Estimates Debate — Vote Labour

The core of the Government’s approach in this area is to boost New Zealand’s productivity. I guess we would all agree that that is a laudable goal. But the Government’s approach is to have working parties, conferences, meetings, innovation strategies, and much talk about the transformation of the economy.

💬 Shane Jones: The OECD like it.

Talk, talk, talk is what the Government is doing, and, indeed, we have just heard Mr Jones exhibiting exactly that characteristic.

I remind members opposite of this fundamental fact. Despite all their talk, New Zealand’s productivity is lower than that of every other OECD country that is better off than we are. We might say that is logical—if they are better off than we are, clearly they will have better productivity. But the real point is that we cannot progress New Zealand’s fortunes up the OECD if every country ahead of us has better productivity. The only way we can do that is to have higher productivity than at least some of the countries in front of us. I know that Mr Shane Jones, the chair of the Finance and Expenditure Committee, would agree with that logic. It is clearly logical that in order to grow we have to have a higher productivity gain than the countries ahead of us. It is simple mathematics. The problem—and the OECD has pointed this out—is that New Zealand is not willing to take the critical steps that would make a difference.

In the employment law area, the OECD said in 2004 and 2005 that the one critical missing element in New Zealand’s employment laws was the lack of a proper probationary period. Every other developed country has probationary periods as a normal part of its workplace law. Britain, for instance, has a 12-month probationary period. Australia has a 6-month period for larger companies and a longer period for smaller ones. In Canada it is 3 months. Throughout all of Europe it is 3 to 12 months.

I say to the Government that there is a clear lesson in all of that. If we want to have competitive laws, if we want to reduce compliance costs, if the Government wants to deal with the serious problem of youth unemployment—it is still at 12 percent—and Māori youth unemployment, which is at 18 percent and rising, then we have to give employers an incentive to make the employment decision. We are, after all, a nation of small businesses—perhaps more so than any other developed country. The strongest recommendation to the Government by its own Small Business Advisory Group is for a probationary period in employment law.

In another week or so the Transport and Industrial Relations Committee will start to hear submissions on the bill that I promoted, which provides for a 3-month—90-day—probationary period. It is a modest and reasonable measure. It is one-quarter of the length of the probationary period in Britain. The Government says there already is a probationary period under section 67 of the Employment Relations Act. But the problem is that in Britain, in Australia, in Canada, and in Europe that does not mean automatic recourse to the full personal grievance procedure. It means that employers can make a simple decision, in a costless way, as to whether a person is working out, and essentially say that the contract will terminate if the employment is not working out. In truth, of course, that does not normally happen. Employers want employees to succeed. They want to train them; they want to get a return on all that effort, and so does the person who has taken the job.

I tell the Government to stop listening to the rhetoric and the misinformation of its union mates, even though they provide nearly all of the Government’s funding for its election campaigns—that is, when it is not looting the public purse, as well. It is time for the Government to step back, act like a Government, and basically introduce laws that will make New Zealand competitive. That would be the most important thing Labour could do for the New Zealand economy.