Minimum Wage Amendment Bill

While debating the Minimum Wage Amendment Bill clause by clause we are struck by the fact that there are only four clauses in this thin, small bill, which has had a chequered history through this House. We are concerned at the moment with the title, and in particular the reference in the title clause to the Minimum Wage Act being the principal Act. I know that my colleague the Hon Tony Ryall will be formally tabling an amendment to the title of the bill but, interestingly, and as has been said many times when debating the title of any bill, it is incumbent upon that title to reflect accurately what is contained in the bill. Unfortunately, the title Minimum Wage Amendment Bill does not reflect what is in the bill at all.

I will give a bit of background to what the title should be. This bill essentially removes the exemption from the minimum wage provision that applies to those who undertake at least 60 credits of training per year towards a qualification on the national qualifications framework. What is disturbing about that is the fact that this bill could well affect the numbers who undertake apprenticeship training and the system of that training in this country. That is what concerns members on this side of the Chamber. For the bill to reflect that concern it should be called either the “Repeal Training Exemption Bill” or, alternatively, the “Undermine the Apprenticeship Training Scheme Bill”.

The biggest worry for those on this side of the Chamber is that the whole point of that previous exemption was that the cost to the employer of providing practical training was recognised. It was, if one likes, the first step on the ladder for young people entering an employment relationship, and provided a practical way of offsetting some of the costs to the employer of the risk of taking on those young people. What would be a substantial concern to members on this side of the Chamber is that the long-term implications of this bill could well mean a decline in the amount of training provided by employers. That would worry us. On-site training has been proven to be a productive way to bring young people into any workforce, to offer an opportunity that would otherwise not have been available to them, and, as I said earlier, effectively to give that young person the ability to get his or her foot on the first rung of that ladder.

This legislation, which is somewhat wrongly entitled the Minimum Wage Amendment Bill, removes the exemption that allows that apprenticeship training to occur. The greatest concern on this side of the Chamber is the fact that that could have the reverse effect to what is intended by this bill, which is, one would imagine, to reward young people for work done at a rate similar to the minimum wage. We say that simply to take away the exemption could leave employers in a situation where they just do not take people on, and where training is not an option that they consider.

Who is that going to help? Will that help the young person who is trying to get his or her first step on that ladder to employment? Will it encourage the employer to take that first risk to give that young person a go, and to give that young person the crucial experience he or she needs? We hear so often from a young person: “I can’t get my foot in the door because they tell me I haven’t got the experience to do the job.” What is this Government about to do? It is about to legislate to take away one of the tools available to the employer to provide that experience to those young people. We on this side of the Chamber say that that is a grave, grave shame.

I rise on behalf of New Zealand First to give support to the broad intention of this bill. I rise also because the minimum wage issue before us in the title clause is one that is worthy in respect of the issues covered by the last speaker at the lower level, or, at the higher level, worthy in respect of giving a real opportunity to people in training.

My experience in working with such schemes over the last 12 years has been, by and large, that employers—or would-be employers in the training sense—are doing their utmost to try to keep within the framework envisaged by the training schemes. My experience has been not so much with apprenticeships unfortunately, but with training providers. This bill will give sustenance and opportunity with regard to the financial rewards that such training deserves. The only problem that New Zealand First has is not with the provision of training schemes such as we have here, but with the vision of those that do not meet these criteria and with the numerous shonky training schemes that we know of around the country. One scheme in Auckland, recently mentioned in this Chamber, had met no such provision and the trainees, or so-called trainees, were working virtually as slave labour. That is also the issue for other training schemes I can speak about, as well.

The clause is correctly named because these young people—and mostly they are young, although they may be in a second-chance situation—are deserving of a reasonable opportunity not just for training but also for receiving a wage commensurate with that. In particular, this bill was conceived and put together in 2001, but in 2003 when the National Certificate of Educational Achievement and unit standards are far more accepted as the broad qualifications for trade training and training of any sort, this bill is needed more now than it was at its inception in 2001.

On behalf of New Zealand First and on behalf of our spokesperson, the Hon Brian Donnelly, I say that we support and commend the title.

I want to make it very clear that the National Party in Opposition is opposing this bill. The reason we are opposing it is that it will cost jobs, it will cost the taxpayers through increased benefits, and it will cost business through additional compliance costs. Do members know how I know that? I know, because in this piece of paper known as the bill, the Government has told Parliament that that will happen. That is why the National Party is moving an amendment stating that the title of the bill should reflect what the bill does.

Our amendment states that the bill should be referred to as the “Repeal of the Training Exemption Bill”. That is a fairer description of what this bill does. It could also be called “The Bill That is Going to Cost Young People Training Opportunities Bill”. That is exactly what it will do, and I can justify that on the basis of the Government’s own report to this House. In the explanatory note to the bill, under the heading “Statement of net benefit of this proposal”, the Government says there will be an impact on the Government’s finances, from increased benefit payments. That means the dole. That means that kids who at the moment are getting the training exemption—and the words “training exemption” should be in the title of the bill—are going to lose their jobs. The Government says so on page 3 of the explanatory note.

On page 4 of the explanatory note, our left-wing minority Labour Government says there will be a decline in the amount of training provided by employers. The bill states there will be a decline in the amount of training provided by employers. That is what this bill will do as a result of removing the minimum wage exemption for young people in training, and, what is more, the Government’s own document says there will be additional costs on business.

Members need to know what this bill does. Right now, it says that young people who are learning skills, the equivalent of 60 credits on the national framework, will not be covered by the minimum wage. The reason they do that is that many of the job opportunities, the on-the-job training opportunities for young people, have an element of training that costs the employer, and part of the deal is that there is a lower compensation for those workers, because they are getting the added benefit of on-the-job training—and do we not need as much on-the-job training as possible? The Government’s own document says that all the money being spent on training schemes up and down the country is wasted because it is not contributing to people getting into work.

The National Party is opposed to anything that will add increased costs to business, cause inflexibility to the labour market, and cost young people jobs. That is why we want to change the title of the bill. This bill is not about the minimum wage; it is about removing the exemption, and that will affect a whole lot of young people—26,000 young people, the select committee was advised. The Government’s own documentation—the report that the Government has tabled in this Parliament—states there will be an adverse impact on the Government’s finances from increased benefit payments. That means that some of those 26,000 young people will lose their training jobs and go on the dole. That is what the Government is telling Parliament. Is that the reason United Future members want to support this bill? Do they want to support it so that 26,000 young people can lose their jobs? I will be shocked if United Future members support this bill. I ask them not to, so that young people can have training opportunities. I ask New Zealand First members to give those 26,000 young people an opportunity. I say to them: “Don’t, don’t, don’t support this bill.”, because the Government itself says that young people will lose their jobs. This bill will add to the inflexibility and the rigidities in the labour market.

I rise on behalf of the ACT party to say that we are opposed to this bill and that we intend to support the amendment Mr Ryall has just given notice of. I know that titles are occasionally ruled out of order by the Chair as being frivolous, but, if the Chair were able to make such a ruling against the Government, then I regard this as one occasion when the title—in this case the “Minimum Wage Amendment Bill”—could be ruled out of order, because, clearly, it is not an appropriate title. The title that has been put forward by Mr Ryall more accurately describes the bill.

The notion of supporting minimum wages was, I guess, illustrated by Mr Peters’ speech. He set out the romantic argument for it, but it is not, in fact, logical. The reason this bill should go through—[Interruption] It actually should be supported by the Greens. That is the party that has argued that there ought to be a minimum wage for students, and it keeps on making that argument. Here we have a Labour Government that says to the quarter of a million adult students in New Zealand: “No, you’ve got to pay for your own education. Take out a loan if you haven’t got enough. No, we don’t support a minimum wage.”—and I agree with that position. However, the Government is suddenly turning round to 26,000 people who are getting training, and saying: “But in your case we are going to tell the employer that you must be paid a wage, even if that doesn’t give an economic return to an employer.” The reason that the National and ACT parties are telling the Government that this is a mistake is that we do have some knowledge of business. Sure, employers want to extend and help with training, but they are up against costs and are required to make a return on money that people have invested in their businesses. They are not there to be a charity. The Government itself admits that this bill will cost jobs.

I ask members opposite, those who can remember—and perhaps Mr Peters, who is supporting this bill; even in the area of education one would have this experience—to think about their own adult experiences. Most people would concede that they learnt more, not at university, not at polytech, not at school, but at their first job. People’s first job is crucial to their careers—and it is the hardest job to get when they have no experience. That is the start people want. In the legal profession, which I am sure will not be counted in this bill, if a person wants to become a barrister, that person has to approach a Queen’s Counsel, very politely, and say: “Please sir, will you take me as your pupil?” [Interruption]

I raise a point of order, Mr Chairperson. It is extremely disruptive for Government Ministers to come over to this side of the Chamber, stand behind me, and hold a long conversation as they try to get the Greens to support their legislation. A Government Minister and the chief whip are holding a loud conversation behind me while I am speaking. I regard that as totally thoughtless and disorderly, and they should be asked to leave.

The CHAIRPERSON (H V Ross Robertson): I thank the honourable member. It is not in order for conversations to take place in the Chamber, especially in the cross benches. They muffle the sound and make it very difficult for the speaker. I ask those members who wish to carry on a conversation to please do so outside the Chamber.

I was just telling the Committee that if one wants to be a barrister, one has to approach a Queen’s Counsel and ask to be his or her pupil. Then one works like a slave for nothing. Why do people do it? They do it because the training is worth so much. No one is actually suggesting making a change in that area. However, the more valuable the training, the greater the risk to the employer. If a person is a pupil working for a barrister, he or she is a danger to shipping. One has to watch every single thing that person does, because one is responsible for their actions. The same applies to a trainee. That person has to be watched, and the idea that we are helping young people by costing them the opportunity to get a job is nonsense.

The Government itself does not actually believe this bill. It is being put forward for ideological reasons. The Greens might believe in it, and if they do, why is the Government not applying a minimum wage to students?

💬 Hon Rick Barker: What’s the fundamentalist monetarist approach to that?

Oh, that is the fundamental monetarist approach! Well, that is very interesting. That is why it is not doing it—it is a fundamental monetarist approach. It is very interesting to hear that from the rather confused Government members. They cannot actually work out why they are doing nothing for students, but they say they are doing something for a number of trainees.

It is very interesting, is it not, that here we have a Government that wants to talk about growth in the economy, wants to have investment, wants to do all the things that Governments want to do, and wants to give out money, yet here is an opportunity for employers to take people on, take on trainees, to be involved in business at the coalface, learning those skills that are so important in business—

💬 Hon Rick Barker: What does this member know?

That member has probably never been an employer. He has probably never employed anybody, so how would he know? He is just a union man. He would not have a clue. He has never employed anyone, never invested, and never put his money at risk. Now he is telling young people what is best for them.

At the moment, if I want to employ somebody who does not have the skills I am prepared to give that person a go. I will take people on and give them those opportunities. I will allow them to get that work ethic, learn those skills, build that expertise, and get involved at the coalface.

But what does this bill do? This bill says no. The title actually repeals the exemption, so the bill could be called the “Minimum Wage (Repeal of Exemption) Bill”. This bill repeals that opportunity for young people, and it repeals the opportunity for employers who make an investment by going out there and taking on these people.

This Government is anti-business, anti-growth, and anti-employer. This is just another huge compliance cost, along with the Holidays (Four Weeks Annual Leave) Amendment Bill, accident compensation levies, and occupational safety and health regulations. This is just another anti-business, anti-employer piece of legislation. What about the people involved? What about the trainees? They are the people we should be looking after. We have an opportunity to help them, and what does this Government do? It takes away that exemption.

Why would I want to take the risk of giving a young person an opportunity to learn some skills, and to get some firsthand experience, when this Government is saying that young people have to be given a minimum wage? There is a risk associated with it, and part of risk management for people who are in business is to weigh up the pros and the cons. I am prepared to give someone a go; I am prepared to give someone the opportunity, but I will not be stifled, hamstrung, and shackled in terms of what I can do in the long term. That is what the Minimum Wage Amendment Bill is about, because it does away with the current exemption to make it an incentive for employers to take people on, and to allow them to have opportunities. The bill removes that exemption. It is anti-business, and anti-employer.

As Tony Ryall has recommended, the bill should be known as the “Minimum Wage (Repeal of Exemption) Bill”. That fairly reflects, articulates, and crystallises what this bill is about. If we look at the explanatory note, we will see it states that a class of trainees will be exempt from the application of the principal Act. It goes on to state: “Currently, trainees who are required in their employment to undertake at least 60 credits of training per year … are exempt from the principal Act.” That is fine. There are about 26,000 trainees out there who will be affected by this. I will tell members what will happen if we move in and say there will be a minimum wage: employers will say, “I’m not prepared to take the risk. I am not prepared to take these people on. I am prepared to give them a fair go at the moment, because I have that opportunity.”

As the Hon Richard Prebble said, there is nothing better than hands-on training—that is where people learn life skills. That is where they get the best training they will ever have. They will not get that from either a training institution or a tertiary institution; it is when they are out there doing what has to be done that they learn life skills. This bill takes away that opportunity from these kids.

I am concerned about the trainees—I am not worried about the employers, because they will just find somebody else. I am concerned that this bill says: “Hey, we’re not going to allow you to do this. We are going to make it difficult for you.” As the Hon Tony Ryall has said, this bill should be regarded as the “Repeal of the Training Exemption Bill”—that is the true title. There is absolutely no way that this bill will help those 26,000 trainees out there, because it is anti-business.

I rise to speak on behalf of United Future. I do not want to shock Tony Ryall, but we are not supporting this bill, and we will be supporting his amendment.

Training is a very important aspect of all of our lives. Personally, I think we are always in training; if we do not continue to train we will not continue to progress. I believe it is important that even a young child should be trained in the correct manner in which to live. We did that with our own children. For example, they would get pocket money, but they had to work for it. Their mum trained them in how to make their beds, then she would give them a list of jobs for the week. Let us say their pocket money was $5; if they did their jobs they got the $5. But if their mum had had to make the bed instead of them, then their mum would take the money for making the bed, and they would miss out.

What can often happen with those sorts of things, from an employer’s perspective, is that people will then start looking for a job that has a larger amount of training than working at a favourable rate, and they will go and take that job so that they can get some form of income. Then, when it is all over, they will leave the poor employer, who will have got no benefit from it. We do not support this bill, because we believe that training is a privilege. If a person can come alongside somebody and be trained in the skills for life, the payment will always follow, after that person is trained, if he or she is a skilled worker. So United Future is not supporting this bill. We maintain that money should be paid for work, rather than for training, and we will therefore not be supporting this legislation.

I move, That the question be now put.

Like National speakers who have gone before me, I rise to oppose this bill. This is absolutely hopeless legislation. It is another form of inflexibility in the labour market that we are becoming used to on this side of the Committee. Time and time again we see inflexibility driven into the labour market.

The title of this bill should not be the Minimum Wage Amendment Bill; it should be the “Loss of Jobs For Some of Our Most Vulnerable Young People Bill”. This will attack the 26,000 young people who rely on on-the-job training, and the goodwill of employers to take them on and give them a chance. Members of this Committee should go and ask those 26,000 people what they most want—do they want another dollar or another 50c potentially tacked on to their minimum wage, do they want the opportunity to have a job, through which they can show their skills, and shine and grow into a wonderful career, or do they want to go on the dole? The Government is telling us that as a result of this legislation, some people will go on the dole.

💬 Hon Tony Ryall: It’s in writing.

It is in writing. Is it good for the employers of this country to have a smaller pool of people to choose from, and for them maybe to get people who have come from the dole, and who have unfortunately had that experience rather than on-the-job training? I say no. Is it good for the young people of New Zealand who are out there excitedly looking for a job, and who are prepared to put their nose to the grindstone and work hard? I say no. Is it good for the taxpayers of New Zealand who are having to fork out for the thousands of people who are on the dole under this Labour Government? There are 135,000 people on the dole already, and that number will be going up as a result of passing this bill, whose title we are discussing here tonight. That number will be going up, and it is in writing in the commentary.

This should not be called the Minimum Wage Amendment Bill—that is a ridiculous title for this bill. It should be called the “Loss of Job Opportunities For Vulnerable Young People Bill”.

Mr Hughes is a young man—

💬 Hon Tony Ryall: Is he on a training rate?

Maybe Mr Hughes has pushed this bill through because he is scared that his rate will get dropped down, because he is the youngest member of Parliament in this House, and all of a sudden, the boss—who is over in Paris at the moment—has seen that young members in the European Parliament get paid less. Darren Hughes has gone and spoken to Mr Swain and various other Ministers, and said: “Look, push through this bill before the boss gets back and all of a sudden my wage is down.” Mr Hughes mixes with a lot of young people. He knows the value of on-the-job training. He is learning his skills and his craft, just like those 26,000 other people are across the country.

💬 Hon Richard Prebble: He’s got his training wheels on now.

He has his training wheels on right now, but we hear he is doing a wonderful job, and that is the kind of on-the-job feedback that comes through. He and his Government will rob young people of that opportunity.

💬 Hon Tony Ryall: He worked for Judy Keall. He should get double the rate.

That probably says it all. This bill will rob those young people of that opportunity.

I will go back to my earlier point. The young people of New Zealand would like an opportunity to have a job. I know that when I was in commercial practice I had many people who came in and offered to work for nothing. That opportunity to work for nothing was valued far more than whatever the wage was. They did not want to talk about whether there was a minimum wage. They did not care about whether the Minimum Wage Amendment Bill was appropriately titled; they cared about the opportunity to have a job. That was the most important thing, because when they went to get another job, their future employer looked at their resume to see what their past work had been—not what they had earned, not whether the minimum wage had been applied, and not whether they had got $5.85 an hour or $5.95 an hour, but what experience and opportunities they had had. This bill will rob those young people of that job opportunity. That is a disgrace. Young people are being sent the wrong message when they are told that it is better to go on the dole than to be paid a little bit less. That is how the thinking that the dole is good for this country is indoctrinated. It is not good for this country—working is.

I move, That the question be now put.

It is with some pleasure that I rise to oppose the Minimum Wage Amendment Bill, and particularly the title, which is so misleading.

There are some things that one learns through life experience that clearly one cannot get from attending all the academic institutions in this country. If ever there was evidence of that it is there in the current Government. The reason Government members are here now in the dead of night trying to ram through legislation that would be much better titled the “Minimum Wage Repeal of Training Exemption Bill”, as proposed by the Hon Tony Ryall, is that they do not have that life experience. One can have all the PhDs in the world but if one does not have some kind of life experience or a PhD in life experience then one is without any knowledge at all.

One of the areas where people get that knowledge—and without a doubt this is so in the farming sector—is through on-the-job training. I know that that comes as a surprise to most of those on the Government side, because none of them has experienced anything like that. I also know that some members of this Parliament are genuinely concerned about the exploitation of young people in the workforce, and for that reason I have some sympathy with where they want to go, but the bottom line is that what is being proposed in this legislation—particularly with the title it has been given—will achieve exactly the opposite of what they are trying to achieve. Even more young people will be unemployed and denied the opportunity to go out and earn a living, and to be part of a constructive and credible workforce.

One need look no further than the comments made recently by some major business interests in the country to find that employers will not take the risk—and I know that is absolutely so in the farming industry. I appeal to members opposite and to the Minister in the chair, the Hon Paul Swain, to take a call and tell me why a farmer with an $80,000 tractor, a $20,000 feed-out wagon, and the potential for a $20,000 penalty for putting penicillin in the milk by accident, or a penalty for allowing stock to wander in a way that they should not—and we have just seen a recent case of bad farming practices, and the $200,000 fine that went with it—would take on an untrained young person, at the minimum wage that is likely to be prescribed by some socialist group based in Wellington. Why would people do that? What incentive is there for them to do that? Clearly, people take a lot of risk in taking someone on. At the moment, in the farming sector in particular, people take that risk: they spend the money, they spend the time in training, and in some cases they even pay for those young people to go on to further academic and practical training through various institutions in the country because they need those young people to come through. Why would they take that risk if there is a huge financial penalty in doing so? I appeal to the Minister to take a call and tell us why he thinks that to be the case.

The select committee was told that 26,000 young people in New Zealand would be affected by this measure. The judgment call that any Government has to make is whether those people will benefit or whether they will not. The overwhelming evidence is that they will not. So why is the Government here at this point in time proposing a bill that clearly will not have the desired outcome? Why is it that this bill is named the Minimum Wage Amendment Bill when it will clearly achieve the exact opposite of that objective? I hope the Minister will take a call and clear that up for the Committee because I know that a lot of people are curious about that.

Also, I know that a large number of young people out there need some kind of encouragement to get from where they are into meaningful employment. One of the things that encourages young people to go into employment is when people from industry approach them and say: “You look as though you are capable. We’re not willing to take the risk under employment law, but if you come and work for us for nothing for a few days or for a week or so on a trial basis we will take that risk and we will give you a go. We will give you that opportunity.” This legislation, and its title in particular, will stop that from happening.

I move, That the question be now put.