Prebble Richard: Companies Amendment Bill Insolvency Amendment Bill — Third Readings 
Prebble Richard: Companies Amendment Bill Insolvency Amendment Bill — Third Readings 
[Volume:616;Page:11945] 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 Speaking on behalf of the ACT party which probably represents far more fair-minded business people than the honourable member’s party ever has I want to say that this bill is unjust bad economics and bad for the country. Let me explain. The bill is now broken into two halves but basically what is being proposed is that in the event of insolvency when it follows that there is not enough money the law sets out who should get what money there is when a company goes bankrupt. The bill proposes that the people who work for the company should get it. It follows—though the member did not mention it—that some other people who up till the passing of this bill would have received some money will now lose out. 
Who are the people who will lose out? Why do we not just take the case of Weddel Crown that was mentioned? We are told that workers there should have got whatever money was available and other unsecured creditors should have lost. Who were the unsecured creditors? They were farmers who had supplied stock to the freezing works. They had not actually been paid for that stock which had been slaughtered and sold. As a result of this bill the money that would otherwise have gone to those farmers or small businesses will now go to workers—not as compensation for work they have done but as redundancy. 
Redundancy of course is by definition not payment for work done. Redundancy is a compensation payment not payment for work done and that is a very big shift proposed by the bill. When there is not enough money we are now going to say to a small business which has done the work and supplied the goods that it should not be paid so that workers can be paid. It is a bit of class legislation. The notion is put up that workers should always get the money. I say to members that yes I have seen cases where companies have gone into liquidation through no fault of any of the employees and management but those cases are the exception. 
The reports made by the Society of Accountants point out that the vast majority of insolvencies are the result of errors and sometimes of foolishness of the people who work for the company. So this bill is saying that the people who actually had an opportunity to change the situation should have their rights prioritised ahead of the people who had no opportunity of saving the company—those small businessmen who supplied it. 
So I ask the Government where the support is for that. I ask that for a very good reason because we all know that the Government asked the civil service to do a review of this law. It did and it did a review of the protection given to workers because workers actually are protected under present insolvency laws. The civil servants confident after having done a review came back and said there should be no alteration to the $6000 figure. Why did they say that? They pointed out that $6000 was a reasonable amount of money to be given which for the average worker is at least 3 months’ work. 
They would also have realised that workers unlike small businesses can get payments from Work and Income if they are out of work. If people try going along and saying: “I am an owner-operator plumber and the business I have been supplying for the last 6 months hasn’t paid me. I’m not going to get paid because the workers are going to get payment ahead of me.” they should see how they get on when they put that forward in front of Work and Income. I suppose they might try a bit of social enterprise or whatever those hip-hop people got their money for but I suspect that an ordinary small business would get short shrift from this Government. In this bill the interests of small businesses are being put behind that of workers. 
But then if we look at the bill—and if members read it they will see it is very badly drafted—we see that the definition of “workers” includes the manager. Providing a manager is not a director he or she gets that $15000. So a manager could realise that a business was to be put into liquidation the next day. Under this bill the manager could write himself or herself a redundancy agreement for $15000 and the next day be a priority creditor. That is what the bill says. 
Hon Rick Barker 
: Rubbish! 
Hon RICHARD PREBBLE 
: It most certainly is rubbish. It is in his bill. He drafted it and that is what it shows. I raised it at the select committee. I pointed out to the member the very clauses where that was possible—and it most certainly is. 
That brings me to another point. I say to the House that this is a member’s bill—on a day that is really for the Opposition and other parties to put forward bills. What we have here is a Government bill that Ministers themselves know is a piece of class legislation so that someone like Lynne Pillay who was speaking previously and who used to be an organiser for the Engineers Union can give the sort of class hate speech she gave in the House today so she can claim that a Labour Government is somehow “for” the workers. I point out that the bill is actually going to help managers—managers who have been so incompetent they have driven their businesses into liquidation and who are probably going to bankrupt other small businesses. Under this bill they will then be able to write themselves a protected cheque for $15000—and the Labour Party tells us that that is fairness. 
But Lynne Pillay told us something else. She asked why we were objecting because there was no cost to this matter. Of course there is a cost. As Mr Rick Barker wanted to point out—apparently this is an advantage from his point of view—banks are one of those that will lose out. He pointed out to us that they are all overseas owned so why did we care. The reason we care is that banks are in business. They are not giving money away and they are going to have to load these provisions into their costs. Who will the cost fall on? It is not going to fall on the bad businesses; it will fall on every business. So the costs of doing business for people who were never going to go bankrupt—who were always going to be prudent and who always looked after their workers—will rise. Admittedly they will rise marginally but they will rise as a result of this bill. 
I say to Lynne Pillay that yes there is a cost in this bill. It will fall upon the 250000 small businesses in New Zealand who need to borrow money and who are prepared to go into business and hire their fellow citizens with their own money. They have to make wages each week. They mortgage their own homes to do it and this Labour Government against the advice of its own officials—for pure class politics—has introduced a bill to let “the workers” get priority over small business. And the Government tells us that that is electorally popular. Perhaps it is but it is still wrong. It is unfair it is unsound economics and this House should vote against this bill. The ACT party will.