Brown Peter: Status of Redundancy Payments Bill — Second Reading 
Brown Peter: Status of Redundancy Payments Bill — Second Reading 
[Volume:615;Page:11123] 
PETER BROWN (Deputy Leader—NZ First) 
: 
 New Zealand First will support this bill for a number of very good reasons. I listened to the National Party contribution a little while back and I found it inconsistent with what is reported in the commentary on the bill: “We recommend that redundancy entitlements be included within the employee priority. We consider that such entitlements form part of a contractually negotiated package for employees which may have included trade-offs in relation to wages or salary.” That seems to imply that at the select committee level everybody was in agreement so I found out who the members of the Commerce Committee were. Among those members were Gerry Brownlee—the deputy chairperson of the committee at the time and now the deputy leader of the National Party—Rodney Hide and the Hon Maurice Williamson. Therefore I find it a little bit unusual that members of those parties come to the House now and take the exactly opposite stance to their members on the select committee. 
A redundancy agreement in a contract is not compulsory; it is negotiated. It is agreed to by both parties—the employer and the worker the employer and the union or the employer and a group of workers. There is nobody with a gun to anybody’s head saying that there must be a redundancy clause in a worker’s agreement. There might be some pressure and I understand there is but as the Hon Mark Gosche said very often redundancy packages are negotiated at the expense of a wage rise—sometimes in total and sometimes in the acceptance of a lesser level of increase. Redundancy is part of a contractual agreement exactly as wages and holiday pay are. All this bill does is raise the priority of redundancy in the circumstance of a company going into liquidation when the receiver has to determine who gets what and who is paid out first. 
There is a cap which is currently $6000 and embraces holiday pay and wages or salary. That cap will be increased to $15000 which will still embrace wages holiday pay and now the redundancy entitlement. 
 I say to my National Party colleagues in particular that working people need to be looked after to the degree that it is not acceptable to sign a contract with people and then try to walk away from it. It is not acceptable to sign a redundancy agreement and then try to avoid paying it out or try to put it at a lower priority. I always had a saying when I was in business. I used to say to my staff: “Make your handshake count. Keep your word.” If there is a redundancy agreement in an employment contract then it should stack up with some degree of priority. That is what this bill does. 
When people have been made redundant in the circumstances we are talking about—where the company has folded and is in the hands of a liquidator—it is a desperate situation for many. When people get this package depending on their financial wealth income or what have you they either get the unemployment benefit or they do not. If they are sufficiently well off—if the redundancy package is reasonably generous—they get a stand-down time of I think up to 10 weeks or thereabouts and they do not get taxpayers’ money. So it is not exactly a golden handshake in every sense of the word. There are some savings for the taxpayer when redundancies are paid out in many circumstances. I say to the National Party which advocates that unemployed people should queue outside post offices that to some degree now those queues will be a little bit shorter. 
On many occasions prior to my coming to Parliament—in my role as a shipping management consultant—I sat in many boardrooms gave many senior executives a piece of advice and was paid handsomely for it. That piece of advice was very simple. Basically it was: “Look after your people because people are the most important component of a company. Be straight with your employees; don’t beat around the bush. If you are inclined to sign a redundancy agreement make it count. Be fair.” New Zealand First has looked long and hard at this legislation. We looked at it when it came before the House in 1996 at the time New Zealand First signed the coalition agreement and we were persuaded by our then National coalition partner not to run with it. I regret that because there have been people who have suffered since. But I am glad we have now not changed our minds but re-looked at the legislation and taken a positive attitude. 
I was quite upset by United Future. It claims to be the party for the family but what about the family person who will go home having been made redundant and who will be put low on the list? We are talking about several people in those sorts of circumstances. They will face their families effectively with nothing—with little more than their wages for the last week and their holiday pay entitlement under the current legislation. 
Hon Richard Prebble 
: How do people earn 6000 bucks a week? 
PETER BROWN 
: That is the maximum cap. 
Hon Richard Prebble 
: And you are now saying that they should get $15000? 
PETER BROWN 
: I am saying to the honourable member that if people are entitled to redundancy it should have equal priority to wages and holiday pay. 
I will tell members the story of what happened on the New Zealand waterfront in 1996. An overseas company owned the biggest stevedoring company in the country. It put its management team in a separate company and put its available plant in a separate company—it might have been the same company that management was in—but the working people were left on their own. They were the face of the company and many of those men—and I know many of them personally—were hand picked at the time of the port reform to do the job. In part they turned round the level of production of cargo handling in this country working 7 days a week 24 hours a day with modern equipment. Then one dark night someone decided that that was the hour and on the Monday morning the workers were told they were not required. They lost everything. They got nothing and some of them had been in the industry for many years. By many years I mean that some of them had been in the industry for 30-plus years—but they got nothing. I would have liked to sort that out. I gather that the whole thing has been addressed now but in my view a long way short of satisfactorily. 
With this legislation at least there will be some priority of entitlement. Money cannot be made where there is none but workers will get consideration ahead of other organisations and contractual services. New Zealand First thinks that that is right and proper and we say to employers that if they do not want to agree to redundancy then they should not sign the employment agreement—they should not put it in the agreement. If employers are absolutely hell-bent in their belief that they will not pay out redundancy in such adverse circumstances as this bill covers then they should not put redundancy in the agreement. But if they put it in it should get the priority it deserves and New Zealand First says that that is second or equal to wages and holiday pay. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 The purpose of Mr Mark Peck’s Status of Redundancy Payments Bill is to cover the situation that occurs when a company has gone into liquidation or bankruptcy. The law states the priority for paying various people should there be any money available. At the moment Parliament gives priority to employees over what are called the unsecured creditors which are companies that supplied services to the company that has gone broke. Why do we do that? We do it because we recognise that many working people do not have a lot of cash so the requirement is that working people who have actually done the work should get paid. Then we try to work out how much money that should be. The limit is $6000 and for the average worker in New Zealand that is 2 months’ wages. There are very few liquidations of companies in which people have not been paid for 2 months. If the boss does not pay employees for one week they realise that something is wrong. If he has not paid them for 2 months I take it that they would have made some inquiries. 
Phil Heatley 
: Some inquiries? 
Hon RICHARD PREBBLE 
: Just to find out what is going on. 
Phil Heatley 
: “Has there been a little mistake?” 
Hon RICHARD PREBBLE 
: Yes. They would ask: “Has there been a little mistake? Why have I and my mates not been paid?”. It is not as though the Government has not looked at this matter. The Government itself did an insolvency review. That was carried out in 2001 so it was done by the Labour Government. It had a look to see what was fair and it said the $6000 limit was still fair. The point is this: the company has gone broke so there is not enough money and somebody is going to lose out. Parliament says the first people who have to lose out—who really should be the bottom priority for payment—should be the shareholders the investors. Normally they get nothing. Sometimes they get 10c in the dollar but normally they get nothing. 
If we give priority to the people who have worked for the company that means we are saying other people should lose out. New Zealand First and the Labour Government have not said who the unsecured creditors actually are. Those of us who are in business know who the unsecured creditors are. They are small businesses. They are the people who are least likely to know that a company is going broke. What are the small businesses that get hurt the most from insolvencies? They are usually the self-employed—the self-employed carpenter and the self-employed contractor. I hear New Zealand First saying we do not want to look after families. Does New Zealand First not realise that people who have mortgaged their homes and set up their own businesses are family people too? Why should they get lower priority than the people who worked for the company? 
Let me just take the example given by New Zealand First because I know about that stevedoring company. I do not support what the owners did but in that particular case the management told the employees that their wages and conditions were out of sync with everyone else and the employees were invited to renegotiate them. They refused to do so. But they had the chance to do that. 
Companies do not go to a small business that is supplying it with goods and services and suddenly say they are going broke. The first time that a small business discovers that is when a cheque bounces. This bill states that the Labour Government believes that small businesses should go broke so the Government can do this deal for its trade union mates. It is unfair that people who have supplied goods and services should lose their money so that the middle management of the company that has gone broke can get $15000. That is who will get that amount. When a company goes broke we have the idea that somehow the shareholders are totally responsible for that. Sometimes they are but usually the middle management played some role in it. Why should people from middle management be able to get $15000? What is that for? It is not for work that they have done. No it is for holidays they might like to get. Those are to be increased. At the moment holidays are protected to the extent of $1500. This Government says that if someone works for a company and is in middle management—the person could actually be the manager the person who bankrupted the company—provided that person did not make himself or herself the director the person could loot the company for $15000 and then say to a small businessman who is running a little plumbing outfit that it is tough luck but he or she will have to go bankrupt. That is what this bill means. 
I say to the Government with regard to the idea that there is enough money for everyone of course there is not enough for that. Over the years Parliament has said what the order of priority for payment should be. The Government itself did an insolvency law review. It released a discussion document. The Government set the position out to people in the community in the way that it does; it says it wants to consult with business and be business friendly. The Government set out the position to business and to insolvency practitioners—people who actually see these cases—and what did they say? They said yes workers should be protected but the $6000 limit is fair enough because that is 2 months’ wages and after that the little man or woman who is supplying goods and services ought to be able to get at least a share of the money. 
This bill is grossly unfair. It will cause a great deal of hurt. It will result in a lot more small businesses going bankrupt and it will make doing business in New Zealand more risky. I have no doubt that Mr Mark Peck who comes from the trade union movement will get a round of applause at the Council of Trade Unions organisation for having used this House to take money that belongs to other people. Yes there were representations on this bill. Federated Farmers pointed out for example that under this bill when there is an insolvency of a freezing works the farmers who have supplied their cattle or sheep to that freezing works will find themselves further down the list than the management that has bankrupted it. They ask what is fair about that. I say to Government members that they can wax eloquent about the fact that workers get hurt in a redundancy and in a company liquidation—so does everyone else. The issue is what is fair and what the certainty and priority should be. Why should we give priority to people who through their own actions contributed to the company going under? Who do Government members think runs companies? It is the very people who are being protected by this legislation. This bill does not state that management is excluded; it just states that directors are excluded. It is unfair legislation. 
This bill is the worst type of party legislation. It is a misuse of a member’s bill and the Government should vote against it now. If the Government thinks this legislation is a good idea it should present it as a Government bill. But it cannot do that because its own Government document states this legislation is not a good thing to do. This bill is an abuse of Parliament. The ACT party which makes no apology for representing small business or for getting up in this House and saying we ought to have fairness and we do not support this type of class legislation says that this bill which takes money from small businesses to give to the Government’s trade union mates is fundamentally unfair. ACT says the bill is wrong and will cause mum and dad businesses to go bankrupt. People should know that when they vote for this bill. And it is all so that Mark Peck can get reselected for Invercargill which he will lose anyway because he has closed down the local schools.