Status of Redundancy Payments Bill

I move, That the Status of Redundancy Payments Bill be now read a first time. This bill arises as a result of the closure of the Weddel freezing works and the redundancies that occurred as a result of that. In particular, I acknowledge the efforts of my colleague Rick Barker, who was the original drafter of the bill, and who worked with people from the freezing works involved.

It is an interesting thing when people are made redundant. All the things that we hold precious in our society—having a family and a home, and the ability to participate in society—are predicated on being able to earn a living. Going through periods of reform, as we have done over the last couple of decades, means quite a lot of dislocation. As a result of that reform, workers went through periods of time in their lives where employment was anything but secure. The only way to compensate for the loss of jobs and the time it took people to find new gainful employment was through instruments such as redundancy. Some workers did not get any redundancy, at all. Those who did all too often found themselves in a position in which, if a company went belly up, their wages and holidays were protected to a sum of about $2,500—which was subsequently raised to $6,000—but no further. Ultimately, their ability to put their lives back together again became severely curtailed as a result of the loss of redundancy payments.

That is simply wrong. Anybody who thinks about it seriously will agree that it is wrong. Reorganisation is not the fault of an employee. It is not the fault of an employee that the economy went through such changes that companies went belly up. Many had given long and faithful employment to their employers during that period of time, and subsequently found themselves unable to do anything about the circumstances they and their families faced. The loss of that redundancy payment was, for many, the last straw. Anybody who has been involved in dealing with those matters in the labour market will tell stories about the effect that the loss of employment has on families.

The number of men I know—and I say men deliberately in this case—who could not go home and face their partners and tell them that they had lost their employment would normally make one weep. They just simply could not get up the courage to say: “I no longer have a job.” For months on end, many of them would deny to their partner that they were not working. That in its own right set up a number of very difficult situations for families, and family breakdown during that time was not an unheard of thing. There were also worse cases than family breakdown. When some freezing works were closed in Southland, a number of people finally could not cope any longer and committed suicide. It is a matter of concern to this Parliament. I say even to the members of the ACT party—and ACT members champion the cause of property rights to a high degree—that the greatest property right a person can have is the right to earn a living, because every other right that comes from that is predicated upon it.

This bill will protect redundancy as structured in an insolvency. It will amend the Companies Act to make redundancy payments a preferential claim when a company goes into liquidation or receivership. The workers from Weddel had to line up with all other unsecured creditors for their redundancy payments, and it is now a matter of record that they did not get what was owed to them. They believed—quite rightly in my view—that should their employment with the company cease, they would be compensated in some measure through redundancy agreements for their loss of employment. We are attempting to do that.

💬 John Carter: What about the farmers losing their stock?

As the member will know, the farmers did raise some very serious issues about what happened to the stock in that situation. The member will well understand that. I believe that matter also has some currency, but on this particular occasion we are dealing with the issue of redundancy, and I ask the member to consider that.

💬 John Carter: I’m more worried about the farmers.

The member might be more worried about the farmers, but he is not the only one worried about the farmers. It is very refreshing—and I note that Shane Ardern is sitting next to the member—that the National Party is worried about the farmers on this occasion. There are things that need to be done.

I am pleased that there has been some movement in this area, and I congratulate my colleague Lianne Dalziel on the work she has done. I also recognise the contribution made by Laila Harré to doing something about the insolvency laws. Some announcements have been made, and already movement has been announced whereby the employee priority will now include some measure of redundancy payment up to a maximum of $15,000. That is an enormous increase on the position we were at, and I pass on my congratulations to the Minister on that.

There is not much more I want to say about the bill, except to conclude as I started: when redundancy occurs, it is life-changing and devastating to those involved. The way that workers have been treated through the insolvency laws has, in many respects, been nothing short of scandalous, and has left many people unable to support even their most basic needs. It is time that Parliament addressed the matter. This bill is an attempt to raise the issue. The Government has made some moves on it, which I acknowledge. I seek the support of Parliament for this bill to go to a select committee, so that we can take the submissions and look at what further work needs to be done to ensure that when workers are faced with that dreadful position in the future, they do not face the same problems as the Weddel workers.

In closing, I want to make one final comment. This bill was introduced into the ballot in 1996. When I read through the explanatory note, I noticed that there was a comment about the Minister of Agriculture having plans for further meatworks closures. I am pleased to say that it is certainly not the intention of this Minister to close any freezing works, at all. However, as the bill had been printed it was far too late to change the explanatory note, which did, of course, relate to a former Minister and a previous Government.

The National Party will be opposing the introduction of this bill. First of all, it is interesting that in the explanatory note the member states that he is bringing in the bill because he has been told that there are likely to be further meatworks closures. His explanation for that was: “Oh well, that is what we said when we were in Opposition and drafted the bill up. Now we are in Government, we don’t think there are going to be any closures, but we still want the bill.” That does not make sense. If the member is so confident that there are not going to be any more closures of meatworks, and that is the industry he is hanging the whole bill off, why introduce it? It simply does not wash.

Again, this bill that the Government is so excited about introducing is another that sends every signal to every businessperson who takes a risk, who creates a job, who enters into something that might be a bit risky but has the potential to provide growth for the country, not to do it. Now that the charm offensive is well and truly over, every single time this Government can, it says to business: “We don’t think you are valuable. We are not interested in you taking risks. We don’t want the jobs.” We are here today with the second piece of legislation in the last 4 hours that is anti-business and sends a signal to business that it is not wanted.

I say to the member that I have worked with the families of people who have been made redundant as a result of businesses going out of work. In the case of the meat industry, which he talked about, I have worked with farmers who have also lost a considerable amount because their stock happened, on the day, to be going through the killing chain. The member nods and says he is worried about those people, but where in the bill is the clause for them? Why did the member not put a clause in the bill that gave those people equal preference? Why did he pick out just one little bit? The salary that is due to a worker is given preference. Any salary that is due has a preference call. Any leave that is due has a preference call. Any holiday pay has a preference call. What the member is saying is that when his mates in the unions have negotiated—often by the use of industrial muscle—a pretty generous redundancy deal, that should have preference over and above anyone who has stock going through the system, for example, in a freezing works. That is not right at all, and I bet that the member will not go out and defend it in the rural parts of Southland.

I want to say to the member that it is OK for him to stand up and say that he feels for farmers, but he certainly has not put that in this legislation. I had a look to see what is in the schedule in which the member is trying to insert the redundancy clause. After paying the costs of the liquidator, the liquidator must next pay the following: “all wages or salary of any employee, whether or not earned wholly or in part by way of commission”… So employees get their wages—wages are the first thing the liquidator must pay. The second thing is all holiday pay owed to them at that time. The third thing is any compensation under the Workers Compensation Act. Employees have to be paid that. The fourth part moves on to one of the things that Governments are more interested in, which is tax.

Above all, there is nothing for people who have genuine stock caught up in the process. The member is saying: “But above all that, I want to put in that any negotiated redundancy gets preference over and above everything else.” If we are to get down to that level, if I were a farmer and sending my stock away, I would be looking for cash in advance. Business practices will be developed to try to bypass that redundancy clause, and that will not do workers any good at all, because at the end of the day the freezing works will say: “Well, you can have a generous redundancy payment, by which point we will have to have terms and conditions for farmers to bypass it; otherwise we will not have any redundancy payment negotiated into the contract, at all.” That becomes the choice. I do not think that what the member is proposing is sensible at all.

The member did not give the credit to the previous National Government that changed the law—I do not expect him to give us the credit, either—to make sure that wages, salaries, and holiday leave were paid before the Inland Revenue Department got its slice. When I came into this House in 1990—Labour had just been in Government for 6 years and had done nothing—a major company in Porirua went into receivership, and the Inland Revenue Department came in and had first dibs. The families on the Kapiti Coast in the Porirua area that were owed wages, salaries, and commission—because it was a clothing factory—got nothing. We changed the law so that wages and salaries did get paid out before the tax department was paid.

The member would have done himself a service by at least acknowledging that change, rather than saying: “That’s not enough; we want the union-negotiated redundancy clause put in there.” What that means is that all other businesses that have stock caught up in the process—it might not be a freezing works; it might be fabric or any of the other commodities tied up in the process—go bust. Their priority falls below the redundancy payment, so their staff miss out. If I happen to have a lot of fabric and send it off there, I am caught up in the process. My business and my staff miss out so that someone else can get redundancy.

How good is that, and how sensible is it to the process? Yes, it is hard for families who go through that, but the member should not pass a law that has a ratchet effect right through the economy. That is daft, and it is one of the reasons that we will be opposing this legislation. Not only does it send a wrong signal to business, it will mean that many businesses will have to move to a cash-upfront option. If someone is thought a bit risky, the business will move to cash upfront, and that person might be forced to go a lot sooner. It might help the minority in the strong unions that have a redundancy agreement, but the people down the track who provide a whole lot of other services, and who have stock, plant, and fixtures caught up in the business, are in the category of small employers. They do not have redundancy agreements, and when they get caught up in that situation, they go under—all because some large firm with a large union has a generous redundancy scheme. I do not think that is right, or worthy of the sort of priority the member is trying to give it. In the long run, I do not think it will help this economy to grow, at all.

It seems that a lot of Governments long ago abandoned—quite secretly, but now quite publicly—any idea of economic growth. I ask the member again, and I ask Government members, to think about the signal that this bill sends to people who are establishing and trying to grow businesses. This provision would be just another thing to worry about and have to deal with—particularly if they have a medium or small business that is dealing with some of those larger ones and are not sure about their own viability. One might ask them: “What is your redundancy agreement? Because if you have a generous redundancy agreement with your staff, then I want to be paid upfront before I deliver any goods or services to you.” I think that is just crazy, and we oppose it because of that.

I raise a point of order, Mr Speaker. In my speech I forgot to mention that on first reading I want to refer the bill to the Transport and Industrial Relations Committee.

On behalf of New Zealand First I say that this is one of a group of bills that seem to have found their way into the House at about the same time. We had Margaret Wilson’s bill on holidays and the way in which payments should be made for holidays, which we supported to the Transport and Industrial Relations Committee. Mr Matt Robson recently introduced another bill about holidays, and we also supported that being referred to that select committee.

This bill has been touched on, insofar as its position in relation to the Companies Act 1993 is concerned, by the previous speaker, Mr Sowry. In terms of that Act, as he said, the liquidator gets paid out for all his or her costs first, and then, according to this bill, the wages and salaries of employees are to be paid out before holiday pay is paid out. As I read the bill—and I tell Mr Peck that I stand to be corrected, because sometimes that happens when a bill is being picked up for the first time—I see that that is an amendment to clause 2 of the seventh schedule of the Act that is being inserted as paragraph (ba), so it would be inserted after paragraph (b) and before paragraph (c). That is how I would read it.

Therefore, this bill states that redundancy payments should be made before amounts due in respect of any compensation, or liability for compensation, under the workers’ compensation legislation. I really find that extraordinarily strange, because one of the most hard-fought things that any Labour movement ever achieved was workers’ compensation. Here we have, in today’s economy, a minority Labour Government saying that redundancy payments, which are paid to a few, will take priority over workers’ compensation, which is paid to many people as of right because of the hard-fought actions of the trade union movement in the 1910s, 1920s and 1930s. I find it quite strange that redundancy pay, which is available to a few workers in big, powerful unions, will get priority over workers’ compensation.

As I said at the beginning, a number of these bills have been introduced in the last couple of weeks, and it is interesting that if this bill does go to a select committee, we will now have a group of bills that will cause a great deal of concern, especially to small and large businesses. I would be interested to learn from the promoter of this bill, or perhaps from a Government Minister, whether it is proposed that that committee will travel. I believe it would be very useful for the select committee to travel to Auckland, Hamilton, Christchurch, Dunedin, and to one or two other major towns like Tauranga, in order to get the view on the spot of small and large businesses. That is needed in order to expose Labour members of Government—who are mainly trade union officials—to the views of people who are involved in business.

I gave Mr Peck the courtesy of listening to him, but obviously he does not care about the views of other members of Parliament, as he stands in the House speaking to the Minister, Lianne Dalziel, with his back to me. Obviously he has no concern about what is being said about this bill, although I treated him with respect. That shows the degree of respect that Labour members have for this legislation—that they are not interested in other members’ views on it.

In the case of this legislation, if we have a plumber working for a freezing company and another plumber who is a self-employed businessperson, the plumber working for the freezing company might be paid redundancy, but the plumber in business on his or her own would get nothing and would also lose the money that had been put into the job. The plumbing contractor, having received no money and having put money into the job, would then not be able to pay his or her staff holiday pay if he or she went broke. This bill is anti-paying out holiday pay, in the event of a plumbing contractor going broke.

As there is a raft of bills currently before select committees New Zealand First will support this bill going to the select committee, but members can see how sceptical we are about it. We would really like to see all the business groups in the country going along to the select committee and telling the trade union officials who make up the Labour Government and its select committees just what a nonsense this bill could be. As I have shown in that simple case, we will be doing the worker in the eye for holiday pay, and possibly even for wages, so that those workers who come under a big union and who have negotiated a redundancy payment can get paid first.

As Mark Peck has said, this bill was inspired by the collapse of the Weddel meatworks in 1994. Those employees found they had no greater protection than other unsecured creditors in respect of their redundancy compensation. Under the Companies Acts of 1955 and 1993, when companies are wound up the order of payment for creditors is as follows: first is the receiver, second are debenture holders, which are usually a bank that has first call on the sale of the fixed assets, third are the employees, who are treated as preferential creditors for up to $6,000 in unpaid wages, salaries, and holiday pay, and fourth are customers with deposits for layby purchases and the Inland Revenue Department for unpaid PAYE and GST. Therefore, after the receiver, the preferential creditors—including staff, layby depositors, and the Inland Revenue Department—have first call on the proceeds from selling company stock, collecting unpaid debts, and selling assets with a floating charge over them. Almost everyone else who is owed money by a failed company—suppliers, contractors, landlords, staff redundancy payments, and the portion of wages and salaries above $6,000—are unsecured creditors and are paid if there is any money left. There is a risk there. Company shareholders get their money back only when outstanding creditors have been paid, so again there is a risk there.

Let us evaluate that risk correctly. When companies go broke, it normally involves a lot of human suffering for a number of people, such as the owners, the staff, and also various contractors and suppliers. There are normally no winners. The banks may be the odd exception to that because they seldom lose, as I have discovered. But life does involve risk. It is a part of life for us, and we all have to learn to handle it correctly if we want to get ahead in life. It is a risk to start a company. It may go broke and the owner will lose everything. It is a risk to work for a company. It may go broke and employees will lose their jobs. Likewise, it is a risk to do work for a company. Again, as we have seen, it may go broke and people will not get paid. All companies involve people, and people will get hurt if a company fails. But worse would be the situation if people were ever to stop taking risks, because we would achieve nothing. I have discovered that most people at the end of their life wish they had taken more risks, not fewer.

This bill amends the Act to make redundancy payments a preferential claim. In other words, it gives redundancy payments the same status as wages and holiday pay. When a company goes into liquidation or receivership, the bill also removes the $6,000 limit on all amounts due to employees. When looking at this bill to determine whether United Future could support it, we had to stand back and look at the bigger picture. In itself, protecting people’s entitlement to their agreed redundancy pay makes sense. However, when we look at it in the light that a company collapse is a disaster for many people, we have to ask ourselves whether compensation that is designed to remove some immediate financial worry associated with the loss of a job should take precedence over payment for work already done by contractors and suppliers, who also, as we have heard, have staff and families to look after. We feel we have to say no. Therefore, United Future will not be supporting this bill. We believe that work already done and due for payment must be ranked alongside, if not ahead of, redundancy payments.

The Green Party would like to congratulate Mark Peck on having this bill drawn out of the ballot, as it deals with a long-neglected aspect of company law that we believe should have been addressed well before now. Like Mr Peck, we believe that there should be more protection for employees’ redundancy entitlements when companies go under. When redundancy agreements are negotiated surely the whole point of them is to compensate workers for the situation they find themselves in when they lose their job through no fault of their own.

Company liquidation or receivership has become all too common a phenomenon over the last 20 years, and there have been many examples of workers losing everything they were owed in redundancy, even when their former bosses would themselves have wished for a far better fate for their employees. I am sure many employers have themselves felt grief as they have seen the Inland Revenue Department paid out, while people supporting families have gone on the dole, unprotected by any cushion of redundancy pay, no matter how long they have served the company or how loyal and productive a worker they have been. At the moment, when an organisation goes under, staff who become suddenly unemployed find themselves having to line up with what is usually a huge queue of unsecured creditors to take their chances on whether they will eventually get even a minor percentage of what they are owed in redundancy. This bill, if passed, will change all that by ensuring that redundancy payments will become a preferential claim in the event of liquidation or receivership.

A second welcome feature of this bill is the removal of the $6,000 limit on all amounts owed to employees, and the elimination of the current $1,500 limit on what a worker can recover in the event of an employer’s bankruptcy.

While this is a member’s bill, I do hope that Mr Peck’s own party will see its way clear to supporting the bill not only to the select committee but also through all stages in the House to become law before the end of this year. The Government, along with individual workers and unions, can be assured of the Green Party’s support for this bill. I look forward to the day that workers’ entitlements are given the same protection as those of other preferential creditors when the worst happens and an employer goes under.

I raise a point of order, Mr Speaker. I apologise to the member who was about to speak. I have made a mistake in the committee that I wish to refer the bill to. I want to refer it to the Commerce Committee, and I will move the motion at the appropriate time.

The ASSISTANT SPEAKER (Hon Clem Simich): Is the member seeking leave to do that?

As I understand it, it is a matter of a motion to the House. I am certainly not seeking leave because I do not think it will be granted.

I understand the matter quite clearly. The member indicated in his speech the committee he will send the bill to—in fact, he did so by way of a point of order immediately after his speech. I do not believe that at this point, towards the end of the debate, the member can now change that. The bill has to be referred to that committee, unless he gets the leave of the House. We are more than happy for the bill to go to the Transport and Industrial Relations Committee. That is the appropriate committee for this legislation to go to. If during the debate the member decides that he might not have the numbers on that committee, and he wants to refer the bill to another committee, that is something for the House or the—[Interruption] I am just waiting for Judith Tizard to calm down. If the member wants to move that the bill go to a different committee, that is something for the member to do by way of leave, or for the Business Committee to decide. But the member cannot just pop up in the House and say that he has changed his mind.

You heard my speech, Mr Assistant Speaker, and during my speech I indicated that I was pleased all three of the bills I mentioned—the Holidays Bill, Matt Robson’s bill, and this bill—were going before the Transport and Industrial Relations Committee. That was a major premise of my speech; I wanted submissions to be made on all three bills together. That would give the ordinary working man the opportunity to make one submission on three bills to one committee, rather than to have to split submissions between two committees. So I take the view that as he has indicated the bill was to go to the Transport and Industrial Relations Committee—and that was a cornerstone of my speech—that is where it should go. If there were any question of leave, New Zealand First would oppose the bill going to any committee other than the Transport and Industrial Relations Committee.

This is actually quite an interesting issue, and not one that, I hope, we will deal with on a partisan basis. It raises quite an important issue in terms of the way bills are dealt with. My understanding is that the member in his speech did not refer to a specific select committee—which might well be regarded as an oversight. He should have referred to a specific select committee. Indeed, had he done so in that speech, then I think that the point raised by Mr Sowry would be absolutely correct. If he referred to the bill going to a select committee in his speech, then clearly the motion would have to be to refer it to that select committee, or leave would be required to change that motion. However, he did not do so, and raised a point of order. It is rather interesting as to whether a statement made in a point of order has the same binding quality as a statement made in the original speech. That raises a further question about whether it is permissible, in any case, for an amendment to be moved to the motion to refer a bill to a select committee. In other words, should you rule that the member has to refer the bill to the Transport and Industrial Relations Committee—if the motion is that—presumably it is within the competence of another member to move an amendment that the bill be referred to a different select committee.

I think that Dr Cullen is absolutely right. We have got ourselves into a very interesting position. Just to pick up on Dr Cullen’s point, I believe he is right that if the committee had been named in the speech, and in that part of the motion, then certainly it could not be changed. But I make this point: I think that raising the matter as a point of order gives it a greater significance, because I thought that the point of order was to correct the speech. I absolutely thought that that was the motion we were debating and discussing. I think that we have to take a bit of time to get this issue right because it could set a dangerous precedent. I am not sure what the answer should be, but I do counsel that we need to take a few minutes. Maybe I could give my speech, then there could be a ruling that was well considered, rather than made on the spur of the moment. I think that this is setting a potential precedent that could be quite dangerous.

Just to pick up on Dr Cullen’s point, Standing Order 281 states that the member in charge of the bill determines where the bill is to go. The member did not follow the correct procedures but acted by way of a point of order immediately following, and stated his intention about the committee to which he intended the bill to go. I feel quite strongly that the member is bound by that. Dr Cullen is right in saying that another member can move an amendment, but that must be done before the first reading. So that amendment needed to be put on the Table before the bill was read for the first time. I have to say that I myself have tried to do the same on several occasions, and have had exactly the same ruling from the Clerk, which was that if I had not lodged an amendment before the Clerk called the bill, then the amendment could not be moved. I do not think that we should start a precedent now to the effect that during the whole process members may table motions to have things moved around.

The ASSISTANT SPEAKER (Hon Clem Simich): I thank members for helping the House through that issue. It is arguable as to how we proceed, given that it was not raised in Mr Peck’s first motion. But the member may seek leave, and we will test the House.

💬 Mark Peck: I do not want to seek leave.

The ASSISTANT SPEAKER (Hon Clem Simich): If the member does not want to seek leave, that is fine. There are other remedies, and we will move on through the speakers.

By way of addressing the issue that the Hon Roger Sowry raised, I point out that notice may be given before the first reading of the bill—which does not mean before the matter is addressed. It means before the House decides that the first reading has taken place.

I raise a point of order, Mr Speaker. This is very important, and I want to make it quite clear, because I have tried that device before and clearly people may well now wish to use it. If a motion does not have to be lodged before a bill is read the first time—I point out that that is something I myself have tried to do and the Clerk of the House, Mr McGee, who was at the Table at the time, indicated to me that the amendment had to be lodged before the bill was called—and if, in fact, you are determining now that at any stage during the introduction speeches on a first reading members can lodge amendments to move bills around to different select committees, then I am happy to accept your ruling. But I want you to make sure that that is the appropriate ruling, because I envisage now that we will get ourselves into situations where we end up with a new procedure—lots of votes at the end of a first reading. We have not done so before, because those amendments have not been able to be lodged once the first speeches were given.

Standing Order 281(4) is quite clear. It states: “An amendment to substitute another committee or to alter any proposed special powers or instruction may be moved if notice of such an amendment is delivered to the Clerk at the Table before the bill is read a first time.” That is not the calling of the order of the day. The bill being read a first time occurs after the vote on the first reading of the bill. Logically, if one thinks it through, one would see that an amendment could not possibly be moved before the order of the day is called, because at that stage it is not known which select committee the member is going to move that the bill be referred to. The member is supposed to do that in the first speech given in the debate.

The ASSISTANT SPEAKER (Hon Clem Simich): I thank the member for his assistance. The amendment that has been alluded to can be made at any time during the first reading speeches. I am aware of the Standing Order. The way I read the Standing Order is that a bill has not been read a first time until all speeches are finished and the bill is announced as having been read a first time. That is the way, I believe, the Standing Order will be interpreted. It is certainly the way I would interpret that Standing Order. An amendment can be made at any time during the speeches. After all, the motion is put not before the first reading, as in Mr Sowry’s interpretation; it is put once those speeches have commenced. So let us proceed, and we will see what happens.

I thank colleagues for a very interesting insight into the Standing Orders. I do not think that Labour Government members will be surprised to hear that the ACT party will be opposing this bill. But I do want to say this: I think that the member in charge of this bill, Mr Mark Peck, is one of Parliament’s better parliamentarians. It was good to see him sit in this House, listen very intently to what Mr Roger Sowry had to say, and actually take it on board. I think that we have had a rare moment in this House. I always like members’ day, and today there have been three excellent speeches following Mark Peck’s speech, from Roger Sowry, Dail Jones, and Paul Adams. I have learnt something from every speech about this vexed issue. I was also very conscious that we had in Mr Peck someone who was listening to the concerns of members and taking those concerns on board. I found the concerns raised by those speakers to be overpowering and overwhelming.

I hope that Mr Peck does not mind me saying this, but when I went across the Chamber and asked him whether this was his bill originally, he said it had been in Rick Barker’s name. I knew that this was not Mark Peck’s bill from the start, because when one reads it one sees that it has a political statement in the commentary at the front of it. It states that a terrible thing happened with the Weddel meatworks closure back in 1994, and it goes on to state that the Minister of Agriculture was predicting more closures of meatworks. That is a political statement. Mr Peck recognised it as such, and said it was a reference to the former National Minister, not to the Minister in this Government. Yes, he agrees with that. What we have here is a bit of fun in Parliament, dating from the time when Mr Barker was in Opposition. The bill has wound its way through the ballot, and now Mr Peck, the parliamentarian, has had to take it over.

Following on from the previous three speakers, I have some questions for Mr Peck. He might not be able to answer them immediately, but I want him to consider them when this legislation is going through the Commerce Committee. First, what is the cost of this bill? What will this bill cost New Zealand? Will it cost nothing, a little bit, or a lot? I do not think we know the answer to that. We have no idea what this bill will cost, because we cannot perceive its full impact. It will not cost taxpayers anything, but in reshaping the parties who carry the risk in the event of a business collapse there will certainly be costs. The cost will not just relate to the shifting of preference from one creditor to another; it will be a cost in terms of changed, and potentially damaging, behaviour. When Mr Peck, as chair of the Commerce Committee, considers this bill, I ask him to give hard consideration to what the economic costs will be to New Zealand.

Second, I ask him who will pay those costs. I do not know the answer to that question. I do not know who will pay for the cost of this bill. What we do know is that workers’ redundancy payments are to shift up the list of creditors when there is a collapse. But who loses out? If workers who were to have lost out will now receive a redundancy payment, someone else has to lose. I ask Mr Peck not to treat this legislation as a free lunch for working people—much as our hearts might go out to them. Who will actually front up and make the payment? I heard Jill Pettis and Damien O’Connor call out that I do not have a heart, and that might be true. However, I ask them to consider whether they have a head. If they have heads, could they apply them to answering the question of who will pay? It appears to me that Mr Peck thinks this legislation is somehow a free lunch. But someone will pay.

I now ask Mr Peck to consider my third question: what will be the ripple effect of this bill on the economy?

I do not think that the honourable Rodney Hide realised he had 2 more minutes to go. After last night, everyone has become used to calm, collected, and friendly Committee stages.

The ASSISTANT SPEAKER (Hon Clem Simich): The member should make her contribution by way of her speech. She was late in rising to the call. The bell indicated the termination of the previous speech.

I was not aware that there were only 5-minute speeches in first reading debates. Obviously I have not spoken during members’ night for a while. What has brought me down to the House to speak tonight, after a long, long time, is Mark Peck’s bill. As Minister of Commerce with responsibility for this area, I have come here to signal the Government’s desire to have this bill referred to the Commerce Committee, so that work can commence on the policy that we have been working on as a Government since 1999. I have to pay some tribute to the National Government of the day, when it agreed, back then, to review both the personal and corporate insolvency laws. I say good on National for that. I am glad that it started that process, which we were very happy to pick up when we became the Government. We followed through the objectives that were set by the Government of the day for that review.

We were asked to look at a predictable and simple regime for financial failure: one that can be administered quickly and efficiently, imposing the minimum necessary compliance and regulatory costs on its users, without stifling innovation, responsible risk-taking, and entrepreneurialism by excessively penalising business failure, and one that distributes the proceeds to creditors in accordance with their relative pre-insolvency entitlements, unless it can be shown that the public interest in providing greater protection to one or more creditors’ priority debts outweighs the economic and social costs of any such priority. That is what we are talking about here tonight. We are talking about the public interest in providing greater protection to one or more creditors, with regard to the social cost of that priority not being accorded.

All that this bill does is to remove limitations. The Government has already decided to increase the amount that can be paid in the way of wages, holiday pay, and those other things we have talked about. That amount has been increased from the figure of $6,000 in the current legislation to $15,000. I would like the select committee to look at that in some detail. The bill proposes that there be no cap on the amount that can be paid, and I think the select committee should hear some argument on that. The second decision we have made is that redundancy compensation can be included within the cap. This bill makes it absolutely clear that wages, holiday pay, and redundancy compensation are all included within the concept of that priority.

It is important that we do give workers the ability to do something that they cannot do themselves. What sets them apart from some of the commercial interests is that they cannot secure themselves against company failure. The previous National Government was very much responsible for improving the situation back in 1993, and this is another chance for National to come on board, and to help to improve the situation even further. The whole point of the legislative framework is to provide protection for people who cannot protect themselves. Workers cannot secure the liability of wages or holiday pay earned, or, indeed, of redundancy compensation that is due and payable. I believe that is an important issue that does need to be addressed.

As I said before, a number of decisions have already been taken on the insolvency law review. We owe the tier one decisions to my former colleague Laila Harré, and I congratulate her on her work in that area. I announced the tier two decisions about a week ago. We have to remember that all those decisions are significant. There is no way that we could draft bills and introduce all the provisions, refer them to a select committee, and pass them through all the remaining stages by the end of this year. I therefore welcome this member’s bill in the House at this time, so that we can address this issue with due speed, and ensure that the sorts of examples we have heard from members on the Government side of the House and from the Green Party are not repeated in the future.

I am pleased to follow my colleague the Hon Roger Sowry in opposing this legislation. It is a matter of commercial reality that, in the years to come, some companies in New Zealand will fail. They will go into liquidation, and they will leave some employees who simply will not be paid their redundancy payments. That is a fact under the current legislation. The question we have to ask tonight is whether we should reconstruct the Companies Act 1993 in order to accommodate a scenario whereby redundancy payments rank ahead of secured creditors, and there is no cap on those redundancy payments—where the $6,000 cap in the current legislation is removed. Should we make that legislative move? I say no to that on a number of fronts. I say that not because we are unsympathetic to those New Zealanders who might find themselves in that position but because of the massive implications that it will have for economic growth in this country, and for the security of hundreds of thousands of small businesses across New Zealand.

Life is all about choices. As Mr Hide said, there is no such thing as a free lunch. This issue is all about choices. As legislators, we face this simple choice. Is it more important to protect a very small group of New Zealanders, those employees who find themselves in the position of not being paid redundancy payments when the company that they have worked for is put in liquidation, or is it more important to protect hundreds of thousands of small companies all around New Zealand? I was in Auckland this morning, and I looked at some data there. I saw there are 109,000 small businesses in the Auckland region alone that employ 4.7 people or less. All those companies will be severely challenged by this legislation; let us make no mistake about that. I say that for one very serious and simple reason: if this legislation is passed, in the event that any small company deals directly with a large organisation with an extensive redundancy liability, it is very unlikely that the small company will be paid, and it risks the entire financial solvency of that company. Is that worth it? I say no.

The ramifications of that are huge. Members should think about that from the perspective of financial institutions. Which bank or financial institution in this country would want to lend money to small companies, knowing that they will be dealing with large organisations that will not pay them, causing their whole businesses to go down. In my electorate of Helensville there are many farmers who deal with large meat companies. They will be risking their entire businesses if this legislation is passed, and I simply say that that is wrong. What is so much more important for New Zealand is not to pass legislation that looks to protect a very small group but to provide a playing field that will generate the highest level of economic growth, so that we can employ all New Zealanders. We need to employ not just the New Zealanders who are in work today, but also the other 400,000 who are currently on a benefit. That is what we need to do.

We need to encourage entrepreneurship and small businesses. The message we have to send to small businesses is that if they set up a business and deal with large and small companies in a mature and well-thought-out way, their position is protected. That is absolutely critical to the integrity of the New Zealand business psyche. I believe that passing this legislation challenges that, and I will be opposing it.

I rise to speak briefly, obviously in support of this bill. I congratulate my colleague and former bench mate on his initiative in bringing this bill to the House. This bill is important. It is about the rights of workers, but it is also about employers, as well. As will have been stated by other colleagues from the Government side of the House in their contributions, this bill is about fairness.

I was very interested to hear Mr Key’s comments, before he resumed his seat, that we all have the right to make choices. I suggest to Mr Key that he has never been made redundant, because there is no choice when one is made redundant. Unfortunately, that happens to too many workers in the world, and not just in New Zealand. In the 1980s my husband and I were made redundant within 3 weeks of each other. Neither of us had any choice over that.

💬 Shane Ardern: Under a Labour Government?

Yes, it was. Neither of us had any choice over that, at all. I tell Mr Key that it was a traumatic experience. No matter how hard we feel that we have worked ourselves, for a short period in our life we have a sense—

💬 Hon Roger Sowry: The member is about to be made redundant again very soon.

Mr Sowry has not made me redundant twice yet, and I do not expect that he will do so in the future. During a short period of time in our life when we are made redundant, we feel that we have no control over our life. I ask the member to reflect generously on what that situation can be like for people, through no fault of their own. In many instances when businesses go under it is not because the employers want them to go under but because of a whole range of conditions and situations in the market at that time.

I am pleased to support this bill to go to a select committee. I look forward to a large number of submitters giving their views to the committee. I wish the bill a speedy passage through Parliament. While it may not be apparent at this stage, the bill is in the interest of both employers and employees.

I thank members for their contribution to the debate. First, I shall deal with Roger Sowry’s point that National started it, and, yes, perhaps I should acknowledge that. It is not being disingenuous. It was good work that—[Interruption] That is life, but at least I have an opportunity to repair it, so I thank Mr Sowry for that.

I say to Mr Dail Jones that I am aware of the history of workers compensation. Indeed, one of the solicitors in my town was one of the best exponents of ensuring that workers got the justice they deserved when they were injured, prior to our having an accident compensation Act. I would hazard a guess that in the situation where a person was made redundant, it would be most unlikely that that person would be on workers compensation. In fact, if we did the figures, we would probably find that the number of people in that situation was zero. But the speech was interesting, and I did enjoy it. Certainly, he raised some important points that will need to be examined by the select committee.

I say to the United Future member that I understand his position. I would ask that he come along to the select committee with an open mind. Let us hear the submissions, because I am mindful of the issues raised by my colleague Jill Pettis, and which I raised in my speech, about how people feel at the time they are made redundant. Until one has been through it oneself, one just does not know. Going home, fronting up to one’s family, and saying “I’m sorry but I can no longer pay our mortgage or put food on the table for the family.”—whatever gender the worker might be—is just the most—

💬 Jill Pettis: Gut-wrenching.

That is the word. It is the total loss of economic power to look after one’s family. All that I ask of that family-friendly party is that its members on the select committee think about that, because it is a matter of some real concern.

I thank Sue Bradford for her comments, and I assure her that we will put in the work.

Rodney Hide raised three questions—the cost, who pays, and the trickle-down effect. Those issues will need work. I hazard a guess that the cost will probably be zip, but the trickle-down effect is an important one. The bill will have an impact. It is quite clear that if money is put into redundancy payments, then it must come from somewhere else. That is work that does need to be done, and I am looking forward to submissions on that.

I have a couple of comments to make to John Key, who is obviously a rising star in the National Party.

First, I say to the member that it is useful to use correct statistics when quoting them back. Just sitting here and using my own “Peckometer”, I have worked out it is highly unlikely that there are 400,000 people on a benefit. [Interruption] It is a debatable point. The member has made his speech. There are 4 million people in New Zealand, and, of that 4 million, probably a good third are not of working age, and then there are senior citizens. If members are looking at those on a benefit, then I think they really need to do the figures as to the number on an unemployment benefit.

💬 An Hon Member: It’s 125,000.

I will accept that figure as a more empiric figure, and say to the member that it is, in fact, the lowest unemployment level we have had in a long time. [Interruption] Fifteen years, actually. I am hopeful that the bill will not be needed.

Furthermore, I acknowledge that any reform in this area does have an effect on companies. But I say to that member that my experience of 16 years as a union official taught me that businesses of the size he is talking about, with fewer than five employees, will not have redundancy agreements, anyway.

💬 Shane Ardern: That’s right; they lose their jobs.

The member is interjecting; he should let me finish the point I am making. I am taking this point seriously, so let me come to what I want to say about it. In those situations, those companies do close, and when they close the employees get nothing.

It has been a good debate. I thank members for it, and I am looking forward to the debate at the select committee.

An amendment has been received from Dr Michael Cullen to omit the words “Transport and Industrial Relations Committee” and substitute the words “Commerce Committee”.

A party vote was called for on the question that the amendment be agreed to.

Hon Dr MICHAEL CULLEN (Leader of the House): I raise a point of order, Mr Speaker. I consulted the United Future members in the House at the time about their voting for the amendment. The indication was that they were going to vote for it. I think they might be confusing it with their opposition to the bill itself.

PAUL ADAMS (United Future): We should have voted in favour of the amendment. My apologies.

The ASSISTANT SPEAKER (Hon Clem Simich): There is confusion. We want certainty, so I will ask the Clerk to call the vote again.

Hon ROGER SOWRY (Deputy Leader—NZ National): I raise a point of order, Mr Speaker. I wonder how there can be confusion when my understanding is that all the parties that voted to oppose the resolution to change the committee had talked about it and had decided that they were going to vote against it. Confusion arose only when the Deputy Prime Minister came in and started sending signals to United Future that it was to toe the line with Labour. If United Future votes the way that it feels, that vote should stand. United Future should not come in here and be bullied by Labour all the time. That is not very appropriate at all. The vote had been conducted, and people had voted freely in Parliament, as is their duty. That party should not now be given an opportunity to change its mind after being pressured by the Minister.

Hon Dr MICHAEL CULLEN (Leader of the House): I am certainly not attempting to apply any pressure at all. I simply raised the issue because I thought there might have been some confusion about the vote, given that United Future is opposing the bill. A procedural motion about which select committee the bill goes to is a different matter. It is not at all out of order for a party to change its vote before the vote has been called, on the basis that it was confused about its position. That has been done a number of times.

RODNEY HIDE (ACT NZ): I think we are in a very tricky situation, because I do think United Future is genuinely confused over this. [Interruption] I am being helped by the Hon. Roger Sowry. I went over and spoke to Paul Adams, and he said that, no, United Future did not want the bill to go to the Commerce Committee; it wanted it to go to the Transport and Industrial Relations Committee. I think Dail Jones was saying that, also. I consulted the Clerk about how the votes would be put, and I had an assurance from the United Future Party that that was how it would be voting. That is absolutely correct; I do not see anyone there who is going to take a point of order to disagree.

This is important. United Future cast its vote, as it intended. As it cast its vote Dr Cullen—I do not think it was intimidation; he is not a very scary guy, actually—did go red in the face, and did start waving his hands in a circular motion, indicating that United Future had got it wrong. I do not think he will deny that. Then he started to mouth—I could pick it up from here—“You voted the wrong way; we are upset.”; that is what I understood the mouthing to be. Then he took a point of order to say that he thought there had been some confusion on the part of the United Future Party. The United Future Party members quickly looked confused, then one of them jumped up and changed the party’s vote. That is a corruption of the voting process. I do not think there was any mistake whatsoever. United Future had told three political parties how it was going to vote, 5 minutes before it voted as it had said it would. Then it wanted to use a point of order to change its vote.

LARRY BALDOCK (United Future): First of all, I do not think it is appropriate for the deputy leader of National to suggest that we have been bullied into something. We are fully aware of what is going on, and we wish to amend our vote. There are no underhand tactics implied here.

Dr MURIEL NEWMAN (Whip—ACT NZ): I seek some clarification. I was of the understanding that once a vote is started it cannot be interrupted. I wonder whether the Assistant Speaker would mind clarifying that point.

The ASSISTANT SPEAKER (Hon Clem Simich): I have heard as much as I need to hear, and I thank all the members for their contribution.

Hon Dr MICHAEL CULLEN (Leader of the House): I raise a point of order, Mr Speaker. I take strong exception to the direct statement made by Mr Hide that there is corruption of the voting process. If he believes that, there is another way of raising that issue, as I am sure he is well aware, but to raise it in the House is highly offensive, and I take offence at it. I think he should be required to withdraw and apologise.

DAIL JONES (Junior Whip—NZ First): I think Mr Hide was telling the truth. He was perfectly entitled to say what he did. If Mr Cullen does not like it, that is just too bad.

The ASSISTANT SPEAKER (Hon Clem Simich): Let us settle down. I too took exception to the use of the word “corruption” by Mr Hide, but I think, in the context, it was not all that offensive. I will not require him to withdraw it.

💬 Rodney Hide: I will withdraw and apologise, if you took offence, Mr Assistant Speaker. Then we can move on.

The ASSISTANT SPEAKER (Hon Clem Simich): Thank you, Mr Hide. Where we are at is that at some stage there was confusion in the House, and there can be confusion in the House, or a particular member or party can indeed be confused. These matters can be dealt with, and should be dealt with, before the vote is declared. The vote had not been declared, and because of the confusion and all the help that the Chair has had, I will ask the Clerk to conduct the vote again.