Minimum Wage (Starting-out Wage) Amendment Bill

I stand to take a call in Part 2, clauses 6 and 7, of the Minimum Wage (Starting-out Wage) Amendment Bill. I just wanted to start with a comment, really, that has bemused me during this debate, which is how come increasing pay motivates bosses and chief executive officers, but cutting it is supposed to motivate young workers? How come? I would really like the Minister in the chair, the Hon Michael Woodhouse, to attempt to answer that if he would, or at least a speaker from the other side, because I do not get it and nor do the thousands of young workers who are affected by this bill—who see, day in and day out, huge salaries being paid to chief executive officers, huge amounts of compensation given to various people, like Solid Energy’s Don Elder with $1.3 million to sit on his couch at home, doing nothing—yet they are supposed to be feeling grateful because this Government is cutting their pay.

They are supposed to be buying into the narrative that we hear again and again from this Government that work is somehow a charitable act and that employers are offering a charity. I found it astonishing that Mike Sabin could assert that employers would create a job for someone because they could pay them $11 an hour. If there is no work to be done and there is no job, they are not going to do it out of charity. But what we hear from the National Government is that workers and young workers should be grateful. They should be grateful for the opportunity, even though they are going to be paid less for doing exactly the same work and they can be sacked within 90 days with no reason given.

Why should young people be grateful?

💬 Mike Sabin: The good old socialist mantra—that all employers are evil.

No, it is not, actually. It is about treating young people—

💬 Mike Sabin: The good old socialist mantra.

I am looking forward to Mike Sabin getting on his feet and answering my first question about why it is OK to pay lots and lots of people, and some people’s chief executive officers, large amounts of money. That is supposed to motivate them and that is the justification we hear, that young people are supposed to be motivated by this bill.

I have a couple of things I want to say about Part 2. In the first part, clause 6, I just want to check with the Minister in the chair that I am right about this, but the way I read it is that it amends the Accident Compensation Act so that young workers will get 80 percent of 80 percent—is that right? So that instead of getting 80 percent of the adult minimum wage, as they do under the current Act, unless they are on the 300 hours or 200 hours, they will get 80 percent of $10.80. I want the Minister to look at that. Otherwise, I do not see the point of that amendment. So what it seems to be saying is that people, young workers who go on accident compensation, are going to have their pay cut even further.

We have already heard today, and we have already talked about how young workers are going to be forced off the invalids benefit and the sickness benefit, otherwise they will be sanctioned. They will be stood down from their benefit for 13 weeks. They will be punished if they refuse to accept the job that Work and Income deems to be acceptable. What happens if they get injured on the job? Remember, these are young workers going into often dangerous situations; it can be very dangerous in some of these jobs. They are worried about raising issues because they can be sacked in 90 days. They could have an accident, and then they find themselves on $10.80 an hour. So what this Part 2 does is reduce the pay for young workers even more if they are injured on the job. That is so unfair, and I would appreciate the Minister addressing that and explaining why the Government thinks that that is fair and that young people should be forced to take another pay cut, should they be injured on the job and have to go on accident compensation.

I want also to address clause 7, which is the transitional and savings provision in relation to the minimum new entrant rate. Again, I want to remind the Committee what the new entrant rate was. It is, in fact, what exists now, but it will go out of existence on 1 May. What that meant was a young worker in their very first job, a 16 or 17-year-old in their very first job, could be paid 80 percent of the adult minimum wage for 3 months or 200 hours on a one-off basis. So that was on the basis that they would learn the job within 3 months or 200 hours, and from then on they would be paid the adult rate.

Of course, what this bill does is remove that. It says that 16 and 17-year-olds have to learn the job, and it takes them 6 months to learn the job, so they are on $11 an hour, and then they go to another job and they have to learn it all over again, so they go back to $11 an hour. They never get ahead while they are 16 and 17. That is so unfair. As we have heard in this debate, 16 and 17-year-olds are often doing the work, the same job, as other workers. It is not about their output or their abilities. If it were, the Government would not be changing the existing provisions that allow for a training period for a worker in their very, very first job.

What this bill does is punish 16 and 17-year-olds. It is not 6 months. It is 6 months, again, and again, and again. If they happen to lose that job when they are 18 and go on to a social security benefit, then if they get a job they can be punished again. So not only can they have youth rates all the time, during the period they are 16 and 17, but it carries on until they are 18 and 19.

What I do not get about all of this is the lack of understanding from the Government about how discriminatory this is, and how unfair it is that people doing the same job can be paid less because of their age. We have not had that kind of discrimination on the basis of gender, on the basis of race, and on the basis of a whole range of other issues over the years, for many, many years. That would be intolerable. We would not say to an older worker who is, say, over 65: “Well, you’re not as productive as that worker, so you’re going to get paid 80 percent.” That would be unacceptable because there are rules about discriminating against older people and people on the basis of age. But somehow, because these are younger people, because they are working and contributing, they can be picked on by this Government. They can be picked off by this Government.

I go back to what I said at the beginning. For some reason, the National Government thinks these workers are going to be grateful for this. Well, I can tell that National Government that they are not. I have had many contacts. I do not know about Mike Sabin, about who he talks to in his area. I was interested in Tracey Martin’s contribution because she lives in the same area, so I was very interested in what she had to say about it. I talk to a lot of young people. I am in touch with the Same Work Same Pay movement, which was out the front only a couple of months ago, protesting about the fact that this bill discriminates against young people who are trying to get ahead and who are doing the same job.

It is unfair, and it is discriminatory. But worst of all, this is not going to make a damn bit of difference to youth unemployment. It is not going to help young people get a job. If there is no work, there is no job, and employers are not going to perform charitable acts by giving young people a chance, because they can pay them less. That is so dopey. That is such a dopey notion. Yet we have heard it again and again.

We all know there is a crisis in youth unemployment, and some of my colleagues have talked about Labour’s solutions and Labour’s ideas on that. I cannot fail to come to the conclusion that this bill demonstrates the absolute dearth of ideas from the National Party when it comes to dealing with our young people. Unfortunately, our young people are going to keep going on the plane to Australia, to better jobs, to a place where they get treated with respect.

💬 David Bennett: The almighty Labour Party owns the young people; that’s right.

David Bennett should probably just not say too much, given the speeches he made 3 years ago saying he did not support youth rates. David Bennett probably should keep quiet.

💬 David Bennett: Come on; let’s have it again.

💬 Mike Sabin: Has he explained yet?

I am looking forward to the member taking a call and explaining why he thinks he got it wrong, why he got it right, and why he is wrong now. That would be very, very interesting.

I was also quite fascinated too that John Banks gave one of his very rare speeches in the House. The ACT Party seems to get very excited when it comes to cutting young workers’ pay. I remember Roger Douglas did it. I remember Roger Douglas did it, and I remember saying: “Is this why you came to Parliament, Mr Douglas?”. It seems with Mr Banks that that may be the case too. I hope that one day all of those members in the Government can stand up and explain to young people why they think this bill is a good idea.

In rising to speak to Part 2 of the Minimum Wage (Starting-out Wage) Amendment Bill I think we may be getting to the crux of what this bill might be about. What we are clear about, and I think both sides are clear about this now—that side was not last week, but we are clear now—is that this bill clearly is not about creating jobs. It does not create one job. I think the Government now accepts that. It did start out saying it was going to create something like 2,000 jobs, but that is clearly a nonsense because, as we have clearly demonstrated on this side of the Chamber, pieces of law do not create jobs. A piece of law like the 90-day bill did not create one job. Cutting wages, under this bill, does not create one job. I think the Government has clearly now got that, because it has stopped using that argument. I think the Government has actually understood that it is a bit of a nonsense to say that this bill creates jobs.

But what my colleague Darien Fenton just referred to, with regard to the amendment to the Accident Compensation Act that we are considering under Part 2 of this bill, is, in fact, correct. We are now debating paying young injured workers 80 percent of 80 percent of the adult minimum wage, which I believe is what the amendment in this part does. I think we might have got to the real motivation for this bill from this Government. If this Government can get away with paying less in terms of ACC payments, it will do exactly that. We may have got to the bottom, really, of what the Government’s motivation is here, because this would reduce the money that the Government needs to pay out in ACC payments, if the amendment in Part 2 is passed. This is a saving to the Government’s books.

Why is this important? Because the Government is desperate to save money in all sorts of inappropriate ways to fulfil its promise that it made to get back into surplus by next year. One of the ways in which this Government is trying a smoke-and-mirrors approach to doing that is that it has kept ACC levies artificially high. It made an announcement at the beginning of this year—Judith Collins made the announcement—that despite the fact that both ACC and Treasury had advised her to reduce the ACC levies and that that would actually keep our very precious and important ACC system very well in place, Judith Collins refused to do that. The John Key - led Government is keeping ACC levies artificially high, and in doing that—Mr Chairperson, this is with regard to Part 2 because Part 2 amends the Accident Compensation Act, and I just want to explain to people the context of this, because this is something that the Government is going after. It is trying to make the Government books look better by—

The CHAIRPERSON (Lindsay Tisch): Order! This part is about the payments and consequential amendments to the Accident Compensation Act. It is not about levies. It is not about ACC levies; it is about payments. I will ask the member to come back on that.

The connection is that what the Government pays out in ACC payments—if it can save money on that at the same time that it is keeping levies artificially high, then that increases the surplus that ACC makes. The reason why the Government is doing that is that it is trying to make it look like the entire Crown accounts are reaching surplus. But the nonsense of that is that the ACC surplus cannot be used for any other purpose but to pay for accidents and injuries. It cannot be used for any other purpose, so it is a complete smoke-and-mirrors type of argument for the Government, to make it look like the Government is getting back into surplus when, in fact, what it is doing is using bills like this to reduce its costs in terms of ACC, in this instance with regard to 15 and 19-year-olds, in order to create a bigger surplus in the ACC accounts in order to make it look like it is reaching surplus in the Crown accounts.

It is actually those young people, those young working people, who will pay the cost. They will pay the cost for that Government’s smoke-and-mirrors approach, because the young workers will be on 80 percent of the adult minimum wage to start off with, and if injured at work, they will be on 80 percent of 80 percent. I do not know what the experience of members opposite is like of living on the minimum wage—I would suspect that not many of them have had to do that—but here we are talking about an injured worker being on 80 percent of 80 percent of the minimum wage.

I would ask the members opposite to reflect on how they think they could make ends meet, if they were a 15 to 19-year-old and they were working and trying to live on $10.80 per hour, and if they were that worker whom I was talking about earlier in the debate who has been forced, really, into accepting $10.80 to work for Wendy’s in Hamilton. They will not have an option. It will not be voluntary. They will be told: “Take it or leave it. The job is yours, but only at the rate of $10.80.” There will not be a freedom of choice about that. They will be forced into that situation. They either say no to the job and then face sanctions by that very same Government or they accept $10.80 an hour. So there will not be a voluntary aspect in that, at all. But if they are in that Wendy’s burger joint that is coming to Hamilton and they get forced into accepting the job for $10.80 an hour and they have an accident, or an injury is suffered at work—it could be, I do not know, hot fat? Those are actually quite common sorts of injuries in that industry. I remember when I was working in that industry that hot fat from those fryers was, unfortunately, quite a regular sort of injury that was suffered by workers. If they actually suffer that type of injury, they will be on 80 percent of $10.80, and that will be those workers—those 15 to 19-year-olds—paying the price for this Government’s promise to return the books to surplus by next year. They will be paying the price, because the Government actually gets to save money here.

So this is not about employers or workers or opportunity or job creation or any of those myths and legends that the Government opposite has tried to tell us about. It is actually about spending cuts, from the Government’s perspective, as well as cutting wages. And the folly of that whole strategy is that cutting wages will actually lead to fewer jobs—not job creation but fewer jobs—because if wages are cut in this way, all of those 15 to 19-year-olds will have less money to spend, and when they spend less money, there is an effect on our entire economy. This bill demonstrates a complete lack of financial and economic management from this Government. It shows that it has not got a clue what it is doing.

I hardly ever agree with David Bennett—we come across each other quite a lot in Hamilton, and I hardly ever agree with him—but he said in 2010 in a speech on this very issue about youth rates: “We do not feel that it is helpful in keeping the focus on growth and growing the economy, which is needed to create jobs, and which this Government has made a top priority for this year.” That is what he said in 2010 about the prospect of cutting wages for young people. He actually said that it would not be good for the economy. He was right. I agreed with him then. But I do not agree with him now, because what he is telling us now, by the way that I expect he is going to cast his vote shortly in this Chamber, is that it is no longer a top priority, actually, for the Government. He said back in 2010 that it was going to be a top priority—creating jobs was going to be a top priority—but he also said back in 2010 that it was “important that we do not set the bar too low, in the sense that our young people who work hard must not find they get no reward for their efforts.” That was David Bennett in 2010. In 2012—2013, sorry; I am going into a bit of a time warp there. It is not even—actually, it was on 21 April, to be fair, so almost 3 years later David Bennett now seems absolutely happy to sell those young people down the tubes. It is frightening that in not even 3 years he and his Government have lost faith in these young people. They have given up on them and—

I will pick up on the point from the previous member, Sue Moroney, immediately. It is quite the opposite, actually. This Minimum Wage (Starting-Out Wage) Amendment Bill is about a Government that actually backs these young people and is prepared to ensure that the environment exists for them to be given a chance. I want to come to Part 2, the transitional provisions. There is one important point I want to make there, but I want to just comment briefly on some of the points that have been lobbed across the floor. People would think that this bill is, according to the Opposition, nothing more than rich, capitalist bosses exploiting poor workers and displacing them. That is entirely inappropriate and simply not the case.

The point was raised by Opposition member Darien Fenton around what the incentives for young people are in this equation, or that if the incentive is that somehow the boss will be pocketing this extra money, where are the incentives for the young people. Well, the incentives for the young people are that the opportunity that they have been looking for will be presented to them more actively. This was something that was related to me by a constituent last week when I was out working on a kūmara farm, harvesting a few kūmaras, being taken through the packing shed, and packing some of those sweet delights. I was talking with that employer, who employs up to 1,000 people on a casual basis through the cropping season, about the importance of the right settings for him to be able to employ casual workers who would otherwise be sitting on a benefit and not have that opportunity. At $15 an hour, he said, he would not be making a dollar. At $16 an hour, he would be out of business. Ninety percent of the country’s kūmara are grown in Dargaville. That is a very good example of the reality versus the sort of socialist ideology that employers are out there to get rich at the expense of the poor worker. This is about getting those settings right.

This is not a bill about creating jobs. This is a bill that provides the appropriate economic settings around the relationship between the employer and the employee. What we are doing to create jobs—because that seems to be something that has entertained the Opposition—is providing a range of economic strategies and policies, through a Business Growth Agenda, which I think is quite unprecedented.

💬 Dr Rajen Prasad: Come on, mate—evidence.

It is a language that Opposition members do not really understand; I am probably wasting my breath for those across on the other side of the Chamber. Quite simply, they cannot stand there and oppose all those moves and then turn around and say: “Oh, but there’s no jobs.”

💬 Sue Moroney: It doesn’t create jobs. It actually reduces jobs, Mike.

Members on the other side of the Chamber can rest assured that the jobs are there, and this is about meeting employers and employees in the middle with the opportunities.

In coming to Part 2, in terms of the transitional provisions, I think it is important to note that where someone is captured in their entry into the workforce in the transitional part of this bill becoming an Act, those who are caught in the middle, if you like, will get the higher of the two positions, which ensures that they are not penalised through that transition period. Obviously there will be a transition, because this is a bill that would have employees working at this rate for 6 months. So there will be that period, and Part 2 simply covers off the importance of getting that transitional balance and the ingredients right. I think in clauses 7(2)(a) and 7(2)(b) it quite clearly states that the better of the two rates will be available to the employee.

Many people—certainly in my electorate and for the constituents, both employers and employees—have raised with me the real anxiety that they feel in a tight labour market that the opportunities are not there. This bill provides a platform to ensure that they are given a chance. The idea that a 16-year-old will somehow displace someone in their mid-twenties who has been in the workforce for 8 or 10 years, who has developed a good work ethic, and who has developed skills and experience in that business is an absolute nonsense.

I want to start by commenting on clause 7(2), which includes the transitional provisions that Mike Sabin was just referring to. My comment is that, actually, clause 7(2) is probably the only sensible clause in the entire Minimum Wage (Starting-out Wage) Amendment Bill, because it offers a modicum of reasonableness in allowing workers who are caught between two stools, if they have already started on the old new entrant rate, a kind of grace period of 3 months or 200 hours to be paid “as if this Act had not been passed”. Well, I have got an idea for a new amendment that we could put on the Table: how about we treat the whole damn bill as if it had not been passed?

This odious, pathetic bill, brought to Parliament by the National Government, illustrates the poverty of failure. It is not the poverty of failure that is a blight on communities all up and down this country—the youth unemployment crisis—it is the poverty of failure that this Government demonstrates by the fact that it is bereft of ideas, it is bereft of vision, and it has no ideas about what to do about the job crisis. The best it can do for young people in this country is to bring to this House a bill that cuts their wages.

Whichever way you slice it, this bill is unfair. It is discriminatory. I ask Mike Sabin, who loves to stand up and say that the Opposition is obsessed with all this socialist ideology and is demonising employers, why he does not bring to this House a bill that would actually provide a step up into the employment market for a group of people in this country who disproportionately suffer high rates of unemployment. I am talking about the people who live in the far north. The people in Northland suffer very high unemployment, so I challenge Mike Sabin to bring to this House a bill that cuts the wages of people in Northland. Why not do that? It is exactly the same principle. If that member is consistent and he cares about unemployment in Northland, then he should bring to this House a bill that cuts the wages of people in Northland. Let us have a starting-out rate for people who live in Northland, Kawerau, Murupara, or Gisborne. Let us cut the wages of people who live in high-unemployment areas. There is no reason, under the logic of the National Government, that we should not cut the wages of the people who live in Northland.

How about another group of people who suffer high rates of unemployment and find it very hard to get into the labour market? How about people who have physical disabilities and mental disabilities? They find it really hard to get a job because an employer will not take a chance on them. I say to members on that side of the Chamber: let us cut their wages to $11. Actually, why not cut the rate lower than $11? Let us cut it to $10 or $9 an hour, because that would give people with disabilities a leg-up into the labour market, and that is what they need. So let us cut the wages of people with disabilities.

There are other groups around in society who suffer high rates of unemployment: Māori people, Pacific people, new migrants, and refugees. They all find it really hard to get into the job market. They all suffer disproportionate rates of unemployment. So, following the logic of the National Government, let us cut their wages. There is no earthly reason why the same logic that underlies this bill should not be applied to disabled people, ethnic minorities, or people who live in Northland, Murupara, Bluff, or the West Coast of the South Island. There are lots of people who are disadvantaged in this labour market, and why should they not be the beneficiaries of the same Tory charity that is cutting the wages of young people in this country? The members on that side of the Chamber are silent, because they know that that analogy illustrates the absolute poverty of imagination and vision that is behind this bill.

Simon O’Connor got up and talked about the fact that there is a sort of fundamentalism on the Labour benches that is behind our opposition to this bill. Well, it is not fundamentalism, Mr O’Connor. It is a belief in basic ideas of human dignity, decency, and the equality of all citizens in our democracy—basic ideas that that member and his colleagues do not seem to have any idea about. Secondly—

I want to take just a quick call on Part 2 of the Minimum Wage (Starting-out Wage) Amendment Bill in respect of the questions that were raised by members Fenton and Moroney. In fact, Ms Moroney, I think, is quoted as saying that the bill shows a complete lack of awareness about the issues facing young people. I suggest to the Committee that that member shows a complete lack of awareness of either this bill or the Accident Compensation Act. It is not 80 percent of 80 percent; the present schedule to the Accident Compensation Act—

💬 Sue Moroney: Could have said that from the start.

Well, you see, this is a really good example, I think, of where the members on the other side assume something and then spend half an hour criticising the Government for a policy that simply does not exist in the bill.

💬 Sue Moroney: If you’d take a call and clarify it.

It does not exist in the bill. Well, I was just letting the tether get a little longer before hanging the member with it.

💬 Darien Fenton: It took you half an hour to work it out.

I was not on the Transport and Industrial Relations Committee. If, as a member of that select committee, someone was doing their job diligently, one should have asked the question, if it were that important to the member, rather than wait to the Committee stage and expose her own shortcomings in a lack of knowledge about the bill. The Accident Compensation Act at the moment already prescribes for the new entrant rate, which Labour put in place. And bear in mind, with all of this ranting and raving about the fact that a starting-out wage is such an evil thing, that Labour in fact put one in place for 3 months. So when the Government does it for 6 months, it is something awful, but when Labour does it for 3 months, it is something noble. I certainly get an inconsistency on that. In schedule 1 of the Accident Corporation Act, anybody who is in that new-entrant rate now who is injured is paid 80 percent of the adult minimum wage.

💬 Sue Moroney: So why are you amending it?

It is not being amended. The description of schedule 1 is being amended to reflect the new nomenclature in the Minimum Wage (Starting-out Wage) Amendment Bill that will be put into the Minimum Wage Act. The same thing will apply if, effectively, they are earning, as the member said, 80 percent of the adult minimum wage and they are injured. Then their weekly earnings are calculated on the adult minimum wage, and weekly compensation will be calculated on 80 percent of that. Therefore, their effective take-home income will not change during a period that they are injured.

I just want to direct my attention to Part 2 of the Minimum Wage (Starting-out Wage) Amendment Bill. I guess what I would like to concentrate on is the fact that the transitional arrangements—I agree with Mr Twyford—are probably the only sensible bits in the bill. The transitional arrangements are about protecting those workers who are aged 16 and 17 who are already on the training rate for a period of 6 months. I would like to note, and I would like to have it noted, that this training rate was the price that was paid to get rid of youth rates, which a previous National Government had brought into legislation in the 1990s. It was Sue Bradford, a former Green MP, who actually brought the bill to the House to get rid of youth rates in their entirety. In order to get agreement across the House that it could apply as a training rate, this is what happened: 16 and 17-year-olds were able to be employed if they were being trained for a period of 200 hours or 3 months at that lower rate of 80 percent of the minimum adult wage.

We are not suggesting that this should continue throughout our employment and industrial relations arena, and we certainly do not think that it should be applying to 18 and 19-year-olds. I agree with Supplementary Order Paper 192 from Darien Fenton that to implement this bill and to allow the reduction in the hourly rate for 18 and 19-year-olds is a huge step backwards, back to the 1990s. I thought we had moved on from then and that we were treating our younger people—or starting to treat them, anyway—with a bit more respect as they enter the workforce.

I do think, in answer to Mr Sabin’s questions about our seeming to think that employers want cheap labour, that, yes, they do. If you look at the unemployment statistics, with 160,000 people unemployed at the moment, and more being forced off benefits and being turned into job seekers, and you add to that mix 16, 17, 18, and 19-year-olds who will be forced off benefits, as well, and into the workforce at cheaper rates, then you are looking at a glut—a glut—of available low-paid workers, and that will force wages down. It will not add anything to the economy—it will not. When you keep wages low, you actually keep spending low, and my colleague Sue Moroney across the Chamber has already mentioned this. You keep wages low, you keep spending low, and, therefore, you keep jobs and wages low, and you keep jobs scarce. It adds no creative thinking towards creating jobs.

This Government seems to think that young people are worth nothing. We have heard from previous speakers that this is about doing them a favour in getting them into work. Well, they will get into work if we invest in them by giving them training, by giving them education, and also by creating jobs. The only kinds of economic strategies that we hear from this Government around creating jobs is the usual “Drill it, mine it, and sell it.”—the usual sort of short-term thinking.

But I come back to Part 2 of this bill. I have already touched on the transitional arrangements, which is the only sensible part of the bill. I do respectfully say to the Minister of Immigration that the equation of 80 percent of 80 percent is correct. Any person who has an injury at work gets 80 percent of what their weekly earnings are. If you are already earning 80 percent, then that means a young worker will be paid 80 percent of 80 percent.

Clause 7 in Part 2 of this bill, the Minimum Wage (Starting-out Wage) Amendment Bill, reveals why this piece of legislation is actually absolutely unnecessary, or should be absolutely unnecessary if this Government was actually doing its job. Clause 7, as other members have referred to, establishes the transitional period, or the transitional effect, for those workers who are already on the 3-month starting-out provisions that are already available. The Government says that this bill is about giving young people a chance to get into the workforce. It says that the way to do that is to have a period of time in which they can be paid less. Well, not that we are entirely comfortable with it, but that situation already exists. So the answer to the Government’s question of how we can get more young people into work has already been answered. But, of course, what this bill does is extends the period of time, from 3 months to 6 months, and extends the number of people who will be affected by the legislation, from not just 16 and 17-year-olds but 18 and 19-year-olds, as well. Therefore, we need the transitional effect of clause 7. Why? Well, the only answer can be that this Government has failed to create jobs, because what we have got now is the situation where these young people who will be impacted by this piece of legislation are competing for low-wage and low-skilled jobs with an older population who used to occupy the high-skilled, high-wage jobs that no longer exist in New Zealand. That is the answer to getting more young people into work—creating more jobs so that people who qualify for the full adult rate actually have decent work to be applying for.

But, no, people in their 20s, their 30s, their 40s, their 50s, and their 60s are competing with teenagers to work at McDonald’s. That is the situation that this Government has created, that is why young people cannot get into work, and that is why the Government needs to pass this legislation, so that young people can compete with older people for the jobs that only young people ought to be doing. The only reason we are in that situation is that this Government has failed to create jobs. This Government has lost its ambition. This Government has lost its way. This Government has no plan.

I would like to refer to some comments made by Mike Sabin whilst debating Part 2, because they contradicted an interjection that he made earlier on while my colleague Sue Moroney was speaking. He got up and said that 20-year-olds are not going to be chucked out of their jobs so that a 16-year-old can come in.

💬 Mike Sabin: A 25-year-old.

Oh, 25-year-olds even—look, that is probably true. But what Mike Sabin did say in an interjection was that if there is a job, it is more likely to go to a young person than it is to an older person, which actually accepts the fact that, firstly, young people—

💬 Mike Sabin: A new job.

Well, first of all, where are the new jobs, Mike Sabin? Where are the new jobs? If they are in McDonald’s and Burger King and Wendy’s, then that is a sad indictment on this Government’s efforts in getting our economy going again. If that is where the new jobs are, if those are the jobs that people are competing for, then what does that tell you, Mr Sabin, about this Government’s failure to get the country working again? Sixteen and 17-year-olds are not going to be competing for engineering jobs. They are not going to be competing for research jobs. They are not going to be competing for teaching jobs or for medical jobs or for nursing jobs. They are competing for low-wage, low-skill, fast-food, supermarket kinds of jobs. The only reason why they are competing with older people is that all the other jobs that people should be doing have gone, and that is because of this Government’s failure. It is no wonder so many New Zealanders are opposed to this piece of legislation, and Labour is happy to represent them.

I move, That the question be now put.

I am happy to take a call on Part 2 of the Minimum Wage (Starting-out Wage) Amendment Bill. In particular, I want to talk about the transitional provisions in there and the rates that are going to be paid. I want to talk about those rates and what they mean, and about some of the consultation that happened with other Government departments. If we have a look at this, I think what we find embedded in the regulatory impact statement, which lays out what other Government departments had to say about this, is the real agenda here, and how the rates that we see set out in this piece of legislation are not intended to stop with young people. They are not intended to be just youth rates. It is quite alarming to read through these when we look at what these rates might be.

If we have a look at Treasury’s comment on this piece of legislation and the youth rates that are in here, Treasury said that it “supports the introduction of a starting out wage, but considers that extending eligibility to a wider group of potential employees who face labour market entry barriers would boost the employment impacts of the policy and also be better aligned with the Government’s welfare reform agenda.” So there we have it in very bold type from Treasury in terms of its comments on this. This is not a piece of legislation that is about giving young people a start in the work force. First, it will not work—we know that; Government members have even given up arguing that it might achieve that. This is a piece of legislation that is about driving down wages. This is a piece of legislation that is nothing to do with raising wages, raising the standard of living, and raising the kind of life that New Zealanders can have in New Zealand.

Then we had the Ministry of Education’s comment in the regulatory impact statement. Let us remember that this is a Government that talks big about an innovation-led economy, and about how we are going to have a future that is based on investment. Well, let us have a look at the stark reality of what the Ministry of Education had to say about youth rates. The Ministry of Education notes that “the starting out wage may impact on the incomes of students who are working part-time while studying or working full-time during school or tertiary holiday periods. This may impact on students’ ability to finance their current or future tertiary study.”

This stuff is really worrying to us here on this side of the House. This is not the way to have the better New Zealand we want to have. If we put this together not only with the welfare reforms that Treasury pulled our attention to in the previous comment but with this Government’s lack of commitment to us having an innovation-led economy in terms of postgraduate allowance, how are the rates that are prescribed in this legislation going to allow someone to undertake full-time postgraduate study, with no access to an allowance, having to supplement their loan, but only able to earn $11 an hour?

Let us have a look at the people who might be doing it. Postgraduate students are very likely to have families to support, very likely to have other people whom their income is going to need to support. This legislation is going to undermine our ability to have more and more people gain qualifications that will make us a better country, that will deliver us higher-paying jobs, and that will lift the aspiration above minimum wage jobs, which the Government seems obsessed with. The Government thinks that it is only minimum wage jobs that young people should aspire to. Well, we here on this side of the House actually want something better for our young people, something better than the $11 that is prescribed in this bill. Let us continue through the regulatory impact statement. Let us have a look at some more of what the Ministry of Education had to say.

💬 Simon O’Connor: What’s this got to do with Part 2?

The Ministry of Education is “concerned that the starting out wage”—i.e., the rates described in Part 2 of this bill—“proposal is at odds with the Government’s Better Public Services targets of increasing the proportion of people attaining NCEA level 2 at school and also the proportion of the population with at least level 4 qualifications aged between 25 and 34.” Again, how does this tie in with the great rhetoric we hear from this Government? It does not, because this is a Government that is not about raising the standard of living of ordinary New Zealanders. This is not a Government that is about getting more people into work. This is not a Government that is about backing our young people.

Mr Sabin seems to think he can meet with a couple of his constituents, match them up with an employer, and, hey presto, we have solved the problem of youth unemployment. Well, Mr Sabin, 41,500 young New Zealanders are unemployed, and 90,000 young New Zealanders are not in any form of education, employment, or training. You cannot solve this in your electorate office. This requires a political solution, one that this Government is failing at because it is out of ideas and has nothing to offer except for the youth rates that it is offering in this bill.

What we have is a Government that will not face up to the fact that it has not put forward any solutions. And then we have a look at what the Ministry of Business, Innovation and Employment came in and said. This is the one piece of advice that the Government has latched on to. National has latched on to this and claimed that based on these rates that are prescribed in Part 2 of this bill, the starting-out wage will create 2,000 new jobs for young people over 2 years. This is based on the modelling and the estimates that the Ministry of Business, Innovation and Employment gave National. But it does not take into any kind of account the kinds of jobs and at what expense. This is probably the same kind of modelling that is coming up with this number of 2,000 jobs, the same model that perhaps told us that we were going to have 177,000 new jobs, which this Government has failed to deliver on.

This Government is willing to preside over increasing unemployment and, more shockingly and disturbingly, preside over increasing youth unemployment. We are at the level of Greece, Spain, and Portugal when it comes to youth unemployment. For 15 to 19-year-olds we are at 30.9 percent. We on this side of the House will not bury our heads in the sand. We know we have to do something about that. You need real solutions. Tinkering around with the rates, such as are prescribed in this piece of legislation, is going to do nothing to fix that. It is an absolute disgrace that this is all that this Government can come up with.

Then if we turn to clause 6 of this piece of legislation, which is around the Accident Compensation Act and how it interacts with this, all this legislation is doing is it is a cost out model. Workplace health and safety training is going to be put at risk under this legislation. We are setting up an employment model that encourages employers to have a high turnover of employees. Put it together with the 90-day legislation and you have all the incentives in the world for employers to keep turning and churning through young employees and paying youth rates. One of the things that this Government needs to own up to is that this is a perpetual piece of legislation for our young people. They do not get subjected to youth rates just once. This is not a starting-out wage; this applies until the day you graduate in age to an adult wage. This is not about giving young people a start. This is not about—

Sitting suspended from 6 p.m. to 7.30 p.m.

The question was put that the amendments set out on Supplementary Order Paper 189 in the name of the Hon Simon Bridges to Part 2 be agreed to.

Amendments agreed to.

The question was put that the amendment set out on Supplementary Order Paper 190 in the name of Darien Fenton to insert new clause 8 be agreed to.

Order! It is very hard to hear. I am not sure whether that conversation is inside the Chamber or being picked up from somewhere else.