Barker Rick: Companies Amendment Bill Insolvency Amendment Bill — Third Readings 
Barker Rick: Companies Amendment Bill Insolvency Amendment Bill — Third Readings 
[Volume:616;Page:11952] 
Hon RICK BARKER (Minister for Courts) 
: 
 It is a pleasure to speak after the three-time loser from a little bit north of Wellington—or should I say four-time loser? It is obvious from that speech why that member no longer plays a leading light in the National Party. The speech was all whinge whinge and grizzle grizzle. The member was short on facts poor on analysis and incorrect with regard to deductions. He said that where people work for their wages and are owed wages they should get them in a redundancy situation. He also said that when they were due to be paid holiday pay they should get it in a redundancy situation. That is exactly one of the issues that this legislation will fix. In the previous legislation passed by National the maximum amount that was claimable in the case of the closure of a business was $6000. National had reduced it to just $6000. In the closure of Tomoana Freezing Works many workers were owed more than $6000 in outstanding wages and holiday pay and they never got it. If Mr Roger Sowry says that he agrees that workers should receive all of their outstanding wages and holiday pay he should support this bill because to say that he supports people getting their entitlements to due wages and holiday pay and does not support this bill is contradictory. 
The second important thing about this bill is that to have a redundancy agreement is not a right. It is not an entitlement as of right; it is the result of a negotiation. I would have thought the National Party would have stood up for the sanctity of contracts. If an employer argues for and agrees to a contractual arrangement that in the event of a redundancy occurring the persons made redundant will be paid a redundancy pay then National should support that contract being fulfilled. Are the National Party and United Future now saying that they do not support the sanctity of a contract? To vote against this legislation is to say that members do not support the sanctity of a contract. That is what they are saying. Let the United Future members take a call and try to argue to the contrary. They are saying that they oppose this legislation and that when someone has willingly freely and by agreement signed up to a redundancy agreement that person should be able to wriggle out of it if he or she feels so desirous. I say to the United Future members that that is double-dealing and we will have none of it. 
Mr Richard Prebble raised another issue when he said that this legislation would enable managers to write themselves a redundancy agreement on the eve of a company collapse to ensure that they got the maximum $15000 payout. Theoretically that is possible but it is extraordinarily unlikely. This information has been made known to Mr Prebble on other occasions but for the record let us make it clear yet again so there can be no mistake. It is unlikely that the manager or chief executive of a company would be able to convince a liquidator that he or she had had a negotiation to reach a redundancy agreement. Mr Prebble may be able to negotiate with himself if he has two personalities; I do not know about that. But most of us have only one personality and if we are to have a negotiation we cannot negotiate with ourselves. For Mr Prebble that may be possible but it is certainly not possible for the average person. I doubt whether he would be able to convince anybody other than himself I guess that it is possible to have a negotiation with oneself. That is the first failure in Mr Prebble’s argument. The second failure is that that would be quite easily seen as a device to get around the law. And on that point it is quite clear that this tactic raised by Mr Prebble as one way of casting aspersions upon this bill is a very dubious claim. 
Now let us get back to the reason for this bill which was initiated by myself. 
Hon Roger Sowry 
: Do you support it? 
Hon RICK BARKER 
: Yes I tell Mr Sowry that I am quite happy to say that I support this legislation. This legislation came into being because of the gross unfairness I saw following the closure of the Tomoana Freezing Works. The workers at Weddel Tomoana lost approximately $35 million in outstanding wages holiday pay and redundancy. The first point I would make about the redundancy agreement is that the workers had paid for the redundancy agreement out of their own wages. They paid for it in this way. Some time prior to the closure the workers went to the company and asked whether they could get a redundancy agreement. The company said that it was interested in negotiating a redundancy agreement but would not agree to a pay increase and a redundancy agreement. The workers had the choice between the two and in lieu of a wage increase they took a redundancy agreement. They paid for that redundancy agreement year after year after year. I tell Mr Prebble Mr Sowry and Mr Adams that those people were in a completely different circumstance to that of a casual creditor who turned up to do some plumbing or a bit of wiring or to put some bread into the kitchen out the back. That redundancy agreement was paid for by years of work. The workers wanted to have an agreement that in the event that Weddel Tomoana went under they would be paid redundancy to tide them over. The company agreed to that. 
Weddel Tomoana had also entered into a Stg£100 million guarantee for its outstanding loans. That was a substantial guarantee. At the particular time that Weddel Tomoana went under every freezing company in New Zealand was heavily into debt to the banking industry. The banks could have turned over any company in New Zealand by stopping its credit. They chose one company because they needed to reduce the exposure they had. The banks needed to reduce the number of freezing works operating in New Zealand and they deliberately chose one company to turn over. Several freezing companies in New Zealand were in a far worse state than Weddel but they were not chosen because Weddel had a Stg£100 million guarantee. The banks knew that if they turned Weddel over they would get all their money out which they did. The people who lost $35 million were the workers. They lost it in wages in holiday pay and in a redundancy agreement that they had paid for. They lost it simply because a former Tory Government—National—had reduced the amount of money that workers were entitled to claim from whatever it was down to $6000. 
This bill lifts that figure up—[ 
Interruption 
] The figure is not limitless; the bill lifts it up to $15000. That is a modest increase. Mr Prebble may wish to cast and portray Labour’s speeches as class-conscious speeches or whatever. But I tell him that in retrospect his speeches are all about the interests of the banking industry. The banks got all their money out of Weddel Tomoana. Without a shadow of a doubt they lost nothing. The other interesting thing is that if Mr Prebble is correct that protecting the banks from these sorts of things will give ordinary customers in New Zealand—because this is what his argument was—a benefit then we should look at the practice. Mr Prebble argued that if the banks have to pick up the cost of redundancy or their share of it because they are not able to claw as much money out of a company then banking costs will go up. I have to tell Mr Prebble that our experience and our intuition take us in exactly the opposite direction of that. The banks have so far been protected by a maximum exposure of $6000 yet everybody in this country knows that for the last 10 years banking fees have been going up dramatically and interest rates have been held at artificially high levels. Our interest rates are higher than almost anywhere else in the world. Bank fees have become an important part of banks’ revenue and banking profits in New Zealand are extraordinarily high. That shows by logic that restricting the amount people receive in redundancy payments to a maximum of $6000 will be of no benefit at all to ordinary people who use the banks—it is quite the contrary. 
The only reason banking charges have come down is that Kiwibank is operating—and the National Party want to sell it off! 
Hon Richard Prebble 
: Ha! 
Hon RICK BARKER 
: Mr Prebble scoffs and laughs but that is what people understand. When Kiwibank came on the scene fees and charges went down and interest rates went down. When Kiwibank started to offer competitive home loans to low-income people the other banks decided to get into that as well. So that is where the situation is with regard to the New Zealand ownership of New Zealand banks—and the National Party wants to sell them off. 
This is a very good bill. I congratulate Mark Peck on doing what I could not do which is to shepherd it through this House. Mark Peck did a fantastic job on this bill and he deserves every credit for that as do all the Commerce Committee members. I want to close with one last word which is Peter Brown’s advice to this House and to the business community that if companies do not want to be involved with a redundancy agreement they should not agree to one. But if they do then they should expect to have to pay redundancy.