Status of Redundancy Payments Bill — Instruction to Committee In Committee 
Status of Redundancy Payments Bill — Instruction to Committee In Committee 
[Volume:615;Page:11546] 
Status of Redundancy Payments Bill 
Instruction to Committee 
MARK PECK (Labour—Invercargill) 
: 
 I move  
That it be an instruction to the Committee of the whole House on the Status of Redundancy Payments Bill that it take the bill part by part 
. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 71 
New Zealand Labour 52; Green Party 9; United Future 8; Progressive 2. 
Noes 47 
New Zealand National 25; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata. 
Motion agreed to. 
In Committee 
Part 1 Amendments to Companies Act 1993 
MARK PECK (Labour—Invercargill) 
: 
 I want to go through Part 1 quickly but take the opportunity at this stage to thank my colleague Rick Barker the author of the original bill for the work he did in the initial stages on putting this legislation together. I am sure he will be as delighted as I am that we have reached the Committee stage in the House where we can scrutinise the provisions recommended unanimously by the select committee which we are seeking to progress today. 
I also take the opportunity to thank New Zealand First for the support it has given to this bill. In particular I acknowledge the contribution of Peter Brown to the debate. Peter Brown is a well-known employer in the shipping industry in New Zealand and he certainly does not deal lightly with industrial relations matters. He is a man for whom I have considerable respect and I certainly want to pass on my thanks to him for the very careful way he has worked through the issues in this bill. 
Part 1 deals with the changes to the Companies Act that are required and with some definitions in terms of the meaning of “director” and amends the seventh schedule of the Companies Act to bring about the changes that are necessary. When one goes through the changes that are being looked at in this particular bill one sees it is about raising the cap on redundancy payments that can be claimed in the case of an insolvency from $6000 to $15000. If one goes further one finds that the amendments to the seventh schedule are about ensuring that that particular sum of money keeps pace with inflation. 
Employees face this particular problem where a company goes belly up—that is employees who have negotiated a redundancy settlement. I do make that particular point clear to the Committee now. We are dealing with a situation where employees have bargained to have a redundancy provision within a contract of employment. In the process of doing so they have probably traded away other things. In other words there has been consideration along the way that redundancy provisions will be included in an employment contract in exchange for other things. Often there can be a lesser wage increase as a result of that. 
By and large one is talking about large industries that have the capacity to be sunset industries. The freezing industry is a classic case in point. This bill picks up on the collapse of the Weddel freezing works in particular but this matter was an issue in my own electorate with the reorganisation of the Alliance freezing works back in the 1980s the move of Southland Frozen Meat to PPCS and ultimately the Alliance and the reduction of the number of chains necessary the change in work methods and things of that ilk. So we are talking about industries where redundancy deals have been negotiated. This bill seeks to ensure that the sums negotiated do not lose their value over time through inflation. 
I do not want to say much more about Part 1 other than that but again I say to the Committee that these particular changes bring this part of the law up to date and recognise the amount of money that people need at a time like that as they try to put their lives back together. It is a sad thing that when a company goes belly up and there are problems with the payment of compensation workers get badly hurt in the process. This bill recognises that and ensures they are entitled to claim a rate of money over and above $6000 which was the previous maximum. 
It is about time the House addressed this particular matter. I know that the Government is doing further work on insolvency law and will send a bill to the House at some time in the future. I am looking forward as the chair of the Commerce Committee to receiving some of that work so that our committee can get on with it. 
I think Part 1 deals with those particular matters quite well and I thank the members who contributed to that during the debate in the select committee. 
The CHAIRPERSON (Ann Hartley) 
: I call Paul Adams. 
RODNEY HIDE (ACT) 
: 
 I raise a point of order Madam Chairperson. I would like you to explain your rationale for allocating the call. 
The CHAIRPERSON (Ann Hartley) 
: Mr Adams was the first member to stand up. That is what it was. 
Hon ROGER SOWRY (National) 
:  
I raise a point of order Madam Chairperson. For the Chair to ascertain who stood up first requires her to move her head around and look. I was standing here while the member was still speaking and I called and you just did not look. 
The CHAIRPERSON (Ann Hartley) 
: Mr Sowry I did not hear you call and I apologise for that but I have called Mr Adams. 
PAUL ADAMS (United Future) 
: 
 As an ex - racing driver I am always very quick off the mark. Madam Chairperson you are correct; I was the first one on my feet. 
United Future will not be supporting the Status of Redundancy Payments Bill. The report from the Commerce Committee is of considerable concern to me. It states: “We considered the issues raised and on reflection felt that the financial dependence of employees on their employer is greater than that of other creditors who are likely to have many sources of income.” I was very concerned when I read that passage written by members of the Commerce Committee. I believe that the statement that creditors are “likely”—that is a key word—“to have many sources of income” is a ridiculous statement to have come from the Commerce Committee and committee members should be ashamed to have made it. 
Let us talk about that issue. What is a redundant worker? A redundant worker is one who is deprived of his or her job because it is no longer necessary. In contrast a creditor is a commercial enterprise or a person to whom money is owed. 
Brian Connell 
: Are you opposing the bill? 
PAUL ADAMS 
: Yes we are. Will employees be paid for all the work they have done up to the point of redundancy? Yes they will. Will those employees have many other sources that they are likely to be able to apply to for work and then again to receive payment from for work that is done? 
Hon Richard Prebble 
: Including welfare. 
PAUL ADAMS 
: Yes the member is correct—including welfare. But what about a poor old sole trader who becomes the creditor of a failed company? I agree with Mark Peck that nobody likes to see a company fail. But here we have sole traders—in other words people who have chosen to work for themselves and take the risk of undertaking work for a company. Just as a worker expects to be paid for work that is done a sole trader also expects when he or she quotes for a contract to be paid for the work that is done. 
Hon Richard Prebble 
: And is the bank sympathetic? 
PAUL ADAMS 
: No the banks are not sympathetic. Will sole traders be paid for the work they have done when this legislation is passed? No they will not. In most cases a small sole trader will not have many sources of other income—absolutely not! What is worse is that the sole trader will possibly be so financially crippled that he or she will be unable to continue working as a sole trader and may in fact face financial disaster. 
I ask the sponsor of this bill Mark Peck where his mercy and compassion is—I hear about that so often from this Government—for those people. Any leader must maintain a good balance between two things: truth and mercy. Both of those factors are totally missing from this legislation. The qualities of being true genuine actual or factual are important—not wondering what one can say that people may perceive as being true. Mercy is the compassionate treatment of a person who is in our care. I believe that this legislation discriminates between a wage earner and a contractor. Both the employee and the sole trader are human beings with families to feed and both want to work for a living. Discrimination is the unfair treatment of a person based on prejudice. 
I have seen it time and time again that in the Government’s eyes there are two groups of people in this country. It is discriminating against one of the groups and I believe that must stop. Both groups are made up of New Zealanders who are trying to earn a living and trying to feed their families but one group has made the big mistake in this Government’s eyes of deciding to go it alone and call themselves self-employed. This Government has a totally mistaken view of what being self-employed is all about. 
Hon ROGER SOWRY (National) 
:  
There is nothing like having a new president of a political party and polling at 1 percent to get that party suddenly to decide that it is on the wrong side of the fence. I am sure that a speech like Mr Adams’ will not go unnoticed as that member tries to find his new place on the list that he is sliding down at the moment. 
Paul Adams 
:I raise a point of order Madam Chairperson. I would like to point out that we have never said we are on one side of the fence or the other. We are in the centre. 
The CHAIRPERSON (Ann Hartley) 
: The point of order is not correct. It is a debatable point. 
Hon ROGER SOWRY 
: Exactly. That is the problem that United Future has. It has never been on one side of the fence or the other. It has voted with one side and talked the other way—but do not worry because the president is sorting it out. Mr Blumsky is going to fix it and that member will be fixed along with that problem so he will not have to worry about what side of the fence he is on in the future. He was on Inky Tulloch’s side of the fence so he is history. 
This is terrible legislation. This legislation does one thing: it says to small businesses that supply large businesses that their money takes a lower priority in the case of an insolvency than the redundancy agreements of the staff who are employed in the business. To put it quite simply when the freezing works goes broke the staff will get their redundancy which has been union negotiated before the contract electrician gets the money that he is owed. So the electrician goes belly-up but the staff will get their redundancy. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Hon ROGER SOWRY 
: The Status of Redundancy Payments Bill puts payment of redundancies for workers who are working for a firm that goes bankrupt ahead of payments for other creditors. That means that the bill and this part which is part of the ordering process says to somebody who has provided goods and services to a business that is insolvent that not only will the staff who have lost their jobs in that business be paid the wages and holiday leave owing to them—and National has no problem with that—but they will be paid redundancy. National totally opposes that ordering because it will force many other small businesses to go under. 
I gave an example of this earlier in the debate where a business that I know of went into insolvency. Under this bill the staff would all get redundancy payments but all the people who had been providing services—the electricians and the people who had sent goods and were owed money—would get nothing. In many cases particularly where they are small firms and have a lot of money owed to them they will now get nothing their priority is reduced and they will go under. 
So employees will walk away with redundancy but a whole lot of other people lose their employment. That does not make economic sense. Businesses do not support this legislation at all and I do not know why this Labour Government is so hell-bent on making it as difficult as it can for business. Why is it? What is it that makes Labour politicians get up in the morning and decide: “We must do something more to put small businesses at risk. We must—” 
Hon Member 
: It’s about worker fairness. 
Hon ROGER SOWRY 
: The Labour member says it is about worker fairness. Well the Labour member does not understand that there is no job for the worker without people who put their money on the line and take the risk. For those sorts of businesses this bill will stop that. 
There are a couple of other points I will make about this later on in the debate. In fact I will make one of them now; as it was such a good point I could see my colleagues were very keen to hear me out on this. The other point I want to make is that this bill like all these Labour Government bills that are anti-business will change the way businesses behave. For example if a supplier is supplying a company that it knows or hears from the rumour mill is going through a bit of a bad patch the supplier will say: “I will come and service your machine but it is cash up front otherwise I will not do it. Because if I front up and fix the machine and then you go belly-up your workers will all be paid redundancy and I will not get anything and I will go belly-up.” 
Winnie Laban thinks that is a good idea and laughs about it. She thinks it is very very funny. In her electorate there is a business that went through this process: Hills Hats. She might not know that or have been there but it went through this process. If this law had been in place that business would not be there now. It went through the insolvency and came out the other end because the creditors managed their way through it. I say to Ms Laban that this bill would have put them under. Is she aware of that? Yes she is. She is aware of that and happy to see it go ahead and vote for it—and happy to sit there and laugh about it—even though in her constituency she knows this bill would have put the business under. 
It is the same with large firms such as Lakeview Farms freezing works in Dannevirke in the member for Wairarapa’s electorate. What would this bill have done to it? Has she talked to the Everton family about it? No she has not. Has she talked to the managers of Lakeview about it? 
Georgina Beyer 
: Have they talked to me? 
Hon ROGER SOWRY 
: Oh they have not come to her. She says they have not talked to her so that is fine. She will ignore it. What do members think about this? She is part of the Maori caucus. Has she talked to the new Maori owners of Lakeview in Levin? 
Georgina Beyer 
: No I haven’t. 
Hon ROGER SOWRY 
: No she has not talked to them. I want to say to her that if she had— 
Georgina Beyer 
: Why would I? 
Hon ROGER SOWRY 
: Because if this bill had been in place Georgina Beyer would know that Lakeview in Dannevirke would not have got through its difficulties a couple of years ago. Is she aware of that? 
Georgina Beyer 
: I am. 
Hon ROGER SOWRY 
: She is aware of it. So she is aware that if the bill had been in place then that business would not have got through its difficulties. So why is she voting for it? 
Georgina Beyer 
: Because I support the bill. 
Hon ROGER SOWRY 
: Oh she is voting for it because she supports the bill. Georgina Beyer has not talked to the owners or the managers even though it is in her electorate. She has not talked to them about the bill at all. She knows and admits in the House that if the bill had been passed the firm would not have got through its difficulties but she will vote for the bill because she supports it. Well that is fantastic logic. That is the arrogance that this Government faces. If one is Georgina Beyer MP one does not have to get down off one’s high horse and talk to some manager in Dannevirke or some owner of a freezing works that is providing a whole lot of jobs. She says that they should come to her. This is the regal approach to politics. That is the arrogance that has this Labour Government in so much trouble. She is not listening caring or worrying but doing what Helen Clark has told her to do. She says: “I support the bill so I am voting for it. I do not care about the consequences.” I want to say to those Labour members that when the next firm is insolvent—and there will be one—and it pays out its redundancy to its workers Labour members will be responsible for other firms going broke. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I rise to speak to the Committee stage of the Status of Redundancy Payments Bill which is a member’s bill in the name of Mr Peck who is a Labour member of Parliament. May I first say to the Committee that I think that this is an abuse of member’s day because it appears that what we are actually having is a Government bill put through on a member’s day. The public and those who made submissions did not expect such a silly bill to go through and if they had known that this was happening I think they would have lobbied more strongly. 
The second thing I want to say to members opposite is that we are dealing with a situation of insolvency which means there is not enough money. So somebody will miss out and what we in Parliament are deciding is who will miss out. The argument appears to be a class argument. The people who are on wages are somehow more meritorious than those who have supplied goods. I am pinching this line from Mr John Key but he made a point to me that I think is a very good one. If one thinks about it creditors who are private contractors and people who have supplied goods have done the work. He pointed out to me that by definition redundancy is work that has not been done. One is being compensated for something that has not happened and may never happen. As was pointed out by Mr Adams—and he is absolutely right—under the present law workers are guaranteed the first bite of the apple which is $6000. For a person on the average wage that is a couple of months’ income. 
 People not only get that guaranteed ahead of creditors but also if all else fails and people are unable to find jobs Parliament offers them another safety-net—welfare. But if people are contractors or suppliers of goods they have already paid that money out so they are lost. Can they go along to Work and Income and say that their businesses have gone insolvent? As Mr Adams said try putting that argument to the bank and see how sympathetic it is! 
This bill is very unfair. But in addition it is out of date. Over a third of the population now earn income not from wages but from outputs. People are in the business themselves—as owner-operators of trucks for example. They are not in the wage and salary business but this Government is suddenly saying to them that it is going to treat them very harshly. I say to Mr Peck that if he had gone back and done some research and had had a look at the number of people who have gone bankrupt as the result of another bankruptcy he would have found very few wage and salary earners. He would have found many many small businesses—second only to the Inland Revenue Department. 
Mr Peck should have done that research but he did not. He could have done something else. He could have looked at the Government’s own research because it did a study the Insolvency Law Review which was put out by the civil service. That looked at whether we should alter the priority. The Government’s own civil servants told it not to make this change. I ask Mr Peck whether he bothered to go and talk to those civil servants. Did he bother to read the report? Did he bother to find out what research they had done? No. This bill is trying to save a member who is facing redundancy in Invercargill. Instead he ought to do something about schools being made redundant. That would do something for him. 
Hon Rick Barker 
: Watch out Richard! 
Hon RICHARD PREBBLE 
: There is Mr Barker calling out. What is the member’s interjection? 
Hon Rick Barker 
: I am just saying “Watch your back.”; Mr Hide is watching. 
Hon RICHARD PREBBLE 
: Mr Hide most certainly is looking after my back. He is also looking after the interests of the taxpayer. I ask Mr Barker what he will say to small businesses in Hastings that find that they will get no money from the next insolvency because he voted for this bill so that the workers can get the money. Let me make this clear to members. When one reads the bill carefully one sees that middle management—the people who made the business bankrupt and have the worst claim morally—can make a claim under this bill too. 
MARK PECK (Labour—Invercargill) 
: 
 I thank members who have contributed to the debate so far because they have raised a number of issues that set some clear delineated points between the parties. Again I thank Peter Brown for the work that New Zealand First has done in coming to its position on this bill and for supporting the bill tonight. 
I want to go through one or two of the arguments that have been put up. First of all there were the arguments from Mr Adams about sole traders and about the position of contractors and the conditions they face as and when difficulties arise. I say to the Committee that the Government has addressed that matter at least in part. There may be other work still to be done that I am not privy to but I do know that the Construction Contracts Act—which recently passed through the House and if I am not mistaken was opposed by the Opposition—dealt with the issue of what happens to subcontractors when a contract gets into trouble. Essentially that legislation attempted to deal with that particular issue upfront before it became an issue at the end of the day. In other words contractors would be able—[ 
Interruption 
]; if the member will let me finish—to be paid throughout the process and to get progress payments for the work they were doing. That was done in response to the very real and tragic circumstances many contractors have faced when they have taken on work as subcontractors on major sites. 
I want to come to the issue of sole traders and independent contractors. I remember when we debated the Employment Relations Bill there was huge debate on the other side of the House about including anything at all about independent contractors in the industrial relations legislation. One of the things about this legislation is that it does not attempt to address the issue of small businesses that are facing problems; it is unashamedly to do with employees. The current Government does support the principle of pari passu which Richard Prebble knows well. In other words it means that like creditors should be treated equally. In this case we are dealing with employees. We are dealing with workers who have the least ability to mitigate their losses in a situation like this. The legislation will apply only to those who as I said earlier tonight have negotiated redundancy agreements into their employment agreements—and in the process of doing so have probably given something away to get that consideration. 
I would hazard a guess that most people who work in mum and dad’s coffee bar or in a business with two or three employees do not have redundancy deals. If the business goes belly up they take their chances like everybody does at the Work and Income office and—hopefully—find a new job. But we are dealing with industries in which there is the possibility of sunrise and sunset. We have talked about the freezing industry. I am pleased to tell the Committee tonight that in my electorate people are talking about building a new freezing works. This bill will not put them off doing that. They will go ahead with it and so they should. 
I want to deal with the issue Roger Sowry brought up. In 10 minutes of debate the only issue he brought up was that of compliance costs. I just want to remind him that today it was revealed that the World Bank survey shows New Zealand to be one of the most favourable regimes in which business can operate. Indeed in spite of the rhetoric of the Opposition we have a very business-friendly regime and this legislation most certainly will not cause any employers to have sleepless nights. It is true to say that in the submission process we heard from the Business Roundtable and Business New Zealand which were opposed to the bill—surprise surprise—but what we did not hear was any grumbling at all from other businesses that may or may not be affected by the legislation. 
I finish on one point which was made by Peter Brown in one of his contributions the last time we debated this bill. If employers do not want a redundancy deal they should not enter into one. But if employers enter into one they should be prepared to pay because that is what it is about; it is about agreements between employees and their employers. That is what it is about. It is not about a Government saying what the obligations should be. 
This bill deals with the unhappy situation that occurs when a business finally goes under. Nobody wants to see that but neither does anybody want to see what happens to workers when they get thrown on the scrap heap. I know that Rick Barker and others on this side of the Chamber have had to deal with what happens to people when they lose their employment through no fault of their own and have to try to pay the mortgage and look after their families. In addition those workers face very long stand-downs. When I was involved with the Ocean Beach freezing works redundancy I had to deal with tradespeople who had stand-downs of 52 weeks before they could get any income. Had they not received a redundancy package along the way—which by the way they agreed to take in a couple of hits in order to assist the company to get out of its difficulties—they would not have been able to meet their commitments at all. 
Not one major business has come to see me to tell me not to go ahead with this bill. They understand the Peter Brown principle: if they are going to have a deal they are going to honour it. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I listened with interest to the member’s speech and I think he has very largely hit the nail on the head. I listened also to the members from the National Party and ACT. They made some valid points and I give them some credence but I would give them even more credence if they had had the strength of character—I will not say gumption—to record in the commentary of the Commerce Committee that they oppose this bill. There has been not a word of opposition to this bill from anybody. The commentary states: “We”—that is the whole select committee—“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.” It goes on to state: “We considered the issues raised and on reflection felt that the financial dependence of employees on their employer is greater than that of other creditors who are likely to have many sources of income. We also recommend the exclusion of company directors and controllers from the employee priority.” 
The select committee got it 100 percent right. This bill is about an employment contract in total having priority—not half of it not just wages and holiday pay but in total. Wages holiday pay and any redundancy agreement that is put in a contract will have the same priority. As Mark Peck just said—he echoed my thoughts from before—if the employer does not want to pay redundancy in such situations he or she should have the gumption not to put a redundancy provision in the contract. 
I have been an employer in a major industry and I know the feelings of working people when they are laid off. It is awful. I know that many workers in many industries are prepared to take a lower wage rise or have poorer conditions to ensure they have a redundancy package if things go bad. I heard Roger Sowry talk about creditors and I have some sympathy for creditors particularly those that are adversely affected by such circumstances. But they are in the minority. Many creditors have other ongoing business at the same time but the working people in a particular industry lose totally. Some people who have reached a rather mature age do not get any further. They have nothing. 
John Key 
: Are you supporting it? 
PETER BROWN 
: I say to Mr Key that yes I am supporting it. I will stand up for the working people of this country. If somebody from this side of the Chamber is not prepared to do that then I think that is pretty shameful. In this country working people work pretty damn hard. I come from a country that has suffered from the actions and inaction of people who wanted demarcation and I am absolutely proud to be part of a country where working people are prepared to put their backs in prepared to do things and prepared to look after the employers’ interests. 
I heard the Hon Richard Prebble say that Mr Hide is looking after the taxpayer. If he really wants to look after the taxpayer he will support this bill. When people get a redundancy payment they cannot go on the dole for quite some time—in some cases Mr Peck said for 52 weeks. There is a minimum time when people who have a redundancy package cannot get the dole. That saves taxpayers’ money. This bill helps the taxpayer. 
This bill is genuine and needs to be considered properly. I suggest that the select committee did that. There is no inkling in the commentary that there was any dissent at the select committee. The National Party in particular was well represented on the select committee; its deputy leader and the Hon Maurice Williamson were on it and neither of them is a slouch when it comes to having a say and expressing his concerns. The ACT party was represented by Rodney Hide— 
Hon Richard Prebble 
: He was looking after the taxpayer. 
PETER BROWN 
: He was looking after the taxpayer. Is the ACT party’s support split on this? I would like to think that perhaps someone in the ACT party is thinking a little bit further about the taxpayer and about the working people of this country. This bill delivers something that I think working people are entitled to. But I repeat: if employers do not want to pay out redundancy and are nervous about having a redundancy agreement then they should not put it in a contract. They have a choice. Employers believe it or not are not a pack of fools. They know what the industry is about. They know about tough negotiating. They are not bowled over by trade unionists or by anybody else who comes into the room—they do not keel over like a feather. I know that first hand because I was one of them. For many years I was a negotiator for waterfront employers. 
Hon RICK BARKER (Associate Minister for Social Development and Employment) 
: 
 Curiously I did the original draft of the Status of Redundancy Payments Bill. I say to Mr Prebble that the people of Tukituki—which was then the seat of Hastings—know full well about this bill. I told them some time ago that I would move this bill and I am really proud to see that my mate Mark Peck is bringing it to a conclusion—something that I could not do. The very reason that this bill exists is the closure of the Tomoana Freezing Works. The Tomoana Freezing Works is a very interesting example of an insolvency. I want to correct one thing that Mr Prebble has got very wrong. The workers at the Tomoana Freezing Works were offered a wage increase one year but they said that they did not want a wage increase and would prefer a redundancy agreement. They had some discussions with the boss and in the end forewent a wage increase in return for a redundancy agreement. They paid for their redundancy agreement year after year and they lost it because of a piece of Tory legislation written by the National Party for its mates. National wrote legislation to cut out the redundancy payment that workers could get so that creditors—the National Party’s mates: big business and big banks—could get more in an insolvency situation. 
It is a well-known fact in Hastings that the workers at the Tomoana Freezing Works lost thousands of dollars in wages holiday pay and all the rest that was owed to them. Yet the company that financed the freezing works Weddel received all its money. The banks received every cent owed to them; they lost not one cent. Mr Prebble will say that this bill is bad legislation because it would give money to workers and deny it to small legitimate business. The truth of the matter—and Mr Prebble knows this—is that the people who win the most in insolvency situations are the big banks. All the major trading banks in New Zealand were owed money by Weddel and all those banks received their money in full. The only people who did not receive their money were the workers. They were restricted because a piece of Tory legislation stated that they could be paid no more than $6000. I think that is terribly wrong and we will change it. 
I congratulate Mark Peck and the Commerce Committee on their excellent report which states that the maximum for preferential claims now will be $15000. I would have liked that figure to be higher than it is because if people are owed money by way of wages then they have made their contribution. They have cut the throats of all those sheep have dressed them have broken them down have put them through the freezers and the product has been sold. Someone has benefited from that. The people who have not benefited are the people who made it happen: the workers. In my view they are entitled to be paid for their labours. I think it is a shameful position for anybody in this Chamber to say that people who have done the work are not entitled to be paid their wages. I will argue against that anywhere. Mr Prebble is welcome to come to Hastings on any occasion and we will have a debate about it. I will get together the 1600 or 2000 workers who were at the Tomoana Freezing Works and Mr Prebble can get up and say to them that the banks deserved all the money they received and that the workers deserved nothing—and in fact that the $6000 the workers received was too much. That is his position. 
I say to Mr Prebble that the 2000 workers who were at the Tomoana Freezing Works do not believe that for one moment. He is trying to visit poverty upon people like them. He does not care about their lifestyle. I saw much poverty as a result of the closure of the Tomoana Freezing Works. What happened to people’s lives was shattering. Richard Prebble does not care about that as long as the banks have their money because the banks support the ACT party. As far as I am concerned the Labour Party is here for ordinary New Zealanders. We are here for everybody. We want to make sure that people get a fair deal and that is why we support this bill. 
I was really pleased that Peter Brown gave the speech that he did—I thought it was fantastic. It showed that he is concerned about ordinary New Zealanders and wants to make sure that their conditions are protected. This issue is not about the vested interest of the banks. If the National Party continues on that path then I say good luck to it. It will need the Status of Redundancy Payments Bill—and so will Mr Prebble with ACT at 1 percent in the polls and falling. Mr Prebble’s main supporter Rodney Hide told the Chamber people should vote for National because ACT does not need any more support—it is happy to go below 1 percent. I say to ACT that it will need the Status of Redundancy Payments Bill at some time in the future. Redundancy payments in this place are around 3 months’ pay—that is it; members cannot get any more. I say “good on you” to the ACT party and that it should keep to that line of argument. It shows that the ACT party is a narrow sectional-interest party. 
LINDSAY TISCH (National—Piako) 
: 
 Is it not extraordinary to hear a party that has no understanding—no comprehension at all—of what makes economies and communities work? That party thinks that money just grows on trees and is there for the picking. If we do not have the risk takers if we do not have the people who are prepared to take risks and invest their money we do not get the growth or the jobs that this Government wants to protect the whole time. I have no difficulty in telling somebody he or she is entitled to X number of dollars. That is because that person has put the effort in and should be rewarded for those efforts. But I object to that becoming a very one-sided issue. After the investment has been made if people are going to lose their shirts this Government says it will forget about those people their families and the staff they employ because it has to look after the vulnerable worker. 
We have just experienced probably the biggest flood disaster we have ever known in this country. I have just come from a meeting attended by growers from the Rangitikei and the Manawatu who will have absolutely no income at all this year. The potato crops have been lost and the pumpkin and squash crops are hanging on the fences—and I have seen them there. And this bill states to those people who have made the investment and got no income—and who are not likely to get any income next year either because it will probably take them 5 years to get back to square one and recover the position they would have had if the flood had not happened—that the Government is not worried about them but that the 2500 employees who work for them will be paid. On top of that if there is a redundancy agreement this bill states the employees are to receive redundancy payments. And then they can go down to Work and Income New Zealand and get a benefit. We say that is wrong. 
If we look at the downstream effect of that we see it will not only be on the growers—the farmers and the other producers. We may ask about the effect on the processors and transport operators. And what about the flow-on effect on a business that may well move into liquidation? We have not yet seen the worst of what will happen in those communities. We have seen the visible effects as we do when we have earthquakes and disasters like that—in this case floods—but we have not seen the downstream effects on the business people in those small communities. If they go bung—if they have to close the doors—and there is a redundancy agreement the employee does not miss out. The employee will get paid. The Inland Revenue Department will get its cop because that is the first charge that has to be paid. After that of course there is any redundancy agreement. 
On page 2 of the commentary on the bill the committee stated: “We consider the cap should be raised to $15000. We recognise that the removal of the cap may detrimentally affect other creditors”. That is exactly what will happen to the small operators. The 297000 small businesses out there will be carrying the can for a Government that does not appreciate or understand what makes this community work. We have all the compliance costs that Roger Sowry talked about and now we have this sort of legislation that states that the workers will benefit from or get something out of an insolvency while the creditors and the owners of the business carry the can. 
In earlier days I was involved with a mortgage discounting scheme. Members may remember it. Businesses got into deep trouble. I was in the Rural Bank in those days and we were giving farmers $40000 to walk off their farms and buy a house in town because their liabilities were greater than their assets. They had negative equity. Now what happened to the staff—to the people who had worked on those properties? Although they did not get anything at least they had a home to live in. But the farmer who had owned that land had put the investment in and had raised the money through a trading bank—or in this case through the Rural Bank which is why I was involved—lost everything. 
PAUL ADAMS (United Future) 
: 
 I must confess I was disappointed with Peter Brown and also Rick Barker on their definition of a worker in this nation. The whole thing seems to focus back that one is only a worker in this nation if one is on somebody’s payroll. Let me assure members that there are many workers in this nation who are not on payrolls who take the risks who go out and work for themselves. What I dislike about this entire legislation is that yes there are agreements for redundancy and all those things but it is basically paying somebody for work that is not done before it is paying somebody for work that is done. Mr Peck should not shake his head because that is quite correct about what is happening. 
The self-employed small-business people in this country face many challenges even with Accident Compensation Corporation benefits. Perhaps they have had a tough year. They are just establishing a small business yet if they are tired and injure themselves what is their income from that point based on? It is based on what they have earned in the previous year. If they have not earned anything as such in the previous year they are really starving. So they have many things. 
I do not want to get into a discussion on whether a person on a wage is better off than a self-employed person because it is not an issue about that. I employ staff I appreciate staff and they are the backbone of any company. They are the ones who make or break the business. So I am not getting into a debate about which is better and which is not. But let me give an illustration that may show members how the thinking changes. There is not a right or wrong on this but let us take a seed. Let us take a pine seed. A worker may see it just as a seed so he will eat it because he will see it as food. Yet the entrepreneurs in this country will see that same pine seed and they will decide not to eat it but to plant it because they see within the seed a pine tree—that can produce a pine forest that can produce a timber company that can employ people. So it goes on. This is where we need both types of people. 
We heard Mark Peck mention that the Credit Contracts Act was enacted to cover payments for these small workers. That was great but this bill now takes away all that advantage. For those workers who have come to the last part of their contract—let us go to the end so the member is happy and agrees with me—maybe on this invoice they have most of their materials which is what would happen with a lot of tradespeople and the firm goes turkey up. Right. So they have done the work and they have bought the materials. They have invested their money but this legislation is telling them they cannot get their money for what they have done unless redundancy has been paid out to workers who have already been paid for all the work they have done. This is to tide them over for a period unless they get work. As has very rightly been pointed out tonight the moment those workers are made redundant they are able to go down and register for the unemployment benefit. Therefore from that day on they get income coming into their families. 
What happens to the small contractor who also has a family and children to support? What happens to him? Firstly he is devastated emotionally because he is now in a situation where he is likely to face bankruptcy through absolutely no fault of his own through circumstances and situations that he had absolutely nothing to do with. We talk about agreements. We talk about a redundancy agreement that is an agreement between a worker and an employee for that which they expect in the future. 
If we are going to have that sort of agreement I ask Mr Peck about the agreement where a contractor quotes for a job puts in the tender has to be competitive and is fighting against many others. What about that agreement where the contractor is saying he will do the work and the client is to pay for it? There is no rationale in the argument that one agreement may stand because someone is on a payroll but that another agreement does not matter because the person is not on a payroll has taken a risk mortgaged the house and has taken on workers. 
BRIAN CONNELL (National—Rakaia) 
: 
 I note that the Act is to come into force 60 days after the date on which it receives the royal assent. I say to the Committee that business people in this country will think that that day is too soon. In fact I think they will agree that any day will be too soon. I want members of the Committee to be absolutely clear about this: this is a union-driven initiative and Mark Peck is just the errand boy. 
Mark Peck 
: I raise a point of order Madam Chairperson. The member knows it is totally out of order to suggest that any member is doing anything other than representing his or her own views in this Chamber and to suggest that anybody else is carrying the candle for any other organisation in this place is out of order. 
Hon Richard Prebble 
: It is incorrect to suggest that a member is being directed by outside people. But in respect of the idea that he is carrying a message I have seen people elected to this place saying they are coming here to deliver a message. That is not out of order and I am surprised the member is not willing to be put up as a supporter of the trade union movement. I did not object when Mr Barker claimed that the ACT party was representing bankers. It did not seem to me to be likely and I am not aware of that connection. If Mr Peck’s comment is out of order then I wonder why Mr Barker was not pulled up for his. 
Hon Rick Barker 
: Mr Prebble tries to cunningly confuse the issue. He talks about Mr Peck carrying a message. That was not the accusation made; the accusation referred to the term “errand boy”. That implies a contract of service a master-servant relationship—the person is carrying an errand on behalf of someone and is being directed by him or her. Therefore it is not about carrying a message; it is about acting under instructions. I have to say to you Madam Chair that an allegation of being under instructions and under the control and direction of someone in a master-servant relationship is totally out of order. 
Lindsay Tisch 
: Point of order— 
The CHAIRPERSON (Ann Hartley) 
: No I am going to rule on this— 
Lindsay Tisch 
: Point of order— 
Jill Pettis 
: It won’t be anything new. 
Lindsay Tisch 
: I am on my feet— 
The CHAIRPERSON (Ann Hartley) 
: No the member is not supposed to be on his feet. I have stood up and said I will rule on this. There will be silence while I am ruling. Mr Prebble is quite correct. The insinuation was not that the member was “under the direction” of someone or that he was being “directed” by someone. 
Lindsay Tisch 
: I raise a point of order Madam Chairperson. 
The CHAIRPERSON (Ann Hartley) 
: Is it a new point of order? I have ruled. 
Lindsay Tisch 
: It is a new point of order. I am not going to revisit what you have said. When I was standing—and I did seek a point of order before you stood up—Labour’s senior whip told me to sit down. I was asking for a point of order and she interjected. Points of order are to be taken in silence but the senior Government whip yelled out while I was standing and before you stood. I ask for your guidance and ruling on this matter. 
The CHAIRPERSON (Ann Hartley) 
: I take the point of order. I was on my feet so I had asked the member to sit down too. 
Hon Taito Phillip Field 
: I raise a point of order Madam Chairperson. As a member of this Committee I take offence at another member being referred to in a derogatory way as being an errand boy. 
The CHAIRPERSON (Ann Hartley) 
: 
I have ruled on this. I refer members to the rulings on page 47 of  
Speakers’ Rulings 
. I have ruled on the matter. 
BRIAN CONNELL 
: We have established that Mr Peck is an errand boy and when he took a call he dispelled any view at all that he knew something about business. He tried to defend the indefensible. He stood up and tried to say that workers were the only people in this country who were entitled to be secured creditors. The fantasy that Mr Brown tried to perpetrate in this Chamber was almost unbelievable. The theory that employers do not have to have a redundancy agreement is one thing but if they tried to run a business in this country without offering their workers such an agreement then all Mr Peck’s union buddies would come down on them like a tonne of bricks threatening to put them out of business. That is an absolute fantasy I say to Mr Brown and he should hang his head. That just does not hang together at all. 
In my opinion the Government has absolutely no right to get involved or to come between employer and employee negotiations or agreements. This legislation is the worst type of nanny State mentality I have encountered since I have been in Parliament. It demonstrates that this Government has a clear anti-business bias and has a view that employers and businesses have deep pockets they can continually trawl through for easy money and cheap votes regardless of whether they think it is right or wrong. 
The assumption is that all business is big business and has the capacity to pay regardless of its financial position. That is not the reality—[ 
Interruption 
] If that member would shut up for a moment she would also learn that that is not the reality. The reality is that businesses employing 10 employees or fewer make up 92.5 percent of all businesses in this country and those employing five employees or fewer make up 86 percent. To put it another way those businesses are not the large meatworks that are meant to be the inspiration for this type of nonsense. In reality those businesses are the small businesses the mums and dads—I say to Mr Brown—who have mortgaged their homes. They are the very people whom his party purports to stand up for and who have mortgaged their homes to take a risk to get into business. 
What will this Government do to them now? When things go bad what will it do to them? It will clobber them. That is going to win a lot of votes! Will those businesses be able to pay? Of course they will not. Mr Peck should think it through. There will be neither enough cash nor enough assets because they are small businesses. 
Let us use an example. A couple mortgage their house and raise $70000—and if I cannot get through this in the time I have left I will take another call and continue. They start in business and things go OK for a while. They employ five people. Suddenly things go awry. Their biggest customer who owes them a hundred grand does not pay and suddenly the squeeze goes on. To cut this sad story short they end up going belly up. It is a low-cost business and they have very few assets. The receivers move in and they find there is $35000 in the bank but this is owed to creditors—that is suppliers who are the very people Mr Sowry mentioned. They are the electricians and the plumbers who have done the work and are expecting payment unlike the employees who have not yet done the work. Let us think about what the definition of redundancy is. It is for loss of earnings; it is not for money that one has already earned. 
Hon Rick Barker 
: Rubbish! 
BRIAN CONNELL 
: That is what one gets paid for I say to Mr Barker. One goes to work and gets a fair day’s pay for a fair day’s work. 
DIANNE YATES (Labour—Hamilton East) 
: 
 I move  
That the question be now put 
. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I rise to make one further point in respect of the bill—a point that Mr Peck has not addressed. When one looks at the bill one discovers that the only employees who are excluded are those who are directors. So in many large companies—the freezing works are the examples that have been given—there would be senior managers who would be entitled to redundancy. I ask the Committee where the fairness is in that. I go even further than that— 
Mark Peck 
: What was the point? I missed the point. 
Hon RICHARD PREBBLE 
: The point is this: the only employees who are excluded are those who are directors or relatives of a director. So the management of a company can get redundancy. I say this to Mr Peck: yes there are examples where companies go broke when it is no one’s fault; there has been a change of economic circumstance. It might even be the example just given by Mr Connell where a major creditor fails to pay but I also have to say to him that in my experience of insolvency frequently it is the result of mismanagement—of managers making bad decisions. I say to Mr Brown from New Zealand First that I know about the case which he told us about of the stevedoring company. Yes what it did to them was wrong but I also know that the employees in that case actually did have an opportunity to renegotiate and they turned it down. 
What about the creditor? The creditor does not have such an opportunity. The creditor is told a company is a good company and has no way of knowing that it is actually going broke. The management may know it is going broke but the creditor does not and the creditor loses. I ask where the morality is in this. The very people responsible for the insolvency who may have been totally irresponsible are now going to get $15000 guaranteed to them and it will be money that is actually taken from small business. 
The only people excluded are directors. Well they are frequently nowhere to be seen. That is a piece of nonsense and when people get up and say: “The hard-working worker did a fair day’s work and worked hard. Why should he not be paid?” I say that sure there are many such people but there are also just as many cases where the management by their actions put the company under and nowthis Parliament is saying that those people should be rewarded. Where is the justice in that? I ask Mr Peck where the morality is in it. Where is the business sense in it? It is clearly wrong and the small business that supplied the goods and services was honest. It supplied the goods and services and it had no chance. But the management that put the company broke under this bill is going to be rewarded. Surely the House can see that that is just wrong. 
Hon RICK BARKER (Associate Minister for Social Development and Employment) 
: 
 This has been a very interesting debate. Firstly let me respond to one of the points made by Brian Connell. I have to say that I found his presentation very disappointing. To claim that people who are owed wages and owed holiday pay have not earned it is just ridiculous. 
Brian Connell 
: I raise a point of order Madam Chairperson. I never said that people who were owed wages or holiday pay were not entitled to that. That is misleading the Committee. 
The CHAIRPERSON (Ann Hartley) 
: That is not a point of order. It is a debatable point. 
Hon RICK BARKER 
: I want to repeat the point. I listened to what Mr Connell said and I am happy to get the  
Hansard 
 out. I want to make it clear that he made it very clear to this House that people who were owed money and would benefit from this bill had not earned it. That is what he was implying and I say to Brian Connell that that is simply not correct. These people have earned it. It is money that they are owed wages they have not been paid and holiday pay they have not been paid. They have earned it and if Brian Connell wants to stand in this Chamber and say that people who have unpaid wages and outstanding holiday pay have not earned it well I am happy to argue with him at any place about that. 
As to the point that was made by United Future as to why other people should not be paid and why these people the workers should get some money—which ties in really I guess with the point that Richard Prebble is making—the fact of the matter is that when a business goes bust it is unusual for it to have sufficient money to pay everybody. That is why we have a problem; not everybody can be paid. Richard Prebble’s argument is that the line for people who are owed wages and holiday pay should be moved back as far as it can contracted as far as it can so it leaves more money for other people. 
He makes a case for the small-business person who is a small contractor but I make the point to Richard Prebble that the vast majority of money that is taken out of those situations of redundancy is to the banks. I am not particularly down on banks but I want to give him just two examples. The first one I have spoken about is Tomoana Freezing Works. The banks got every cent they were due. I have got 2000 people in my constituency who are owed money. 
Mark Peck 
: Thirty-five million. 
Hon RICK BARKER 
: They are owed $35 million. That is what was owed to the people of Hastings in the area of my electorate and the banks nearly all overseas-owned got the lot. Richard Prebble says that is a bad thing. It is bad luck for the people of Hastings good luck for the banks and he supports that. He does not want to see any redress. Well I say to Richard Prebble that I am on the side of my constituents. I want my constituents in any future redundancy to get their money. 
Hon Richard Prebble 
: What did the banks do wrong? 
Hon RICK BARKER 
: The banks knew exactly what was going on in the case of Weddel Tomoana. They had a person in that head office every day. They knew all its accounts. They could have put that company under any time they wished and they did not. They decided they could not. Instead of putting any company down which they could have—AFFCO or otherwise—they in fact decided to down Weddel and my constituents lost $35 million. 
So what we are deciding here is where the balance lies. ACT wants to cut the workers back more and more. The National Party wants to cut the workers back more and more. That is their traditional ground—beating up on unions and beating up on working people. They realise; they think there are no votes for them in this but they do not care. All they are interested in is big business. They see that if the line has shifted from $6000 to $15000 in the small pool of money that is outstanding then the workers are going to get some more and some of the banks are going to get less. 
Well I have to say to them that is just tough. We are entitled to draw the line and the proposal to this House is to make it $15000 rather than $6000. As for what Paul Adams is saying about the other small-business people well there is a difference here Paul. These people have a contract. The contract says that in the event that they are laid off— 
Brian Connell 
: I raise a point of order Madam Chairperson. I understand that it is a convention in this Chamber that members are referred to by their correct names. 
The CHAIRPERSON (Ann Hartley) 
: That is quite correct. The member will refer to members by their correct names. 
Hon RICK BARKER 
: Yes; I am sorry. The member did not take offence but I accept the chastising from the Chair. The point I want to make is that there is a contract here. The contract says—and I give the member the example—that the workers at Tomoana Freezing Works went without a wage increase in return for redundancy agreement. 
What that member is effectively saying is that there should be no sanctity of the contract. There is a contractual agreement. Other people who enter into business arrangements with them might have a different contract of agreement. They might be unsecured. 
Paul Adams 
: What about the creditor’s contract? 
Hon RICK BARKER 
:Well if that is what they have done their business on—being unsecured—that is the way they have conducted the business. But in terms of the workers they have decided to negotiate an agreement that has a redundancy clause and I would have thought that United Future would argue in favour of the sanctity of the contract and said that where a contract exists it should be honoured. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I want to take up a few of the points raised by various members. First of all I would like to correct any impression I gave to Paul Adams that only employees are working people. I accept the point he made. I know that self-employed people are working people and that they work very hard and I hope the member takes my correction. 
I would like to talk about the people affected by the flood which was an issue that Lindsay Tisch raised. If I heard him correctly he is saying that employees of a small business in one of the flood-stricken towns will have lower priority than a contractor who lives miles away and is not affected by the flood. The flood victim is going to lose his or her job yet Mr Tisch says that any payments made should go to the contractor who might live in safe surroundings quite some miles away. I find that to be an unusual argument to say the least. 
Mr Connell raised the point that all employers are subjected to heavy-handed tactics by union officials. He seemed to imply that. I think that from memory only about 20 percent or thereabouts of working people in this country are in a union. The vast majority of people who work for small businesses are not unionised and in all probability they do not have a redundancy clause in their employment agreements. So I do not know how he comes to the conclusion that small businesses will be highly saddled with union officials coming in and demanding this and demanding that when in fact no such clause will exist in most of the agreements. Nobody will come in after the event and say that the business should have had this and because it should have had it it has to have it and has to pay out accordingly. I find the argument a little bit unusual to say the least. 
In terms of the larger employers who do have a unionised workforce to suggest that the employers are weak-kneed or they cannot look after their own interests is rather insulting. I can only tell Mr Connell that if they are that bad I had better get in amongst them because there is still some steel in my spine. I had better get back there pretty damn fast because if employers cannot front up— 
John Key 
: Intimidated! 
PETER BROWN 
: Intimidated? I can recall employers who were so tough that they would make the lot of us here look like a bunch of juveniles. Do not go away with the impression that employers in this country are easy meat for anybody! They are hard-working but they are also hard-nosed. So members should not think that union officials walk into the room and these guys fall over and say: “What do you want? Where do we sign?”. It is a long way from that I can assure members. As I say for many years I was an employer in the association of waterfront employers and we had some right stoushes I can tell members. I do not think the unions got terribly much that they did not have to work damn hard for. Equally we employers achieved some quite workable agreements as a result of those stoushes. It is two-way traffic and a two-way dialogue. It is very demanding at the time but at the end of the day virtually all agreements are like that; there might be a bit of rough and tumble in getting there but they are agreements. I have yet to meet an employer who has had a gun put to his or her head literally or had his or her arm squeezed up his or her back or anything like that and signed an agreement. 
Hon Richard Prebble 
: I have. 
PETER BROWN 
: Oh the member has? 
Hon Richard Prebble 
: Most certainly and on the waterfront too. 
PETER BROWN 
: Well I tell that member that the waterfront unionists used various tactics but I have never seen them go to the extent of the physical action of putting people’s arms up their back or whatever. I tell Mr Prebble that some of the employers in the days that he is talking about were what I call phoney employers. They did not actually employ the labour; they represented the shipowner who put the ship through the port and they bowed to pressure that they should not have bowed to. But since port reform where I had a positive role things have changed quite dramatically. 
Hon Richard Prebble 
: I had a minor one. 
PETER BROWN 
: Mr Prebble did have a minor one. In fact I remember advising people on what they should say to him when he was the Minister. I was quite pleasantly surprised when they came back with the right answers. 
Hon TAITO PHILLIP FIELD (Minister of State) 
: 
 I am going to make a contribution because I have been listening to this debate and from the sound of in particular contributions made by Mr Sowry and a few others one would think that this bill is in relation to something that has not been agreed to in negotiations between employers and their workers. What we are talking about here is a situation where a redundancy package has been properly negotiated to be part of the terms of employment of workers. 
I want to take up first of all the implication made by Mr Sowry that redundancy payments would send a business belly up. Well that is just not right. What we are talking about here is in fact a business that has already gone belly up and is facing closure with the workers losing their jobs and with the employer looking at honouring what has already been negotiated and agreed to in terms of a redundancy package. 
I want to make another point in relation to some of the comments that have been made about workers having immediate access to welfare payments after a closure. In my experience that is certainly not the case. There is a stand-down period where holiday pay has to be taken into account and other moneys that have been paid out to workers have to be taken into account. In some cases there is quite a lengthy stand-down period for those workers before they get payment of a benefit or anything else. 
I can appreciate the arguments that have been put forward by some members in relation to the plight of small business. Sometimes those hard-working people have taken a risk in terms of investment. I take on board the points that have been made by Paul Adams. There are a lot of hard-working New Zealanders who make a commitment and a sacrifice in starting a business and that needs to be acknowledged. Nobody on this side denies that. 
What we are talking about is the situation that prompted this bill. It has been aptly described by my colleague Rick Barker and in the speeches made by my colleague Mark Peck and I want to congratulate him on sponsoring the bill. It is a situation of closure where a significant workforce is made redundant and where small communities in rural areas are affected. We have had some colleagues on the National side talk about farmers and their situation. Often these huge redundancies have affected rural towns and farmers. Some of those farmers who have been made redundant have been reliant on working in the meat industry during the killing season to supplement their earnings. 
I agree with the points made by Rick Barker in relation to the Tomoana Freezing Works closure but I also want to identify with the Patea Freezing Works closure because that was a classic example of a whole community that was affected by redundancy. Those workers losing their livelihoods turned that town into a ghost town. The loss of jobs and loss of income affected their children and families and also affected the whole community of Patea. Other small businesses in Patea were detrimentally affected as a result of that closure. When we talk about employers under this bill having to give workers priority where a redundancy provision has already been agreed to we are taking about the survival of small communities. A lot of small businesses in a small rural town like Patea are very much dependent on the income of workers. That is an aspect that members also have to take into account. It is not a simple question of our just viewing this matter from a small-business point of view or from a business point of view; it is also a question of how it affects other New Zealanders—ordinary working New Zealanders. Closure not only has an effect on families and children; it has a downstream effect on communities and on other small businesses in those small towns. 
That is where I think the issue of fairness has to come in. We cannot be one-eyed because nobody is not going to suffer as a result of a closure of a business. I think all people in small businesses—management as well as staff—suffer as a result of that situation and I think it is very very important to have a balanced approach to consider what is fair and what priority should be given to workers and to consider the downstream effect that I have been talking about. I think this bill has a balanced approach and a fair approach to the issue of redundancy. 
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 75 
New Zealand Labour 52; New Zealand First 13; Green Party 8; Progressive 2. 
Noes 42 
New Zealand National 25; ACT New Zealand 8; United Future 8; Independent: Awatere Huata. 
Part 1 agreed to. 
Part 2 Amendments to Insolvency Act 1967 
MARK PECK (Labour—Invercargill) 
: 
 Part 2 amends the Insolvency Act in a number of ways. Essentially it deals with issues in the Insolvency Act providing for no lien over a bankrupt’s books. It deals with priorities and makes some consequential appeals as a result of the amendments that are made as well. The importance of this is to establish redundancy as part of the priority for employee entitlements. Prior to that employee entitlements were basically wages holiday pay and other incidentals that might have been accrued during the time of employment. But as has been discussed in the currency of this debate many employees in the process of negotiating their redundancy deals trade away things to obtain that little bit of security at the time that a company might be going through hard times and subsequently folding up. 
Rick Barker talked a lot about Tomoana Freezing Works and I have talked about Ocean Beach freezing works. There are a myriad of freezing works in this country that have been affected. I thank Phillip Field for raising the issue of Patea. Having come from Taranaki myself I know that the Patea community was absolutely rent asunder when that particular freezing works closed. Nobody wishes that on anybody or on any community and nobody wishes redundancy on anybody either. Nobody wants to see a firm fail and go under but that is the cut-throat nature of business and as I mentioned earlier in a contribution in my electorate there is talk about building another freezing works. I have to say that that concerns the Alliance freezing company quite seriously. It has been through major reorganisation and having had to cut chains to close Ocean Beach Freezing Works and to bring in double shifts to be able to process the stock now faces the establishment of new chains. I do not know—other speakers might want to elaborate—when a new chain has been built in New Zealand in the freezing industry for quite some period of time. These are the pressures that go on businesses as they face their normal business. So including the redundancy settlement as part of the employee priorities simply means that that part of the wage and salary package is protected to a maximum of $15000. 
Let us go back to the situation at Tomoana Freezing Works. We are talking about $35 million across 2000 workers. That is a heck of a lot more than $15000. That is a dead loss to those employees. Those particular workers were totally unable to do anything about looking after their mortgages and their families. I am sure Rick Barker can tell the Committee some of the stories. Workers are very reluctant to come forward to tell us the difficulties that they face when they are trying to look after their families on no income. It is highly personal and highly embarrassing to them and a little bit of decency about protecting those particular matters is important. 
The other thing that this particular part of the bill does is ensure that there are periodic adjustments and it provides the mechanism for the periodic adjustment to occur. That will mean that the House will not have to revisit this matter again once this particular legislation has been passed. It will mean as a result of cost-of-living increases that in time these amounts will be reviewed against that and increased by Order in Council. That will mean that this will not diminish over time and will not devalue as a result of inflation. Those workers who subsequently find themselves in a position later on in their working lives to lose income are able to pick up their redundancy payments at a rate more appropriate than perhaps the $15000 rate. Again I thank the select committee for the work it did and I thank the submissioners who submitted on this part of the bill. I say to the Committee that this legislation is moving this part of our industrial law into the 21st century. 
JOHN KEY (National—Helensville) 
: 
 Most members of this Committee can understand why Mr Peck has such an interest in redundancy and even have some sympathy. Members may wonder what Mr Peck has done to deserve Trevor Mallard and his Sonny Bolstad impressions down in Invercargill. 
I want to pick up on just two points before I move into what I think is the main issue here. The first is the comment that Mr Barker made that somehow the ACT party’s position was driven off the bankers supporting the ACT party. It may come as quite a shock to Mr Barker who may not know who funds the Labour Party but if he looks at financial contributions from financial institutions he will see quite clearly that the largest benefactors were the Labour Party and the National Party—not the ACT party. He might want to check that out. [ 
Interruption 
] It is a matter of public record and if the Minister does not understand that then he should have a look at it. 
The second point I want to make concerns the issue that Mr Tisch raised regarding growers and how their losses will be suffered and I think it is testimony to how the Labour Government sees self-employed people. The growers in the Manawatu Rangitikei and the Horowhenua who are losing their entire livelihoods and will not be protected by some sort of union-driven status of redundancy bill are being offered three-quarters of the unemployment benefit by this Government. They are not even good enough to get the unemployment rate—they are being offered three-quarters. That is what the Labour Government thinks of self-employed people—when they are really down as a result of the flood they get three-quarters of the unemployment rate. It is a disgrace. 
I want to pick up on a point made by Mr Prebble in his speech in relation to the fairness of these redundancies and the fairness of this legislation. The logic behind this bill is so silly that one would imagine that nobody has taken a reasonable time to look at it. I want to make this first—the first and most obvious point. There is nothing stopping any employee in New Zealand from having this treatment currently. Employees can negotiate the position. They are absolutely free to negotiate this position with employers today—and they do not do it. Why do they not do it? They do not do it because firstly they do not see the value in it doing it and secondly employers understand what the impact will be on the banks’ capital structures. The second point I want to make in relation to fairness is that if anybody can see that a redundancy is likely to happen if anybody can see that a collapse is likely to happen it is the people inside the company. It is not people outside the company. We have all had experiences of going round to large employers in New Zealand and we can recognise when the writing is on the wall. So if people need protection then it is small businesses that operate with those and customers. 
I make one final point. We have heard quite a lot of debate about the issue related to small businesses but no mention has been made of customers who pre-pay for activities with a company that goes broke. There is a large group of New Zealanders who will be adversely affected. However I want to speak tonight mainly about what this bill will do to the capital structure of investing in New Zealand and in companies. One of the great tragedies of this bill relates to whether New Zealand is committed to getting back into the top half of the OECD—and we know that the Government does not like to talk about that. We know the Government has abandoned that proposition. Treasury tells us day after day as it tells the Government that the Government’s policies are anti-growth and that they will not deliver higher living standards for New Zealand any time before the 21st century—unless with the good grace of the people of New Zealand we can put a National-ACT Government in power which I have no doubt will occur very soon. Very importantly we need entrepreneurial activities and we need banks to want to invest in small businesses. The first thing this bill does is make small companies that interact with large companies more vulnerable. That is exactly what this bill does. It makes them more vulnerable and less likely to get a payout than anybody else. Banks will automatically adjust their risk profile if this legislation goes through. 
Peter Brown 
: Rubbish! 
JOHN KEY 
: The member says “Rubbish” but he has not actually spoken to the banks about it. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 Part 2 sets out a new order of payment. I have a question for Mr Peck if he is able to answer it. It would appear from my reading of clause 8 that one could actually sign a redundancy agreement the day before a company goes insolvent and as a result of that the employee would immediately get a credit. Is that correct? If so then we are enabling people to “defeat the creditors” and that is regarded as very naughty. In fact a person can go to jail for that. It appears to me that if the manager of a company realises that the firm is going broke then provided that person is not a director he or she ought to negotiate a redundancy agreement with himself or herself. He or she probably can being the manager. 
Nothing I have seen in the bill stops a manager of a company provided he or she is not a director from negotiating with himself or herself signing an immediate redundancy which would be for only $15000 then going to the liquidator and putting the company into liquidation. Is that correct or have I misread it? It may be on reading section 104(1)(d)(iv) in clause 8(1) that it has to be 4 months before a company is put into liquidation. However I would like an answer to that question. Members have been telling us how carefully they have studied it so Mr Brown could tell me. 
Are we really allowing the manager of a company to do this—a manager who may have made the company insolvent through his own misdeeds? Perhaps the manager gambles and drinks and is told by his accountant that he has to put the company into liquidation. The manager may say: “Nick I’ve just got to do one thing first. I need to negotiate myself a $15000 redundancy. Just wait a second while I sign the agreement then I’ll put the company into liquidation.” Are we seriously doing that? If we are I assure the Committee that what I am describing will not be a joke; it will happen. Of course it will happen. Human beings are not perfect but they are very ingenious. If the incentive is for a manager to write himself or herself a $15000 redundancy agreement because he or she will get priority over everyone else—and he or she will get paid—then that is exactly what will happen. 
Where is the commercial logic in that? Where is the morality of it? What is the point of us having an Insolvency Act that states it is a criminal offence for a person to defeat the creditors when we then put up a measure that enables people who put a company into liquidation to give themselves $15000 redundancy? I would like that simple question answered. Am I reading it correctly? If I am not what is the situation? It would appear to me that a redundancy deal signed the day before a company is put into liquidation would get priority. If that is so then there is nothing to stop a manager if he or she has the proper authority from signing himself or herself a $15000 redundancy deal. How can we possibly think that is fair law? 
BRIAN CONNELL (National—Rakaia) 
: 
 Normally I start my speech in these debates by saying that I am pleased to take a call but I am not. I feel compelled to take a call because I think that this legislation is some of the worst that has been perpetrated in this House. 
In my last call I was speaking about insolvency and working through an example that I did not conclude so I will take the opportunity to do that now. Members will remember that I was saying that the receivers had moved in and that there was $35000 in the bank that was owed to creditors. Under this legislation the employees are owed $75000 not to mention their superannuation holidays and wages owing—and I would have made that point more carefully had Mr Barker allowed me to. Thirty-five thousand dollars does not cover the redundancy liability so mum dad and the kids have their house sold from underneath them. It is worth $150000. The employees who did none of the risk taking will divide up the spoils. They will get their wages holiday pay etc. and now they will get $15000 to boot. Wages holiday pay and redundancy sees them get $17000 each and on a rough calculation a grand total of $85000. There is a shortfall of $50000 owed to the employees so they will be working to sell up mum and dad as well. It will pit Kiwi against Kiwi and mum and dad against mum and dad. The bank takes the balance to cover the loan of $70000 and that is fair and reasonable because it is protecting shareholders’ funds—the same people the mums and dads who make deposits. Seventy thousand dollars plus $50000 for the quicker people in the House is $120000 a positive balance of $30000 with regard to the value of the house. Moneys owed to other creditors amount to $35000; therefore mum and dad are now left penniless if not bankrupt and the employees have the option of either going on to the dole or working elsewhere. That sounds really fair does it not? It sounds very fair indeed. Well I do not think it does. 
I shall now respond to the comments made by Mr Field. I thought that his contribution was very level headed and I commend him for it. I tell Mr Field that the workers and the mums and dads who run a business are equal. Why should we cherry pick? Why should some be more equal than others? Because mum and dad form a business or incorporate they are just workers who are deriving their income in a slightly different way. This legislation will not encourage people to take risks. Essentially we will end up getting a very risk-averse culture where it is just not seen as being worthwhile to put up one’s house as a stake in order to raise money to get into business. 
Mr Key raised the issue of the cost of capital. I ask Mr Peck: what will this do to the cost of capital? I would like him to take a call to answer that question. I do not think he really knows the answer so it is probably unfair to ask him. However I will give him the answer. This bill will increase the cost of capital because banks will not have the same level of security—and banks price for risk. The other thing the bill will do is remove capital out of the marketplace. Banks will simply say: “The deal is going to be shorter so we’ll call up money sooner or we’re just not prepared to risk at all.” 
This legislation will do immense harm and for the life of me I cannot understand why Mr Peck and his Government colleagues cannot heed these warnings. They are not coming just from me. The Status of Redundancy Payments Bill was opposed—and Mr Peck says by just a few—by Business New Zealand the Financial Services Federation the New Zealand Business Roundtable the Joint Insolvency Committee of the New Zealand Law Society and the Institute of Chartered Accountants of New Zealand Federated Farmers and I shall stop there. Does anyone in the Chamber actually support this legislation other than unionists? Interestingly enough the Council of Trade Unions submission was one of six in favour of the bill. Others expressing similar sentiments came from the Rail and Maritime Transport Union from the New Zealand Nurses Organisation— 
PAUL ADAMS (United Future) 
: 
 The point I would like to pick up on—and I agree that the Hon Taito Phillip Field did make some very good and sensible points in his speech—is that when a large business fails in a small community it can also bring devastating results. I agree with that. 
From United Future’s perspective—and we are a true centrist party so we do try to see both sides of the spectrum and try to come with a common-sense middle ground—what we need to understand is that big business is great. We would agree with that and we would support it. But a big business does not just arrive all of a sudden except in some cases when it comes in as an overseas entity. 
 But take for example Stephen Tindall and The Warehouse. That business started in a building that we once shared. He started with only one or two employees and the business gradually grew. Any sporting club that fails to cultivate the youth and stays only with older people eventually dies. 
In this country we need to see the importance of small business. I take the Hon Richard Prebble’s point that over one-third of our population earns their money from outputs now. That will only increase. Much as the Government says that we are the least regulated it is the type of regulations that we are talking about here that is putting the brakes on small business. It is making people less likely to want to employ staff. They would rather employ contractors because they do not want to deal with all these issues. I think that as MPs we have a responsibility to make a fairer level playing field that will not only support people who want to be wage earners but equally will support people who are prepared to take a risk put their house on the line and give it a go. Because if we fail to support those people we will not have the Stephen Tindalls in this nation: the people who are prepared to put everything on the line to serve the population of New Zealand. A business is only there to serve its customers and it rises and falls on its merits and ability to serve its customers well. 
We create difficulties when we continue to bring in legislation that will affect those entrepreneurs who want to go out and work under contract. We say to them that we will give support to the contracts that wage earners have but the contracts that contractors may have with a business in order to get paid will be put aside. Contractors will wait in line after the Inland Revenue Department after the banks and after the redundancy payments. As we have heard a few times we are not talking about workers’ wages or holiday pay—nobody would want to restrict those payments. But redundancy clauses can be put into many packages and whichever way it is viewed it is payment for work that has not been done whereas possibly one-third of the workforce are on an outputs-based income. 
United Future cannot in any way see the fairness or merit in paying people for work that has not been done ahead of paying people for work that has been done. Any leader who does not base his or her efforts on truth compassion and mercy really is in trouble. I seriously ask Mr Peck and those who are supporting this bill to ask themselves whether they are showing compassion and mercy to the entrepreneurs of this country who lay everything on the line to help other people get work. All they are asking for is fair pay for themselves. 
Hon ROGER SOWRY (National) 
: 
 It is good to follow the United Future party. I note the member said it is the true centrist party and it is—it controls half a percent either side of the centre and long may it continue to do that. 
This bill is a terrible bill. We are debating Part 2 and all of it is new. The entire part was introduced at the select committee. It did not form part of the original bill. Mr Peck said that people did not come along to the select committee and argue and make submissions so on that basis we should put the bill through. I say to Mr Peck that the public and business sector at large did not believe that the Government would pass this bill. They did not think it would be as stupid as that. I challenge the Government to send this bill back to the select committee adopt it as a Government bill and tell the people out there who will be really hurt by this bill that the Government is prepared to listen to them. 
But the Government will not do that even though it knows that lots of small-business people stand to lose the shirts off their backs. That is the reality of this bill. Any small business that has paid out for goods or services and provided them to a large company that then becomes insolvent will go to the wall whilst the workers get their redundancy. That tells us what Labour’s priorities are. Its priorities are not about creating wealth. Labour does not give a fig for small businesses out there that are providing services to larger businesses. This bill offers them no protection—none at all. 
Hon Rick Barker 
: It’s not— 
Hon ROGER SOWRY 
: Rick Barker says that it is not designed to. That is fine. So small businesses will go to the wall? 
Now I come to New Zealand First. I cannot understand why that party is supporting this bill. It does not fit at all with the leader of New Zealand First who has championed small business during his time in Parliament. How does New Zealand First argue that this bill is good for a small business that is providing goods and services to a large business when it places it at risk? I cannot see how New Zealand First which normally claims a lot more common sense on these issues can support a bill that puts lots of small businesses at risk. 
Hon Rick Barker 
: Rubbish! 
Hon ROGER SOWRY 
: That is an intelligent interjection from the member. Let us consider a rest home that goes into receivership. It happens. 
Hon Rick Barker 
: A who? 
Hon ROGER SOWRY 
: A rest home. Is the member aware of rest homes? The staff component is about 40 percent of the wage bill. The rest home has a redundancy agreement so that all the staff—all the nurse aides—walk away with a couple of thousand dollars redundancy. Who misses out? The suppliers do. The people who are owed money for supplying food security services checking alarm systems and all those personal services miss out—lots of tiny companies and small businesses. No Labour members have got to their feet to say they think that workers deserve more than small businesses. Why does Mr Barker think that all the little businesses that were providing services— 
PETER BROWN (Deputy Leader—NZ First) 
:  
I will try to answer some of the questions that have been raised in this portion of the debate. Firstly the Hon Richard Prebble gave the scenario of a manager who knowing the company is about to go belly up the next day signs up his own redundancy agreement which is capped. This bill includes holiday pay wages and redundancy. The $15000 cap does not relate just to redundancy; it relates to everything. If a manager is as desperate as that—and I do not know a manager who would be inclined to do that but I accept that the honourable member might know of somebody—then I am prepared as we are in the Committee stage to support an amendment to this bill that will address that concern and exclude directors and company managers who are likely to do such a thing. I am certain someone could work out a little bit of wording and New Zealand First will support a clause preventing a manager from ripping off the system. 
In terms of the point raised by the Hon Roger Sowry I say to that member that we are talking in the main about employees of large companies. Not many small businesses employ unionised workforces that have redundancy agreements but there are— 
Hon Roger Sowry 
: We’ll wait for the next bill. 
PETER BROWN 
: We will wait for the next bill but we are talking about this bill at this point in time and the member should not get confused. 
Lindsay Tisch 
: Look ahead. 
PETER BROWN 
: The member has to be kidding. Does he think ahead? That is why Don Brash this morning or this afternoon was in Katikati. He blocked off the road and the car-parks for a paltry little crowd. Is that thinking ahead? 
Dr Wayne Mapp 
: There were 600 people. 
PETER BROWN 
: I would not bet on that. [ 
Interruption 
] I do not mind those guys chipping in but it is a little bit disconcerting when they are seated behind me. Never mind they want to have something to say. 
We know that with many redundancy agreements signed up in this country the working people the employees have made some sacrifice to get a redundancy agreement. In essence it is like an insurance policy. We know that over the years things have gone wrong in many industries. I asked the library to research where there have been major redundancies. The library gave a summation of such a size it is hard to collate including the meat industry sharemarket industry clothing industry car industry airline industry and shipping industry as well as stevedoring. 
If the National Party wants to dismiss that information so frivolously and as Mr Connell earlier suggested that this bill was opposed by a number of submitters then I ask those members why they did not oppose it at the Commerce Committee. I ask National Party members why they signed up to this clause in the commentary on the bill: “We recommend that redundancy entitlements be included within the employee priority.” In other words the total contract is treated as one. “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 is what National Party members signed up to at the select committee. 
Hon Richard Prebble 
: Were they actually there? 
PETER BROWN 
: That is a good question. But the document tells me there were two National representatives on the select committee: the Hon Maurice Williamson— 
Hon Richard Prebble 
: Maurice Williamson would not have been there. 
PETER BROWN 
: —he might not have been there; the member thinks not—and their current deputy leader Gerry Brownlee. He might have had other things on his mind. [ 
Interruption 
] Well if that is supposedly the Government-in-waiting God help this country. If that is what those members do with one little bill like this—sign up to it not know what they are doing and not turn up at the select committee—then God help this country if they ever come to the forefront of it. If that is true that is a disgrace. 
This bill puts working people’s contracts to the fore and that is a fair way of handling things in the view of New Zealand First. We support this bill and will be pleased to see it go through the House in short order. 
Hon RICK BARKER (Associate Minister for Social Development and Employment) 
: 
 Peter Brown had some very good advice for the National Party and the people it claims to represent. It is very simple: “If you don’t like it or agree with it don’t sign up for it.” It is as simple as that—even Richard Prebble would agree with it. But if they sign up for it and agree with it then they should be bound by it. 
There was a very interesting presentation given recently by Mr Roger Sowry. I note Mr Sowry is the previous chair of the Commerce Committee. This bill has come back from that committee but do I see any dissenting report on it from Mr Roger Sowry? 
Hon Roger Sowry 
: I raise a point of order Mr Chairperson. It is true I am now the previous deputy chair of the Commerce Committee and I want to thank Labour members for voting for me for that role. But in fact I was not on the committee at all when the bill was before it. I wish I had been because National would have opposed it. 
Hon RICK BARKER 
: Point of order— 
The CHAIRPERSON (Hon Clem Simich) 
: No that is not a point of order and we will not get into a debate on it. 
Hon RICK BARKER 
: I should be protected from spurious points of order and that is a debatable point. 
Anyway I want to make the other point. The deputy chair of the Commerce Committee was Gerry Brownlee that outspoken bombastic deputy leader of the National Party. He speaks out volubly on Maori affairs. He does not know anything about that area but that does not stop him from speaking out on it. But when it comes to this very key heartfelt issue for the National Party what do members see from that party? Silence. I cannot find a dissenting opinion at all. 
That does not surprise me because I listened to one of the presentations by Roger Sowry before and he talked about the Lakeview Farm Fresh meat-processing plant being in Dannevirke. Well I have news for Mr Sowry; it is in the Otaki electorate. No wonder he was not elected but defeated time after time. He does not know where these places are. Has Mr Sowry ever visited the electorate or does he just put his name on the ballot paper? 
Hon Member 
: He’s passed through it. 
Hon RICK BARKER 
: I am reliably told that he has passed through it three times while going to Auckland. He might have stopped for a cup of tea at Levin. Anyway I say to Mr Sowry that Lakeview Farm Fresh is at Lake Horowhenua in the Otaki electorate; it is not in Dannevirke at all. How does that give credibility to Mr Sowry’s opinion? 
But he asks a fair question: “What about small business?”. Well what about small business? I say to members that this is not about being anti - small business pro-this or anti-that. What this is all about is that a long time ago for the amount of money guaranteed for wages and holiday pay which is owed—which Brian Connell said was not worked for and not earned but I will put that aside for the moment—the bar was set much higher. It was the Tory party that cut the level back. The Tory party did that—but it is nothing unusual. The Tory party cut penalty rates for workers did it not? It had gone around before the election and said there would be no cuts to penalty rates. 
The CHAIRPERSON (Hon Clem Simich) 
: I tell the member he has had more than half of his time and it would be nice if he would come to Part 2 of the bill. 
Hon Roger Sowry 
: I raise a point of order Mr Chairperson. Given that your predecessor has on many occasions ruled that parties have to be called by their correct names I would appreciate your upholding the same ruling in this Committee. The name is the National Party and we are proud of that. The Tory party is in another part of the world but unfortunately the member does not seem to understand that. 
The CHAIRPERSON (Hon Clem Simich) 
: I thank the member for that. 
Hon RICK BARKER 
: Part 2 is very interesting because it talks about priorities and allocation. When we talk about priorities we can see what National Party priorities are about. Those members want to maintain the boundary so that when there is a diminished amount of money left over to pay out most of it to goes to business. They want most of it to go to banks. They do not care about the ordinary working people who have sweated and slaved over those jobs. 
When a business goes broke people not only lose their income; they lose their livelihood. Their life’s work could be put into those businesses. In the example of a rest home which Mr Sowry talked about a supplier like a butcher might turn up and put over a few shanks of meat but that butcher will be serving many other rest homes. But for people working in the rest homes their jobs are their full-time jobs and their only jobs and their livelihoods are at stake. 
We say the bar that was reduced by the previous National Government to a miserable $6000 should be increased to $15000. As Peter Brown put it very well: when someone has signed up for a redundancy agreement we believe in the sanctity of that contract—unlike United Future members who say that it does not matter what has been signed. We say we must honour the sanctity of the contract; if the employer has agreed to it and signed up to it the deal should stick. 
We are very happy to say that working people should have redundancy payments holiday pay and annual leave protected to a maximum of $15000. That is what the bill is about and we are very happy with that. If the National Party wants to take more off workers we are not surprised because when it comes to the matter of 4 weeks’ annual leave what have those members said? They will abolish it. We have said 4 weeks’ annual leave but the Tories want to cut it to 3 weeks’ annual leave. 
MARK PECK (Labour—Invercargill) 
: 
 There was one serious matter raised during the debate that I felt should— 
Hon Rick Barker 
: I thought I raised at least three. 
MARK PECK 
: I really appreciated the member’s contribution to the debate but the Hon Richard Prebble raised a serious matter concerning a redundancy agreement being negotiated just prior to bankruptcy or litigation. I am advised by the officials that the law is not clear but it is unlikely that the payment could be challenged by the liquidator or official assignee on the basis that it was giving an unfair advantage to the employee because the employer would not be a creditor at the time the contract was negotiated. 
However I draw members’ attention to clause 5(7) which deals with the definition of who is an employee and who is not. It is quite clear that in any such circumstances the employee must be a genuine employee hired by an employer “to do any work for hire or reward under a contract of service”. So in the situation of it being alleged that a form of insider trading could have been entered into—to assist employees and disadvantage other creditors—the question would have to be asked why a company would want to do that particularly in the light of it not having had a redundancy agreement in the past. Most particularly it would be unable to assist anybody who had any interest in the ongoing nature of the business especially shareholders family members directors or the like. 
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 75 
New Zealand Labour 52; New Zealand First 13; Green Party 8; Progressive 2. 
Noes 42 
New Zealand National 25; ACT New Zealand 8; United Future 8; Independent: Awatere Huata. 
Part 2 agreed to. 
Clauses 1 and 2 
MARK PECK (Labour—Invercargill) 
: 
 Under the new Standing Orders this part of the debate is a little different. Essentially in dealing with clauses 1 and 2 we can assume that the matters around the title and the commencement date have been traversed in the course of the debate so it is an opportunity to sum up the debate and the issues. 
Lindsay Tisch 
: No! 
MARK PECK 
: Yes indeed it is. I suggest that the member reads his Standing Orders report. He will find that that is exactly what this part of the debate is about. 
First of all I thank members for engaging in the debate. It has been quite robust and has raised some serious issues. Indeed Opposition issues in respect of the way business will be treated particularly small business are matters that this Government has been concerned with and has dealt with in other legislative ways—in particular in the Construction Contracts Act which deals with the issue of progressive payments for small contractors. 
The Joint Insolvency Committee is still doing quite a bit of work in insolvency law and I am sure that as that committee progresses its work further announcements will be made to the House—be they in the form of reports or legislation. Of course that is a matter totally outside the ambit of my remit tonight. 
The contents of this bill are encapsulated quite well in its title. It will raise the priority status of redundancy payments under insolvency legislation and within the terms of the Companies Act in order to ensure that where a company goes into bankruptcy its employees have the protection of $15000—being their wages holiday pay and any component of a negotiated redundancy agreement. 
I want to thank the New Zealand First members for raising two principles in the debate the first being that a company should not enter into a redundancy agreement unless it intends to honour it—and New Zealand First is prepared to support the bill on that basis. Secondly they raised the point of the rights of workers in an industry. They outlined a number of industries in which redundancy has become a feature simply by the nature of change in the way work is done or the incredibly competitive nature of those particular industries as they have tried to survive. 
During the debate there has also been discussion about it being a sad thing when companies close. We all know that. We know about the disruptive effect of closures not only on employees their families and their communities but also on the business community. Closures impact on business confidence and they are something that all of us hope will never occur. Unfortunately in the nature of business they do happen. 
I am pleased to say that the bill has been well debated in the Committee stage. I think it is right that the commencement clause clause 2 provides that there is a period of grace for employers to get their heads around the new legislation. By virtue of the fact that the bill comes into effect on the 60th day after it receives the royal assent it will allow employers and their advisers to do their homework so that they are able to implement it in the way intended. 
PANSY WONG (National) 
: 
 I find it quite interesting that although we are supposed to be debating the title and the commencement date Mr Mark Peck did not quite bring himself to talk about the title. I gather from his whole speech that he is exceptionally defensive and apologetic towards small business. So he should be because this bill once again demonstrates the problem of a Labour Government that does not act out of principle but tries to be all things to all people. In this legislation it tries to please employees of a business that goes bankrupt who have negotiated redundancy packages without thinking about what will happen to the employees of the creditors—the suppliers—of the business that do not get paid. When suppliers cannot get payments from businesses that are in trouble what happens to their employees? 
That further demonstrates what happens when a party like Labour is in Government. It continues not to think about principles but to act on vested interests—lobbied by the unions of one particular sector—and forgets about the employees of the suppliers that are creditors to those businesses in trouble. Who will protect them? I find it really difficult when a Labour Government introduces a bill that upsets very long-held principles and commercial practices without very good background and analysis. 
Some of my colleagues mentioned that it might be a reaction to the closure of freezing works. My we are reaching back into history! That is the problem of this Labour Government—it still operates in the 1950s and 1960s. It is still fighting the class war when right now it is the year 2004 and employers understand that their most important business assets are their people. 
The National Government’s Employment Contracts Act created a very flexible environment in which individuals could negotiate directly with their employers. Unfortunately once again we face a Labour Government that operates in the 1950s and is starting to sneakin amendments and changes to legislation that no longer reflect contemporary working conditions in New Zealand. 
 I want to briefly mention the title and make the point which National has been making for a long time that it should really reflect more closely the intention of the bill. To simply call it the “Status of Redundancy Payments Bill” does not tell a lot of people what the bill is all about. It seems to me that it is more appropriate to call it the “Changing Status of Redundancy Payments Bill” or the “Creating Further Redundancy Payments Bill”. 
When Mr Mark Peck mentioned the commencement date I wondered why the commencement clause refers to this magical figure of the 60th day. I am not too sure what is magical about the 60th day of this legislation being in force. Does it mean that it will take that amount of time to educate employers about what the Labour Government’s plan is and to inform business of these changes? Will Mr Mark Peck tell the public whether there will be a follow-up? Will there be an assessment of the consequences of this legislation? 
The Government says the bill will not change much so why is it wasting Parliament’s time changing a well-known commercial practice that has been in existence for quite a long while? The National Party will definitely vote against this legislation. It is not a party that believes in a U-turning leader. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 This bill is correctly named. I think that the title reflects what it is all about. The Status of Redundancy Payments Bill basically provides for employees who have signed a redundancy agreement with their employer to have a higher status in the pecking order if the firm wants to needs to or does go belly up. [ 
Interruption 
] I cannot see exactly what the member is doing. I wish he would stop echoing like a sparrow at the back. 
Over the years thousands of people have been made redundant in this country. I listed them before from press cuttings I got from the library. They are people from the meatworks the sharemarket the clothing industry the car industry the airline industry the stevedoring industry and the shipping industry. Thousands of people have been affected and without exception every one of them went home feeling quite distressed and in quite some anguish. 
In many cases when these firms have gone belly up contractors have lost some money and some as a result have gone into liquidation—but not always. In the main small businesses that service large businesses survive because they have their eggs in many baskets. When I was the manager of a stevedoring company from time to time I was offered the chance to tender for a stevedoring contract from an organisation that was perhaps a little suspect— 
Richard Worth 
: Dodgy. 
PETER BROWN 
:—or dodgy. I would put in a tender but then I would ask for a financial advance to lessen my risk. Nine times out of ten I would receive such. Occasionally a company would be reluctant to give me one. I then evaluated whether the risk was greater than I first thought and it was my choice whether I took the contract. 
Small-business people are not dumb. They know the wiles of the world and the way things operate. I hear National Party members in particular talk about employers as if they do not have a clue how to do anything. I wonder whether any National Party members have had any experience in real business operating at the coalface with people. 
Richard Worth 
: I have. 
PETER BROWN 
: A lawyer says that he has had experience in real business. It is encouraging to know that a lawyer has had hands-on experience in real business where he has been dealing with staff in sufficient numbers. 
Employed people are entitled to some protection. They go to work daily and rely heavily on the employer to do things correctly to look after them and to offer them some security of employment. This bill moves the redundancy payment one step further to give them that protection. Nobody wants companies to go bankrupt nobody wants to see liquidations nobody wants to see people made redundant and nobody wants to see contractors lose in these sorts of circumstances but when those events occur there needs to be a priority order. This bill changes the current priority order in a fair-minded manner. The cap is $15000 which embraces holiday pay wage entitlements and a redundancy payment. I think that is quite reasonable. I think it offers protection to working people who have signed a redundancy agreement—they get no redundancy if they do not have a signed agreement. There is no gun to an employer’s head to agree to a redundancy agreement. I think that this bill is appropriate and that the title is appropriate. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 75 
New Zealand Labour 52; New Zealand First 13; Green Party 8; Progressive 2. 
Noes 42 
New Zealand National 25; ACT New Zealand 8; United Future 8; Independent: Awatere Huata. 
Clause 1 agreed to. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 75 
New Zealand Labour 52; New Zealand First 13; Green Party 8; Progressive 2. 
Noes 42 
New Zealand National 25; ACT New Zealand 8; United Future 8; Independent: Awatere Huata. 
Clause 2 agreed to. 
MARK PECK (Labour—Invercargill) 
: 
 I move  
That the Committee divide the bill into the Companies Amendment Bill and the Insolvency Amendment Bill pursuant to Supplementary Order Paper 192. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 75 
New Zealand Labour 52; New Zealand First 13; Green Party 8; Progressive 2. 
Noes 42 
New Zealand National 25; ACT New Zealand 8; United Future 8; Independent: Awatere Huata. 
Motion agreed to. 
The CHAIRPERSON (Hon Clem Simich) 
: Before I report the bill so divided I want to congratulate Mark Peck on taking a member’s bill through the Committee. 
Bill reported without amendment.