Little Andrew: Minimum Wage (Starting-out Wage) Amendment Bill — Second Reading 
Text is incorporated into the Bound Volume 
Little Andrew: Minimum Wage (Starting-out Wage) Amendment Bill — Second Reading 
[Sitting date: 14 March 2013. Volume:688;Page:8584. Text is incorporated into the Bound Volume.] 
ANDREW LITTLE (Labour) 
: 
 I rise to speak on the Minimum Wage (Starting-out Wage) Amendment Bill. That last speaker John Banks was absolutely correct in one thing he said—that this bill is an opportunity for employers. That is all it is about. I rise on a day when some in this country are celebrating the arrival of a new pope. Cardinal Jorge from Buenos Aires—Pope Francis I—has committed himself to alleviating the burdens on the poor. So those of that faith now have a new champion on their side and the Catholics in this House will know that they have as their religious leader someone who is committed to alleviating the burdens on the poor. This legislation is no way to go about it. 
The Minister of Labour Simon Bridges is new in that role. He is learning a lot about the labour market. He has been to the home of the high-skilled high-wage economy in this country and that is Taranaki. He had a look around at the oil and gas sector last week and he came back brimming with ideas and realising that what is happening in Taranaki is unique to Taranaki. But here is the thing about the way the labour market operates. Passing laws does not create jobs. Passing laws does not make work. What does make work is economic activity. 
David Bennett 
: Oh! This can’t be the Labour Party. 
ANDREW LITTLE 
: It is pretty simple economics and even David Bennett from the Waikato understands it. In order for jobs to be generated there needs to be economic activity. People do not sit around saying: “Gee I’m not an employer today but if I could get away with paying nothing or next to nothing I will employ a whole bunch of people.” What are they going to employ them for? People take on labour people engage workers when there is work to be done. That is the first part of the equation Minister. There has to be work to be done. 
 The second part of the equation is that there has to be value that can be generated as a result of it. We can go back to the old surplus value theory of labour which is that providing you take somebody on and the return on the value of that work can pay for the worker and provide the employer with something then you pretty much have what it takes to create work. Creating an environment where you just reduce the price of labour is not about creating work. It is simply about opening exploitation. When the Hon John Banks said that this is an opportunity for employers there is only one meaning you can attach to those words and that is that this is an opportunity for employers to further drive down the cost of labour jobs and work that they already engage. It is not going to create a single extra job in this country. It will not help a single extra person. All it will do is mean that those people who are employed under it will get paid less than they would otherwise have been paid and who knows about the quality and the training under it? 
The law is very clear and the conditions for engagement under this legislation are simply any training. Well I met an employer recently and so did my colleague Darien Fenton who lamented the fact that the minimum wage that is in place at the moment meant that it was getting harder and harder for his friend who runs a business that requires a lot of envelope stuffing to engage people. He wanted an even lower wage so that young people could be in his words trained up to stuff envelopes and they would have work. Well actually I am not quite sure whether that is what this bill is about and what its objective is. That is not work that we want. The challenge for New Zealand and the challenge for this Government and any Government is to encourage and incentivise that sort of economic activity that is going to encourage or create those jobs that are high value that are higher wage not minimum wage jobs. 
The reality is that there are parts of this country now where we have a two-speed economy operating where we do have jobs that are well paid well remunerated. I am not talking about the chief executives of Government departments when they get well paid and they get paid even more when they leave their job. I am talking about people who leave work in the morning or might leave at the end of their shift come home from doing an honest day’s work and get an honest day’s pay to look after their family have a few hobbies and stuff. There are some people who live that sort of lifestyle and do very well. There are a growing number who have that sort of life—a 40-hour-a-week job or longer—and can still barely make ends meet because they are on the minimum wage. There is a growing number of sectors where that is happening. It is no longer just the service sector either. It is in important industries of ours—for example forestry where a growing number of the workforce are on the minimum wage. This bill will do nothing to help that. What it will do is give a signal to those employers that if they can dress up an induction to the workplace as training they can get away with 6 months of paying an even lower wage than they have to pay as the minimum wage now. That is all it will do. It will cheapen labour make it easier for the ruthless employers and the employers that we actually do not need more of and make it even worse for those workers who are struggling to get work. 
This is not going to help young people. The old canard is trotted out every now and again: “Oh but what about the 90-day trial?”. The most dubious piece of labour market research we have seen in a generation from the NZIER calling itself the New Zealand Institute of Economic Research came out and said: “Oh it created 13000 jobs.” The research was done within months of the legislation coming into effect and every other worthwhile and self-respecting—actually decent—economist who ever looked at that piece of research said that it was a load of bunkum. It failed to take into account the fact that there were other measures in place to help young people. But it did not even take into account the displacement effect—the fact that employers were getting rid of some workers and employing them under the 90-day law because they could get away with it because it was low-skilled work and they could manage a high-rotation workforce and they did it. There was no evidence that making things worse for younger people whether it is in terms of their security of employment à la the 90-day legislation or lowering the minimum wage is going to help young people into work. The labour market does not operate that way. Economics 101 does not operate that way. You do not have to be very smart to realise that simply lowering the price of labour does not create a single extra job. What creates jobs is economic activity and that is what this Government has singly failed to do to achieve and to do anything about. 
So despite all the arguments that were trotted out by employers by the less than half a dozen employer representatives who fronted up to the select committee to say that the current minimum wage is a barrier to work that this will not create work they knew when pushed that they could not sustain that argument. They did not believe in it—they did not believe it. I think this Minister when he is pushed and when he looks into his heart and when he looks to Pope Francis I will know that this legislation will not achieve the objectives that he claims of it. That is why we will be opposing this legislation. There are fortunately other members in this House who know that cutting the minimum wage reducing it even further does not help. 
Darien Fenton 
: David Bennett. 
ANDREW LITTLE 
: David Bennett for example said that when there was an attempt previously to reduce the minimum wage through legislation we are by doing so denying young people their success by holding them at a lower rate than their ability shows as individuals. David Bennett was right. That was David Bennett National MP for a Hamilton seat either east or west—but anyway one of the Hamilton seats. He knew then; he was right then. It will be interesting to see whether he takes a call today to talk on this bill which he knows is wrong. 
We are opposed to this legislation. It will do nothing for New Zealand. It will do even less for young people. What we need is a real plan that is going to create jobs and lift incomes in New Zealand.