Willis Nicola; Hipkins ChrisNICOLA WILLIS (National): I want to ask the Minister a couple of questions about this bill. The first is I'd like him to put on the record in the Hansard to clarify exactly why the current legislation which allows for the Minister to make grants subject to any conditions that the Minister specifies in writing—and it sets that out in section 548 currently—why an Act which says that when those grants are paid for any purpose or service that the Minister sees fit and requires that the service provider must ensure that it's subject to those conditions it actually meets those conditions—why these amendments are necessary. Then turning to the detail of these amendments and accepting that the Minister may have good reason why he has had to add additions I want to look at the detail of this wording because if we look at new section 548(5A) which inserts a new—if we look at the new subsections in clause 4 that will be introduced here we have a new power for the Minister: that he is allowed to apply conditions or purposes that relate to employment matters like for example remuneration. My question is: if the reason the Minister is making these amendments is because he thinks that it is necessary in order to set pay parity levels then why not just limit it to remuneration why does it need to be wider and relate to employment matters more broadly and why in new section 548(5B) has he gone to the detail of saying that the conditions or purposes may be specified by the Minister to help achieve aims that are or include employment relations aims."? The reason I'm asking this question Minister is really on behalf of all the early childhood services out there who are saying "What is this? It's not what was written on the tin. We were told that this was about pay parity but this seems to be the Minister reaching his hand into our business in some sort of union drive in which he's trying to have a whole bunch of detailed employment conditions that he can now impose on us as a condition of funding." I ask the Minister: why is it not limited to what's in the current Act? Why if he wanted to add an extension did he not limit it to remuneration? Why does he have this broader power around employment conditions? Finally I want to ask the Minister this question which is: if he is so confident that an optional scheme leaves genuine choice for service providers then who does he think are the services that are most likely to be able to afford to opt in to a scheme that may well underfund these employment conditions? He's been with the services at the weekend. He knows what they're all saying. They're all saying "Well you're going to tie our hands behind our backs and say that 'The only way that you can get more funding to pay your teachers is if you opt into my scheme.' " The Minister is saying that you have to opt in to this scheme in order to get the additional funding but the additional funding may not actually cover the cost of that. So what I would put to the Minister is that the services that will be able to afford to make that choice are the services that can then turn around to mum and dad and say "We're going to increase the fees." So what I would say is that the services who are going to be able to pay their teachers more under this scheme are the services that probably already are the most able to attract and pay their staff well. I am concerned that we're going to see a situation where services in some of our lower socio-economic communities where their families and communities don't have the resources to pay more fees are going to be faced with a stark choice which is to opt in and be worse off or to stay out and have a great struggle attracting staff because they can't compete on paying the wages. I would really appreciate it if the Minister would address those three points. Hon CHRIS HIPKINS (Minister of Education): Thank you Madam Chair. The latter of the points relates specifically to the rates of funding which of course are not covered by this bill. In terms of the member's first question—why is section 548 insufficient as it stands now?—the advice that the Government received was that there is some ambiguity there as to whether or not a condition that relates specifically to pay parity could be attached because of the relationship between section 548 and the purpose of the Act—bearing in mind that the purpose clauses of the Act have only recently been inserted. They were inserted when the Education and Training Act was passed last year that rewrote the previous Education Act which didn't have a similar purpose clause. So those purpose clauses in the Act relate to education—educational quality educational outcomes—and there was some ambiguity as to whether or not an employment condition could be attached to the funding and be consistent with the overall purpose of the Act. So to remove that ambiguity we are doing this particular legislative change.The second question is: why not simply limit it to pay parity? Why use the broader language of you know employment conditions if you like? That is because many of the issues that are related to pay parity do flow through to some slightly wider issues—not much wider but slightly wider. So if you include step-based progression for example—so after a length of tenure each year you step up a step on the salary scale—it's arguable that you could argue that parity only would be going wider than that. We want to be able to deliver parity as the sector understands it including the centre managers which is that you step up each step each year which is what happens with kindergarten primary and secondary schools. We're offering an equivalent in the funded sector which is the education and care sector which includes a diversity of provision.In terms of those wider issues around will centres be better off or worse off that will depend on the funding rates that are determined by Government or offered by Government; they have not been finalised and they are not part of this bill.NICOLA WILLIS (National): So do I take from that from the Minister in the chair Chris Hipkins that not only is this bill intended to provide a vehicle for the Minister to introduce minimum pay rates but also to dictate to early childhood education services the conditions under which they must promote and pay a teacher more? The reason I ask that is that this is something that is quite jealously guarded by employers the idea that they get to choose which of their staff they offer a pay rise to under what conditions and the idea that actually there may be circumstances in which they wish to pay someone more despite the fact that they haven't had the length of service of another teacher. They may believe that one teacher is a great performer and deserves to be paid more than another teacher who's actually been there longer but isn't performing as well. So I would seek from the Minister clarification that what I understood to be his answer to the last question is that he has widened the conditions or purposes here in order to allow himself as the Minister to dictate those step changes and those salary conditions.The second question I'd like to ask the Minister is even putting that to one side—so this issue of wider step changes and his ability to dictate that—even if that was all he wanted to do why do we find these words in this bill: "[These] conditions or purposes may be specified by the Minister to help achieve aims that are or include employment relations aims."? Those words seem extremely broad; those words seem extremely vague. "Employment relations aims" could capture all sorts of things and I would invite the Minister to give us some examples of the sorts of employment relations aims he would expect to be covered and to give the sector some comfort that that will be limited in some way.Hon CHRIS HIPKINS (Minister of Education): Thank you Madam Chair. In answer to the latter part of the member's question employment relations in this context in terms of the way the Government intends to use this relates to pay. In terms of the member's suggestion around whether employers should be able to promote people or not that is not something the Government intends to interfere with in any way. If someone is promoted that is completely a matter for their employer. The intention of the Government is to specify minimum rates of pay. There is absolutely nothing stopping centres paying their staff more than the minimum rates of pay.In terms of annual progression which is pay progression as opposed to a promotion our intention is to use this provision in a way that brings the rest of the sector into line with the kindergarten teachers' pay conditions which means that a person gets a pay increment every year up a stepped salary scale. Stepped salary scales are not at all uncommon in employment relations agreements."