Salesa JennyFAIR PAY AGREEMENTS BILLFirst ReadingHon MICHAEL WOOD (Minister for Workplace Relations and Safety): I present a legislative statement on the Fair Pay Agreements Bill. SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website. Hon MICHAEL WOOD: I move That the Fair Pay Agreements Bill be now read a first time. I nominate the Education and Workforce Committee to consider the bill. This one's for Mele and Malia and all the other cleaners who keep our offices our schools and our hospitals clean and hygienic. It's for Jason and Wa'el and the security guards across New Zealand who work day and night to keep people and property safe. It's for Connor and Muwela and all of their colleagues across retail who have kept us all supplied with food and goods during the COVID-19 pandemic. It's for Morris and the thousands of bus drivers who keep our cities and our towns moving. It's also for the major employer who told me last week how proud he is of his cleaning workforce and how much he wants to end the race to the bottom so that his team can have fair pay and conditions and his sector can have a sustainable future. The global pandemic has reminded us of the value of much of the work done in our communities that has been undervalued for too long. We've gotten through COVID together and as we build back better it is time to deal with some of the longstanding inequalities that have been exposed. For 30 years the critical work and contribution of Kiwis performing some of the most essential work in our country has been systematically undervalued. I ask this House why the cleaners who keep us in this Chamber healthy and safe should not have wages that allow them to live in dignity and their whānau to have security. I ask this House why the bus drivers who serve our communities up and down New Zealand should not have hours of work that enable them to participate fully in family and community life. I ask this House why aged care should not be a sector that attracts skilled and caring Kiwis through decent sustainable pay and conditions. The answer is that for 30 years our employment relations system has embedded low pay and conditions in a race to the bottom in many of these sectors. This isn't necessarily about employers deliberately doing the wrong thing; it's the inevitable consequence of a system that has incentivised competition based on low labour costs. Almost exactly 31 years ago in this Chamber—and it's here in the Hansard from 1991—we were told in the debate on the Employment Contracts Act that a highly deregulated market and the end of sector-based bargaining would improve New Zealand's labour productivity. It did not. We were told that the wealth would trickle down. It did not. We were told that workers would not see their living standards reduced but for many of them they did. Fair pay agreements (FPAs) are about creating a new modern sector-based bargaining system that supports fair safe and productive workplaces. The model is built on international evidence described by the OECD Directorate for Employment Labour and Social Affairs as the positive benefits that a level of sector-based bargaining can have in labour markets but most importantly the FPA Bill is a uniquely New Zealand solution to the race to the bottom problems that I have described. The model was initially developed by a tripartite working group chaired by the Rt Hon Jim Bolger whose careful and balanced work on this issue I acknowledge today. FPAs will enable good-faith bargaining to occur at the sector or occupational level and will establish a minimum floor for conditions in that area. In the same way that the Government establishes a minimum floor like the minimum wage or statutory sick leave employers and unions will be able to negotiate and agree a bespoke minimum floor relevant to the issues in their sector. By establishing a floor underneath pay and conditions competition based on low labour costs will be disincentivised. Our 30-year experiment with a low - labour-cost model has not worked. Many workers have suffered but equally our rates of labour productivity have been amongst the worst in the world under that regime: lower than the OECD average and lower than many countries that have a level of sector-based coordination for worker terms and conditions. A model based on wage-based competition is focused on the wrong things. FPAs will incentivise competition based on the right things. The quality of goods and services offered investment in skills and training R & D innovation—these are the things that will drive productivity and prosperity for our country. Inherent in this bill we recognise that wealth creation is a shared endeavour. It takes the contribution of both those who provide capital and those who provide labour. Why shouldn't there be negotiation compromise and shared vision for how a sector progresses and how the fruits of growth are shared given that both parties have that stake? The bill before the House provides a carefully worked through framework for how the FPA system will function. Some of the key design details include provisions for the initiation and bargaining of fair pay agreements. There will be two pathways for a union to initiate bargaining for an FPA: a representation test based on employee numbers or a public interest test. Employees will be represented by unions and employers will largely be represented by employer associations. The process will be guided by the good-faith obligations that are well-known and established in the existing Employment Relations Act (ERA). Once an FPA has been negotiated it will need to be ratified by both employees and employers. This ensures that there will be support from both the industry or occupation for the new minimum terms of the FPA and there will be a particular weighting for small businesses in that ratification process. There will be certain topics which have to be negotiated as mandatory terms in FPAs including base wage rates ordinary hours and penalty rates. Other topics such as flexible working conditions redundancy and health and safety will need to be discussed but will not necessarily have to be agreed as part of a final FPA. FPAs will be longer-term agreements of between three and five years that provide parties with a platform for dealing with the long-term issues in their sector. The bill also provides for a dispute resolution system built off ERA provisions with access to mediation and where necessary determination so that fair pay agreement negotiations do come to a conclusion and provide certainty for all parties. I acknowledge that this is a significant reform of our workplace relations system. Some will have questions and concerns and I will continue to engage on reasonable issues that are raised. I know that the select committee will also work hard to hear submissions and I have every expectation that they will recommend improvements to the bill at the next stage. Vigorous debate is good and different views are to be expected on an issue like this but I strongly urge debate based on the substance of the bill and debate focused on the labour market failures that we are trying to fix. Sector-based bargaining is not an extreme approach to these issues. It is common around the world including in our nearest neighbour. Australia has had a sector-based bargaining system in place for over 40 years contributing to higher wages and an economy where average annual labour productivity growth has been 46 percent higher than New Zealand's since 1991 when we abolished sector-based bargaining. The arguments that FPAs and sector-based bargaining stand contrary to good productivity growth are false. Debate based on misinformation and scaremongering will take us nowhere and it will be seen by New Zealanders as a desperate smokescreen to block progress. So I want to be very clear about some of the disinformation that has already been raised by members opposite. Firstly there is no compulsory union membership under FPAs. Existing voluntary unionism rights are affirmed in Part 2 of the bill. Secondly there is no recourse to industrial action by employees or employers during FPA negotiations. Any claim to the contrary is factually false and is designed to scare rather than inform. If the parliamentary Opposition want to create memes of me in an awesome 1970s shirt and bloviate about Soviet Russia then so be it but I think that New Zealanders deserve and expect better given the issues at hand. I say further to members opposite that there is an honourable conservative tradition in this country of supporting security and stability for people and communities. Much of that was ripped away by the tidal wave of reform 30 or 40 years ago. Both this Government and the previous one have had to try and deal with some of the social damage that resulted. FPAs at their core are about rebuilding the social contract valuing work and creating the stability and security that allows our communities to thrive. This bill fulfils a Labour manifesto commitment that was democratically campaigned on at the 2020 election. It's a piece of legislation that is in the best traditions of reforming Labour Governments that improve life for working New Zealanders and move our country forward and it is in the best traditions of the Kiwi values of a fair go for all and working together. This bill will help stop the race to the bottom. It will enable good-faith bargaining at the sector level to overcome inequalities that have developed over the past 30 years. Through FPAs we will build a more inclusive economy in which employees and employers can table their aspirations and negotiate as equals in good faith to solve problems and chart a fairer safer and more productive future ahead. As I said before this bill is for Mele Malia Jason Wa'el Connor Muwela and Morris. It is for those workers who help make our country but who have been left out in the cold. It is about the dignity and the value of their work in our society. It is about fairness. I commend this bill to the House. ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to.