Employment Relations Law Reform Bill — Second Reading 
Employment Relations Law Reform Bill — Second Reading 
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Employment Relations Law Reform Bill 
Second Reading 
Hon PAUL SWAIN (Minister of Labour) 
: 
 I move  
That the Employment Relations Law Reform Bill be now read a second time 
. I would like to thank the members of the Transport and Industrial Relations Committee for their comprehensive work on the bill. The select committee received 354 substantive submissions and heard 202 oral submissions. This bill has been closely examined by employers employees unions industry associations and other interested parties. The select committee has carefully considered their submissions and as a result recommended a number of practical improvements and I draw members’ attention to the following key amendments recommended by that committee. 
The commencement date is now 1 December 2004 as a result of the committee’s work. In good-faith areas the bill clarifies that good faith is a broader concept than common law obligations of mutual trust and confidence and confirms that good faith applies to bargaining for individual agreements. The select committee has also recommended a number of amendments to better define the duty of good faith. These amendments include removing the specific requirement for employers and employees to be supportive of each other in recognition of the fact that the parties are entitled to pursue their own interests and bargaining in other situations. 
The provisions relating to employers’ good-faith obligations to provide information to employees and give them an opportunity to comment on it have also been amended. The intent of these provisions is that employers should provide information to their employees on decisions that will or are likely to adversely affect the continuation of their employment. The select committee has recommended that employers will not be required to provide information on routine operational decisions and will not have to provide information where that would unreasonably prejudice their commercial position—a clearly sensible recommendation. 
In relation to whether employers and employees have acted in good faith over individual bargaining the fact that employers and employees may have differing resources and capabilities may now be taken into account. A similar provision already exists for collective bargaining. This is a sensible amendment because it recognises that employers may have differing capacities and resources to engage in good-faith bargaining and that approximately 80 percent of New Zealand employees are employed on individual agreements. 
In regard to free-riding or passing on the bill aims to prevent employers from undermining collective bargaining by automatically passing on collectively bargained terms and conditions to employees not covered by the collective agreement. The risk of undermining collective bargaining is higher during the bargaining process. The select committee has therefore recommended amending the bill so that it would be a breach of good faith if during bargaining an employer passed on the term or conditions reached in that bargaining where this is done with the intent or has the effect of undermining the collective bargaining process. 
After collective bargaining has concluded the test for a breach of good faith would be higher. An employer would be in breach of good faith at this point only if he or she passed on the collective terms and conditions with both the intent and the effect of undermining the collective agreement. 
The select committee has also recommended clarifying that employers are not prevented from providing all employees with the same terms and conditions of employment—[ 
Interruption 
]—an issue that the National Party has difficulty in comprehending so I will read it again. The select committee has also recommended clarifying that employers are not prevented from providing all employees with the same terms and conditions of employment. These amendments make it explicit that the outcome of different sets of bargaining may be the same or similar—provided of course that employers and employees have bargained in good faith. 
On bargaining-fee arrangements: the select committee has recommended that I move an amendment to the bill to allow for bargaining-fee arrangements to be negotiated where it is agreed that the terms and conditions of a collective agreement are to be passed on to non-union members on individual agreements. Non-union employees who do not wish to pay the bargaining fee will of course be able to opt out of the arrangement. I agree with this recommendation and I have released a Supplementary Order Paper which has now been tabled proposing that where a union and an employer agree on a bargaining-fee arrangement affected employees would take part in a ballot to decide whether the bargaining-fee arrangement should operate in their workplace. In practice that means that where a majority of those balloted support such an arrangement all non-union employees falling within the coverage of the collective agreement would be given the same terms and conditions as those covered by the collective agreement in return for paying a bargaining fee. Employees who do not want to pay a bargaining fee will be able to opt out of the arrangement. Strikes and lockouts over bargaining-fee arrangements will be prohibited. 
The issues surrounding concluding a collective agreement were also discussed by the select committee and it has recommended that the bill give more guidance on what could be considered to be a genuine reason not to conclude a collective agreement. A genuine reason must be based on reasonable grounds and this does not include opposition or objection in principle to collective bargaining or collective agreements. 
What about multi-employer collective agreements or “MECAs” I hear members ask. Amendments have been proposed to the provisions relating to multi-employer collective agreements. The select committee has recommended removing the specific requirement to attend the first meeting of bargaining for such agreements. This was obviously an issue that was raised at the select committee. A number of employers had concerns about it and came to see me about it and the select committee quite wisely has recommended that the first meeting for bargaining for a— 
Dr Wayne Mapp 
: You actually made it tough by another device. 
Hon PAUL SWAIN 
: That is not a bad idea and the member on the select committee hopefully will agree with it. The existing good-faith obligations will continue to apply to bargaining for multi-employer collective agreements as well as to bargaining for single-employer collective agreements. 
What about restructuring situations and continuity of employment? The select committee has recommended clarifying the schedule that lists a group of employees who will receive employment protection in sale-of-business or restructuring-of-business situations. The term “food services” has a broader reach than was intended and the select committee has recommended rightly that it should be replaced with the term “food catering services”. This change ensures that the protections— 
Simon Power 
: This will not work. 
Hon PAUL SWAIN 
: Of course it will work. This change ensures that the protections in the bill are targeted at the most at-risk employees. Amendments to these provisions also tighten the process for changing the schedule. A report commissioned by the Minister of Labour about whether the grounds for changing the schedule have been met would form the basis for consultation with employers employees and other parties as appropriate. 
I turn now to the question of equal pay. After careful consideration of the views on updating the equal pay legislation the select committee has recommended that the equal pay provisions of the bill be removed. Amendments to update equal pay legislation will be considered in the context of the Government’s pay and employment equity initiatives. 
What about personal grievances? The select committee has recommended amending the test of justification in personal grievance cases to reinforce that it is based on what a fair and reasonable employer would have done. The requirement of an employer to consider and balance the legitimate interests of the employee and the employer has also been removed. I am aware that many employers particularly small-business owners have concerns about the procedures for dismissals and personal grievances and their capability to deal with these issues. I have spoken to a number of these employers including those that are represented on the Small Business Advisory Group and they argue that the issue of personal grievance is the single biggest issue that they face. In fact 80 percent of small-business people employed in New Zealand are not covered by any collective agreement or union and this is the issue that they are most concerned about. As a result I have indicated to them that once the bill is passed I will be looking at ways to give better guidance around these issues and I have already indicated a number of— 
Hon Dr Nick Smith 
: That’s what you said with the holidays stuff. 
Hon PAUL SWAIN 
: And we did that. Does the member remember that? It is coming up a bit later in the week. If the member did some reading it would be helpful. 
So all in all the select committee has done thoroughly good work on this legislation. [ 
Interruption 
] I heard that there were quite good discussions on the select committee actually. Of course one of the issues about employment relations legislation is balance. Everybody recognises that perhaps the balance went too far in the 1980s and in the time leading up the 1980s. Then in the 1990s of course the Employment Contracts Act stripped away all the rights and we replaced it with the Employment Relations Act. National of course said it would scrap the Employment Relations Act. Only last year it said that and now the Leader of the Opposition Don Brash says that basically business thinks it is all right. So once again there is a problem and I would be very interested to know what the National Party position is on the Employment Relations Act generally. I would like to hear about that but as far as this bill is concerned it is about getting the balance between the rights of the employer and the rights of the employee. 
The select committee under the good guidance and leadership of my friend and colleague Mark Gosche has provided excellent leadership on this legislation. He has brought back a piece of legislation a reform bill that has been much improved since it went before the committee. It is great legislation and I recommend it most strongly to the House. 
Dr DON BRASH (Leader of the Opposition) 
: 
 I rise to oppose this bill and I oppose it very strongly. Sometimes in this House I rise to speak on a bill that is a bit like the curate’s egg—good in some parts and bad in others—but this bill is unqualifiedly bad in every respect. What will this bill actually achieve? Will it achieve faster growth for New Zealand? Not a dog’s chance! Will it achieve higher productivity? Not a dog’s chance! Will it narrow the gap in living standards between New Zealand and Australia? Of course not! Will it lower unemployment? No. Every economist in the world accepts that if we want to lower unemployment on a consistent basis over time and over the cycle we need to have a less inflexible labour market not a more inflexible labour market. 
This bill will achieve one thing and one thing only. It will help the Labour Party’s friends and funders in the trade union movement. Almost 80 percent of all employees in this country choose not to belong to a union. Almost 90 percent of all employees in the private sector choose not to belong to a union. So what does this Government do? Well this Government as some of my colleagues have been pointing out is basically made up of people who were previously members and office holders in unions: Rick Barker David Benson-Pope David Cunliffe Lianne Dalziel Helen Duncan Paul Swain and so on we go. It is a long list of names: Phil Goff Mark Gosche George Hawkins Darren Hughes Winnie Laban and on and on. All of them are former union representatives so surely it is not a surprise to us that they introduced a bill that will have the primary purpose of boosting union membership. 
The Government designed a bill to assist unions increase their membership by making it a breach of good faith for an employer to do anything with the intention of undermining the union or that might have the effect of undermining the union. So it is clear that it would be a breach of good faith for an employer to pay a non-union employee the same as he or she has agreed to pay a union member. I strongly suggest that it would be a breach of good faith under this law to pay a non-union employee more than union members even if the employer judged that a non-union employee was likely to be more productive more flexible and therefore more beneficial to the employer than a union member would be. 
The bill requires that all individual contracts must be negotiated individually. So the bill places huge pressure on employers especially large employers to abandon individual contracts. In case non-union employees still do not get it the bill will provide as the Minister himself has just indicated that a majority of all employees union and non-union can impose a bargaining fee on all employees—payable of course to the union. This bill is all part of the Government’s plan to push people into unions disregarding the effect on growth disregarding the effect on productivity and disregarding the effect on employment. Let us look for a moment at what the Government has done elsewhere in this area. It has been paying lump-sum payments to members of the New Zealand Public Service Association—$5 million last year. This year the Government has made lump-sum payments to staff in the Ministry of Social Development the Inland Revenue Department and several other departments provided they were members of the union. The Government said that it is more convenient for the employer to deal in a general way with members of the union. I suspect that some employers would like to say that it is more productive to have employees who are not members of the union but I also suspect that if employers were to say that they would very quickly find themselves in breach of the legislation. 
As my colleagues have pointed out in recent press statements members of both the Post Primary Teachers Association and the New Zealand Educational Institute have recently been again awarded lump-sum payments by this union. We are on the way back to de facto compulsory unionism. Let me say it again: we are on our way back to de facto compulsory unionism. 
Darren Hughes 
: Say it one more time! 
Dr DON BRASH 
: I thank the member. We are on the way back to de facto compulsory unionism. I am delighted to hear that Mr Hughes accepts that. As the Minister pointed out the bill makes it relatively easy to force an employer into a multi-employer collective agreement. That will be disastrous for small employers and it will be disastrous for employers in those parts of the country where the cost of living is a bit lower and therefore wages are a bit lower. We are on our way back to national awards and again that will be a disaster for smaller employers and employers in parts of the country outside metropolitan New Zealand. 
The bill also threatens to destroy much of the goodwill built up in small businesses when those businesses are sold. The Minister did not spend much time talking about that. The bill contains a clause that allows employees to simply choose not to transfer to the new employer with potentially disastrous effect on the goodwill involved in that business. That faces the vendor with the possibility of large redundancy payments when the employees all decide to opt out and the buyer could face the prospect of taking over a business with no staff at all. This bill could be a disaster for the people who have spent their lives building up a small business with 5 10 15 or 20 employees. So it is hugely damaging legislation and one that the National Party is committed to repealing. 
Government Member 
: You said that about the Employment Relations Act. 
Dr DON BRASH 
: Since the member has raised the question of the Employment Relations Act let me say that there are some features about it that we have no problem with. 
Darren Hughes 
: What’s National got against it? 
Dr DON BRASH 
: I say to Mr Hughes there are three areas in particular that we have a great deal of problem with. First of all the Employment Relations Act makes it almost impossible to dismiss even recently hired staff. It gives unions a monopoly of bargaining and it makes it very difficult indeed to hire staff on fixed-term contracts. Those factors are all disastrous and damaging to our productivity growth. 
The majority report on the bill explains why references to pay equity have been dropped. That is because it points out that equal pay for work of equal value is under “significant examination” in preparation for another bill. This is a warning that there is yet more damaging legislation on the way. 
The bill also provides that an employer would be in breach of good faith if a collective agreement in the health sector did not observe the principles of the Treaty of Waitangi. We have surely had enough of references to the principles of the treaty without indication of what that might mean and yet again here we have a new bill writing the principles of the treaty back into more legislation. This legislation is seriously bad and the National Party not only will repeal it when in Government but will oppose it now with every means at its disposal. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 That speech was made by a dead Opposition leader not by one who is full of vigour and passion but by one who hates unions with vigour like his predecessor did. I was most disappointed. The worst insult he could sling at people on the Government side of the House is that we used to be in unions. Some of us are still in unions and we are proud of it. There is nothing wrong with that. It is as though it is some sort of crime to belong to unions. That was not the case when I last looked at that. One would have to ask oneself whether that was the real National Party position we heard from Dr Brash. I hope we will have speeches from several National members. The latest addition to the spokesperson’s role is Dr Wayne Mapp who is still in nappies as far as industrial relations are concerned. He did not have anything to do with this bill but that is not his fault because he only recently got the hospital pass when Roger Sowry decided to depart from the House. At least Roger Sowry heard the submissions on this bill and heard from employer after employer that the Employment Relations Act was working well. 
Let us go back a little while—not too long ago in history—and look at what the National Party said. We find that Max Bradford—the man who would take away people’s holidays and who is now on a permanent one—said that National would repeal and replace the Act. He was talking about the Employment Relations Act. 
Hon Paul Swain 
: When was that? 
Hon MARK GOSCHE 
: That was in August 2000. National’s then leader Jenny Shipley—National changes leaders and spokespersons so quickly that one needs a list as long as this to keep up with what the National Party’s policies and statements are—swore that National would repeal the legislation as soon as it reclaimed the Treasury benches. That ain’t going to happen in a hurry. The next leader Bill English said he would repeal the legislation because he thought it had too many problems. In October 2003 Don Brash said that most definitely National would scrap the Employment Relations Act. It was reported: “Brash views a less regulated labour market as the key.” John Key said that under National people should expect quite significant changes to be made to the Employment Relations Act and that there had been nothing wrong with the Employment Contracts Act. He should ask the employers and the workers what they think about that. 
We now have Dr Brash saying that he thinks the business community is broadly happy with the Employment Relations Act. So the Act is not the evil that it was but this bill is the evil! National said the Act would drive down productivity drive up unemployment make workers and bosses worse off and make us worse off than the rest of the world. 
Hon Paul Swain 
: What did they say then? 
Hon MARK GOSCHE 
: National said that all of that would be a result of the Employment Relations Act and now Dr Brash says that it is actually working quite well. Every employer who came along to the Transport and Industrial Relations Committee—and Roger Sowry can vouch for this—said that he or she thought the Act was going well. Mr Prebble asked employer after employer what they thought of the Act and they said they thought it was going pretty well and that we did not need to fix it. Some of us have memories that go back for more than 3 minutes and we can remember employer after employer making submissions on the original Employment Relations Bill and saying that it would bring the world to an end unemployment would shoot up strikes would happen more often and productivity would come down. None of that has happened and at least the employers have the honesty to say that that is the case. They are pragmatic honest people in the main and they say that the Act is working pretty well. 
Some employers had some difficulties with this bill. The select committee listened to them and we have come back with a changed and an improved bill. We listened to their concerns about multi-employer collective bargaining and the offending clause is gone. We listened to submission after submission from employers and employees on equal pay. That has been taken out because the select committee did its job and listened to submitters. What does the National Party do in terms of listening? It is impossible to expect people who are dead to listen and that is why the leader of the National Opposition whatever his name is cannot figure out what his position on the bill is or what it will be next week or the week after—and certainly not next year. We will be listening with interest to the outgoing Roger Sowry who got on top of this bill and understood it. He does not agree with every aspect of it but he knows that it contains some good things. He has a smile on his face now because he is getting out of the National caucus. He is going to get a real job in the real world instead of being part of  
Six Feet Under 
 or a New Zealand version of that programme. 
Of course Dr Wayne Mapp who has a law degree knows nothing about the law in respect of employment relations. He did not even know that the previous National Government he was a member of gave workers days in lieu for working on public holidays so he will be able to contribute greatly to this debate on industrial relations! Dr Mapp has not even caught up with what National did when it was last in power so we can expect him to have a different view from that of Dr Brash and Mr Sowry. Then there is the whip who managed to get those dull-faced sleepy people on the Opposition side to come down here to the House to dutifully listen to their leader make a terribly boring speech. Most of them were desperate to keep their eyes open during 10 minutes of what passed for a speech on employment relations law. Simon Power’s great desire was to be the spokesperson on industrial relations. He is terribly disappointed that he got the whip’s job and that Wayne Mapp got the job he had wanted. Wayne Mapp is disappointed because he probably wanted to be given something more important than industrial relations. 
The National members know they are on a loser. The days are gone of National’s tired old mantra of attacking unionists as if they were evil and devilish. Those days are gone just like the National Party’s days are gone. Nobody listens to that sort of nonsense any more. The National Party has no policy in the employment relations area. One minute it says that the Employment Relations Act is evil terrible Third World legislation and then its leader says that now he has had to listen to employers who tell him they are broadly happy with it. National does not have a policy at all other than to come along here to the Chamber to whinge and put us to sleep with boring speeches from its so-called leader. It is just sorrowful what has happened to the National Party. Jenny Shipley was passionate about it; she hated unions with a passion. When Jim Bolger got his rancour up he would have a good go at the unions even though as a former Minister of Labour he knew that pragmatism was much more important than ideology. Of course Bill English has gone on to greener pastures now attacking kindergartens and whatever else he is up to. For poor old National it is like the last one out the door gets the industrial relations job. That job used to be a strong point of National because it used to think that the class war still existed that workers were evil and that unions were even worse. 
However most people have come into the modern age and realise that there has to be legislation that gives some equality to people on both sides of the bargaining table. That is what this bill seeks to do. It defines good faith so that people can understand it and it provides for proper bargaining so that people cannot just turn up and say that they do not want something. That is not good-faith bargaining but it is what the law as it was applied allowed some employers to do. We have defined good faith. We have given clear indications of what an employer can do if he or she wants to dismiss an employee and what the test should be. It is odd that people complain about personal grievance procedures but who opened that up to the lawyers and the ratbags? It was the previous National Government under the Employment Contracts Act. That was one of the worst things that ever happened. We look forward to Wayne Mapp moving an amendment to go back to the days before the Employment Contracts Act and stop all the ratbag advocates who take personal grievances for the fun of it so that they can screw money out of decent employers. We look forward to the National Party putting up a Supplementary Order Paper or an amendment on that one. We will be waiting a very long time for that to occur. National whinges but takes no action and it has no policy or ideas. 
We have done something in this legislation to make the law clearer. We are looking after the most vulnerable workers in New Zealand—those who have been treated like cattle and have been contracted out without any protection of their employment. This bill contains very important legislation and I am very proud of it. I have seen far too many workers be screwed by the system of contracting out. They now have some protection and that is the way it should be. This bill is very good. I thank the other members of the select committee and I look forward to the passage of this bill. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I start by explaining quite categorically that New Zealand First is not anti-union. Nor are we worried about the existence of unions; they do not scare us as they appear to do to some of my colleagues on this side of the House. In fact we will go a little bit further and say that in many areas of industrial relations the climate is better for having unions. But that is not to say and I make this quite clear that we will support this bill. We will not and I will tell the honourable members over there precisely why. 
Hon Mark Gosche 
: What about the workers? 
PETER BROWN 
: Exactly what about the workers! The member should read part of the opening sentence of the third paragraph of the original bill that went to the select committee which states: “To achieve this the Act acknowledges the inherent inequality of power in employment relationships and seeks to balance the interests of employers and employees through the promotion of unions and collective bargaining”. That scares a number of employers in this country witless. It really scares them. I tell honourable Government members that with power comes responsibility or to put it more correctly responsibility brings power. 
The employer has far more responsibilities than the union or the union official or the employee. First the employer is responsible for the location of the very business where it is situated the site it is on and how it is structured. The employer is responsible for the organisation how it functions and what it is trying to do etc. The employer is responsible for the management and the administration team that is in place to make a successful business. The employer is responsible for financing the business and takes the financial risk. So far the employee has had no involvement in any of those categories. 
The employer is responsible for the equipment maintenance of the equipment and all the costs that go with maintaining proper equipment. The employer is responsible for health and safety. I know that employees have a role in that but the buck stops finally with the employer. The employer is responsible for the development and marketing of the business and for industrial harmony. The employee does not have a say in any of those and if he or she has a say it is a relatively minor say. The employer is responsible for staff morale. The employer and the company suffer if morale is not high or not adequate. 
I find it and New Zealand First finds it disturbing that this legislation sets out to promote the inherent inequality of power in employment relationships and seeks to balance the interests of employers and employees. That we find alarming as do many employers in this country particularly small to middle-sized employers. 
We come from the position that the Employment Relations Act is working pretty well. Many employers told us: “If it ain’t broke don’t fix it.” If we heard that once we heard it more than a dozen times at the select committee. New Zealand First voted against the Employment Relations Bill when it went through the House. We were very concerned but at the select committee we modified the first bill and got it into a semblance of acceptability. One area in that bill and I make note of it is the mediation system which is working very very well. A very positive move was to introduce the mediation system in the Employment Relations Act as against what occurred under the Employment Contracts Act. 
 So there are aspects of the Act that are working exceedingly well. Having said all of that and having made clear that New Zealand First will not be supporting this bill I say that there is one aspect that causes us concern and that we will want to look at in some detail. I am talking about free-riding or freeloading which is a concern felt by unionised working people. I know many union officials and very moderate people at that who are absolutely brassed off when the conditions they have negotiated are passed on to somebody else— 
Hon Paul Swain 
: Who has not paid a fee. 
PETER BROWN 
: —who has not paid a fee. That was a real issue for the select committee to wrestle with. New Zealand First is of a mind that members should look closely at the Minister’s Supplementary Order Paper which addresses the bargaining fee arrangement. [ 
Interruption 
] My National Party colleague is talking in the background and I cannot quite hear what he is saying but I gather he is not agreeing with me. That issue alone is worth examining and New Zealand First will be looking at it in some detail in the Committee stage. We understand the concern about freeloading or free-riding or whatever we want call it.. We will look at that positively. On a personal note I have examined the Minister’s Supplementary Order Paper and I believe that at least two clauses should be added. I see the Minister is taking notes. First I believe that employers should have some say about whether they will allow a bargaining-fee arrangement. 
Hon Paul Swain 
: If the employer decides no that’s it. 
PETER BROWN 
: The bill does not make that clear so it should be tidied up. Secondly before a secret ballot is taken there should be some outline guidance or structure as to what the bargaining fee will be. We do not want a situation where at the last minute employers say that everybody voted for it and then people find out it will cost an arm and a leg. I know of employers—and I see the Minister is taking a good deal of note—who probably will be prepared to pay that bargaining fee themselves by negotiating with a union and paying a fee so that it is all clean-cut. Obviously I cannot commit them to it but I know that some employers think along those lines. New Zealand First might well be putting forward an amendment but if the Minister is taking note of the points raised by us and wants to produce his own Supplementary Order Paper that takes those into account then we will be more than pleased. 
We believe that the remainder of the bill could lead to and is an attempt to lead to more people becoming unionised. We know that basically 20 percent of the workforce in this country is in a union and 80 percent of the workforce is not. We believe there is an underhand attempt in this bill if I might be so bold to get people to become more union orientated and join a union. 
Dr Wayne Mapp 
: That’s the whole point of the legislation. 
PETER BROWN 
: I suspect that it is. 
Hon Paul Swain 
: They can opt out. 
PETER BROWN 
: Yes they can. We would like—[ 
Interruption 
] Mr Mapp will get his turn in due course I suppose. 
Dr Wayne Mapp 
: I hope so. 
PETER BROWN 
: Well I do not. But never mind he will. That is why we are worried about supporting this bill any further than looking at that bargaining-fee arrangement. We would prefer and I want thison the record that collective agreements were not the monopoly of unions. In Australia non-union people can combine and have a collective agreement and given that New Zealanders are not inferior in any way shape or form to Australians this bill is an ideal opportunity to open up collective agreements to non-union people and any others who want to have a collective. We believe that that is the long-term solution and contrary to what Mr Mapp said we believe that the bargaining fee if adopted will be an opening to allow for collectives to be negotiated by non-union people in the longer term. 
Dr Wayne Mapp 
: True. But it’s not on the Supplementary Order Paper. 
PETER BROWN 
: The member is agreeing with me now I think. Apart from the bargaining-fee arrangement which we will take a genuinely sincere look at—and the Minister was taking notes of my points—we will be opposing the bill. 
SUE BRADFORD (Green) 
: 
 The Green Party is pleased to be supporting the second reading of the Employment Relations Law Reform Bill this afternoon. 
Dr Wayne Mapp 
: A Labour-Green coalition. 
SUE BRADFORD 
: Great stuff! Despite the enormous amount of work that went into drafting and considering the Employment Relations Act in 2000 it is inevitable that a number of issues would eventually need tidying up once the Act was put into practice. However despite the usual protestations of many employer and business submitters I do not think that either the original Employment Relations Act or this amending bill is in any way radical or extreme. I am sure the economy of New Zealand will not collapse as a result of the introduction of bargaining fees or the protection of vulnerable employees’ interests in some change-of-employer situations. 
In the Transport and Industrial Relations Committee process this time round I was particularly struck by the number of submitters from the employer community who started off by saying as Mr Brown has already mentioned that the Employment Relations Act is working pretty well and “If it ain’t broke don’t fix it.” but then went on to warn that businesses would go under or leave the country as a result of the draconian measures proposed in this bill. What the submitters seemed to have forgotten is that all the same warnings of imminent disaster were made in 2000 often by the same organisations and the same people and as a result of their crying wolf once too often the power of their prophecies has been somewhat diminished. 
All that the Employment Relations Act and this amending bill are doing is taking some small and useful steps towards redressing the imbalance of power created by the introduction of the Employment Contracts Act and the benefit cuts in 1991. There is a lot more that should be done to rectify the situation than the Government has deemed possible with this bill—for example in the protection of low-paid workers and casual workers and stronger safeguards against freeloading. But of course the Green Party supports the bill’s intent and direction as far as it goes. 
We are particularly pleased to see that finally some protections will be put in place for certain groups of employees whose continuity of employment and conditions are threatened when the business they work for is restructured or sold. In 2000 we tried really hard alongside some of our union colleagues to make sure that what was then called the “transfer of undertakings” clause was retained in the Employment Relations Act but unfortunately at that time Labour saw fit to beat a retreat in the face of big-business pressure. I commend the Government for sticking to its principles a little more strongly this time around and it is great to see that people who work in the cleaning food catering caretaking orderly and laundry services in the public sector and aviation sector and those who work in the cleaning and food-catering services in the private sector will at least now have an arrangement in place that will go a long way towards safeguarding their wages and conditions when their jobs are sold out from under them or otherwise restructured. 
A second area of particular interest to the Green Party has been the vexed question of how to do more to prevent non-union members from freeloading off their union colleagues in the same workplace. Since the period of mass de-unionisation following the introduction of the Employment Contracts Act this has become an entrenched and difficult problem with workers who pay union fees each week feeling naturally somewhat aggrieved that their colleagues in the same workplace doing the same or similar work are often given all the benefits of a collective agreement negotiated by the union but without ever having to pay a cent towards the costs incurred. Even research carried out by the Department of Labour itself in 2003 evaluating the short-term impacts of the Employment Relations Act reported: “Free-riding by individuals on collective terms and conditions has become commonplace in many organisations.” When the department asked non-union members why they did not join the union over 65 percent said it was because they could get the benefit without joining. 
The bill as reported back makes welcome but limited progress on this issue with the introduction of new sections to the Employment Relations Act aimed at preventing the undermining of collective bargaining and agreements by making it a breach of good faith in some circumstances for an employer to pass on terms and conditions and in particular when it is clearly the employer’s intention to undermine the collective. 
 The Green Party has also been pleased that the Government has seen fit to go a step beyond this by agreeing that the Employment Relations Act should also be amended to allow for bargaining-fee arrangements to be negotiated where both the employer and the union agree and that non-union employees who do not want to pay a fee or join a union in these circumstances will then have to undertake their own individual negotiation without any kind of automatic pass-on. While the amendments around bargaining fees that the Government is putting forward at the Committee stage do not in our view go far enough at least those amendments will be a further small but significant step in the right direction. 
A third area of this bill in which the Green Party has taken a particular interest has been the erstwhile Part 2 which repealed the Equal Pay Act and the Government Service Equal Pay Act and replaced them with new equal-pay provisions. We found ourselves in agreement with the many submitters who argued that given all the good work that has been done in recent years on equal pay for work of equal value it would be a retrograde and undesirable step to make such a legislative change without including pay equity as an essential component. The Green Party felt it would be better just to ditch Part 2 and for the Government to consider the results of the work of the task force on pay and employment equity in drafting up a new and separate bill covering both equal pay and pay equity. We are pleased that in the end the Government supported this position and agreed to delete Part 2. 
It will be incumbent on all unions women’s groups and others who continue to fight so hard on this issue to make sure Labour sticks with the statement in the commentary on the bill: “The majority looks forward to the development of robust equal pay and pay equity provisions being introduced in the future.” We do need to make sure that this is not put off into some never-never land but remains firmly on Labour’s agenda over the coming months. 
Another welcome change to the bill achieved as a result of the select committee process has been the improvement to amendments dealing with the implementation of a code of good faith for the public health sector. We were very concerned that the bill as originally drafted would have undermined all the good work that was happening between health unions and their district health board employers on developing a code and would have given the Minister undue influence when industrial action took place. What we now have is a real improvement with the inclusion of the now agreed-upon code in the schedule and a matching of clauses in this area with other good-faith provisions elsewhere in the bill. 
Overall I commend the Government for being willing to listen to submitters and for making these and other improvements to the bill as we have gone along. This is not to say that this bill is perfect—far from it—but it is a small but useful step towards further realising a fairer and more productive industrial relations environment for the benefit of both workers and employers. 
Hon RICHARD PREBBLE (ACT) 
: 
 I rise on behalf of the ACT party to speak to the Employment Relations Law Reform Bill— 
Darren Hughes 
: The only one left. 
Hon RICHARD PREBBLE 
: —dream on—and to advise the House that this bill should be rejected. It is our view that the bill will result in a significant deterioration in industrial relations and in fairness in the workplace and that there will be a loss of productivity and over time a loss of jobs and growth. This bill is not as various Government Ministers have attempted to describe it a tinkering with the Employment Relations Act. The proposed changes are comprehensive and they will have a significant impact. 
On that point it is true that I said that the Employment Relations Act when it came in would have a significant impact. What Labour members fail to mention to the House is that amendments made to it—some moved by myself and some moved by National members as a result of submissions from employers—meant that it was significantly better legislation than the original bill that the Labour Government had introduced. [ 
Interruption 
] The member should listen; this is important because a number of the very damaging amendments and clauses in the original bill have now been reintroduced in this amendment bill. 
What is wrong with the bill? Let me take the House through some of those amendments. First the bill extends the meaning of good faith in terms of employment relations beyond the common law obligations. The common law obligations are well known to lawyers and they are quite understandable. Good faith basically means that one has to deal with people with mutual trust and confidence. But the bill extends that term to mean whatever the Employment Court decides what it means. Some future Employment Court judge—whom no doubt we will criticise for being an activist—will decide that the good-faith provision has some extraordinary meaning that perhaps even members opposite have not conceived of. That is what happens when Parliament drafts vague amendments of that sort. We in this Parliament are not saying what “good faith” means; we are actually saying that any judge—appointed by Margaret Wilson—can make any sort of interpretation of good faith. That of course will create total confusion in employment relations and will lead to much more aggravation than there is under the present law. 
The next problem is this. If the court decides that there has not been good faith the Employment Relations Authority itself is entitled to determine what the terms of employment will be. So if one is an employer employing 50 people and one has worked out one’s budget and worked out how much the employees will be paid but an employee says that he or she was not dealt with in good faith because when that employee put some proposals to the employer the employer said “No” the State steps in. Members might think it is pretty reasonable to say “No” but we just heard from a Labour member that one cannot say “No” any more; one has to keep talking for hours. Well perhaps one wants to get on with making one’s widgets! [ 
Interruption 
] Then what happens is that the State—not the employer but the State which does not have to provide the wages each week—decides what all the terms of employment should be. There is a name for that and it is communism. That is a measure that we are introducing and its final ramifications could be to deter—[ 
Interruption 
] The member opposite has no idea what he is passing and he has no idea what it will actually mean. We could have the Employment Relations Authority setting terms and conditions of employment that would bankrupt the company. That is what this Government is prepared to do. 
The next purpose of the bill is to promote collective bargaining. Members have said that they heard employer after employer praising the present law. That is actually not quite right. What happened was that employer after employer said there was no need to change the present law. I do not recall hearing a single employer in the submissions I heard—I did not hear all of them but I heard a large number—say that he or she wanted collective wage bargaining. In fact what employers said was that they wanted the ability to deal with their employees directly. They did not want to be forced by unions and the State to have to sit down with their competitors and tell them what they were paying people or to have their competitors decide what the wages and conditions in their factory should be. I thought that the position that the employers put was a pretty reasonable one. 
We then have the most extraordinary abuse of State power in that the bill states that it is a breach of good faith for an employer to pass on the terms and conditions of a collective agreement to non-union members. The Government has said that it is a breach of good faith only if the employer does it in order to undermine the collective agreement. 
Dr Wayne Mapp 
: Just the effect is all that is required. 
Hon RICHARD PREBBLE 
: That is right. The member who interjected is a member of that committee and learned in law. He said that it is a breach of good faith if it has the effect of undermining the collective agreement. 
Well what are these amendments designed to do? They are certainly not designed to improve productivity. They are certainly not designed to promote job growth. The real reason for these clauses is to promote trade union membership and trade union power and they most certainly do that. Well is there a case to do it? If we go and ask employees whom members opposite say they represent we find that 90 percent of private sector employees do not belong to trade unions. So 90 percent of employees—outside the Government’s own workforce which is encouraged by I think illegal measures to belong to unions—are basically saying they do not want to belong to unions. They are quite happy to deal with their employers themselves and they do not need the help of the Council of Trade Unions and the like. But here we have a bill where the Government is saying that it knows better and it is going to help trade unions. 
The Government is intending to introduce—I do not know whether the Supplementary Order Paper has arrived yet—a freeloader clause whereby we will have compulsory unionism without the bother of the union having to represent members. It is— 
Rodney Hide 
: Just pay. 
Hon RICHARD PREBBLE 
: Yes. If the union bargains with the employer for maybe just five people the 90 employees there who did not belong to the union will get a bill for the fact that the union bargained with the employer. We received no evidence at all that trade unions have actually introduced better conditions. In fact employer after employer came along and said that when they had renegotiated their agreements nearly all the advances and new ideas had come from them and the unions had just sat there and said: “I want I want.” Well why should one have to pay a bargaining fee to a union that one does not even belong to? 
I say to the House that that is an American idea. Yes it happens with American unions in American unionised states. What happens to that bargaining fee? Is there any requirement that it has to be spent for the advantage of the person who pays it? No there is not. There will be no requirement that it be spent on bargaining. We all know where most of that money will go. It will go to promote the Labour Party. This bill is actually a bill between the Labour Party and the trade unions whereby the Labour Party will give them a bargaining fee—wink wink nod nod—and next election the unions will give a large part of it back to the Labour Party. It is a sort of—I was going to say deal—[ 
Interruption 
] Well it is worse than that; it is actually a triangle because the bureaucrats in the Department of Labour who under the Employment Contracts Act—which employers said they liked very much— 
Darren Hughes 
: We call it the Pipitea clause. 
Hon RICHARD PREBBLE 
: The member says he calls it the Pipitea clause; I call it a monstrous step back towards compulsory trade unionism. 
PAUL ADAMS (United Future) 
: 
 I rise on behalf of United Future to speak on this bill. After hearing all the previous speakers I say that the biggest sign or indicator to the Government that this legislation is bad legislation is that the only other party I have heard supporting it in the House so far is the Green Party. That has to be a wake-up call for the Government if nothing else is. 
But really there is no better situation for a good working relationship between an employer and an employee than the current working environment. The employer needs staff and staff numbers are short at the moment but of course every worker in the country needs a job. So I think there is a great opportunity there for the worker and the employer to work together and negotiate as the Hon Richard Prebble said a satisfactory working relationship. 
I want to raise some of the amendments made by the Transport and Industrial Relations Committee. Some of the changes seem to make good sense. The bill now acknowledges that it is possible that an employee in negotiating an individual agreement may end up with pay rates and conditions that are the same as those negotiated as part of a collective agreement without it being part of some grand anti-union conspiracy. I suggest that under this legislation it will still be very difficult for employers to avoid the claim that they are undermining the collective agreement. 
This bill also gives employers more scope to withhold sensitive financial information when jobs are under threat. We do not want a situation where a company that is contemplating restructuring is forced to share commercially sensitive information with the unions which have the opportunity to comment and which may then publicise that information in an attempt to put pressure back on the company. That is hardly acting in good faith. It is also a serious threat to employer autonomy. After all employers are the ones who are risking their capital that they have invested in the business as Peter Brown adequately pointed out to us. 
However the committee did not get rid of the provisions that allow collective agreements to recognise the benefits of that agreement through a bargaining bonus. Last year over 6000 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 new collective agreements. At the time 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. Only unions can negotiate collective agreements so the one-off nature of the bargaining bonus means that it is effectively restricted to union members. It does not extend to non-union members who are then signed up to the same terms and conditions as in the collective agreement. 
If we look at the average bonus received $712 we see that it would cover each member’s union dues for the year. The Minister of Labour must have been worried about the legality of the bargaining bonus for Public Service Association members because clause 8 amends section 9 of the principal Act by adding subsection (3) which states: “this Act does not prevent a collective agreement containing a term or condition that is intended to recognise the benefits—(a) of a collective agreement: (b) arising out of the relationship on which a collective agreement is based.” 
To further discourage free-riding the Government members on the select committee even encouraged the Minister to bring in a Supplementary Order Paper containing a provision that means that employers and unions can agree to take money off non-union workers as a bargaining fee. Fonterra and the Dairy Workers Union tried to get non-union workers to pay the fees of the union members who had negotiated a collective agreement but it was thrown out of court. The amendment put forward on the Supplementary Order Paper will effectively override that judgment. In theory it enables non-union employees to opt out of paying the fee but members can imagine the situation of a new employee who has just started working in a job where a collective agreement exists. The current law requires a new employee to be put on the collective agreement for the first 30 days and he or she is then given the opportunity to join the collective agreement or to negotiate an individual contract. It is really a Hobson’s choice. The employer cannot pass on the terms and conditions of the collective agreement to the employee in the form of an individual agreement because the employer would risk opening himself or herself up to a claim that he or she had undermined the collective agreement. The employee is then faced with the choice of remaining in the collective agreement thus retaining the current terms with the possibility of receiving an additional bargaining bonus when the agreement is next negotiated or negotiating an individual agreement that is likely to offer him or her less than the collective agreement does and that may be reduced again by the amount of a bargaining fee. Under this bill the unions will have the ability to double dip by both gathering a bargaining bonus as part of the collective agreement and taking a bargaining fee off non-union employees. 
This bill started out as a way for the Government to pay back its union mates by making it more difficult for employees to avoid joining a union and the select committee’s recommendations only reinforce that. It is evident in the preference given by the legislation to multi-employer collective agreements which comprise only 1 percent of agreements yet dominate in the public service. Pushing uniform conditions on the private sector does not recognise that unlike public sector agencies individual firms are in competition and want the freedom to change the wage structure of their employees for competitive advantage. This bill denies the private sector the legitimate choice between collective and individual agreements. 
The expectation that a collective agreement should be concluded is nowhere more evident than in the provision that places the burden of proof on employers who have to provide a genuine reason not to conclude a collective agreement. An employer may not want to agree to a collective agreement for a very good reason such as few of his or her employees belonging to a union or the union making unreasonable claims. Yet if the union persists the law is behind it and the Employment Relations Authority could force the employer to agree to a collective agreement anyway. 
It is those sorts of provisions and particularly the numerous references in the bill to all the penalties that can be applied against employers for breaches of the legislation that seem totally at odds with the object of the Act which is to build productive employment relations through the promotion of mutual trust and confidence. Therefore United Future will continue to oppose this bill. 
DAVE HEREORA (Labour) 
: 
 I rise to talk about two issues surrounding the bill. One is quite a passionate issue for me as during the mid-1990s I dealt with the contracting out of workers. I would like to revisit the clause in the bill that offers protection to workers in transfer of employment situations. It will provide certainty about what happens to workers when a business or part of a business changes hands as all employment agreements will now be required to address what processes will be followed if the business is sold or if work is contracted out. 
There will be additional protections for workers categorised as vulnerable under the Act. Vulnerable employees—people who work in certain sectors where businesses change hands often—will be given the right to transfer on the same terms and conditions and they will at least have the chance to make a case for redundancy. In my experience in the field of contracting out the practice of businesses changing hands was quite rife in the mid-1990s particularly in the public hospitals. Every public hospital in the Auckland region had contracted out what was termed “non-clinical core services”. 
One of the hospitals in particular had contracted for an international company to take over the service and that company lasted less than 12 months before it went bankrupt. The effect of that bankruptcy left 300 workers—overnight—with no terms and conditions of employment. I think that most important was the hurt of it all that surrounded the workers’ service—the service given over 15 to 30 years by that 300-strong workforce who lost their redundancy provisions as a result of the bankruptcy. Half of that workforce is currently employed back in-house and we have had to renegotiate terms and conditions for the remaining half but we can imagine the instability that has occurred as a result of a changeover from one employer to the other particularly where redundancy provisions have lapsed as a result of the problem. 
I think that under this change that has been proposed we now have some certainty for those workers and I am sure that giving workers the opportunity to maintain their terms and conditions upon transfer from one employer to another is a sensible move by this Parliament. It is a sensible move to maintain some certainty for workers particularly those workers who have large families and I am sure that the security this bill offers will provide them with the chance at least to apply for a new job if the service is transferred to another employer. 
The other area I wanted to talk about was the issue raised by the ACT member Mr Prebble in terms of the bargaining fee. Often I have been in the situation of negotiating employment agreements on sites and I have found a huge division in relation to the workforce at those sites. Obviously the division was caused through union members in negotiation as opposed to non-union members and when we were successful in negotiating decent wage increases those increases were often passed on to non-union members. It caused a huge moral problem on the site for workers to the extent that I felt in some cases it could have led to a health and safety issue. 
I would also like to revisit the Minister’s intention. I recall that he said he was looking at bargaining-fee arrangements to be negotiated where it is agreed that the terms and conditions of effective agreements are to be passed on to non-union members on individual agreements. Non-union employees who do not wish to pay the bargaining fee will be able to opt out of the arrangement. The Minister also agreed with the recommendation and is looking at releasing a Supplementary Order Paper proposing that where a union and an employer agree on a bargaining-fee arrangement affected employees will take part in a ballot to decide whether the bargaining-fee arrangements should operate in their workplace. I think that that is a positive move at least to address the discrepancy between those two groups of workers. The issue about providing a fee of a sort for non-union members will I hope enhance and reduce tensions on the site between the two groups. Obviously I believe that that is a key fundamental from my experience of being in those situations and negotiating those terms. 
The purpose of the bill is to amend the Employment Relations Act and the key amendment made in this Employment Relations Amendment Bill is about fair employment law. It is about resolving disputes without lawyers—if that is possible—about giving employees a genuine choice between individual and collective employment agreements and about creating more certainty about what happens to employees when a business is sold or transferred. I think the bill represents a good balance of practical and realistic measures that will strengthen the Act and further promote positive employment relationships. After all that is the key to any industrial situation. Claims that the amendments are about compulsory unionism national awards or compulsory arbitration are absolutely wrong. 
The bill is about providing a balance in employment relations. Opposition parties would like that balance to be tipped in favour of the employer but often when we are talking about equal balance we need to have some assurance that workers do have an opportunity at least to negotiate on an even playing field with their employer. They should have that opportunity to be able to put forward claims and negotiate their way through. I suppose that in looking at the principles of good faith we hope that the principles will at least set a platform for negotiation in situations where often—and I have been in those situations—employers just refuse to negotiate and where there is not even the opportunity to place claims on the table because some employers refuse to get around the table so that at least that can be achieved. 
I am confident and hopeful that these moderate changes may provide an opportunity for workers at the very least to be able to sit at the table and talk through the issues that I think both the employer and those workers have in common. In my brief association with the Transport and Industrial Relations Committee before I was released from the committee I heard a number of submitters talking about looking at various changes. From what I observed I think the select committee has done a good job in addressing those changes. 
Dr WAYNE MAPP (National—North Shore) 
: 
 Today a book is being launched. It is about that infamous trade unionist Fintan Patrick Walsh. On this very day this Government this Labour-Green coalition— 
Hon Judith Tizard 
: Eh? 
Dr WAYNE MAPP 
: Yes that is exactly what the case is. The Labour-Green coalition is launching New Zealand back into that era of the “Black Prince” of unionism because these are the facts. There are 2.1 million people in the workforce and 1.7 million have chosen not to belong to unions. 
Hon Richard Prebble 
: How many? 
Dr WAYNE MAPP 
: The number is 1.7 million or 80 percent of the workforce. Twenty years ago—up until 1991—it was compulsory to belong to a union but when people had a choice they voted and they voted to opt out. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Dr WAYNE MAPP 
: Prior to the dinner break I was making the point that 80 percent of New Zealanders when given the choice have chosen not to be members of a union. They have decided they could better spend the kind of money that goes on union fees—several hundred dollars per year—on themselves and their families. More particularly they will not be bound by the cloth-cap ideology that infects so many members on the other side of the House. 
This bill is clear. I have to say about the Government that it is honest in its intentions. It wants to force people back into unions. That is the only possible explanation for this bill because the evidence before the Transport and Industrial Relations Committee was compelling. Not one employer wanted this bill. Did we hear demands from workers up and down this country for this bill? The answer is no. They have already voted with their feet; 80 percent have said no to unions. The only people who want this legislation are the unions and the Government has caved in to them. 
Why did the Government do that? It is because they are one and the same. The members of this Government are essentially unionists. That is their background tradition and history. If a union asks the Government to help it out its response is: “How can we do that? How high do we have to jump?” The Government wants to force New Zealanders back into unions. It wants to deny free choice. 
The Government is ignoring all the evidence. The OECD in its economic survey of New Zealand made the very clear point that this legislation would reduce productivity harm the progress of our nation and set back this country. Yet that is precisely what the Government is doing today. It is setting back this country by reducing choice and restricting freedom. 
Let us look at the bill. Under this bill “good faith”—or rather the breaches thereof—will be subject to a fine of $10000. We will soon be the only country to have penal provisions for breaches of what are essentially negotiation positions. Let us be honest: negotiation is a robust process. People set out their positions to the maximum yet the Government’s approach is to say that if they do that they will be fined $10000. It is the absolute antithesis of good faith to be providing fines. 
It will now be virtually impossible for employers to offer to employees an individual contract that is the same as a collective contract. I know the Government says that that is not true but the Government has put in a whole series of pernicious measures that have precisely that effect. Every time that happens the unions will argue that it undermines collective contracts and therefore is a breach of good faith. Even if an employer does not intend to do that it will be sufficient for the union to show that it has the effect of undermining the collective contract. 
What does that lead to? It leads to a fine and that is wrong. If the unions have their way we will see a record of the way in which firms conduct their negotiations. If the unions are successful in showing on a number of occasions a breach of good faith under proposed new section 50J the Employment Relations Authority—which has been absolutely stacked by this Government with unionists—will then set the terms and conditions of an employment contract. So what will we have? We will have unionists dressed up as authority members fixing the terms of contracts—and we can just bet they will favour the unions. That is why this legislation is pernicious. 
Further employers will be forced to stay at the table to negotiate everything on the table. That is another means for multi-employer collective contracts. The employer cannot object in principle which is what proposed new section 33 states. Employers cannot object in principle to a collective contract so they will be forced to sit at the table and negotiate. The Government says that employers will not have to attend the first meeting but in reality they will because if they do not they will be in breach of good faith. The Government has constructed a catch-22 scenario whereby employers will be forced into multi-employer collective contracts. 
We have seen the first shots of this campaign. The Auckland watersiders went on strike. They want a collective across the entire country. They had picketers from Tauranga and Australia. That is a return to the bad old days the days of Fintan Patrick Walsh with a single union contract across all the ports. 
The unions will pick their targets. They will pick the transport industry the ports and the freezing works because they know that is where our economy is vulnerable. Our economy is uniquely vulnerable in that regard. We are more dependent than any other economy on the export of primary products produced from a few large facilities. If we block that export we will block our economy; if we give those powers to the unions we will reduce growth in our country. We have seen it before. That is precisely what happened in the 1950s 1960s and 1970s. This country paid heavily for that with low growth and low productivity and I might add that the Chair knows the truth of that. We have had growth only when we have provided freedom. That is what has happened. The growth has occurred in the last 15 years when there has been freedom so this bill is a return to the bad old days. 
Dr Brash referred to a particular point that the Government has snuck in even in this legislation—a Treaty of Waitangi clause. Parties to public health contracts are required to recognise the principles of the Treaty of Waitangi. That is what clause 7 of the code proposed in schedule 1AA states. Does that mean that the Employment Relations Authority—and the all-knowing unionists on that outfit—will now interpret the treaty for the benefit of workplaces up and down the country? Is that the kind of nonsense this Government would deliver to employment relationships in our country? I say frankly that that is ludicrous. The Government must surely realise the absurdity of that. 
I close on this point: National is fundamentally opposed to this legislation. We are of the view that it is totally wrong and we will repeal it when in Government. We will strip out from the Employment Relations Act all the provisions that relate to union preferences because we believe in freedom—freedom for New Zealand workers to make their choices and their arrangements. 
DIANNE YATES (Labour—Hamilton East) 
: 
 I think the only thing worse than that speech on this bill was the speech by Dr Brash. Both speakers Dr Mapp and Dr Brash have shown a complete lack of understanding of the history of New Zealand. Both have shown us— 
Hon Roger Sowry 
: David Bennett has got this lady. She’s gone. 
DIANNE YATES 
: That member can have his turn to speak in a minute. Both those members have shown us that they have not read the bill. Both of them are going on about something called the bad old days without realising that they are now living in the good modern present day. I support this bill and I say to Dr Mapp that he has forgotten what it is like to be an 18-year-old who is going for his or her first job and trying to negotiate a salary. There are many people who have forgotten about the realities of employment; they have been here in the House for too long. They have been with the rich and the powerful for too long and do not understand what it is to go for a job to negotiate a salary and to work as an ordinary human being who is trying to make a living in this world. 
Hon ROGER SOWRY (National) 
: 
 National is totally opposed to the Employment Relations Law Reform Bill. It is interesting to see the Labour Party tonight. The member for Hamilton East Dianne Yates spoke for about 90 seconds on the bill. We know that she does not have her heart in it. David Bennett will win Hamilton East because we know that the member for Hamilton East has lost the political fire in her belly. We saw that in the quite pathetic speech she gave tonight. It is understandable that the member was overlooked for Cabinet and now the voters of Hamilton East are about to overlook her for David Bennett. 
A whole range of businesses appeared before the Transport and Industrial Relations Committee to speak about this legislation. I will run through just some of them because I do not have time in 10 minutes to go through them all. I will talk about what businesses said in the select committee because Labour members have tried to change history to make it look as though businesses support the current employment law. They do not and they certainly do not support this bill. 
I will start with the tourism industry because I see that the Associate Minister of Tourism Dover Samuels is in the House today. I bet he has not been sitting with people in the tourism industry and saying that this bill is good. I was at a tourism meeting in his electorate in the far north just a few weeks ago and I can say that the people in the industry there are 100 percent opposed to this bill. I told them to go and see Dover Samuels and they laughed—just as Richmond Ltd representatives laughed at the prospect of talking to Rick Barker. Heinz-Wattie Ltd told the select committee that if it had known that this bill was to be passed it would not have brought the plant from Australia across to New Zealand. Fisher and Paykel told the committee that this bill would lead it to look at manufacturing off shore. 
A whole list of industries come before the select committee and opposed the bill. Spotless Services a cleaning company and one of the largest employers in New Zealand is totally opposed to it. Fletcher Building Progressive Enterprises Foodstuffs Sealord’s Top Town Cinema Westpac Auckland International Airport Armourguard—if one can name a company that company appeared before the select committee and opposed the legislation. But it was not just those companies that opposed it; the largest company in New Zealand Carter Holt Harvey was totally opposed to it. The New Zealand Refining Co. in Dover Samuel’s constituency was totally opposed to it. A whole range of other companies that the Crown owns and that we never hear from because they are full of Labour-appointed board members who cower to the Labour Government came out of their shells to appear before the select committee to say that they do not want this bill. Crown-owned Solid Energy fronted up and said that the legislation would be bad for the company. It does not want it passed. That was highly unusual. Crown-owned Air New Zealand appeared before the select committee and said that this bill would put it at a disadvantage. 
All those companies complained that the Government was not listening to business. The Government has decided in conjunction with the Greens that basically its mandate was to say: “To hell with business; we will proceed to pass this legislation because we need the union funds for next year’s campaign”. That is all that this bill is about. Effectively it will bring in compulsory union membership. 
Jill Pettis 
: Don’t be ridiculous. 
Hon ROGER SOWRY 
: The member for Whanganui knows that if employers in her electorate front up and pay to a non-union staff member the same wage as they pay to a union member they can end up before the Employment Tribunal. She also knows that the unions will use that to enforce compulsory union membership. The meat companies operating in her area told us that in the select committee. We asked them what their local member said and they said that she does not care. We know that. I think they are being charitable. I think that she does not understand but they said she does not care. 
Lakeland Health the Government’s own Crown health enterprise fronted up to the select committee and said: “This legislation will not work for us.” Lakeland Health said that it had two unions on site and that it could not pass the wage from one union on to the other. The staff are doing the same job. Nurses and cleaners are involved. Some nurses belong to one union and some to another. Some cleaners belong to the same union as a group of nurses. The unions will not sit at the table together and negotiate with Lakeland Health. This legislation means that Lakeland Health cannot pass on the same terms and conditions across its enterprise. So how can Lakeland Health work it? I think Mr Hereora was at the committee that day— 
Dave Hereora 
: It’s tough. 
Hon ROGER SOWRY 
: He says it is tough but I ask him what Lakeland Health should do. 
Dave Hereora 
: Treat its workers fairly. 
Hon ROGER SOWRY 
: How can it pay the same to both? 
Dave Hereora 
: It should treat its workers fairly. 
Hon ROGER SOWRY 
: Members will see that Mr Hereora does not have an answer. He does not know. I liked what he said in the select committee best of all. He sat in the committee and said nothing—not a word. But it was not for just a few hours that he sat there saying nothing; he sat there for day after day after day not saying a word. 
The best example we have to show why we oppose this bill involves a collective that runs a childcare centre in Manukau. It has to deal with the New Zealand Educational Institute. The New Zealand Educational Institute using the provisions of this bill fronted up to the childcare centre and said that the collective was required to negotiate with the union in 2 weeks’ time in Wellington. So the collective in Mangere began fund-raising to send someone to Wellington to negotiate because the union would not negotiate with it in Auckland. Is that good law? Do Labour members support that? They sit there in silence. 
The member for Hamilton East gave a half-hearted speech. This bill is all about pay-off compulsory unionism more union fees and more funds for the Labour Party coffers. It is not about growth new jobs productivity or any of those things. Mr Hereora sat in the Transport and Industrial Relations Committee and said nothing not just for hours but for days because he has come to Parliament to say nothing. He has not come for his own views; he has been sent here by the union as its doormat for this legislation to be passed through Parliament. 
This bill will damage this country beyond belief and it will be repealed by the next National Government. The test of this legislation is that there is no Labour member who will stand up in a workplace and defend it—not one. 
Dianne Yates 
: Yes there is. 
Hon ROGER SOWRY 
: Oh Dianne Yates will do it. Will she go to Gallaghers and defend it? 
Dianne Yates 
: Yes. 
Hon ROGER SOWRY 
: Right we will set the date—[ 
Interruption 
] Oh she will do it if the Engineering Printing and Manufacturing Union invites her and not the employer. That shows how weak and pathetic she is. That shows why she has gone. 
JILL PETTIS (Labour—Whanganui) 
: 
 That member does not have to worry—[ 
Interruption 
] 
Hon Roger Sowry 
: I raise a point of order Mr Speaker. I take deep offence at that member’s comment and I require it to be withdrawn and apologised for. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member has taken offence under Standing Order 116. He is entitled to do so. The member will withdraw. 
Dianne Yates 
: I said he was ignorant. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member will withdraw. 
Dianne Yates 
: I withdraw. I said he was ignorant. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member must not refer to the comment she made. She must stand and withdraw the comment. 
Dianne Yates 
: I withdraw. 
Hon Roger Sowry 
: I raise a point of order Mr Speaker. I think that if I called the honourable member an “old cow” you would require me to withdraw. The member used a phrase “ignorant pig”. I find that—[ 
Interruption 
] 
Hon Marian Hobbs 
: No she didn’t—[ 
Interruption 
] 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I refer members to Standing Order 84(3). 
Hon Roger Sowry 
: Unless the senior Government whip is going to take her pills she should be quiet. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: That is out of order. 
Hon Roger Sowry 
: I heard the member; I took deep offence at what she said. I require her to withdraw and apologise. 
Dianne Yates 
: I will withdraw if the member thought I said that but I did not say it. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The issue has now been dealt with. 
Hon Marian Hobbs 
: I was sitting—[ 
Interruption 
] Can we have silence during a point of order? 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Is this a point of order? 
Hon Marian Hobbs 
: Yes it is. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
:The issue has already been dealt with. I thought the member was seeking the call. 
Hon Marian Hobbs 
: I am seeking a point of order. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The issue has already been dealt with. The member has withdrawn and there the matter rests. 
JILL PETTIS 
: That member Roger Sowry does not need to worry about—[ 
Interruption 
] 
Hon Roger Sowry 
: I raise a point of order Mr Speaker. The member for Wellington Central called a comment across the House that I take offence at. I require it to be withdrawn. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I never heard anything but I was somewhat distracted at the time. If the member made an offensive comment the member will know that she has done that. Offence has been taken under Standing Order 116. I ask the member to withdraw. 
Hon Marian Hobbs 
: I withdraw. 
JILL PETTIS 
: That member Roger Sowry does not have to worry about going near any freezing works because he is already dog tucker. He has been rejected four times by the electorate of Otaki that he once represented and Darren Hughes on our side of the House has got that seat sewn up. He will probably hold it for as long as Jonathan Hunt has represented his seat in this House. 
The speeches from the National Party tonight have been like the year 2000 revisited when the Employment Relations Bill was introduced by this Labour-led Government with all those dire predictions of doom and gloom and the earth going to end as we knew it and with National members running around like Chicken Little saying the sky was going to fall in. None of it has come to pass at all and in fact their own leader who pops in here from time to time—40 minutes today probably on overtime— 
Hon Roger Sowry 
: I raise a point of order Mr Speaker. If it is in order to refer to the fact—and the member should get her facts right—of the over 1½ hours the National Leader was here she should talk about the half hour the Prime Minister spent here. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Can I remind members that under Speaker’s ruling 23/7 it is inappropriate to refer to the absence of members. 
JILL PETTIS 
: I was not referring to the member’s absence; I was referring to his presence—but never mind. I think this is delightful. I love these kinds of debates because boy does it separate us from them! I love it when we have debates about industrial relations because I am so proud to be a member of the Labour Party and the Labour Government. At times like this I just love it! 
I enjoy going to workplaces and talking about the industrial relations policies that have enabled people to be paid a decent wage. Who do those members over there think negotiated their wage increases for them? Did they do it themselves when they were 18 19 or even 30 and not in a position of power on the workplace floor? Do they think that their charm and good looks—and I am being extremely generous here when I say that but I am prepared to be generous—got them their wage increases? I do not think so. It is trade unions that have negotiated and won wage increases for the average New Zealander. I bet not one of those people over there said to their bosses when a pay increase had been won: “Oh sir take it back; I don’t want it.” How many of those members over there have ever put up their hand to an employer and said: “Oh please sir I don’t want it.”? Tito tito—that is all I can say. 
Any claims by those members over there that these amendments are about compulsory unionism shows that they had better enrol for a literacy course because they have clearly never read the amendment bill—never read it at all. All the scare tactics—actually they are pretty pathetic and weak—are not as good as they used to be from the National Government. 
Just as a little aside I say that if my grandfather who I am proud to say was a “red fed” was reincarnated and saw the National Party over there today and compared it to the National Party that he fought against to the marrow of his bones every day of his adult life he would not believe what was happening. He would say to me his granddaughter: “You’re not telling the truth. It can’t be the National Party.” because he fought every single living moment of his day for workers’ rights. 
The National Party was a strong powerful force when I was growing up. In fact most of my childhood was spent under National Government figures and we were scared of them. When we look at how powerful the National Party was during my childhood and my youth and then look at it today we see that it is just a pathetic shell. The claims that National are making today about this Employment Relations Law Reform Bill have absolutely no substance at all. National members would not have a clue about workers’ history in this country because they are not in the least bit interested. 
To say that this legislation will affect productivity and the economy of this country is to absolutely ignore the current situation. Members should read their papers. We get them delivered free to our offices every morning. They should read what the reports from the World Bank say about how New Zealand’s labour laws are more flexible than those of comparable countries. 
 They should read what the report:  
New Zealand - Australia Economic Interdependence 
 found. It found that Australian firms just across the ditch saw New Zealand as more flexible and innovative than Australia and it is stated in other reports that New Zealand is the easiest country in the world in which to do business. 
The vast majority of employers in this country are fair and want a good working arrangement for their staff. We have a labour and a skills shortage in this country because that lot over there failed to plan failed to train and failed to upskill workers. They know that but they will not admit it. We cannot afford as a country to go back to the 1990s and those draconian dinosaur-like policies that they would like—but fortunately will not have the opportunity—to foist upon this country. This is a good progressive bill and the House should support it. 
A party vote was called for on the question  
That the amendments recommended by the Transport and Industrial Relations Committee by majority be agreed to. 
Ayes 63 
New Zealand Labour 51; Green Party 9; Progressive 2; Maori Party 1. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; United Future 8; Independent: Awatere Huata. 
Question agreed to. 
A party vote was called for on the question  
That the Employment Relations Law Reform Bill be now read a second time. 
Ayes 63 
New Zealand Labour 51; Green Party 9; Progressive 2; Maori Party 1. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; United Future 8; Independent: Awatere Huata. 
Bill read a second time.