Fair Pay Agreements Bill

We come now to Part 3. This is the debate on clauses 26 to 61, “Preliminary requirements: initiating bargaining and forming bargaining sides”. The question is that Part 3 stand part.

I’ve got just a few remarks to introduce Part 3. As the Chair has said, this part relates to the initiation of bargaining and the forming of bargaining sides. This is an important part of how fair pay agreements are established. In the first instance, unions and workers are required to initiate for fair pay agreements. There are broadly two pathways—a representation test and a public interest test—for that. Those are described in some detail in this part. There is then an obligation on unions to engage in a notification process to make sure that other unions, but also employers, are aware of that fair pay agreement being initiated after it has been approved by the Ministry for Business, Innovation and Employment (MBIE).

In terms of some of the changes for the consideration of the committee here, the Education and Workforce Committee—I’ve said this before—I think they’ve made some quite useful changes and clarifications there. In respect of the public interest test, the select committee has recommended back to the House and this committee that this be clarified to ensure that for a public interest test to be met, both low pay and one other factor have to be considered. It’s, effectively, narrowed the test from what was originally proposed in the legislation, where it could be any of those factors that were taken into account. It’s now clear that it has to be pay and at least one other factor before the public interest test can be met.

Then, in terms of coverage—we touched on this previously—there is clarification that in the initiation process, the union should, in the first instance, endeavour to describe coverage for the use of the Australian and New Zealand Standard Classification of Occupations and the Australia and New Zealand Standard Industrial Classification codes. That is about being as clear as possible about who will be covered for the purposes of the bargaining of fair pay agreements, noting that the parties could agree to different coverage through the course of the bargaining, but that’s quite an important point and, I think, will provide much-greater clarity, which does address one of the questions which kept coming up from submitters.

In the Supplementary Order Paper 264 that I have put forward, the main change for the committee to be aware of is that there were some additional indicators, effectively, for MBIE to assess whether the public interest test had been met. On further consideration, and in response to general submissions that were received around simplifying things as much as possible, those additional indicators have been removed from the legislation. MBIE will simply need to assess whether a public interest test has been made against the core criteria that are in the legislation.

So there are a number of issues there. I’ll be happy to take any questions that do relate to those matters and other matters that are in Part 3.

Thank you, Mr Chair. For those at home tuning into their crystal sets to watch or listen to this debate on the—misnamed—Fair Pay Agreements Bill, we’re now two and a half hours into this legislation and we’re now starting Part 3 of a bill which has 11 parts. This Government in its wisdom has introduced a very detailed bill which will have very significant effect on our workplaces up and down the country, and this part, Part 3, of course, is one of the meatier parts which we will need to delve into. It’s important that we do get some understandings about some of the issues raised, because one fundamental element of this part is how such a misnamed fair pay agreement would be initiated, because once it starts, there is no stopping. Unless the union, which in all reality would’ve initiated it, changes their mind and pulls out, there is no stopping the process, and there will be a fair pay agreement (FPA). So it is very important what the rules are for starting this and initiating such a process.

The Minister for Workplace Relations and Safety, in his wisdom has introduced three options. First is that 10 percent of a covered workforce may vote for it—10 percent. In most people’s understanding of democracy, they don’t sort of think of 10 percent as being a particularly strong call for change. You know, it’s kind of about the number of people that vote for the Green Party , for example—but not quite—so I don’t think most New Zealanders would indicate—

Hon Michael Wood: Does the member get 10 percent in Epsom?

Hon PAUL GOLDSMITH: Well, that’s a very interesting point, but not quite relevant to this part. But what I was saying was I don’t think most people would be very impressed if the Greens were to rule the country on 10 percent, or just under thereof. Not many people would think that was a mandate. So you’ve got 10 percent—that’s one option.

Then you’ve got the option of 1,000 employees. Now, again, if you happen to be in an occupation where there are 200,000 New Zealanders engaged in that occupation, if we’re in retail or sales or something like that, this Minister is telling us that it only takes 1,000. It may be less than half of 1 percent of the workforce. Just think about that: less than half of 1 percent of the workforce can start a process that cannot be stopped. That, to me, is an outrage—a total democratic outrage.

But no, there’s worse: even if you can’t make it to that threshold, you can’t even make it to half of 1 percent, there’s a third option, which is you can get one of these things if there is a public interest test and you can persuade the chief executive of the ministry of business information—or whatever it’s called—that the fair pay agreement covers an area that is of low pay, little good bargaining power, a lack of pay progression, and inadequate pay and various factors. And so the select committee, again, in their wisdom decided that there must be low-pay provisions. But that doesn’t actually define what “low pay” is. I suppose the first question that I have of many—

Hon Damien O’Connor: You’d find out if you were on it.

Hon PAUL GOLDSMITH: Well, you know it if you’ve got it. That might be the answer from the Minister. You know you’re low paid if you feel you’re low paid. If that’s his definition, then I think there is a certain mayor in Auckland earning nearly $300,000 who thinks he’s low paid and he should only do a 30-hour week on account of that. So maybe he would be included in that definition. I’m not sure. So I’d like to hear from the Minister as to how he defines “low pay”. But, more fundamentally, I’d like to have him explain to the committee and to the people of New Zealand how he thinks that a situation where fewer than half of 1 percent of the employees in a particular occupation or industry can decide for the other 99.5 percent that they’re going to be swept up in a fair pay agreement regardless of whether they want it or not, and how he thinks that is, in any way, shape, or form, a reasonable or democratic thing to do.

So I have taken the liberty of bringing forth an amendment which would actually do away with that proposal and say instead that a fair pay agreement can be initiated if 50 percent of a workforce or an area to be covered agree with it. And surely that is the rational and fair and appropriate way to do it—not 10 percent, not the Greens, but 50 percent; a successful Labour Party or a National Party on a good day or a combination of a number of parties in the political equivalent where you have a majority of people in an area being covered, deciding that they want this. How can that not be a reasonable proposition, as opposed to a situation where a tiny, tiny fraction of the workforce to be covered by a misnamed fair pay agreement would be able to start a process? Because it would be all right if this very tiny minority were able to start a process that that could be stopped in some way, and that if it started and everybody looked at it and said, “Well, that doesn’t make sense; we’re not going to do it; therefore it’s not going to happen. Good night and thank you very much.”, that is not what this legislation does. Once it starts, there ain’t no stopping. There’s going to be a fair pay agreement probably decided by the Employment Relations Authority.

So the Government’s proposal is 10 percent—a very low threshold; less than half of 1 percent in a large occupation or even less; maybe a just a smidgen of a fraction less than 1 percent in terms of 1,000 workers—and, even if that doesn’t work, this rather loosely defined public interest test based on low pay, which I’d love to hear from the Minister exactly how he defines it and what constitutes that in the sense of low pay.

Just briefly while I’ve got some more time, it’s interesting that not all employees who are covered by the proposed FPA need to meet the criteria of the public interest test, which is interesting. So if we’re talking about low pay, it doesn’t mean that the industry itself needs to be low paid; it just needs to be that some members of the industry are low paid. Maybe I’ve got that wrong. But, again, if you were to take salespeople, for example, as an occupation that there was going to be an FPA for—of course, many salespeople if they are, I don’t know, in real estate or selling cars or selling helicopters or whatever might be paid very well; may be paid very well. So they wouldn’t necessarily fall within the category of low pay, although according to Wayne Brown’s definition of “low pay”, they might be. But, of course, all you need is one or two salespeople who are not paid very well, and then you would fall within the public interest test that the chief executive of Ministry of Business, Innovation and Employment (MBIE) can apply. And then, again, you could have a situation where, you know, there might be 200,000 salespeople across the country—I don’t know how many there are—and it’s certainly not 50 percent that I would argue should be agreeing to a fair pay agreement that should agree to it; it’s not 10 percent that the Government thinks; it’s not the 1,000 people, which would be less than half of 1 percent who have to agree with it; it could be that none of them could agree with it; there could be nobody that agrees with it whatsoever. It could be all 200,000 salespeople across the country and none of them agree with it, but the chief executive of MBIE decides to go ahead because there are one or two salespeople that aren’t making much money. Have I got that right and does that make sense?

I’d like to continue on from where my colleague the Hon Paul Goldsmith was talking about before, especially in relation to the at least 1,000 employees covered, and the Hon Paul Goldsmith made the comment around these very large sectors or industries where you would have numerous people working in them—you know, 100,000; maybe even more—and only 1,000 of those is needed to trigger this process, and once triggered it cannot be stopped. He did comment about whether or not this was representative, and I would really want to ask that question again: is it representative?

I’d also like to tie it back to a big part that we discussed in Part 2, which was around good faith. Is this really a bill that is operating in good faith, if you are allowing a very small percentage of the workforce to initiate a process that the vast majority may not be engaged in or wanting to engage in? Have we met that good-faith test where you could have a number of people who for political or ideological reasons or whether they just want to agitate? Or, as my colleague Erica Stanford mentioned before, maybe they are induced by the potential of benefits that the union could represent to them. Are we necessarily meeting that good-faith test in this regard? I would say that I’m not sure that we are, but I would like to hear from the Minister on how he balances that.

I would also like to go to clause 29(1)(a), which was discussed around, you know, receiving low pay for work, and whether that takes account for—a lot of employment arrangements are based on a base salary, as it may be, but there’s also a commission aspect to it as well. It may be, you know, in some jobs that are, ultimately, high paying, however, the base conditions to that are quite low, but that is commonly used as an incentive, especially in the sales industry, to entice employees to work hard and make sales. It is a pretty good model for encouraging people to get out there and work hard. Does it take account of that? I would like the Minister to comment on whether it does reflect commissions. We note that banks don’t necessarily look at commissions or bonus structures when they’re reviewing mortgages, so I’m not particularly sure whether this bill would take that into account. You may have someone that does earn a lot of money, given that they do have commissions in the good times, but when you just look at it on paper, as a bank would do when assessing how creditworthy you are, you may just be on a low base rate.

I’d also like to ask, when you’re talking about low pay for their work, in relation to what are we talking about here? Is that in relation to the minimum wage? Is it in relation to a living wage? Is it in relation to the local environment and the cost of living pressures that they may be facing in their locality? Are we talking about an industry median wage? Are we being cognisant of the fact that it is a global and movable workforce and looking at what international competitors may be offering in this space?

If I move down to clause 29A(1)(b)(i), where it talks about having little bargaining power in their employment, I’d like to ask the Minister, who is the judge of this, how is that determined?

I would also like to then skip down to clause 29A(1)(b)(iii)(A), where it talks about not being adequately paid, taking into account factors such as working long or unsocial hours—you know, late nights, weekends. I’ve certainly done my share of night shifts and they’re not great, and I was compensated for that, but some of those are unique to different workplaces. That’s where we get into issues here, because the different workplaces are so unique and they all have their own little intricacies, and how we are able to then, through this bill—and I would like to know how we can then apply blanket, nationwide, industry-wide, and then take into account all of the variables that each different workplace will be faced with. I think that will be a significant challenge, and is probably quite a blunt instrument in that regard. So I would be interested to hear what the Minister’s response is.

Thank you to the members for their questions. They primarily revolved around the representation and public interest tests. I encourage all members in the debate to read the very good report that was put together by the Fair Pay Agreement Working Group, chaired by the Rt Hon Jim Bolger.

Hon Paul Goldsmith: Elder abuse.

Hon MICHAEL WOOD: I think that’s a very disrespectful comment about our former Prime Minister, who’s played a very significant role in public life and worked very constructively with unions, employers, academics, and civil society more broadly to develop the Fair Pay Agreement Working Group’s recommendations.

It’s really worth pointing out as well, if the member or others wish to read that report—and I would recommend it—that that report confirms that in all respects, except for the universal application of fair pay agreements (FPAs), all of the parties agreed to the key design details. It’s fair to say that Business New Zealand did not agree with the universal application of FPAs; that’s their prerogative, and that’s clearly stated in the report. But all of the other design details were unanimously agreed by all of the parties, including the initiation tests, because the initiation tests, both public interest pathway and representation pathway that members see in this bill, come straight from the recommendations of the Fair Pay Agreement Working Group. So that is the genesis of them.

The reason for where the working group arrived, and the Government continues to agree with this, is it is appropriate to have a test and a threshold, but, by definition, fair pay agreements are mainly in place for workers who have found it really difficult, under the existing arrangements, to organise and to engage in collective bargaining, and prohibitive tests would simply mean that it would not happen. It would be too difficult for workers to be able to access the benefits of collective bargaining, which, ultimately, is the core problem that we are trying to resolve here. That is something that has been commented on by many international organisations who visit New Zealand, that our low rates of collective bargaining lead to some of these poor outcomes in the labour market, and that we’re unusual in not having a sector-based form of bargaining to deal with that.

I also put this to the member in respect of, effectively, the questions of legitimacy that he raises here. I’ve had colleagues of his say that instead of doing this, the Government should just choose some sectors where there are labour market problems, and the Government should just legislate for there to be improvements. Well, what we have actually tried to do here is to set up a process whereby employers and employees can sit down and bargain in good faith, knowing the sectors that they represent and come to those outcomes themselves instead of Government imposing it, or, as opposed to the Australian model, a commission hearing arguments and then determining, instantly, no bargaining involved. So, actually, I think where we’ve landed in terms of the way of doing this is a pretty reasonable way that actually tries to make sure that civil society partners, our social partners, unions, and businesses, can work these things through. That is a genesis of both of those thresholds.

In terms of the public interest test and how those matters will be assessed, they’ve encouraged me to just read a little bit further down to 29A(3), which makes it clear that regulations will be put in place so that the Ministry of Business, Innovation and Employment has guidance to make judgments as to whether those criteria have been set and those regulations will be put in place in time for parties to be able to engage in the initiation process. We will do work to ensure, in those regulations, which are not actually the substance of this debate, but we’ll do work to make sure that those regulations are really focused in on low pay and those other factors and have a reasonable degree of objectivity about them. I think, when it comes to low pay, the members can take it as a given that we will be focused on those people who are genuinely paid at a relatively low rate of pay, at or around or a little bit above the minimum wage.

Mr Uffindell asked whether the representation test met the definition of “good faith”. The Act’s definition of “good faith”, in the Employment Relations Act and in this bill, has a specific meaning that relates to good-faith relationships between parties involved in the bargaining process, so that doesn’t really come into it. The member asked about the role of commission in determining pay for the purposes of this piece of legislation. Generally speaking, commission, because it is variable, no one can rely upon it. It is not considered to be a part of base pay. In terms of who judges who has little bargaining power and all of the other criteria, that role, as this part clearly describes, is the Employment Relations Authority. The member asked about the individual variables that were listed in the bill. As I described in my opening comments, my Supplementary Order Paper actually removes those, so it’s just the core criteria that will be assessed for the public interest test.

Thank you, Mr Chair. I’ve got a couple of things I want to ask the Minister, the Hon Michael Wood, about, one of them is in relation to a Supplementary Order Paper (SOP).

But, firstly, just sticking with the part we’ve been talking about around the representation tests, I guess the question I’ve got is around determining whether or not you’ve met the tests. And I can see here that the union that’s seeking to rely on the representation test must provide evidence to the chief executive that the relevant number of employees who would be within the coverage of the proposed fair pay agreement (FPA) are there.

What I want to know from the Minister about this part is: what information will he be looking for? The question is: if they claim that they’ve got 10 percent, what information will the Minister be relying on to ensure that’s correct? Because the unions won’t necessarily hold information around the total workforce. And we’ve got quite a flexible workforce, so you might find that you’ve got people who are employed, say, in hospitality, who do multiple roles in their job. And it may well be that 50 percent of their job is in, for example, cleaning, which might be something that is being sought to have an FPA on. But the unions don’t have that information.

So, I guess, the question for the Minister is: if the union can’t come up with a thousand, they come up with, say, 300 or 400 and claim that’s 10 percent and provides some sort of evidence, how is the Minister going to know whether or not that is 10 percent of the total workforce; where will he get his information from to ensure that that 10 percent threshold is met? Because the unions won’t necessarily have that information because, obviously, not everyone is part of a union and, as I mentioned, there’s quite a flexible workforce of people doing multiple roles. So who holds that information; how do we know what the total workforce is, when many people are flexible; and how will we know that that 10 percent has indeed been met? That’s my first question.

And, then, I guess, the second part of that question is: is there anything in this bill whereby that could be challenged? So if the major employers get together and say, “Well, actually, no, that’s not 10 percent”, is there a vehicle within the bill for them to be able to supply evidence to suggest that that is not 10 percent and actually challenge that that representation test has not been met, is that something that’s been included, and, if not, why not? Because I’ve not been able to find it. So there’s that part.

I just wanted to clarify: when the Minister was just talking about the regulations that will come into force around the public interest test and around the low pay, will those regulations include the number of people on that low pay? Because that was one of the questions that we asked earlier—that there might be a workforce where there is a small percentage of people that are low paid, and if this was being covered by the public interest test. I understand that, in regulations, it will set what that low pay will be, but will it also set the proportion of people that fall into that, and will there be a requirement to meet a certain percentage—so 5 percent, 10 percent, or 20 percent of that workforce? So those are my first questions about that particular part.

I just want to move on now to the tabled amendment in the name of my colleague Paul Goldsmith—I’m failing to find the number, but we can work it out. It’s around clause 39 after subsection (1) and inserts a new subclause, (1)(a): an employer must acquire permission from each of their employees before releasing their contact details to the initiating union. Now, I do see that in this particular clause, there is a requirement that “The employer must not provide the contact details of an employee who has elected … not to have their contact details provided.” This, sort of, adds a belt and braces to that, requiring the employer to formally request permission from all of their employees before passing on personal information—contact details, email, phone number, or name—of those employees. So it’s just an extra check and balance and step for the employer that they must go through in order to ascertain that one of their employees may well elect not to have their contact details provided, because people are very careful around their privacy these days and may well not want their details passed on to a union. Thank you.

So following up those questions from my colleague Erica Stanford, in relation to clause 30 and 30A, in how the how the chief executive of the Ministry of Business, Innovation and Employment (MBIE) is supposed to deal with an application and what evidence is supposed to be forwarded.

So I’ve made the point—and the Minister didn’t really sort of give a coherent answer to it—as to why we believe that not having 50 percent of a workforce agreeing with it is not a reasonable hurdle to start a process that cannot be finished, and why he thinks that 10 percent or less than half of 1 percent or even less than that if there’s a public interest test met, is good enough. And just saying that the working group said that that was good enough doesn’t strike me as a good answer.

But moving on from that, the question is, well, how do you determine that 10 percent threshold has been met? As Erica Stanford said, there’s no clear way of doing that, particularly in the very complicated circumstances of people doing multiple jobs and getting over that threshold. If over 25 percent of your work is in, then you’re in it, and so how on earth this great logistical exercise is supposed to occur so that we know how many people we’re dealing with in order to work out whether 10 percent have been engaged.

But the question I have is, of course, there is no prescribed way in which the chief executive of MBIE can satisfy himself or herself that the union initiation claim has been met. And why is that? Of course, the legislation is kind of silent on that. So the chief executive gets it, the initiating union claims they’ve got 10 percent and that they’ll come up with whatever justification they come up with.

Then, as far as I can see from the legislation, it’s just up to the judgment of the chief executive of MBIE as to whether that’s met or not. And why did he not consider the Minister and the Government actually being a little bit more explicit about that so that people could reassure themselves that it had been met?

Next question is around clause 31, where it says the coverage of the proposed fair pay agreement (FPA) must be clear enough to enable all employees and employers to determine whether or not they’d be covered, and that will be defined in regulations. Now, of course, you know, the regulations can be changed by Order in Council very swiftly by the Government. So it creates an enormous amount of uncertainty about what’s in and what’s out and how that’s going to be defined. So I’d be interested from the Minister as to how he thinks that’s going to aid the general business certainty context that we’re operating in.

Thirdly, around clauses 32 and 32A: applications to initiate bargaining. It says that MBIE will have a maximum of 30 days, extendable to 45 days, to assess applications to initiate fair pay agreements. But that time frame will come into force six months after the main parts of the bill. So I’m just curious as to that. I hope it doesn’t mean that there is no maximum prior to that six months. Or does he not think that there will be applications through? I’d like him to explain the sort of thinking behind that element of it.

But the absurd part it relates to—it says that MBIE may invite public submissions when considering applications. For example, in relation to the public interest test, whose opinion is that it’s in the public interest? And, you know, that’s a highly debateable thing. Of course, as you know, I’ve already used the example of the Mayor of Auckland, Wayne Brown, thinking he’s low paid on a $300,000 salary. So where that line is drawn is a highly subjective thing.

So it’s a possibility that the chief executive of MBIE may seek public submissions. If he does or she does, then there’s a maximum of 30 working days to do that, however. So he’s got 30 working days—or she’s got 30 working days—to invite submissions.

But the chief executive also only has a maximum of 30 working days to review and decide upon the application. Which is, you know, kind of farcical, isn’t it? So the chief executive comes in, she gets the application to initiate, got 30 working days, but, you know, can include some public submissions, which also could be 30 working days. But it’s all got to be within 30 working days.

It seems very odd. I suppose if you were of a cast of mind where you were thinking that perhaps this Government wasn’t genuine about its desire to have genuine public consultation on whether or not this thing should be done or not, then perhaps you could draw that conclusion by the fact that somehow you’re supposed to have had a period of public submissions of no more than 30 working days within an overall process—where, don’t forget, you know, the chief executive has to reassure himself or herself that the union has either sort of crossed the threshold or 10, or whether it’s in the public interest to go ahead with this fair pay agreement because of one of four criteria being met. So how that timing works is a bit of a mystery to me, and how genuine public submissions are to be included.

I might add why the Minister has regarded that as an optional thing for the chief executive of MBIE. Because if you get to the point so you haven’t met the 10 percent threshold—which we think should be 50 percent; you haven’t met the 1,000 employees but you’ve gone for a public interest test. Why on earth would you not, in every circumstance, offer the opportunity for public submissions on that question?

I think it should be that the chief executive must invite public submissions when considering applications, because, you know, these things—as we said right from the start—once it’s initiated, once it started, there is no stopping it. There will be an FPA. So the starting of it is important.

So I’d be interested in responses to those questions in relation to clauses 30, 31, and 32.

I’m happy to address the questions raised by Erica Stanford and the Hon Paul Goldsmith, which mainly go to queries around the representation test. Firstly, it’s just important to clarify that that test is to the satisfaction of the chief executive of the Ministry of Business, Innovation and Employment (MBIE)—one or tother of the members mentioned the Minister there. It’s not a role for a Minister; it’s a role that sits with the chief executive, and they have to be satisfied. That is a duty and a test that has to be met to the satisfaction of the chief executive of MBIE, taking into account the application that is made, and, if they choose to open up for submissions, additional information that comes forward, most likely from employers.

So in particular respect of the 10 percent test—and there was a question here. The question was: well, how would there be confirmation that a group of workers who had initiated on that pathway did represent 10 percent? That is where the chief executive of MBIE could directly engage with employers to test out the number of people who are within that coverage. So people who are seeking initiation have to be within the coverage that is being claimed for. They could receive that information from employers.

In answer to Erica Stanford’s question: yes, that would be a judicially reviewable action from the chief executive of MBIE.

In terms of the question around the proportion of people who are low-paid, that goes back to a previous answer I have given, which is that that can be set by regulations. That’s in new clause 29A(3)—the question around the proportion of people who would have to be low-paid. Obviously, you’ll have sectors where the vast majority of people, most of us would agree, are low-paid, and we’ll have a small number who are not, and so reasonable proportions will be set there through the process of regulations.

I acknowledge the member for her comments around the Supplementary Order Paper (SOP) seeking changes around the contact details process. That is not an SOP that the Government will be agreeing to. We have set in place, in the legislation, a very clear process. People will be able to opt out if they do not want their contact details passed on, and we think that that is broadly satisfactory.

In terms of clarity around coverage, which Paul Goldsmith had questions around, this goes to clause 31. As I have outlined previously, the Government, again, has the ability to set regulations to provide clarity around coverage, and I’ve confirmed to the committee my intention that we’ll be looking to use the Australian and New Zealand Standard Classification of Occupations (ANZSCO) and Australia and New Zealand Standard Industrial Classification (ANZSIC) codes there, which are well understood and provide good clarity.

The reason we want to do that through regulations is that it could be that things evolve in terms of the tools that are used by employers to understand job roles and job families. ANZSCO and ANZSIC are the most useful tool now, but if that changed, we’d want to provide the flexibility there.

Then, in terms of the time frames—the 30 days or 45 days for MBIE to make assessments and confirm—this was a change made by the Education and Workforce Committee, who, in response to submissions all round, actually, did put in place a number of changes to make sure that the process moves through relatively expeditiously. The reason that it’s six months after commencement is there is a possibility at the outset that you might get a large number of applications come in at once and that could be difficult for MBIE to process. So in that time, they have to process them and respond in a way that’s reasonably practicable, but beyond that point you’d then expect applications to come in a more staggered way, and that’s where the stricter 30/45-day requirement will come in there, and we think that is important to ensure that, ultimately, the entity who is responsible for the system is performing their duties in a reasonably efficient way.

Thank you, Mr Chair. I’d just like the Minister to have a look at clause 29A, “Test for initiating bargaining: public interest test”, and consider the two tabled amendments that I’ve put forward today. The first one refers to clause 29A(1)(a), which says, “receive low pay for their work;”. For clarity we suggest that it be amended to “pay at or near the minimum wage” as they are demographic that the Minister purports to be wanting to help through this legislation, and just for the sake of fact, the supermarkets are often looked at as beneficiaries of this legislation.

The average wage in a supermarket grocery store is $24.82, in a department store it’s $26, and in a clothing store it’s $26.70. So we would suggest that it be closer to that minimum wage. It’s interesting to note that my colleague Rachel Boyack said yesterday that she’s so proud the unions got the Countdown supermarkets at the living wage. The Countdown supermarkets were the only ones that didn’t participate in that particular survey.

The second amendment refers to clause 29A(1)(b)(i), which currently states, “they have little bargaining power in their employment:” We would suggest you have a look at rewording that to, maybe, “a majority are not members of a union” as if the majority are members of a union, they’re already well represented and shouldn’t need this legislation to help them through. I’d ask the Minister to consider that. Thank you.

Happy to provide a couple of quick responses to Chris Baillie’s comments on the amendment that he is tabling. As I’ve canvassed, the Government intends to provide clarity around low pay and that criteria through regulations. I actually don’t think we’re probably too far apart there. I’ve indicated previously that we will be looking to provide a relatively objective measure that is focused in around those workers who are close to the minimum wage. I don’t think we’ll actually get to a position that’s too far apart there. We think it’s more appropriate to do that through a regulations process rather than to embed that in the primary legislation.

In respect of an assessment of bargaining power, I’m convinced that that is the appropriate measure there. It is still possible for there to be workers in a particular sector who perhaps do belong to a union, but for various reasons it might be particularly difficult for them to exercise the ability to engage in collective bargainings. That test around bargaining power is also one that’s already well understood. That is a test that is already in Part 6A of the Employment Relations Act, which relates to particular groups of employees who have additional protection in contracting out arrangements. I think that is the appropriate test, and, for that reason, we won’t be supporting those tabled amendments, but I thank the member for his comments.

Thank you, Madam Chair. I just want to go back to some of the questions that weren’t answered. My question was: how do we know what total size of the workforce is, to determine what 10 percent is? I know that the chief executive must be happy with the application and be satisfied that the test is being met. I’ve got a number of questions. That’s my first question, which hasn’t been answered. As I said, especially when you’ve got a workforce that is flexible that a person might do many jobs within their specific job—so if they work in hospitality, they might do cleaning, front of house, bar, cook, the might do a few jobs—how do we know what the size of the workforce is, and does that include people who do that job for less than 50 percent of the time? So the size of the cleaning workforce—well, that’s a bad example; let’s use the example of bar staff. You’ve got a number of people who cover bar staff in a hospitality job but it’s not their main role—are they included in this 10 percent of the entire workforce? So that’s the first question. How can the chief executive be satisfied that the 10 percent test has been met, when there’s no evidence to suggest what the total workforce is? That’s the first part I don’t think has been answered.

I guess the second part is: how is the chief executive satisfied and what information do you expect that the union will give them to be satisfied? So when they go to the chief executive and say, “We’ve got a thousand members.”, what do you expect will be given? At this point, we have to remember that bargaining initiating hasn’t started, so, therefore, the employers haven’t been required to give the details of all their employees. So the union is going to be supplying information to the chief executive which may just say, “We are confident that we’ve met the 10 percent test and we’ve got 300.” Will they be supplying names and details and contracts to see what percentage of their workers may well be covered in this fair pay agreement (FPA)? What information do you expect will be given and what requirement is there to give that information? I do understand and I know that the Minister has said that if the chief executive is not satisfied, they can then ask for more information.

My next question is: what information is that and how do they get it and where are the privacy protections? This goes back to my initial question of: how do you know that you’ve met the 10 percent or you’ve even met the thousand? People do so many different roles within a job and only part of their job may actually be covered under this particular FPA that’s being proposed. So what that would require would be the union giving details to the chief executive—if requested, I expect, and this is what I’m asking—of a breakdown of the jobs that each of these people do. Is that the level of detail that the chief executive can ask for? That information is private information, so how is that able to be given across? What is the test, I guess, for the chief executive to then be satisfied that the test has been met? Because of the flexible nature of the workforce, there will have to be information given, I expect, that will be quite detailed around the roles of the person and the amount of hours that each of those roles are undertaking to determine whether or not they are actually included, because it will have to be a certain percentage of their work that will mean they’re included in this FPA. So you may well find, if it’s a really big workforce, they’ve got a thousand people and that the chief executive will then be expected to go through, I would assume, every single one of those people, their contracts, their hours of works, and how many hours they work in that particular role. So it’s really complicated and quite convoluted.

I guess the next question is: is that what the Minister expects the chief executive to do to be satisfied, or is he able to just kind of look at it sort of with a helicopter view and go, “Well, you’ve given me a thousand, you say you’ve got a thousand people, the title of their job is ‘hospitality worker’ or ‘bar staff.’ ”? But is he required to go into the level of detail to make sure that the work that they do meets the required percentage to be included in the FPA to count as one of these people? This is really important to make sure that that test is made.

So there are two questions there. One about: how do you know what the total workforce is? And the next part is around the requirements of the chief executive to actually make sure that they are meeting that threshold.

Thank you. Again, I apologise to people who are tuning in and wondering how long this debate will go on. We’re now over three hours and still on Part 3 because it is a detailed bill with an enormous number of complexities that we in Parliament—and this is the process that we’re going through, trying to reassure us, or not, that the Minister has got some clear justifications for what he’s doing. So I want to look at clause 36, where it talks about “Within 15 working days [of] receiving notice that … [an] application to initiate bargaining” has been approved. So this is about starting the process for a fair pay agreement, which, as we’ve said before, once it’s started, cannot be stopped. The initiating union is required to identify and notify other unions and employers who it believes are likely to be covered by the fair pay agreement. Now, I just wonder, logically, practically, and logistically how on earth this is supposed to happen, because the criterion being used is that reasonable efforts have to be made. I suppose my concern is that, in reality, it will mean only token efforts are applied in 15 days. I mean, there’s no way anybody can effectively figure out whether other unions are involved or employees are likely to be covered.

I keep referring to the humble superette up in Hokianga with one or two employees. Now, are we really saying that within 15 days the initiating union is going to sort of be able to get right across the country into the many nooks and crannies if, for example, it’s in hospitality or cleaning? Hospitality, I suppose, is easier because at least you can go through the streets and see that there is a shop there. But when it comes to, say, cleaning, the little mum and dad operator with two employees in Haast, for example—and I was in Haast last week and talking to business owners who were at their wit’s end around just trying to find employees, let alone more regulation coming down the track. But if you’re a little mum and dad cleaning operation in Haast, for example, the conceit or the pretence of this bill is that somehow, within 15 days, a union is going to scour the country and find all these little mum and dad operators and give them notice that there’s going to be a fair pay agreement. We all know that that is just nonsense. The best endeavours will be—and it’s given some indication in the legislation that what they might do is publish a notice in the daily newspapers. So, I mean, that will be of great reassurance to the little cleaning operator in Haast to know that there will be a public notice in the New Zealand Herald or in the Otago Daily Times because, heck, they’ve got nothing to do with their life. They can’t get employees, they’re busy as all hell, they’re trying to make a living, but the expectation is that they will be keeping an eye on the Otago Daily Times for any public notices as to fair pay agreements relating to cleaners. We all know that that’s just nonsense.

So it’s an unrealistic expectation and it creates the near certainty that employers and employees who are caught by the proposed fair pay agreement won’t be notified. The first thing they’ll hear about it is when it actually comes into force and some labour inspector turns up on their doorstep and says, “Oi, you’re not part of this. You’re not paying the correct penal rates”—or whatever it is that’s been agreed without their knowledge—“and you’re going to face big fines.”, which we’ll come to later. So please explain how on earth he thinks that within 15 days this great logistical exercise is supposed to occur, and in any way, does he believe that all the little employer operators—

CHAIRPERSON (Hon Jenny Salesa): Order!

I’m happy to answer questions from Erica Stanford and the Hon Paul Goldsmith now. We had a few interplays around the question on the representation test—the 10 percent test in particular—and the size of the workforce. I’ve responded a couple of times, but if I can clarify again: the point of this test is it is a little more onerous, as the members talk about. The union will need to provide evidence that is initiating that that 10 percent threshold is met. At its simplest, it’s a relatively simple equation with a divisor: how many people have applied, want to initiate; how many people are in that area of coverage. It’s one divided by the other. To get to 10 percent—

Erica Stanford: Yeah, but how do you know the bottom part?

Hon MICHAEL WOOD: If the member will just let me finish—I didn’t interrupt her. The union will be required to provide evidence to that effect. The chief executive of the Ministry of Business, Innovation and Employment (MBIE) will need to be satisfied, on a reasonable basis, that test is met. The chief executive of MBIE, as I have described already, will be able to seek submissions from employers to receive further information to determine whether they are satisfied or not by that. Employers will generally know how many people are employed in different roles. So I think there are reasonable ways of MBIE being able to determine that test in a reasonable way. We’ve said that it’s challengeable if someone thinks that it has not been determined in a reasonable way as well, and there’s a capacity for regulations to be created to give greater guidance to the chief of MBIE in coming to that conclusion. But that is something that I do not expect to actually be as onerous or as difficult as the member has indicated.

In terms of the notification requirements in clause 36 that Paul Goldsmith has identified, this is one of those areas where the Education and Workforce Committee has provided further useful clarification. I just say to the member: he is catastrophising here. How does the member think that when this Parliament makes new laws, or a Government department like WorkSafe makes new regulations, that information gets communicated to the employer in Kaikohe or other employers around the country? It’s through sensible and rational channels. This information will be promulgated through publicly accessible channels, in newspapers, and on websites. There will be a process of contacting employer associations and asking them to feed that out through the networks. It will be through normal communication channels, as we use for those other things that we do as a normal part of running the Government and regulatory systems across the employment relations system. MBIE will have a function there, in terms of getting that information out, as will social partners. If there was a fair pay agreement initiated, for example, within the retail sector, it would be obvious to talk to Retail New Zealand. It would assist getting that information out across their networks. Some of these things are not rocket science, Mr Goldsmith.

In addition to that, the legislation requires that the union must use its “best endeavours” to directly contact employers in that sector, and they will have networks and information to that respect. They must place information on a website and they must also go through the major newspaper. So, taken in its totality, there are number of very reasonable steps which are set out here. And, of course, in particular, I think there is a role that employer associations will play here—they will be contacted and they will let members know. So I think, overall, the answers to the member’s questions are set out relatively clearly in clause 36 and in other parts of this part and they will ensure a reasonably smooth process in this area that, as I say, it is not inconsistent with how other information gets promulgated to employers in the normal course of business.

I move, That the question be now put.

Thank you very much, Madam Chair. It’s a pleasure to take a call on Part 3. And I want to take us a little bit back, if I may, to clause 26(3), then (4). I refer, here, to the linkage of that point with the departmental disclosure statement, section 2.5, which refers to, in particular, the cost burden that will be placed upon employers as a result of this legislation. And, obviously, clause 26(4) initiates the obligations around the employers to undertake obligations that are relating to representation and the requirement to comply around a duty of good faith, etc., etc.

And so the question that I have for the Minister, the Hon Michael Wood, particularly, is: in section 2.5(b) of the departmental disclosure, it refers to estimated benefits in this case, which, of course, will be a cost to employers of $150 million to $600 million of ongoing benefit to workers. I think—for those that are that are sitting at home watching this, which I’m sure there’ll be a large number—on every side of a benefit, there is also a cost. So someone has to pay these benefits. And $0.6 billion is the estimate, here, around what will be the cost on employers to, in effect, affect this legislation—and that’s the increase in labour costs, which would be borne by the employer.

So I’m wanting to get clarity from the Minister on three points, in particular. The range given in the estimate is between $150 million and $0.6 billion. So that’s a pretty big range, right? I mean, that’s pretty significant. So give us some context, give us some substantiation, and give us some confidence around how this number is being determined and, importantly, if this is going to increase labour costs by $0.6 billion, how can that be, in effect, justified in regards to the reality that our business community—I think, all Kiwis, not just business community, all Kiwis—right now are struggling under the significant burden of a cost of living crisis? Adding more cost—and this is not just a little bit; you know, $0.6 billion, that’s a significant amount of additional cost. So I’d like to have a bit of clarity around how that number was ticketed. That also is in reference to appendix one of the departmental disclosure statement where those numbers are quoted.

There’s other elements there, which are costs of bargaining consultation. So, again, that links back to Part 3, clause 26(2)—again, the cost there refers to $1 million to $2 million. Well, that seems to be way out of whack in terms of 150 to 600. I mean, I just can’t see the linkage in terms of how those two numbers relate. So I’d like the Minister to provide some clarity around how the costs of bargaining, in consultation, on regulated employers will be calculated.

The third element is, actually, well, let’s look at the compliance cost on the public sector as a result of this as well, because we talk about the cost burden that’s going to fall on all employers. And the Hon Paul Goldsmith actually referred to Haast—I think he referred to. I was actually in Te Ānau last week, and, I tell you what, the people of Te Ānau, the business owners—we had a meeting with hospitality owners and business owners—they are in strife, and that understates it. And so they are struggling with a workforce crisis. So they’ve now, I guess, as a result of this legislation, according to appendix one of the departmental disclosure, got a train coming at them, you know, a train of cost coming at them. Not only them but, actually, it looks like it costs the Government—according to appendix one, they’re also going to increase by around $10 to $12 million, which seems significantly less than the $150 million to $0.6 billion around the labour costs. So, again, I’d like a little bit of clarification around how that component of what is the cost to Government and how are those numbers being determined, and what is the expectation around the ability for those costs to be covered. Thank you, Minister.

Thank you, Madam Chair. Just going back to what the Minister was saying before about how things would be communicated out—and, Minister, you noted that it would be on websites and publications. It would just be good for anyone at home who’s tuning in or may later want to understand where to look for this: on what websites and publications would notices be made available? You know, 15 days is a pretty short time, and a lot of people aren’t as politically attuned as what we are. I’d imagine most members of the public aren’t trawling through union websites to see when their collective bargaining process is kicking off and what their obligations are under that. So if there’s a bit more clarity around that.

I was also wondering whether the Minister had considered—if it is just going to be on a union website or on an employer’s website—whether any research has been done around how often people actually engage with those sites; whether there are any other ways to notify. And, Minister, you mentioned phone calls. If you’re looking at the retail sector, for instance, that’s a significant number of phone calls. So I’m just a little bit concerned here around the practicalities of that and whether people will actually get visibility of what they need to.

Around the 15 days, I’m curious as to how that time was landed on. That is a pretty short time frame, considering whether the penalties are not engaging, and also, perhaps, people are completely unaware—I know a lot of people just watch sport and reality TV and aren’t looking for this sort of stuff to pop up on their radar. All of a sudden, an inspector turns up and says, “Boo! You haven’t been doing what you’re meant to.” And all of a sudden, they’re faced with penalties. So I can understand the intentions around it, but I would also want to wade through the—not saying that I agree with the intentions, but I would also want to explore how practical all of this is, and the communication to the key stakeholders involved.

Going back to clause 29A(1)(b)(ii)—the test for initiating bargaining—“they have a lack of pay progression in their employment”, how are we determining that? Are we looking through employment contracts and saying that they must be locking in a pay increase every year? I know in several of my employment contracts, I haven’t had anything stipulated around that. So is it a backward-looking thing? Because what this clause looks like is that it’s a forward-looking piece and it is quite uncommon—well, it’s not necessarily common for employment contracts to stipulate that you will have your wage increased at X amount per year, whether it be 2 percent, 3 percent; heaven forbid for employers if it was at Consumers Price Index, but I know the workers would definitely appreciate that. So just wanting to get a bit of clarity around how that was landed on.

In the time I’ve got left, I’d like to jump over to contractual uncertainty, including performing short-term seasonal work or working on an intermittent or irregular basis. Look, the reality is that a lot of people do work on a contractual basis. And some of that is just the way we’ve been moving; a lot of it is also just the way people actually want to operate. A lot of people are stepping out of traditional employment with a big employer and putting out their services as they see fit—as they should be able to see fit, frankly, in a free society—on a contractual basis.

I’ll take a couple of industries and I’ll go with the tech one for starters: a lot of people there contract themselves out. A lot of people in that sector also don’t necessarily get paid a lot, because they’re going into young companies—start-ups or whatever you want to phrase them as—and a lot of their pay isn’t actually through wages, but through equity. And they’re buying something in the hope of being part of something that goes well. Are you then going to say to all of these companies which are on pretty short runways, as far as cash flow is concerned, “Yeah, we understand that you’ve given your employees share plans, but we don’t really care about it; we’re really concerned that you’re paying them a low weekly wage;”—or whatever it may be—“we’re now going to apply an industry standard”—which is inevitably going to be set by much more established players—“and force these little companies to have to cough up with a lot more than they would be able”—

CHAIRPERSON (Hon Jenny Salesa): Order! The member’s time is up.

Madam Chair, thank you. I’m happy to respond to a couple of the questions from Mr Watts and Mr Uffindell.

Mr Watts’ questions were largely focused around questions around costs. To be honest, I’m not entirely clear how they relate to clause 26 of Part 3 of the bill, which relates to the initiation of bargaining, to be quite honest. The reason that there are a range of costs, none the less, in the information produced by the Ministry of Business, Innovation and Employment (MBIE) is that this is an enabling framework and, in the end, costs and benefits will fall based on where and when and how quickly fair pay agreements are initiated and how many people they cover, and that will ultimately be up to parties in the system to work through. There’s a fundamental difference here between the member’s analysis and the Government’s. The member sees it as a zero-sum game—that employees potentially receiving improved pay and conditions necessarily means that others in the system are worse off. They argue that every time we put the minimum wage up; yet economic growth has continued to grow when we do that. Unemployment has continued to fall and corporate profits have actually continued to increase. There is actually such a thing as investing in workers and making sure they have fair pay and conditions that can actually benefit the overall economy. And that, to be honest, in this debate, fair and square, is the difference between the view the Government has and the view that the Opposition has, but I’m not sure it really goes to this part.

The member is right that there’s no “off the hook” for the public sector here. It applies to employers, whether they’re private sector, NGO, or public sector, and that is the fair and the appropriate thing to do. If the Government is responsible for paying people in a way that is low or inappropriate, then I do hope that fair pay agreements are a way of improving things for those workers.

Mr Uffindell asked further questions around the requirements for advising people that a fair pay agreement has been initiated. I’ve responded to that already and provided clear information, and it’s there in the bill around the use of websites, around the use of MBIE’s channels, and around the use of daily newspapers as well. I’ve got to be honest, in respect of some of the examples Mr Uffindell gives, I just think it shows a lack of understanding around the reality of life for low-paid workers in New Zealand. We’re not talking about people who have share plans. We’re not talking about people working in highly paid roles at the top of banking institutions or the private medical sector or public relations. We are talking about the low-paid workers who often don’t have pay progression, who often have been stuck at or near the minimum wage for years and years and years and have to work multiple jobs and have insecure lives because of those conditions. I understand that is a different circle from that which many members opposite move within, but that is who this bill is focused on, and the examples that the member gives shows that he has very little appreciation of that.

The member also needs to note—and, again, please, I ask all members engaging in this debate to read the bill. He makes commentary about people who work in contract areas. The bill does not cover contractors.

I move, That the question be now put.

I raise a point of order, Madam Chair. I just wanted to check—I haven’t had a chance to talk on my tabled amendment on a clause that we haven’t talked about yet. It is part of the part. Is it not normal practice that that we would get an opportunity—as a part of the Standing Orders to actually talk about an amendment that we put forward on a clause that we haven’t even talked about in the part before we move to voting on it? How are we going to vote on it when we haven’t had a chance to talk about it?

CHAIRPERSON (Hon Jenny Salesa): Speaking to that point of order, just—in following the speeches that have been given on this particular part, and I have been following it even from my office, the member has given five speeches in that time. The member could have actually spoken about the particular part that he is giving me the point of order about. Also, the member is the one who has given the most speeches on this particular part that we’ve just voted on in Part 3.

Hon PAUL GOLDSMITH: Just speaking further, the only point I’d make, Madam Chair, is that this is a very big part, with an enormous number of issues in it. I didn’t repeat myself on any of them; they’re all separate issues, and there are an enormous number of issues. It’s not our fault that the Government has introduced a bill with very fat parts with lots of clauses in them that need to be discussed.

CHAIRPERSON (Hon Jenny Salesa): And that is not the Chair’s fault that the member has actually, in the times of the five speeches that he’s given, not spoken to the parts of the bill that he hasn’t yet covered. It is, you’re right, a very big bill. But in three and a half hours or so, we’ve only covered three parts. We have many other parts to cover.

Point of order. To assist Mr Goldsmith, I seek leave that this bill be taken as one question.

That has not been agreed to.

Point of order. Madam Speaker, just following on from your counsel to the committee before, I mean, there has been times where a Chairperson has advised there’d been repetition in certain areas of the part and would encourage members to speak to parts of the bill or Supplementary Order Papers (SOPs) that hadn’t been spoken to. So if Mr Goldsmith in his five calls thinks that he spoke to five different points, then maybe on his sixth call, he would’ve spoken to that SOP. I think it’s tough for us, as Opposition, where we’re trying to debate each part of the bill, if we’re not giving full warning that you are going to bring it to a close like other Chairs have before.

There are times when I actually give warning. As I said earlier on, I had been watching this debate, even from my office. One of the things that I do with the Chair that has been here before me is actually have a small discussion just to see if things are beginning to be repetitive. The Chair that was here before me did say to me that things were beginning to be repetitive. I did, however, give a number of calls. It is not actually a ruling that we always give—there is a point of warning before we shut down a debate, but it is actually within my powers as Chair of this committee to close out particular parts, and we’ve taken the vote. I will now move that we move on to Part 4.

The question is that the Minister’s amendments to Part 3 set out on Supplementary Order Paper 264 be agreed to.

The Hon Paul Goldsmith’s tabled amendment deleting clause 29A and amending clause 32(4)(b)(ii) is out of order as being inconsistent with a prevision decision of the committee.

The question is that the Hon Paul Goldsmith’s remaining tabled amendments to clauses 28, 29, 30, and 30A be agreed to.

The question is that Chris Baillie’s tabled amendment to clause 29A(1)(a) be agreed to.

The question is that Chris Baillie’s tabled amendment to clause 29A(1)(b)(i) be agreed to.

Chris Baillie’s amendments to Part 3 set out on Supplementary Order Paper 267 are out of order as being outside the objects and principles of the Bill.

Chris Baillie’s amendment to clause 32 set out on Supplementary Order Paper 266 is out of order as being inconsistent with a previous decision of the committee.

The question is that Chris Baillie’s remaining amendments to Part 3 set out on Supplementary Order Paper 266 be agreed to.

The question is that the Hon Paul Goldsmith’s tabled amendment to clause 39 be agreed to.