying that they should get $15000? 
PETER BROWN 
: I am saying to the honourable member that if people are entitled to redundancy it should have equal priority to wages and holiday pay. 
I will tell members the story of what happened on the New Zealand waterfront in 1996. An overseas company owned the biggest stevedoring company in the country. It put its management team in a separate company and put its available plant in a separate company—it might have been the same company that management was in—but the working people were left on their own. They were the face of the company and many of those men—and I know many of them personally—were hand picked at the time of the port reform to do the job. In part they turned round the level of production of cargo handling in this country working 7 days a week 24 hours a day with modern equipment. Then one dark night someone decided that that was the hour and on the Monday morning the workers were told they were not required. They lost everything. They got nothing and some of them had been in the industry for many years. By many years I mean that some of them had been in the industry for 30-plus years—but they got nothing. I would have liked to sort that out. I gather that the whole thing has been addressed now but in my view a long way short of satisfactorily. 
With this legislation at least there will be some priority of entitlement. Money cannot be made where there is none but workers will get consideration ahead of other organisations and contractual services. New Zealand First thinks that that is right and proper and we say to employers that if they do not want to agree to redundancy then they should not sign the employment agreement—they should not put it in the agreement. If employers are absolutely hell-bent in their belief that they will not pay out redundancy in such adverse circumstances as this bill covers then they should not put redundancy in the agreement. But if they put it in it should get the priority it deserves and New Zealand First says that that is second or equal to wages and holiday pay. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 The purpose of Mr Mark Peck’s Status of Redundancy Payments Bill is to cover the situation that occurs when a company has gone into liquidation or bankruptcy. The law states the priority for paying various people should there be any money available. At the moment Parliament gives priority to employees over what are called the unsecured creditors which are companies that supplied services to the company that has gone broke. Why do we do that? We do it because we recognise that many working people do not have a lot of cash so the requirement is that working people who have actually done the work should get paid. Then we try to work out how much money that should be. The limit is $6000 and for the average worker in New Zealand that is 2 months’ wages. There are very few liquidations of companies in which people have not been paid for 2 months. If the boss does not pay employees for one week they realise that something is wrong. If he has not paid them for 2 months I take it that they would have made some inquiries. 
Phil Heatley 
: Some inquiries? 
Hon RICHARD PREBBLE 
: Just to find out what is going on. 
Phil Heatley 
: “Has there been a little mistake?” 
Hon RICHARD PREBBLE 
: Yes. They would ask: “Has there been a little mistake? Why have I and my mates not been paid?”. It is not as though the Government has not looked at this matter. The Government itself did an insolvency review. That was carried out in 2001 so it was done by the Labour Government. It had a look to see what was fair and it said the $6000 limit was still fair. The point is this: the company has gone broke so there is not enough money and somebody is going to lose out. Parliament says the first people who have to lose out—who really should be the bottom priority for payment—should be the shareholders the investors. Normally they get nothing. Sometimes they get 10c in the dollar but normally they get nothing. 
If we give priority to the people who have worked for the company that means we are saying other people should lose out. New Zealand First and the Labour Government have not said who the unsecured creditors actually are. Those of us who are in business know who the unsecured creditors are. They are small businesses. They are the people who are least likely to know that a company is going broke. What are the small businesses that get hurt the most from insolvencies? They are usually the self-employed—the self-employed carpenter and the self-employed contractor. I hear New Zealand First saying we do not want to look after families. Does New Zealand First not realise that people who have mortgaged their homes and set up their own businesses are family people too? Why should they get lower priority than the people who worked for the company? 
Let me just take the example given by New Zealand First because I know about that stevedoring company. I do not support what the owners did but in that particular case the management told the employees that their wages and conditions were out of sync with everyone else and the employees were invited to renegotiate them. They refused to do so. But they had the chance to do that. 
Companies do not go to a small business that is supplying it with goods and services and suddenly say they are going broke. The first time that a small business discovers that is when a cheque bounces. This bill states that the Labour Government believes that small businesses should go broke so the Government can do this deal for its trade union mates. It is unfair that people who have supplied goods and services should lose their money so that the middle management of the company that has gone broke can get $15000. That is who will get that amount. When a company goes broke we have the idea that somehow the shareholders are totally responsible for that. Sometimes they are but usually the middle management played some role in it. Why should people from middle management be able to get $15000? What is that for? It is not for work that they have done. No it is for holidays they might like to get. Those are to be increased. At the moment holidays are protected to the extent of $1500. This Government says that if someone works for a company and is in middle management—the person could actually be the manager the person who bankrupted the company—provided that person did not make himself or herself the director the person could loot the company for $15000 and then say to a small businessman who is running a little plumbing outfit that it is tough luck but he or she will have to go bankrupt. That is what this bill means. 
I say to the Government with regard to the idea that there is enough money for everyone of course there is not enough for that. Over the years Parliament has said what the order of priority for payment should be. The Government itself did an insolvency law review. It released a discussion document. The Government set the position out to people in the community in the way that it does; it says it wants to consult with business and be business friendly. The Government set out the position to business and to insolvency practitioners—people who actually see these cases—and what did they say? They said yes workers should be protected but the $6000 limit is fair enough because that is 2 months’ wages and after that the little man or woman who is supplying goods and services ought to be able to get at least a share of the money. 
This bill is grossly unfair. It will cause a great deal of hurt. It will result in a lot more small businesses going bankrupt and it will make doing business in New Zealand more risky. I have no doubt that Mr Mark Peck who comes from the trade union movement will get a round of applause at the Council of Trade Unions organisation for having used this House to take money that belongs to other people. Yes there were representations on this bill. Federated Farmers pointed out for example that under this bill when there is an insolvency of a freezing works the farmers who have supplied their cattle or sheep to that freezing works will find themselves further down the list than the management that has bankrupted it. They ask what is fair about that. I say to Government members that they can wax eloquent about the fact that workers get hurt in a redundancy and in a company liquidation—so does everyone else. The issue is what is fair and what the certainty and priority should be. Why should we give priority to people who through their own actions contributed to the company going under? Who do Government members think runs companies? It is the very people who are being protected by this legislation. This bill does not state that management is excluded; it just states that directors are excluded. It is unfair legislation. 
This bill is the worst type of party legislation. It is a misuse of a member’s bill and the Government should vote against it now. If the Government thinks this legislation is a good idea it should present it as a Government bill. But it cannot do that because its own Government document states this legislation is not a good thing to do. This bill is an abuse of Parliament. The ACT party which makes no apology for representing small business or for getting up in this House and saying we ought to have fairness and we do not support this type of class legislation says that this bill which takes money from small businesses to give to the Government’s trade union mates is fundamentally unfair. ACT says the bill is wrong and will cause mum and dad businesses to go bankrupt. People should know that when they vote for this bill. And it is all so that Mark Peck can get reselected for Invercargill which he will lose anyway because he has closed down the local schools. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Just before I call the next speaker I tell members the issue of red lights was raised by the Hon Richard Prebble. I have been informed that the red lights on all microphones are on. It is just an indication that the system is switched on. When a member has the floor the microphone is turned on for that member. 
Sitting suspended from 5.56 p.m. to 7.30 p.m. 
DAVE HEREORA (Labour) 
: 
 I feel privileged that I am able to contribute to this debate. I will share with other members some of the situations that occurred during my time as a union organiser. I stand in support of the Status of Redundancy Payments Bill and in doing so I will reiterate its purpose which is to amend the preferential claim provisions of personal and corporate insolvency legislation to introduce preferential status for workers’ redundancy entitlements. 
I would like to pay tribute to a group of workers that have been affected by redundancy. The example I will relate is an acknowledgment of the immense hurt and heartache that occurred as a result of contracting out services in our public hospitals. In doing that it is important to acknowledge the moral issues surrounding a redundancy announcement. Obviously the first effect it has on workers is that it creates insecurity as far as providing for their family and insecurity about their home. It also lessens the opportunities they have for contributing within the community. 
The example I give involved 130 cleaners who were contracted out. It was very difficult for us as the union responsible for negotiating their transfer terms and conditions to have the contractor accept liability for the redundancy as part of that transfer. I believe to this day that we were fortunate that their first employer agreed to transfer their redundancy entitlements to the contractor as a part of their terms and conditions. Members can imagine the relief that we felt in managing to achieve that. Although the contractor refused to pick up any liability of service of employment with them we however managed to firm up redundancy entitlements for those workers in the negotiations. 
The length of service of those workers—130 of them the majority of whom were Pacific Island and Maori women—ranged between 15 percent of them who had 25 to 30 years’ service to 75 percent of them who had between 5 and 15 years’ service. Their average earnings were not a helluva lot. Their earnings per annum ranged between $18000 and $22000. On their particular entitlement for redundancy they would have received between $10000 and $12000 if they had been there for 30 years. That is not a helluva lot in today’s situation but I suppose it was in respect of the provision of redundancy for that group of workers. 
I reiterate that it was not easy negotiating those terms so for me this bill provides the opportunity to offer some form of protection for that situation. Following a 3-month period with the new employer we assumed that things were not going right. We assumed that through their constant restructuring and attempts to save money that there was a possibility redundancy could occur. After 8 months of constant approaches to that employer on the issues surrounding redundancy and constant denials those workers were called to a meeting one afternoon and told that the company had been liquidated. 
One can imagine the despair of all those workers when they were told that there was no work for them for the next day for the next week and no employment security for them to continue to offer protection for their families. As their union representatives we assisted them with paying their power bills and helped with food—the basic essentials that were necessary to get them through. During that period we also renegotiated a contracting service for that group and managed to stitch up a deal on terms and conditions that were relatively less then than that which they had enjoyed with their previous employer. To this day that group of workers does not have the opportunity to stop and enjoy an afternoon break—that was a part of their new deal. 
So when identifying talking about and giving acknowledgment to the moral issues surrounding redundancy we begin to realise the importance of putting up protections—although they are minimum protections—for workers who are vulnerable. I reiterate that of those 130 workers the majority were women who were considered to be the main earners in their families. They all had families they all had children and overnight they had nowhere to go. 
Some 7 years later we managed to receive some part payment in respect of their redundancies. That part payment amounted to just over 1 percent of their total entitlement. For workers who had given their service for between 25 and 30 years and who loved their jobs they ended up with a redundancy package worth less than 1 percent of their total entitlement. This bill is timely in introducing some protections although they are minimal to ensure that we do not revisit that situation ever again. 
Before the tea break the leader of the ACT party mentioned that this bill would kill small businesses. Throughout his address to us I did not hear him talk about big business. Although he did say that this bill was designed to support our union buddies he did not talk about big business. The company that I have talked about is a foreign company and was a big business. It came to our shores secured this contract and formed itself into another company. To this day I know that the reason it formed the new company was to avoid paying out that redundancy. Let us not forget that as a part of the transfer of conditions it was responsible for holding in its bank account the redundancy entitlements of all those workers for when it came their time to be made redundant. All that went out of the window as well. The company jolly well knew that it was responsible for protecting the interests of its employees by holding that redundancy entitlement on their behalf but it was gobbled up as part of the liquidation. So it is timely that we have legislation that gives us the opportunity to protect those workers. 
I will finish by saying that this bill will protect redundancy as structured in an insolvency and it will amend the Companies Act to make redundancy payments a preferential claim when a company goes into liquidation or receivership. The workers from Tempo DNC had to line up with all other unsecured creditors for their redundancy payments and it is now a matter of record that they did not get what was owed to them. They believed quite rightly in my view that should their employment with the company cease they would be compensated in some measure through redundancy agreements for their loss of employment. 
PHIL HEATLEY (National—Whangarei) 
: 
 I rise on behalf of the National Party to oppose this bill passing through Parliament at this time and I will outline the reasons for that. 
But before I do that I would like to say that we in the National Party thoroughly understand the need for redundancy payments. We appreciate the need for redundancy payments but we do believe that that is a matter between the employer and the employee and there is no reason why an employer and an employee and even an employer and multiple employees cannot reach their own conclusions when they sign a contract agreement as to how much that redundancy payment should be valued at. 
Lynne Pillay 
: They do. 
PHIL HEATLEY 
: They can discuss that with each other through the individual contract process and we support their doing that. Obviously I know they do it and we support that way of going about it. But for this Government to legislate right across that mutual agreement is absurd to us. Why can it not be left to the employer and the employee and why does this Government feel the need to interfere and to legislate right across that process? That is the question we ask. 
There comes a point when a relationship between an employer and an employee severs and that certainly becomes the case when an employer can no longer afford to pay the employee. The employer is not asking the employee to continue to work for no wages; the employer simply cannot pay the employee any longer and is going bankrupt. That is one point where the relationship between the employer and the employee clearly must sever. This bill extends that responsibility. The employer has obviously proven he or she cannot afford to pay the employee yet this Government expects the employer to do that very thing even though the employer has proved that he or she cannot do it. Simply that will make businesses more risk-averse. They will not want to grow. There are plenty of other reasons at the moment why they do not want to employ more people and one is the compliance costs that are incurred; this measure is just another one. Although it is not a cost unless a business goes bankrupt it is a cost in terms of the risk the business knows it is taking on. 
When we look at the details of this bill we see that it raises even more concerns. Why for example is it suggested that the cap be increased to $15000 from $6000? We heard earlier from Richard Prebble who pointed out that if we go by the average wage $6000 is roughly 2 months’ work. Why have we suddenly decided that the cap should be 5 months’ worth of work? In fact it may not even be work. In fact we know it is not work. The employees concerned are going to be paid 5 months’ worth of wages for no work at all. Why does this Government believe that an employer should pay out from money he or she does not have 5 months’ worth of salary for no work at all? Why would the Government recommend that an employer with no money at all pay out 5 months’ worth of wages for no work at all in return? That is absolutely absurd. How did the Government reach the figure of $15000? 
It is interesting too that that figure can be varied. The bill states that that cap can be adjusted to reflect overall percentage increases over the relevant adjustment period in average weekly earnings calculated by reference to the last quarterly employment survey. In other words it is tagged to the increase over time of the average wage. Surely if an individual employee’s pay increases phenomenally more than the average wage or phenomenally less than the average wage the cap on his or her redundancy payout should shift accordingly. Why choose the average? Why go for the median? Why go for mediocrity? I have no idea why this Government has chosen such an arbitrary figure and such an arbitrary way of adjusting it. 
Also the bill states that if there is an overall decrease in the average wage there will not be a decrease in the reduction; it will stay the same. In other words employers are left with a situation where the payout and the cost to them can rise over time but cannot decrease over time. In other words the risk to them can increase but not decrease. Again that seems to be an arbitrary choice by the Government. 
David Benson-Pope 
: That member’s party would pay the Gibbses but not the workforce. That is what that member’s party would do. 
PHIL HEATLEY 
: The chief Labour whip might twitch over there but he has no idea what is in the bill. He has made one speech I think this term. I do not want to provoke him enough such that the Prime Minister will again have to apologise on his behalf and again be embarrassed by his twitching over there. 
I am also interested to see that clause 5(7) the clause that deals with amending the seventh schedule of the principal Act deals with those who are excluded from this redundancy cap change. Interestingly if a family member of one of the directors works in the company he or she is not entitled to this privilege that this Government is giving the workers. The vast number of businesses in this country are small businesses. Many of them are family businesses whereby family members particularly children are employed to sweep the floors and to work their way from the bottom up so that they can one day run the company. Those particular people who may exert as much blood sweat and tears as any other worker in the company are not entitled to this provision in the bill. 
Why is that? Why are those who carry the weight of the business not entitled to any payout? Worse still family members related to those who carry the risk of the business are not entitled to any payout. Why is that? Why is this Government picking on small family businesses and family members who work in those businesses? I can name countless large companies and countless small family businesses where children are employed in order to learn the ropes. Yet they will get no benefit from this bill. 
The question has to be asked as to who risks the capital in these companies whether they are small or large. Who risks their savings in these businesses whether they are small or large? Who lives and breathes the businesses day in and day out—not just during the 37½ hour working week but all weekend and all night as well? Who does that? Well in the Labour Government’s mind the people who do that are the ones it is going to punish and they are the business owners. 
David Benson-Pope 
: What party is it that ensured this country had the worst industrial record? 
PHIL HEATLEY 
: I might have to call on the Prime Minister to apologise for “Twitch” over there. I can see his moustache twitching away. I am going to have to apologise for the member. 
Madam DEPUTY SPEAKER 
: Please be seated. 
PHIL HEATLEY 
: Can I call down the Prime Minister to apologise for the member? 
Madam DEPUTY SPEAKER 
: When the member is told to be seated he will please be seated. The member must refer to members by their correct names. He knows that. The member will withdraw that remark. 
PHIL HEATLEY 
: The remark? 
Madam DEPUTY SPEAKER 
: He did not refer to the member by his correct name. 
PHIL HEATLEY 
: I withdraw. I will not take the time of the House to invite the Prime Minister down to the House to apologise for the chief Labour whip David Benson-Pope. It has happened once already in the last few days. What I will do is finish my speech by reminding members of who puts up the capital who takes the risk and who worries day in and day out all week. It is the business owners the ones whom the Labour Government seeks to penalise. By doing so it inadvertently penalises the very workers whom those people employ. That is why National opposes this bill. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 The National Party member has it wrong again. All those people listening to their radios in Whangarei will be very disappointed in their member. This bill is not about referring— 
Phil Heatley 
: I raise a point of order Madam Speaker. The member who is the Labour buddy MP for Whangarei is talking about people in Whangarei listening on their wirelesses to these speeches; she may not be aware that people in Whangarei cannot receive Parliament and I would just like to let the House know that. 
Madam DEPUTY SPEAKER 
: That is not a point of order. 
LYNNE PILLAY 
: Then those people were not blessed with listening to all that rot. Clearly that member has missed the plot. This bill refers to an insolvency situation. It imposes no extra cost on the employer. It is simply about making the creditor status of workers fairer—that is making them preferred creditors. His speech was another example of misinformation from that side of the House—another outrageous claim just like his leader’s claim. 
I am very pleased to stand in support of this bill and I commend my colleague Mark Peck for his member’s bill. I commend him for producing this bill because as I have he has seen the heartache of redundancy the heartache to workers and their families and the heartache to employers and their families. It is devastating for anybody to be deprived of one’s livelihood through no fault of one’s own. The stress both financial and emotional is far-reaching. For some workers the security of redundancy compensation goes some way to assisting them and their families at that difficult time while they adjust to the loss—the loss of their job the loss of their income the loss of their self-esteem and the loss of their dreams for the future. That redundancy compensation can provide some hope whether it is to tide them over until another job is found whether it is for financial support while training or studying or whether it is to allow them to look towards restarting a work career through a small business which this Government is happy to support. Imagine the double whammy if those workers then learn that their redundancy compensation which offers some short-term security is at best at risk but more likely worthless; that that redundancy deal is simply not worth the paper it is written on although it was negotiated in good faith by the employer who is willing for the employees to receive that money should the funds allow it. 
I have seen that situation most recently with the Qantas New Zealand employees. The uncertainty for those skilled professional employees who had thought they had a career a job for life was devastating. They were in a job market that had severely diminished and they had the challenge of finding employment in their chosen field. Add to that the harsh reality that their longstanding redundancy deal which they had negotiated with their employer in good faith 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 does give employee redundancy claims priority over other unsecured claims and some preferential claims in—and I repeat for Mr Heatley—an insolvency situation. The bill removes the current limit of $6000 on preferential claims made by an employee in a corporate insolvency situation and raises the cap to $15000. I think that is good for workers. The bill also introduces a new priority and that is to provide an incentive for creditors to financially assist a liquidator in recovering or preserving business assets. That is one way to help increase the overall return to creditors. So this bill is about common sense fairness and balance and builds on this Government’s election policy to improve protection of workers’ conditions where businesses are transferred and sold—as we will be addressing in the Employment Relations Act amendments—and to continue reforming laws relating to redundant workers. 
If we look at the background to this bill the Weddell collapse we see that those workers had to line up with other unsecured creditors for their redundancy pay—compensation that had been negotiated in good faith between them their union and their employer. They were collectively owed $35 million and 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 still no guarantee of full redundancy there is considerable comfort for workers in being in a fairer position in the queue. 
I say to those on that side of this House who oppose this legislation “Shame!”. It is the same sad little group who revels in opposing anything relating to fair play whether it is about workers’ rights women’s rights students’ rights superannuitants’ rights and so on. It is consistent with their support for the pillaging and plundering of the Employment Contracts Act and with their opposition to the Employment Relations Act improved health and safety provisions and improved holiday entitlements. It is consistent with their inability to accept or even comprehend the principle of work-life balance. It is consistent with their inability to comprehend the win-win situation of investing in employees by having healthy and safe working conditions by having a family-friendly approach to employment by following the principle of a fair day’s work for a fair day’s pay and by ensuring a degree of certainty about receiving fair compensation in a redundancy situation. 
I repeat that this bill does not unlike what Mr Heatley said add any cost whatsoever to the employer. I am tired of sitting in this 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—even if we make allowance for stupidity—to make those outlandish claims in this House. Again I commend my colleague Mark Peck. He has had the foresight the compassion the sense of justice and the intelligence to bring this bill to the House to build on this Government’s delivery of fairness and justice so that we as a nation can hold our head high on the world stage and so that we can look our people in the eye and say we are committed to being fair and do not want to see people ripped off. We are also committed to saying to employers that we want to be fair to them and to support them in their businesses but we insist that it is fair that in insolvency situations workers have a fair place in the queue. I say to Mr Heatley that that is supported not only by Labour supporters and workers but also by businesses in New Zealand. 
Hon TAITO PHILLIP FIELD (Minister of State) 
: 
 I congratulate my parliamentary colleague Mark Peck who sponsored this bill. It has arisen out of the bitter experiences that many workers have faced as a result of redundancies. I concur with the comments made and the situations explained by colleagues on this side of the House who have represented workers up and down the country. 
From personal experience I have witnessed the trauma and suffering caused when people lose their livelihood and the impact that it has on the individual the spouse the children and the wider family. Most New Zealanders understand that aspect because they have seen redundancies happening for a few decades in New Zealand. As a result of policies adopted at times in our history they have seen the closure of factories particularly in the meat industry and other industries. They have seen workers thrown on to the scrap heap and have witnessed the suffering not only of families but also the community and in many cases some of the rural towns that those people belong to. 
I want to talk about the meat industry which prompted my colleague Mark Peck to bring forward this bill. I particularly refer to the closure of the Weddel meatworks and also remind the country of the situation in the meat industry over the past 15 to 20 years. Many meatworkers will vouch for the fact that they were not responsible for those policies but paid the price. Those workers gave many many years of dedicated commitment to their companies but were thrown on to the scrap heap as a result of restructuring and policies that were adopted at the time. I am talking about the National Party Government lead by Rob Muldoon when we were paying supplementary minimum prices for lambs that we could not sell so had to turn that meat into tallow. The only way to sell it was to sell it as soap. As a result of some of those policies certain companies could not survive when the final crunch came. The workers paid the price for those policies and it was the workers who lost their jobs and their families suffered. 
I can tell the House now that some of those workers paid the price not only with psychological problems but also probably with a shortened lifespan as a result of that redundancy situation. I remind members this afternoon that we are talking about the very serious business of redundancy that ordinary New Zealanders—Maori European Pacific Islanders and Asians—suffer as a result of any business closure or insolvency. It is only right that the House should look at the priority to be given to workers who are in that unfortunate situation and their families and children in terms of a negotiated redundancy agreement already signed and sealed and of what is owed to the workers. We are not talking about payment for no work as Mr Heatley said but recognition and compensation for the many many years of service that those workers have given to the development of that particular industry. 
New Zealanders have come to understand that redundancy compensation is legitimate and justified. This bill provides that there is some minimum safeguard to ensure that workers line up and be given some priority with other creditors and as preferential creditors in an insolvency situation. Members of this House should support that safeguard as a minimum. 
Just lately Opposition members have been talking about fairness and Mr Brash has talked about fairness. But they should put their money where their mouth is. If they are really genuine about the issue of fairness they should also think about equality. We are talking about ordinary New Zealanders of different ethnic backgrounds who suffer the situation of redundancy. They should be given some fairness in the way they are treated and given priority in relation to redundancy compensation—that is well-earned compensation for many years of service to a particular company or workplace. 
I am very pleased to support this bill. The Commerce Committee has done a good job. It looks to increasing the cap on the employee priority. Again the member for Whangarei was wrong in relation to the $15000 cap because $15000 redundancy would have to represent significant years of service. In fact if we look at the normal 6:2 situations—that is 6 weeks for the first year of service and 2 weeks—people would be very lucky to get a 6:2 redundancy agreement. That payment for many years of service is actually a pittance. It only goes towards assisting in some small way the re-establishment of a family and the individual trying to find another job. That is a very minimal amount of money for the many years of service that workers give to their workplace. The $15000 cap that has been determined and recommended by the select committee is not some outlandish figure. It is a reasonable cap. The entitlement to redundancy is not enforced by this bill. It is still up to the employer the workers and their representatives to negotiate a fair redundancy agreement. That is still open in terms of that relationship. 
It is important that the Government sets a fair framework for those negotiations and a fair law to ensure that workers get a fair deal in terms of their employment and conditions of work. Redundancy and preparation for hopefully the unlikely situation of redundancy should be established on a fair basis. I believe that this bill sets a fair framework for workers to be given some priority in the situation of redundancy. It removes the current limit of $6000 on preferential claims made by an employee in a corporate insolvency under the Companies Act and is reasonable. 
The other recommendations that the select committee made are fair. If companies are in difficulties then to some extent the bill requires them to plan properly before they announce a closure. Companies need to look at ensuring that workers are included in the equation of how a closure will occur and how an insolvency situation will be dealt with rather than the company thinking it can get away with throwing workers on to the scrap heap without giving any consideration to matters of relocation and re-establishment. In particular there must be recognition of service and the upheaval to families and the price they will pay. Often children pay the price when there is loss of livelihood by a father or mother. 
From my personal experience as a secretary of a union that was involved in the closure of a meatworks involving nearly 1500 workers in Petone some 25 years ago I was proud to be associated with people who fought a good fight in terms of protecting the level of wages and conditions of the people in the meat industry. They did not kowtow to the demands of an unreasonable employer. The price they had to pay was the closure of their factory and to fight the good fight in terms of a redundancy deal. We know that Southdown freezing works was one of the first freezing works in New Zealand to close. A deal of 6:2 was established as a redundancy standard and I am proud to say that meatworkers at Gear Meat Processing Ltd fought a redundancy battle that resulted in their getting a level of redundancy that was at least comparable to that received by the Southdown workers during their dispute over redundancy. 
I am proud of the history of the workers who have fought for and actually established standards on the issue of redundancy not only for the meat industry but for other industries throughout New Zealand and for fighting for the interests and advancement of workers’ level of payment and compensation for redundancy. With regard to these issues I am proud to be representing here not only the Labour Party but also the labour movement. 
A party vote was called for on the question  
That the Status of Redundancy Payments Bill be now read a second time. 
Ayes 76 
New Zealand Labour 52; New Zealand First 13; Green Party 9; Progressive 2. 
Noes 42 
New Zealand National 25; ACT New Zealand 8; United Future 8; Independent: Awatere Huata. 
Bill read a second time.