Cullen Michael: Employment Relations Amendment Bill — Second Reading In Committee 
Cullen Michael: Employment Relations Amendment Bill — Second Reading In Committee 
[Volume:651;Page:392] 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 That speech clearly exhausted the member. He can retire into somnolence for the remainder of this sitting running through into Saturday—but I always appreciate his Charles Laughton imitations in this Chamber.  
Why is the Employment Relations Amendment Bill in front of us under urgency at the present time? The obvious answer from the Labour perspective is to say this is some deep-dyed plot whereby the National Party is in cahoots with Business New Zealand to ram it through. The problem with that theory is quite simple: Business New Zealand is opposed to ramming this bill through the House. The Council of Trade Unions is opposed to it Business New Zealand is opposed to it—that is the trade unions and the employers—but the National Government is in favour of it all by itself. Nobody else is in favour of ramming the bill through; the Human Rights Commission is opposed to ramming it through. It is being rammed through for a simple reason: Mr Key said before the election there would be 100 days of action. At the Business Committee on Tuesday even Mr Brownlee did not know what the 100 days of action was going to be. There had to be something in it and the National members have made up what is in the 100 days of action.  
So we have this bill a bill that could be passed at any time in the next few months and could go to a select committee; an education bill on something that could be done by regulation and does not even require a bill at all; and two law and order bills that could go to a select committee and do not require to be done immediately. The only things that had to be done quickly were the tax changes because they come in on 1 April and there was a need to have a period of time before they come into force. This bill is about cosmetics and on looking at the opposite side of the Chamber one can see the need for the cosmetics. Indeed today I walked into one of the men’s toilets in the area frequently occupied by National members opened a shoe box to look for the shoe polish and found a huge pot of Shiseido face powder. Clearly a lot of people on the opposite side of the Chamber have been using a lot of cosmetics over the recent past.  
Where did the notion of 100 days come from? What is the historic origin of the term “the Hundred Days”? The trouble with being a historian as I am by profession is that sometimes one knows things one does not really want to know. The term “the Hundred Days” comes from Napoleon. The time between the escape from Elba to the Battle of Waterloo was the Hundred Days. I have bad news for the National Party: Napoleon lost the Battle of Waterloo. National’s use of the term “100 days” is not a good idea given the historical precedent. I advise National members to forget about it.  
What is the real purpose of this bill? Well it is not clear at all. We are told it is to encourage employment. Let me adopt a question I used in the KiwiSaver debate. What assumptions are being built into the Half Year Economic and Fiscal Update that will reduce the projections for unemployment as a consequence of the passage of this legislation? Is officialdom convinced is Treasury convinced that a single extra net job will be created as a result of this bill rather than the recycling of some people on a 90-day basis through one job which counts as one job?  
John Hayes 
: No it won’t happen. 
Hon Dr MICHAEL CULLEN 
: If it will not happen what is the point of the bill? If as Mr Hayes says it will not happen that people will be recycled through a job then why is this bill supposed to be a centrepiece of the National Party’s policy when it will have no effect? 
John Hayes 
: It will have an effect. 
Hon Dr MICHAEL CULLEN 
: It will have an effect but it will not happen! There is a whole new kind of physics emerging here within National—something quite interesting is emerging in terms of National’s view about the future.  
This measure was not in the Speech from the Throne. It was never a centrepiece of the National Party’s policy announced to the public at large during the election campaign. National members went around business groups and it was whispered quietly that there would be a 90-day probationary clause. The bill does not actually create a 90-day probationary clause because the current Act provides for probationary clauses in employment agreements. The employee and the employer can agree to a probationary clause but the employee’s personal rights remain under it. 
Hon Trevor Mallard 
: Can they be longer? 
Hon Dr MICHAEL CULLEN 
: Yes the periods can be longer or shorter than 90 days. Actually the current law is more flexible about probationary clauses. They can be for 60 days 90 days 120 days or 3 years—like Mr Key who is on a probationary clause for 3 years. At the end of that time his employer may well decide not to renew that particular contract. After 27 years or a little bit longer than that my employers are probably deciding not to renew mine. There can be very long probationary clauses.  
The argument was also put forward that Labour does not like employers. I have gone through the list and I have found that probably more people on this side than on the other side of the House have been employers. Mr Hide for example has been employed by the State all his life in one form or another. 
Hon Member 
: Or by Alan Gibbs. 
Hon Dr MICHAEL CULLEN 
: That is right and sometimes simultaneously in fact; Alan Gibbs and the State have employed Mr Hide. But the real problem is that the National Party does not understand industrial relations. There is a Gresham’s law about industrial relations which those members need to understand. Particularly when the country is in a period of low economic growth as we are this year and will be next year—and probably the year after that we will have pretty low economic growth as well—Gresham’s law applies. Gresham’s law is the law that bad money drives out good. It said debased coinage would drive out un-debased coinage in the old days when coinage meant something in that regard.  
Unfortunately in areas like the service industries—but not in high-tech industries which are a different kind of world—that employ unskilled or semi-skilled labour a Gresham’s law of industrial relations does apply. If one employer can employ people at a much cheaper rate and on reduced terms compared with another employer the other employer’s labour costs are a higher proportion of the total cost of the business. In that respect employers who are trying to provide decent conditions sooner or later tend to be forced to reduce their conditions as well in order to compete with the bad employers. That is why we have to have industrial relations law. If all employers were good and everybody acted properly we would not need to have industrial relations law at all. It could simply be a matter of having individual contracts between employers and employees—individual arrangements.  
Industrial relations law is there to provide a proper framework because unfortunately as always people are prone to sin in some form or another. The people being exposed to that will be disproportionately Maori and disproportionately Pasifika. That is what will happen in this case because the service industries are disproportionately staffed by those people and they also disproportionately employ women compared with men. So Government members should not tell us the issue is about Labour failing to trust employers. Employers are like any other group of people: there are good people average people and bad people. The problem is that in these kinds of areas and in those kinds of industries—as I say not in the high-tech industries not in the professions and not in the managerial sectors by and large—bad employers’ practices tend to drive out good employers’ practices because that is the nature of competition within those kinds of businesses. So this measure will not work.  
The other point that the Government needs to bear in mind is what one might call the doctrine of unintended consequences which is a pretty important and powerful doctrine to always bear in mind. I remember that I led the then Labour Opposition in the second reading debate on the Employment Contracts Bill because Helen Clark was overseas. The Employment Contracts Bill had two prime aims. It was there in part to destroy much of the trade union movement and after it was enacted it succeeded in that; and it was there in part to destroy working conditions and wages. It was intended to lower the base of working conditions and wages and adopt a low-wage path to economic growth. In that the Employment Contracts Act succeeded; it certainly did that. But it also had unintended consequences. The whole personal grievance industry which both the National Party and employers moaned more and more about as the decade progressed was very largely a creation of that Act. Employees could really rely upon only the legal system and the taking of personal grievances to protect themselves. Employment cases that were previously sorted out between the union and the employer and satisfactorily resolved at minimal cost to both parties became more and more a focus of personal grievances. Under the Employment Relations Act the tide has been pushed out on the personal grievance industry. It has moved back in the opposite direction to some extent.  
People will find a way round this law—those who can. Those who can afford to get a lawyer will find a way round this law. There will be enough loopholes in it for clever lawyers and judges who believe that the Government has gone too far. They will do exactly what they did with regard to the Employment Contracts Act. They will lead in the opposite direction and say to the Government: “We believe you’ve gone too far. Therefore we will create further opportunities somewhere else within the legal system to counteract as best as possible the effects of what you are doing that we don’t agree with.” This bill will create uncertainty; it will create further costs for employers. It will not create new employment.