Sowry Roger: Status of Redundancy Payments Bill — Second Reading 
Sowry Roger: Status of Redundancy Payments Bill — Second Reading 
[Volume:614;Page:10429] 
Hon ROGER SOWRY (National) 
: 
 I am glad that the member who has just resumed his seat acknowledged the fact that the bill was introduced by Mr Barker. I am sure that if Mr Barker had not been promoted into Cabinet the bill would still be in his name. But that is how it works: some go in and some do not and some are left behind to pick up members’ bills. 
This is not a good bill. It is a bill that National strongly opposes. It is a ticking bomb for small business in New Zealand. Shortly after I came to this Parliament in the early 1990s a large manufacturing firm in Porirua went into receivership. The staff of that firm found that their wages were unable to be paid to them because the unsecured creditor with first call on the money held by the receiver after he or she had paid his or her own liquidation fee was the Inland Revenue Department. The Inland Revenue Department in those days got its share of the money before workers got their share of the money. That situation was changed in the early 1990s I think quite fairly so that people working for a firm that went broke got their wages and salaries before the taxman got his cut. Liquidator fees became the top priority and wages salaries and holiday pay due to workers became the next priority. They were followed by—and this is important—payment to people who were suppliers to the business and were owed money; the suppliers of goods and services ranked No. 3 and tax ranked No. 4 in the list of priorities that a liquidator dealt with. 
This bill takes redundancy payments—something negotiated into an agreement—and puts them up to No. 2 along with wages salaries and holiday pay in order of priority for a liquidator to pay when a business goes under. What is the effect of that? The effect is twofold. Firstly the incentives now are very strong on trade unions to negotiate very generous redundancy provisions because if a business goes belly up staff get them as part of the whole liquidator payout and they get them at the same time and at the same ratio as and with equality to wages salary and holiday pay. So employers will now face a much stronger demand for good redundancy agreements. They know that this issue is not just about workers being made redundant if a business is in difficulty; they know that for every business that goes belly up every business that ends up in liquidation redundancy now becomes a call on the liquidator and it is a call over and above that of the suppliers of goods and services. 
Here is where the rubber hits the road with this bill. Who are the losers? The parties that are voting for this bill in the House are voting for small-business people to lose. The independent contractor the person supplying goods and services—an electrician for example—the people who go into the business to do work are the ones who will lose. They did not mind waiting behind salaries and wages. I have never had one business person come to me and say: “I was working for a business. I was supplying goods and services. It went broke I’ve lost money and it’s outrageous that the staff were paid.” I have never had that. But now they will be saying that not only were the staff paid but all the staff got their redundancy as well and that has threatened their businesses. Their small businesses will go under because as suppliers they have been caught and all the staff will get a maximum of $15000 redundancy paid to them before the suppliers get one dollar for the goods and services that they fronted up with. A supplier of materials to a business who will have bought the materials and on-sold them but not have been paid for them will lose. That person cannot go back to his or her supplier and say: “I’m sorry. I was supplying this material to a shirt manufacturer. It has gone belly up. Don’t worry—all their staff got a good redundancy. But I can’t pay you.” The supplier of the materials still has to pay his or her supplier down the chain. 
This bill is appalling legislation in that the real loser will be small business. I look forward to the second week of February I think it is when the Minister of Finance and the Minister for Small Business are launching in Parliament a small-business offensive. Fifteen Ministers will be involved. They are going to travel around the country to talk to small businesses and tell them how much they love them and how well they are working with them. I look forward to their saying to those small businesses: “By the way if you’ve supplied goods and services to someone who’s gone into liquidation as a creditor you now rate lower than redundancy payments for the staff.” 
I have to say I have never heard a request from anyone that redundancy payments be included above payment of suppliers of goods and services. I cannot understand how the Minister of Finance thinks it makes sense to put at risk a whole range of small businesses—which will go to the wall once a large business goes into liquidation—because of this provision. I cannot understand that at all and I hope the Minister will take a call and explain why someone’s redundancy payment—not someone’s wages or salary; we understand that having first call—is so important that it has to rank ahead of payments to people who have supplied goods and services who will rank behind them. 
National will be opposing this legislation. We will be seeking to amend it during the Committee stage and I ask other political parties to have a really close look at it. The bill actually had very few submissions. It was not taken seriously by the community. It was a members’ bill in the name of Rick Barker; we cannot blame people for not taking it seriously. I do not think even the person who introduced it thought for one moment that it would go through. 
 My appeal to members of the Government and the Greens who are going to ram this bill through is to ask them to wait for the insolvency law review to come to Parliament and to do this measure as part of that package when people can take it seriously. I cannot see what the Greens will gain from being able to go to small businesses around the country and say: “Sorry mate; if you’re a supplier you’re out of luck.” Many suppliers will change business practice and I accept that; many will now require cash on delivery. If one thinks a business is a bit dodgy that is what one will do; the business will not get the goods unless it pays cash—and a Green member nods enthusiastically. That is fine; it will force some businesses out of business earlier. The businessman who just needs a week or two of credit will be gone under this bill. 
So who wins out of it? It is just about impossible to see who can win out of it. It does nothing for economic growth. It does nothing to encourage the entrepreneurs and the risk takers in society. But it does everything to tell the trade union movement to get out there and negotiate good strong redundancy packages. That is really what this bill is aimed at; it is another payback to the trade union movement—more of which we will see tomorrow with the amendments to the Employment Relations Act; more business-unfriendly legislation is about to come down the tubes tomorrow from Margaret Wilson. National totally opposes this bill.