Minimum Wage Amendment Bill

I am pleased to speak on this bill. This bill provides protection now for training employees of all ages who are currently exempt from minimum wage protection. In that current state they can invariably be paid very little while they are training, or nothing. This bill proposes protections for them that are long overdue. I am pleased to speak in support of this bill.

It has been a somewhat protracted period since the Minimum Wage Amendment Bill first saw the light of day in June 2001, and the Green Party will certainly be giving our support to this bill at the end of the final stage of this third reading debate. It is a pity that the Transport and Industrial Relations Committee dealing with the bill could not find any agreement on whether it should be passed, given that all this bill does is apply a minimum wage for a category of trainees who, up until now, have been exempted from even the low level of security provided by the Minimum Wage Act. The Green Party believes that it is only fair that people who are undertaking at least 60 credits of training a year under the national qualifications framework should have the dignity of being paid at a rate at least equivalent to the youth minimum wage. At $6.80 an hour it is hardly a fortune, given the cost of food, work clothes, transport, and accommodation these days.

We also think it is sensible that the bill allows for the criteria for application of the training wage, and the rate itself, to be set by regulation so that these can be adjusted by the Government on a regular basis, rather than having to go through the whole lengthy and difficult business of amending the Act each time. Flexibility alongside principles of equity are going to be critical factors in making this bill work. Historically, trainees in areas like hairdressing, panel beating, and parts of horticulture, have been the most hard done by, often paid at shockingly low rates, and it is high time apprentices in these industries were brought into the 21st century. Contrary to what some business representatives and some Opposition MPs say, I do not believe that raising rates to the princely sum of $6.80 an hour is actually going to break the banks of employers, most of whom are in fact quite conscious of the tremendous value that apprentices offer in all sorts of ways in the workplace, otherwise they would not take them on in the first place.

The Green Party commends this bill as part of an overall labour strategy of moving towards higher minimum standards for all workers. However, we do wish the Government could move a little faster on other minimum-wage issues. The current adult minimum wage of $8.50 an hour brings in only $340 a week gross. With average household spending standing at present at around $758 a week, or more, this means that the minimum after-tax take-home pay is well under 50 percent of what is needed to sustain life for the average family.

We totally support the Council of Trade Unions and others who are calling on the Government to raise the minimum wage, immediately, to $10 an hour. Even at this rate the gross wage for 40 hours’ work is $400 a week, which is equivalent to 52.5 percent of the 2002 average hourly rate. At a time when we live in a contradictory situation, whereby we still have mass unemployment at the same time as workforce shortages in some areas, we believe that workers, employers, and labour productivity as a whole will all benefit if there is a rise in the minimum wage to at least $10 an hour.

Higher wages mean more spending on goods and services, which, in turn, mean greater income for employers; increasing their capacity to cope with the wage rise itself and also raising their potential to take on more staff in the long run.

We believe that the Government should also be moving as quickly as possible towards phasing out the discriminatory youth rates that still exist for 16 and 17-year-olds. We cannot see any ethical or practical reason that a fit young 16-year-old pumping gas at the local service station for 20 hours a week should earn less per hour than a fit young 18-year-old, or than an even less fit 50-year-old.

For those who continue to scoff, both at the prospect of rises in youth wages or at proposals to lift the minimum wage overall by $1.50 an hour, I remind them that New Zealand wages are still something like 26 percent behind those of Australians. The Green Party will always and consistently back any moves to raise minimum wages and conditions for New Zealand workers, and we commend this bill as being of particular significance in terms of improving conditions for some of the most exploited and underpaid young workers in New Zealand.

I am happy to be here to support the third reading of this bill. It represents a strong agreement between, particularly, the Labour Party, the Progressive party, and the Green Party—

💬 Dail Jones: And New Zealand First.

—and New Zealand First.

This is an interesting bill, because it will pass through the House with support from the other de facto coalition grouping here in this Parliament, which sometimes stands up and decides it wants—

💬 Dail Jones: New Zealand First, too.

Oh, New Zealand First is pointing out that it supports the bill, as well. Is that not amazing? I really thought New Zealand First might have done better than that. This bill is another case of the Greens arguing, as they did, about hairdressers and panel beaters being paid “shocking wages”, to quote Sue Bradford, and of not allowing the facts to get in the way of a good headline.

It is interesting that National supported this bill going to the Transport and Industrial Relations Committee, where we said we should look to see whether there was any substance to the sorts of horror stories about trainees being paid “shocking wages”, and where there was also the opportunity to find out before the select committee what the impact of the legislation would really be, both on the interface with welfare and on the fiscal cost to the overall Budget. Now that the bill has come back from the select committee, National is in the position where it is not prepared to support it because, significantly, all the sorts of stories that were said to exist around this legislation simply evaporated when the select committee examined it.

There were no cases presented of people being exploited by being paid “shocking wages” or no wages, as Sue Bradford alleged, and, furthermore, the Department of Labour officials were unable to give any indication at all as to the overall effects of passing this legislation. I say that given the Government’s talk about the need to facilitate businesses’ ability to do business, one would have thought it would make some attempt to find out whether legislation like this would make it easier or harder to do business. It is of concern to me that today we find out yet again that we are being asked to support legislation proposed by the Government and supported by the Greens—and now, by New Zealand First—to solve a problem that does not exist.

That is the problem we have when people like Mr Robson, who is trying to interject and who has never worked in the real world, are members of the Government. Union delegates, teachers—the highly unionised profession of teaching—and those types of people come into Parliament and become very concerned about whether there is a problem—[Interruption] Well, New Zealand First at this stage is supporting the bill, but I certainly hope that after it listens to the good arguments being advanced here, it will change its mind. This is a case where people who are unfamiliar with the real world—

💬 David Benson-Pope: There are no good arguments, so far.

Well, we will have to go over them again. It takes a long time to get through to David Benson-Pope, but I will attempt to do so.

I will give the member one good argument. What economic analysis was presented to the select committee as to the effect of this legislation on the employment chances of young New Zealanders? I will give David Benson-Pope the answer before he picks up the phone, because now he is totally embarrassed. The Leader of the House has turned round to him and told him to stop interjecting, because he is not helping the cause. The answer, for the benefit of David Benson-Pope, is that no analysis was done.

Only in the last couple of weeks have we had the superb discussion document produced by a colleague of ours, Katherine Rich.

💬 Simon Power: A fine document.

It is one of the best pieces of work to have come out of an Opposition in decades. That paper talks about the very difficult interface of getting young New Zealanders out of welfare dependency. It makes the point strongly that the big step is to get the young people without skills into their first job. Sue Bradford is nodding her head now; she agrees with that. The big challenge that parliamentarians on both sides of the fence face is to try to get people out of the comfort zone where the unemployment benefit looks like an attractive option, and to get them into a job.

I tell Sue Bradford that invariably those people have negligible skills. If they can get into a job and work with an employer who is prepared to help them to acquire skills, they become very, very employable people who can make a contribution. From my point of view, they then become people who will not get stranded in welfare dependency. Sue Bradford is nodding her head saying that that sounds pretty good. So why should we enact legislation that will make that just that much harder? The Government is now insisting that those young people—[Interruption] Michael Cullen is to make another contribution. He took about 1 minute to get his last contribution out, but he now wants to do it—

💬 Hon Dr Michael Cullen: If you pay people it’s much harder to employ them, is it not?

If you pay people it is much harder to employ them?

💬 Hon Dr Michael Cullen: That’s right; that’s National’s policy.

Well, it is true.

💬 Hon Dr Michael Cullen: Oh, it’s true?

Let me explain that; the trouble with academics who have never been in the real world is that they do not understand that.

In a situation where an employer could take on a young New Zealander and that person requires a lot of training, that employer will look at this legislation and say if he or she takes that person on, that employer will have to pay the minimum wage. Therefore that person will not get the job, because the employer is better advised to employ somebody who already has some training. I tell Dr Cullen that that young person, who would have had the opportunity of getting out of the welfare trap, will not have that opportunity, and—

💬 Heather Roy: They get stuck.

They get stuck in the welfare trap. Now that suits the Labour Party, because it works on the very selfish attitude that someone who is confined to welfare and stuck in it will vote for Labour. That is about how cynical David Benson-Pope and Michael Cullen are about this issue.

💬 Heather Roy: People will vote for Labour because they are trapped in welfare.

That says a lot about the future of this country.

💬 David Benson-Pope: You should be paid for the privilege of working.

That is about the silliest comment that we have heard from David Benson-Pope. We should have a register of the stupid comments that David Benson-Pope makes. He says one should be paid for the privilege of working.

💬 Hon Dr Michael Cullen: No.

Well, what is he saying?

💬 Hon Member: He is privileged to be here!

He is paid for the privilege of being here; people pay him $100,000 to make inane comments like that here. So he is paid for the privilege of being here. But David Benson-Pope should go down to Dunedin and represent some of the people we are talking about, who want to work but do not have skills. Here was a chance to give them skills, and the Government is making sure that they do not get that chance. That is what this legislation does.

I say to the Government, in my closing minutes, that it talks about wanting to support business and talks about wanting to lift the growth rate of New Zealand, and today in question time Dr Cullen fudged an answer about New Zealand’s progress on growth and lifting ourselves up the ladder towards the top half of the OECD. That was very embarrassing for Dr Cullen, because he knows that in actual fact we are going backwards.

💬 Hon Dr Michael Cullen: No.

We are going backwards, I tell Dr Cullen. If one is going from 4 percent to 2 percent, one is going backwards. Even the Speaker knows that.

💬 David Benson-Pope: Getting the rail back is backwards?

Well, I ask members! I reckon the Government members will ask that member to stop interjecting pretty quickly. But quite seriously, I say that this legislation will do nothing to help the chances of those young New Zealanders.

💬 David Benson-Pope: Let’s talk about the euthanasia legislation.

That is how that member wants to treat those young New Zealanders, whom I came here to represent. I care about them, even if David Benson-Pope does not.

I am proud to stand to support this bill, and to belong to a party that believes that people should be paid a fair wage for a fair day’s work. The Labour Party believes that people should be paid for working. Clearly, after listening to the last speaker, we know that the National Party thinks that people should work for nothing. In my day that was actually called slavery, but let us not mind about that. We believe that people should be paid for working; the National Party thinks they should not. Clearly, that is why we are on the Government side of the House and those members are on the Opposition side. If they do not change their policies, they will be there for a very, very long time.

I thank the House for giving me the opportunity of speaking on this bill. Hitherto the good business people around New Zealand and the folk in Rakaia have been only too willing to take on young people, who are generally unskilled people, set them on the road to a career, and give them an opportunity. However, we now have to ask the question: why would they take the chance? As business people, we understand—and we are the business people of this House, along with the ACT folk, who understand—that working is reciprocal. We pay for what we get in return. The young folk who will be jeopardised by this legislation understand that, as well. That is the crime of this legislation. The Government has not thought it through.

We had 4 percent growth when we had the best of times—I know that 4 percent is good, but although I do not think it is bad it is not as good as we could do—and one of the factors that restricted our growth was the lack of skilled people in sufficient numbers across regional New Zealand to drive our economy, once we had the opportunity. This bill will undermine that. Why would employers take the chance of employing people when they will be exposed to the whole 9 yards of the Government’s anti-business employer relations legislation? Why would they take the chance? Members should ask most employers, and they will tell them that when it comes to arguing in the Labour Court they just give up. They say that it is cheaper to get the cheque-book out, rather than fight through an institution that is biased towards them, and it is a total sham.

💬 Hon George Hawkins: This guy makes up all sorts of things.

I heard George Hawkins call out.

💬 Simon Power: I didn’t understand him.

I did not understand him either, but I really do think that that man is depriving a village somewhere of its idiot.

💬 Mr SPEAKER: That is going too far. The member will withdraw that comment.

I withdraw. I was just thinking out loud.

💬 Mr SPEAKER: The member will not make any comment. He will withdraw or his speech will be finished.

I withdraw. The other thing that concerns me and other business people around this country is that this legislation will drive up the costs of compliance and red tape. I refer to a commentary in the New Zealand Herald where Business New Zealand described the bill as anti-growth. It stated: “It would discourage apprentice training and mean increased payroll costs for employers.’’ The question that I ask—and I believe that it has been asked before and not answered—is how many people this will affect. The article went on to say: “It would also override existing employment agreements.”—agreements where the vast majority of people are entirely happy with their lot.

What escapes people who are so purist about the bill is that most employers pay more than the minimum wage now. It is logical, when one thinks about it. Why would people continue to stay in employment if they did not think they were getting a fair shake? They would just vote with their feet.

The other thing that concerns me is that in a report that I picked up from a select committee I read that two parties—and I will name them, National and ACT—were concerned that the Labour Department had been unable to estimate compliance costs to employees, the effect on the labour market, or the positive impact on trainees. We went to the office of the Minister of Labour, Margaret Wilson, but she was unavailable for comment. Do members know why she was unavailable for comment? It was because she did not have the answers. In fact, I do not think she had even thought about it.

Why do we not accept a sensible, pragmatic solution to this problem, if in fact one exists? My National colleagues suggested this, leading up to the last election. Why not have a trial period where people can engage in an employment relationship where both parties can have a look at one another to see whether they want to stay in the employment relationship? The employer does not get stuck with a dud, and let us be honest, there will be some. I hope it does not happen very often. Employees may find that they have engaged in a job that is just not for them, and they will not leave that with a black mark against their name. Each party will walk away shaking hands and saying: “It just wasn’t for us.”

My colleague David Carter raised an issue that is worth dealing with. But just as an aside before I go there, I talked about compliance costs and exemptions. I wonder how long it will be before Māori trusts are exempt from employing people at the minimum wage on the basis that they are too poor? I will just hang that question out there and let people dwell on that for a while.

David Carter raised the issue of the interface between minimum wage, work, and welfare dependency. What has been suggested here will drive people into welfare, and that will guarantee them a life of poverty and dependency. I do not know about members of this House, but do we not have greater aspirations for our kids than a life of welfare dependency and poverty? I see the Green member shaking her head in acknowledgment. Why is that member supporting the Government in this type of legislation? Our population has not even doubled in the last 30 years, but we have seen a 12-fold increase in welfare dependency. There is such a significant number of working-age people in this country on welfare that we could not even shoehorn them into the city of Christchurch. That is an indictment on this country. It is one of the greatest social failures in our history.

Let us have a look at the forestry industry and the impact this might have on it. The headline here states: “The forestry has trees, but no trainees. The forestry sector needs 30,000 more workers by the year 2025”. [Interruption] Does that member want the floor? She should take the call.

💬 Jill Pettis: Will the member yield?

If the member takes 10 minutes, I will yield.

💬 Jill Pettis: I’ve already had a call.

It must have been very brief, because it was very memorable! The key was to break down stereotypes and show young people who were keen to work outdoors that they would not be locked into semi-skilled, repetitive jobs. That was the key. The industry was trying to attract young people. The question I now raise is: why will it bother? Have we actually now closed the door on 30,000 young people getting into the forestry industry? That is the number of jobs it says it is looking for. The question is very, very relevant, because at the moment the forestry industry is quite marginal. By increasing the wage bill, compliance costs will overnight, with the stroke of a pen, damage that industry beyond repair.

I leave members with this thought—one that I think the Government should dwell on: if we want to share wealth, then we have to create it first. The Government, by doing what it is, is doing that concept immense harm.