Financial Review Debate — Department of Labour

I thought I would preface my speech this afternoon by reminding members of what the Department of Labour’s primary role is, and that is to improve the performance of the labour market. The report noted that the department has identified workplace productivity as the key to lifting New Zealand’s living standards and wealth.

I would like to concentrate for a moment on those issues of productivity. It is alarming to find that the report states: “Despite the department’s efforts to improve productivity, it was noted that New Zealand’s labour productivity growth in the measured sector has markedly declined since 2000;”. Today’s Independent talks about productivity in an article headed: “Productivity: It’s a hard road to hoe”, and we have heard that Statistics New Zealand is hiring 1½ people to work for 2 years on a feasibility study to determine whether it is even possible or feasible to measure public sector productivity. New Zealand appears to be deciding whether it is feasible, but we know the answer to that. The report says that a good start might be to measure productivity at the Department of Labour.

The Department of Labour has a website that includes references to workplace productivity. That website was last updated last year, on 6 December. The department’s website was last updated over 4 months ago, and I do not think that is a wonderful example of workplace activity. The Department of Labour seems to create groups. It had a Workplace Productivity Reference Group. Then it had a Workplace Productivity Working-group. But that working-group was established in 2004—4 years ago—and we still cannot measure public sector productivity in the Department of Labour. In fact, the most recent news item for the reference group was in April 2007—over 12 months ago.

If we measured productivity by the number of productivity work groups or productivity reference groups set up by the Department of Labour, then maybe the department would win the productivity prize. It is a sad state when the very department that is responsible for workplace relations is not bearing up to what it should be doing.

The Department of Labour is responsible for advocating good workplace practices. If members look at the financial review, they will be horrified to find that the number of personal grievance claims in that department alone has nearly doubled in 12 months. In fact, last year the cost of settling employment relations problems was $97,500. The year before, the cost was $7,000. That is a massive $90,000 more to settle the department’s own personal grievance and employment relationships problems—and this is the very department that is supposed to be advocating good workplace practices. One might like to suggest that it should be practising what it preaches.

Labour has spent so much of our taxpayers’ money, but it cannot tell us whether it has been effective, and sometimes it cannot tell us what it has spent it on because it just does not measure that productivity. This is not a new phenomenon. Back in 2005 the report to the incoming Minister—and I appreciate that it was not the Minister in the chair this afternoon, the Hon Trevor Mallard—cited productivity as a major concern, yet the numbers are absolutely dismal. Labour productivity growth has averaged a mere 1.4 percent per annum. By comparison, between 1990 and 1997 it averaged 2.6 percent per annum, between 1997 and 2000 it reached an average of 3.4 percent per annum, and now it is a paltry 1 percent. New Zealand’s productivity growth has markedly declined and that is a tragedy.

I want to thank that member Kate Wilkinson for the opening she has just given us, and to give her, if she likes, a relatively simple explanation, because I think for that member it needs to be about labour productivity. When unemployment is rising, people who are in the lower skilled jobs and who are the least productive are more likely to get the sack, and when the National Government was in office that happened. When that happens—when the people who are less productive because their skills are lower and the machines they use are less sophisticated, get the sack—average productivity goes up, unemployment goes up, and average labour productivity goes up. When we have a Labour Government and unemployment comes down, a whole pile of people who have never had a job, who would not know how to work a sophisticated machine, and who are not in the professional category, get jobs, and average labour productivity is exactly—

Dr the Hon Lockwood Smith: What about capital productivity?

We will get to capital soon. What happens then is that productivity drops. Instead of celebrating the fact that more people have got jobs, that member is moaning about it.

Now having said that, I do not think it is good enough that many people who are coming into the workforce now, or who have been in the workforce for a number of years, have skills that are not adequate for the modern world. There are a number of reasons for it—probably the abolition of the Apprenticeship Act was part of it, and probably a very important part is that the National Party got rid of trade training, including Māori Trade Training and a number of areas like that. Our skill development, both in pre-workforce and especially within the workforce, was abysmal under the National Party. That is why we have had to have a massive growth in spending in that area and in the numbers involved. The number of apprentices has gone from almost none to, I think, 40,000 entering Modern Apprenticeships since we have been in Government, and there are a number of areas like that.

I do want to go back, away from some of the more general employment and training issues that the member referred to, and say that at some stage soon the National Party will have to front up. Its current policy, for example, is to cut back paid parental leave. Its current policy is to make the fourth week of leave negotiable—to take it away from workers and say “You’ve got to negotiate it.” Its current policy as far as sick leave is concerned is to cut back the eligibility for sick leave. Its current policy is to make a large number of changes to the Employment Relations Act, all of which go against the interests of workers. I was looking forward, in fact a number of people were looking forward, to Kate Wilkinson speaking, I think it was last week or the week before, when it was announced that she would be giving a comprehensive update on the National Party policy—

💬 Charles Chauvel: The same as Bill English?

Well, the same as Bill English on KiwiSaver. She turned up, read from the research unit notes, and gave no policy at all. There are some things that I can say about that member. She is a relatively new member and not very experienced. But I can tell the member that when she promises an audience that she is going to give a comprehensive explanation of industrial relations policy, and it states that on the invitation, the audience thinks she is fraudulent when she does not do it. They think that member committed fraud. A whole pile of people, some of whom were silly enough to think that the National Party might have a chance to be in Government, turned up to listen. They were shocked. There were people who were not only from a left-wing perspective—

💬 Kate Wilkinson: You weren’t there.

No, but I have had reports from all over the place on how poorly that member performed then.

I am happy to take a call on the financial review of the Department of Labour. If I had taken a bet with my colleagues that the productivity figures for the 1990s would be wheeled out in this debate today, I would have won a lot of money, because there they were—those old tired figures about what happened in the 1990s. What is interesting about the National Party is that its members do not want to talk about the 1990s unless they think there is something good—and they think that the productivity figures for the 1990s were good. Well, as my colleague the Minister of Labour said, productivity is easy to grow if it is based on low wages, on high labour utilisation, and on low investment in skills and plant. Any fool can produce higher productivity on those measures. In fact, I reckon any sweatshop in any Third World country or developing country, or any organisation using child labour, would be able to show high productivity. With low skill and low wages, of course there is going to be high productivity.

But what National’s approach did not do during the 1990s was grow wages. It contributed to an almost nil wage growth in 5 out of 9 years during the 1990s. It contributed to a growth in the wage differential—which it now likes to whinge about—between New Zealand and Australia by almost 50 percent, and it did not grow our skill base; in fact, it shrank it. This Government has been running to catch up ever since. You did not encourage innovation, you did not do any training, and you did not even know what a high-quality workplace looked like.

💬 Kate Wilkinson: I raise a point of order, Mr Chairperson. I do not particularly relish interrupting the member, but the member is bringing you into the debate, and that is not appropriate.

The CHAIRPERSON (Hon Clem Simich): I thank the member for raising that; she is quite right. Could the member try not to do that?

The National Party did not even know what a high-quality workplace would look like. The point of improving productivity is to contribute to society’s long-term standards of living so that everybody shares in the benefits of a growing economy. It is not about making people work harder and faster—which the National Party seems to think it is—or for less pay, and nor is it about making some people at one end much better off and everyone else worse off. I do not hear from the National Party its answers to improving productivity. I hear a lot of whingeing, moaning, and grizzling—

💬 Kate Wilkinson: Be patient.

The member tells us to be patient; we are waiting with bated breath to hear what National’s policy is about improving productivity. I suspect very much that it will be the same old things those members did in the 1990s so they can get back to Government, because that is the only way they know of getting that graph to go up. Of course, their policies caused huge damage to people. The standard of living went down under the National Government.

I also agree with the Minister that National needs to explain its agenda on workers’ rights. It is time the National Party fronted up. Sooner or later that party is going to have to do it. At the moment there is just guesswork, and it is not a pretty picture. One thing that everybody is very clear on is that National is still promoting a law change that would expose 700,000 working New Zealanders to unfair sacking and discrimination every year, with the reinvention of Wayne Mapp’s “Get the Sack in 90 Days Bill”, which was resoundingly beaten in Parliament in 2006. We can look at the record for our information. The National Party has opposed every decent piece of employment policy over the last 9 years, including 4 weeks’ annual leave, paid parental leave, and time and a half for statutory holiday work. So it is time National told people what its real intentions are.

💬 Kate Wilkinson: We will.

The National Party says that it will, but I think it has a secret agenda. I do not think the National Party wants to own up to what its policies are. It is hoping that no one is going to ask—that there will be no questions about its industrial relations policy leading into the election. National is hoping to keep it quiet and it is hoping that “Slippery John” will be able to get through the next election campaign without any questions about industrial relations. Well, I am sorry but there will be questions, and they are coming now. They are coming thick and fast. We want to know, and the workers out there want to know, what National is going to do about industrial legislation. What will National do to improve productivity? If National thinks it has better ideas, where are they? Tell us what they are.

We know, so far, that National would like to dismiss some workers—unfairly—on probation. I have already mentioned that issue. We know that National would like to have workers sell their fourth week of holidays—in other words, a worker would go along and sign up to a job, and find that the fourth week of holidays would be included in his or her pay.

Report noted.

Ministry of Social Development