Adams Paul: Employment Relations Law Reform Bill — First Reading 
Adams Paul: Employment Relations Law Reform Bill — First Reading 
[Volume:614;Page:10673] 
PAUL ADAMS (United Future) 
: 
 I rise on behalf of United Future to oppose this bill. We are not convinced that we need this bill. The Prime Minister told the Council of Trade Unions conference this year that opponents of the Employment Relations Act must be very disappointed that the legislation had been successful and a stabilising influence on employment relations. Business groups say that the reason the Employment Relations Act has not turned out as badly as they thought it would is that all the controversial parts were dumped. If the law is working so well now then why does it need to be amended? The Government wants to review the Employment Relations Act because the law has not helped out its old mates the unions as much as it had hoped it would. 
Advocates of the Employment Relations Act hoped that the union density—that is the proportion of unionised workers in the labour force—would rise from the 17 percent it had sunk to under the Employment Contracts Act. According to a study by the Industrial Relations Centre at Victoria University union membership has grown by around 10 percent in the past 3 years but union density has remained virtually flat at around 20 percent since the mid-1990s. That stagnation has occurred despite the fact that under the Employment Relations Act unions have been given the exclusive right to collective bargaining. As the old Employment Contracts Act agreements expired workers either had to join an established union form one of their own or revert to individual agreements. Few employees have elected to join unions and those who have done so joined unions formed of members in one workplace. They are not affiliated with the Council of Trade Unions and tend to be regarded sceptically by the union movement. It is probably not surprising that employees in the public sector are five times more likely to be collectivised than their private sector counterparts. Slightly over half of all trade union members are employed in the public service. So this bill is all about trying to increase the influence of the traditional unions beyond the public sector. 
The unions claim that the reason they are not succeeding under the Employment Relations Act is that non-union employees free ride on the same terms and conditions secured by collective agreements. So this bill makes it a breach of good faith for employers to undermine collective bargaining if they pass on the same terms and conditions to non-union employees without presenting them with the opportunity to join a union. I think that in practice it will be very hard to establish whether an employer has undermined collective bargaining. Even the union leaders have said that the bill will not give them enough ammunition to stop freeloading. I wonder what would happen if an employer decided to pay non-union members more money than union members receive. He or she would be in trouble. That would be seen as an incentive for people not to join the union. That is the trouble when we get legalistic on this stuff. People need to be given a break and allowed to work one with the other as they negotiate things. So this clause is just a symbolic gesture to the Government’s supporters. 
But the bill does make it legal to give a bargaining bonus to members of a union. What wonderful words those are to a member of a union who negotiates a collective agreement. Can members remember when 6902 Public Service Association members at the Inland Revenue Department the Ministry of Social Development and Land Information New Zealand received a total of almost $4.5 million in bonus payments for successfully negotiating a new collective agreement? At the time we knew that United Future and other parties in this House questioned whether that was a breach of section 9(1) of the Employment Relations Act which prohibits preference on the basis of union membership. But only unions can negotiate collective agreements so at the time the agreement is made the one-off nature of the bargaining bonus effectively restricts it to union members. The average bonus received $712 would have covered each member’s union fees for the year. How nice that was! Fonterra and the unions tried to do the opposite of that and to get non-union workers to pay the fees of the union members because they had negotiated the collective employment agreement. But that has been challenged in court. The Minister must have been worried about the legality of the bargaining bonus for Public Service Association members because now we have a new clause in this bill that amends section 9 of the principal Act to state that it does not prevent a collective agreement from containing a term or condition that is intended to recognise the benefits of a collective agreement or the relationship upon which it is based. The Government knew that the bargaining bonus was dodgy so now it is covering it up. 
I turn to what I think is the most contentious part of this bill and that is the idea that in certain industries new business owners have to take on the staff of the old business. Even a political party does not have to take on the old staff if there is a change. 
David Benson-Pope 
: The National Party does. 
PAUL ADAMS 
: Not always. That is not true. Those who win a contract to provide a service will be forced to employ the staff of the outfit that lost the contract. People are people. 
Simon Power 
: That’s a very good point. People are people. 
PAUL ADAMS 
: That is a very good point. It was quite a revelation to the member. 
Simon Power 
: You were quick off the mark. People are definitely people. 
PAUL ADAMS 
: I was; I realise that. I am pleased to inform the member of that. He can put it in his memory bank now and he will be right. People are definitely people. Some have leadership ability and some do not. Some are soft-hearted and some are hard-hearted. Sometimes a business with a soft-hearted leader can go down the gurgler whereas a new person can come in take up the leadership responsibility pick up the business and take it on to greater heights. But under this legislation that person will not have the ability to deal with the business as it may need to be dealt with. He or she will be forced to employ the staff of the outfit that lost the contract. 
A new owner might have the chance to improve a failing company and take the business on for the very reason that he or she can do it at a lower cost. Lumping the new owner with the old employees will create an additional cost either in redundancy payments or in terms of a higher wage rate. What if the new owner has to make his or her own people redundant in order to make way for the old crowd? That will happen mark my words. This bill may make it impossible to sell a failing business. Instead the employer may just close it down. Where will that leave the workers? What if the failure of the business was in part due to incompetent staff? The bill talks about making the best use of existing talents but what if there was no existing talent? 
The decision to take on workers is one for a business to make. The Minister said in the House yesterday that skilled employees need to be seen as an asset of a business. But unlike plant and machinery a new owner cannot sell staff and get a return. I would have thought that the whole idea of contracting out for services is that the entire assets of the business are transferable and able to be dispensed with entirely if the person paying for the service is not satisfied. The explanatory note of the bill claims that compliance costs to business are likely to be relatively insignificant but anyone who takes on a new business or contract will have to factor into the price the increased cost of the liability of the old workers. 
 If we are to review the Employment Relations Act let us put in the things that are really needed—things like trying to stop employees from taking out unjustified dismissal claims when they are sacked just so they can cut down the stand-down period before they collect the dole. What about John Tamihere’s great idea? I can relate well to that man. He has a good head on his shoulders and he understands the reality of the world that we live in. He has a great idea of allowing small businesses a 1-month probationary period to assess new employees which he has been arguing for as part of the review of the Act. If those sorts of things were in this bill then we might have something different to say but we are not voting for this bill.