Key John: Status of Redundancy Payments Bill — First Reading 
Key John: Status of Redundancy Payments Bill — First Reading 
[Volume:606;Page:4043] 
JOHN KEY (NZ National—Helensville) 
: 
 I am pleased to follow my colleague the Hon Roger Sowry in opposing this legislation. It is a matter of commercial reality that in the years to come some companies in New Zealand will fail. They will go into liquidation and they will leave some employees who simply will not be paid their redundancy payments. That is a fact under the current legislation. The question we have to ask tonight is whether we should reconstruct the Companies Act 1993 in order to accommodate a scenario whereby redundancy payments rank ahead of secured creditors and there is no cap on those redundancy payments—where the $6000 cap in the current legislation is removed. Should we make that legislative move? I say no to that on a number of fronts. I say that not because we are unsympathetic to those New Zealanders who might find themselves in that position but because of the massive implications that it will have for economic growth in this country and for the security of hundreds of thousands of small businesses across New Zealand. 
Life is all about choices. As Mr Hide said there is no such thing as a free lunch. This issue is all about choices. As legislators we face this simple choice. Is it more important to protect a very small group of New Zealanders those employees who find themselves in the position of not being paid redundancy payments when the company that they have worked for is put in liquidation or is it more important to protect hundreds of thousands of small companies all around New Zealand? I was in Auckland this morning and I looked at some data there. I saw there are 109000 small businesses in the Auckland region alone that employ 4.7 people or less. All those companies will be severely challenged by this legislation; let us make no mistake about that. I say that for one very serious and simple reason: if this legislation is passed in the event that any small company deals directly with a large organisation with an extensive redundancy liability it is very unlikely that the small company will be paid and it risks the entire financial solvency of that company. Is that worth it? I say no. 
The ramifications of that are huge. Members should think about that from the perspective of financial institutions. Which bank or financial institution in this country would want to lend money to small companies knowing that they will be dealing with large organisations that will not pay them causing their whole businesses to go down. In my electorate of Helensville there are many farmers who deal with large meat companies. They will be risking their entire businesses if this legislation is passed and I simply say that that is wrong. What is so much more important for New Zealand is not to pass legislation that looks to protect a very small group but to provide a playing field that will generate the highest level of economic growth so that we can employ all New Zealanders. We need to employ not just the New Zealanders who are in work today but also the other 400000 who are currently on a benefit. That is what we need to do. 
We need to encourage entrepreneurship and small businesses. The message we have to send to small businesses is that if they set up a business and deal with large and small companies in a mature and well-thought-out way their position is protected. That is absolutely critical to the integrity of the New Zealand business psyche. I believe that passing this legislation challenges that and I will be opposing it.