Minimum Wage (Starting-out Wage) Amendment Bill

I move, That the Minimum Wage (Starting-out Wage) Amendment Bill be now read a third time. It gives me great satisfaction to support this bill at its third reading. This bill delivers on the Government’s commitment to establish a starting-out wage to assist young people to gain a foothold in the labour market. I would like to thank the Transport and Industrial Relations Committee, officials, and submitters for their work on, and contribution to, this bill.

The Minimum Wage (Starting-out Wage) Amendment Bill is part of the Government’s focus to create job opportunities for young people who are finding it difficult to get work in the current economic climate, and who have not been helped by the minimum wage settings broadened by the previous Government. The youth minimum wage was abolished in 2008 by the Labour Government and replaced by a new entrants wage that was rarely used. Research commissioned by the then Department of Labour suggests the abolition of the youth minimum wage has resulted in the loss of up to 9,000 jobs for young New Zealanders. The new entrants wage applies for the first 3 months or 200 cumulative hours. Businesses complain it is too complicated, impractical, and fleeting to bother with. Ministry of Business, Innovation and Employment research indicates it is used by only 2 percent of employers.

The starting-out wage will encourage employers to take on young people, who will then have the satisfaction of earning money, gaining skills, and getting the work experience they need. The bill achieves this by providing the ability to set different minimum wage rates, known as starting-out wage rates, by Order in Council for specified groups of young people aged 16 to 19 years. These rates must be set at no less than 80 percent of the adult minimum wage. This bill encourages continuity with the same employer by providing that a young person on a starting-out wage must complete 6 months of continuous work with an employer before they are entitled to be paid the adult rate by the employer. With a steady work history behind them, young people, like other employees with a steady work history, will be seen as less risky for new employers to take on.

The bill also addresses the problem of young people who have been on a benefit for a length of time of 6 months or more and may face difficulty re-entering or gaining a foothold in the workforce. The bill will provide for a starting-out wage rate to be set for these young people, and in so doing encourage employers to take on young people who have been out of the workforce for a while or may lack skills or experience. The bill also provides for young people aged between 16 and 19 years who are required to undergo training as a condition of the work to be paid the starting-out wage, rather than the minimum training wage.

This Government is committed to creating an environment that encourages economic growth. Part of this environment is providing a better balance to our labour market rules, which focuses on helping businesses grow while ensuring workers’ rights and opportunities are maintained. Initiatives such as the starting-out wage will give young people the opportunity to get a foot in the door. This bill will provide a strong incentive for employers to take on young people. Once in work, young people will gain the essential and necessary skills and work experience that will assist them throughout their working lives. This is a positive step for young people in New Zealand. I commend this bill to the House.

I rise to put on record Labour’s very strong opposition to the Minimum Wage (Starting-out Wage) Amendment Bill. The passing of this bill today will create an underclass of young workers and consign them to economic marginalisation. Not content with making it impossible for young workers to challenge their unfair treatment and dismissal in the first 90 days of employment, and not content with its abject failure in addressing youth unemployment, this Government has now come up with a failed and tired old approach of cutting the wages of young workers aged 16 to 19 years.

This bill assumes that there are thousands of employers out there just waiting to offer jobs to younger people and to give them a foot in the workforce, as National says and as the Minister of Labour says. We know that that is a false assumption. The Ministry of Business, Innovation and Employment has openly admitted that it has very little idea of whether this bill will meet its stated outcomes. The ministry tried a best guess that this bill could create 400 to 1,100 jobs, but we in Labour have learnt to become very wary of Government predictions of job creation. Who has forgotten the 2011 Budget projection of 170,000 new jobs by 2015-16? What has happened since then? Unemployment has continued to rise, more good jobs have been lost, and our youth unemployment is a national disgrace. Then today we learnt that there could be as many as 1,500 more jobs going from Telecom, which are high-skilled jobs.

What worries me most of all about this bill is that it is just the beginning under this young, new Minister. Treasury has suggested that paying other workers sub-minimum wages is something that could be extended in the future—other workers who have a high unemployment rate. So what we could see in the future are the vulnerable workers such as Māori and Pasifika or those who live in areas where jobs are hard to find on a so-called starting-out wage.

Unfortunately, what this bill does is remind us that the Government has no ideas and that we are going back to the past, where low-wage jobs were the norm, where productivity was increased by having more people paid less and working longer, where good jobs were offshored because of lack of investment and hands-on economic policy, and where our young people were sacrificed to a future of economic marginality.

This bill needs to be read in context with the Government’s planned changes to other employment laws, which will help slash the wages for hundreds of thousands of other New Zealand workers. From what I hear, the Government’s ideas for those employment law changes are so irrational that the Ministry of Business, Innovation and Employment is struggling to draft the appropriate legislation. I think that that may be why the former Minister of Labour Kate Wilkinson failed to progress the National Government’s policy, and the new, young, much-admired but very inexperienced and naive Minister Simon Bridges will find the same thing.

Cuts to workers’ rights and pay are classic National Party. In the face of its economic failures and its marginalisation of thousands of unemployed and underemployed, it has resorted to its tried and failed policies of last century. In 2010 National strongly opposed Roger Douglas’ member’s bill to reintroduce youth rates, and the then Minister of Labour, Kate Wilkinson, confirmed that her Government would not support a return to discriminatory and unfair youth rates. We heard a range of florid speeches—and I can see that we are going to get another one from members like David Bennett and Jackie Blue—opposing youth rates and saying that young people deserved better. Well, what has changed? What has changed is that the Government is returning to its neo-liberal roots of making cuts to workers’ rights and pay as a substitute for real economic policy and plans, and it is our young people who are going to pay the price.

You know, the most offensive thing about this bill is its framing as a starting-out wage. We know that that title is simply not true. Under this bill 16 and 17-year-olds will be returned to youth rates every time they start a new job, regardless of previous job experience, and under this bill 18 and 19-year-olds, who may have already had jobs on adult minimum wages or adult wages, will be forced on to sub-minimum rates if they have been unfortunate enough to be on a social security benefit, including the invalids benefit and sickness benefit. This bill, combined with the social welfare reforms from the Minister for Social Development, Paula Bennett, that we heard about and debated here yesterday, feeds the notion that our young people are lazy, they are addicted to drugs, and they are unreliable. It is based on the false assumption that the only way we can get young people into work is to pay them less.

The National Government has tried to run the argument that this bill is about the dignity of work. Labour certainly agrees that work is the best antidote to poverty, but it should be decent work. Decent work is not where people are paid less than they are worth, where they can be sacked without reason, where they can be forced to take jobs that could be unsafe, and where they are punished by a nasty regime within the social security system if they do not gratefully sign up for any job on a sub-minimum wage. A job should not only be about the work performed. It is a lot more than that. It is about getting experience, but also it is about relationships with other people in the workplace. It is about being fulfilled as a human being. People must feel recognised for their efforts and know that they are valued for those efforts and the contribution they make, and that applies to 16 and 17-year-olds and to 18 and 19-year-olds as much as it does to anyone else.

What this bill will do is unleash thousands of young people available as cheaper workers on to our labour market, and that affects every single worker in New Zealand. There is absolutely no doubt that having cheaper young workers leads to the displacement of older workers—older workers who, in this dire economic climate, are desperate to hang on to their jobs, who are not only in the queues of unemployment but also underemployment, who are crying out for better wages, and who are crying out for a Government that will do something to help them. And it takes no account of the expenses of young people—the expenses they incur while actually working—and whether the job will pay for the expenses of going to work.

When we have a Minister for Social Development who is so desperate to claim success in job creation that she trumpets the employment of 16 workers for 2 weeks in the census collection, we are in real trouble. When we now apparently have a culture within our Government agencies where job gains are celebrated by the ringing of a bell, no matter what the job is, no matter what the pay level is, no matter what the conditions are, and no matter what the safety risks are, and where all that matters is numbers, we are in serious trouble.

As we have gone through this bill, I have had on my mind one person I want to mention, and that is a teenager called Peniata Junior Endermann. He is a student at Edgewater College in Auckland who works from 5 p.m. to 10 p.m., Monday to Friday, as a cleaner earning the minimum wage. He is studying full-time. He is still at school. He is 16 going on 17. This job, along with his homework, means that Peniata puts in 16-hour days to help his mother, who also works as a cleaner on the minimum wage, and to help provide for his family and three siblings aged 15, 13, and 9. So Peniata is not lazy or unmotivated or unwilling. He has got himself a job. He should not have had to, but the state of our economy and low wages mean that in families like his everyone has to help out. But if Peniata changes his employment or if he is employed by a different cleaning firm, under this bill and the Government’s intentions around protections for cleaners and other vulnerable workers, his pay will go down to $11 an hour. So it is young people like Peniata whom the young Minister Simon Bridges needs to talk to.

This Government did not listen to the more than 500 submissions opposed to this bill. It ignored the business community, who said that this is not a silver bullet and will not do the job and that the Government needs to do a lot better on youth unemployment. The simple arrogance of this bill is gobsmacking. I cannot express strongly enough Labour’s disappointment and dismay at the direction this Government is taking today.

I just want to pay tribute to our fine young Minister of Labour, who has done a very good job in putting forward this Minimum Wage (Starting-out Wage) Amendment Bill. Today is an important day for the Labour Party. The Labor Party in Australia is coming back to its roots. It is understanding the problems of having leadership that does not apply. The Labour Party of New Zealand has not gone through what the Labor Party of Australia is going through today: the blood-letting, the letting out of that pain, and facing the reality of the world. That member who just got up and spoke, Darien Fenton, did a personal attack on the Minister as her way of attacking this bill, and that is shameful. That is the kind of approach that the Labor Party in Australia has been playing, and look what is happening to it today. It is falling apart in front of your eyes. In 2 hours’ time there will be a vote on the Labor Party and the leadership in Australia—

💬 Iain Lees-Galloway: What a shambles!

It is a shambles. That is right. It is a shambles, and members opposite are following in their footsteps. It is going to happen to you soon—I am sorry, Mr Assistant Speaker. It will happen—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! [Interruption] I am on my feet. I certainly do not want you to be bringing me into the debate, and that is for all speakers this afternoon. Keep the word “you” out of it.

That speaker spoke about being worried about the legacy under this new young Minister. That is what she said, and I think that was shameful.

We need to move on to what the Labour members actually propose when they debate bills. The Labour Party says that workers should get more money the more time that they are in work. The Labour Party is based on the union movement, and the whole part of that union movement is that the longer you are in work, the more pay and conditions you get. That is what the Labour Party always says. The Labour Party is based upon a union movement that believes that there is a hierarchy of employment and payment, does it not? That is what it stands for, and yet in this bill it will not stand for this. It will not stand for giving people a chance when it is its mantra—that is what it is. The Labour Party is about hierarchy of payment, it is about hierarchy of conditions, and when it comes to giving a young person a chance, it will not have a part of it.

In reality our young people should be in education. There will be no future for our young people if they do not get that education going forward. But some of our people make a choice at that time of their life that they want to go straight into the workforce, and the Labour Party members are denying them that choice, and the reason they are denying them that choice—

💬 Hon Member: They hate the young.

They do not hate the young. They do not hate the young; they want to control the young. They want to control people and they want to play workers off against each other. They want to play older workers against younger workers and say that this is unfair and that the Labour Party looks after all their interests when that is not true.

The people out there need to understand. They need to not believe that party, because, in the end, that party does not stand for equality of wages between all workers; that party is all about having a hierarchy of wages and entitlements. It is a bit rich for those members to come into this House today and say to young people who want to get on the start of employment that they should not have that chance. It is very disappointing and really is a reflection of how far the Labour Party has got to go in New Zealand, like it has in Australia, on this dark day for the Labor Party in Australia. Thank you.

What a bizarre and shambolic contribution that was from David Bennett. He started off talking about the Australian Labor Party. He is so embarrassed by this piece of legislation, the Minimum Wage (Starting-out) Wage Amendment Bill, he could not even bring himself to talk about the New Zealand Parliament, let alone the bill that the New Zealand Parliament is addressing at the moment. Then he went on to talk about the hierarchy of wages and actually probably got to the heart of what this legislation is about, because he said he wants to ensure that people start on the lowest rate possible. He wants to make sure that the entry rates are lower so that the whole hierarchy comes down. That party believes in dropping wages. Its own leader said: “I would love to see wages drop.” That is because the National Party believes in driving wages down, keeping workers down. That is all that the National Party lives for.

But I have got to be honest, I like quoting David Bennett. My favourite one, from a few years ago, is: “The Government is not here to make your life better.” That was my particular favourite from David Bennett: “The Government is not here to make your life better.” My goodness, we could not ask for a better representation of David Bennett’s mantra of “The Government is not here to make your life better.” than this piece of legislation.

But that is not all. David Bennett has had a range of views on this issue. A mere 2 years ago David Bennett said: “I encourage those people who are listening and members in the House to look at this issue in the wider perspective of what we want to achieve in setting some incentives and some direction, and not try to scaremonger or create perceptions that if we have a lower rate of pay at the first level of employment, those opportunities will necessarily be provided.” David Bennett, take a bow. I could not agree more with what David Bennett said 2 years ago in this House.

It was not just David Bennett; it was Jackie Blue as well, I think, at the time. Paula Bennett did not like the idea of youth rates, and the Minister of Labour at the time, Kate Wilkinson—whatever has happened to her? She did not agree with youth rates either. This National Party flip-flops all over the place. It was in favour of it when it was in Opposition, then it was opposed to it when it was in Government. Now, a couple of years later in Government, it is in favour of it again. It is all at sea. What an absolute shambles this Government is.

Let us be real about what this bill truly represents. It represents the failure of this Government. It represents the failure of the National Government to grow the economy. It represents the failure of the National Government to create more jobs. It represents the failure of the National Government to keep people in education, to make sure there are places available at universities and at polytechnics and in apprenticeships. It is an absolute demonstration of what happens when a Government comes to power with absolutely no economic plan at all.

So what we have got is people losing jobs at Telecom, in the productive sector, people losing engineering jobs, and people losing high-skill, high-wage jobs, so now more and more of those people are competing with youngsters for those entry-level jobs at McDonald’s, at Burger King, at Wendy’s, at Pak ’N Save, at Countdown. That is the real problem here. Those jobs, which should be the entry-level jobs and often are the minimum wage jobs, are the jobs where, basically, youngsters were the only people applying for them. Now young people face massive competition from people who have been turfed out of their jobs because this economy is so weak.

And, look, we accept that there is a certain nature of evolution in the job market. Some jobs will come and some will go. Some industries will rise, some businesses will rise; others will fall. But as businesses fall, if the economy is in good health, there will be other jobs for people to go to. There will be other high-skill, high-wage jobs for people to go to. But no, the only places where there are new jobs are the fast-food and supermarket industries, which is why this bill, the Minimum Wage (Starting-out Wage) Amendment Bill, is being passed by this Government—because young people are having to compete so hard against the older workforce for those low-skill, low-wage jobs.

What happened to the aspiration? What happened to the brighter future?

💬 David Bennett: What happened to Julia Gillard?

💬 Jami-Lee Ross: Oh, she’s gone.

Where did it all go? It has all gone to Australia. That is right—they have all flown to Australia. Members opposite can say what they like about what is happening with the Australian Government at the moment, they can say whatever they like, but the Australians are taking our talented young people. People are seeing more opportunity in Australia than they are seeing in New Zealand, so if I were those members I would not be crowing about what is happening in Australia, because the Australians are still doing a better job than any of those members could do in Government. That is the real situation.

Look, there is no justice in telling young people that their work is worth less than that of somebody else who is doing the same job as them and is just a couple of years older. That is unjustifiable discrimination. This House has been doing a very good job of dealing with other forms of unjustifiable discrimination in the past few weeks, and yet here the National Government is reintroducing another form of absolutely unjustifiable discrimination.

The fact is that the thing the Government says this bill is supposed to achieve, which is to give young people a supposed leg-up by allowing them to get into a job at a lower wage rate, already exists. It already exists, and yet we still have massive youth unemployment, we still have no growth in jobs, and we still have no growth in the economy. So doing more of what we have already got is not going to change things. That is the real situation. This bill is simply a representation of this Government’s failure.

Under National’s watch 72,000 young New Zealanders aged between 18 and 30 have disappeared to Australia because that is where the job opportunities are, that is where the wages are, that is where the good working conditions are, and that is where the unions are strong. Paying lower wages, eroding workers’ rights, and beating up the unions will only send more of our talented, valuable young people away overseas, and it is more and more likely that they will be lost to us for ever.

John Key has lost his ambition. He has lost the vision for a brighter future. He is content with New Zealand being mediocre and second-best.

💬 Hon Trevor Mallard: He’s ambiguous for New Zealand.

He is ambiguous for New Zealand. He is content with our country being a place of low wages and low opportunity, and people are leaving in droves for better opportunities overseas.

You do not improve the lot of our future generations by paying them less for doing exactly the same job as someone who is older. There is no justification for doing it. We would like to see the evidence, actually. We have heard a lot of rhetoric from the National Government, but we would actually like to see the evidence. I think that the National Government should listen to its own members a little bit more closely. There was Paula Bennett: “we are not convinced it would reduce youth unemployment, plus it would be a distraction from the really important work of improving productivity and growing the economy in order to create long-term jobs, which will keep young people in New Zealand.” Well, that was 2 years ago. Where is Paula Bennett now? Why is she not focused on improving productivity? Why is she not focused on growing the economy? Why is she not focused on keeping young people here in New Zealand, working for this country’s future? This Minimum Wage (Starting-out Wage) Amendment Bill demonstrates how this shambolic National Government has failed New Zealanders, failed our young people, and failed to grow the economy. The sooner its term comes to an end and New Zealand can be put on the path towards success, the better.

I think we can probably agree in the House today that there is no doubt that we should be very worried about the rate of youth unemployment in New Zealand. We know that there are at least 90,000 young people nationwide who are not in any kind of employment, education, or training. We know that in every region of the country more young people are claiming the unemployment benefit than 5 years ago. We know that youth unemployment for those aged 15 to 19 is at around 30 percent. That is a rate that rivals those of Spain, of Greece, and of all those countries in economic chaos at the moment. We do not want to be in that list of countries. As well as hurting our young people right now, such high rates of youth unemployment will be disastrous for our country in the long term—for our long-term health, education, employment, and justice spending and for the skills and sustainability of our future workforce. So this issue does deserve the highest priority of this House.

However, the Government claims that reintroducing youth rates is its answer to these high rates of youth unemployment—that reintroducing youth rates, as it does in this bill, the Minimum Wage (Starting-out Wage) Amendment Bill, will improve job opportunities for young people and will encourage employers to take on more young workers. So how did it arrive at this particular solution to the problem of youth unemployment? Did it conduct a detailed evaluation of all the different ways that you might address youth unemployment, of all the different options to help young people into employment and training, and have a look at those against some kind of robust criterion about which was the most likely to succeed? No, it did not. It made an ideological commitment before the election to reintroduce youth rates—largely at the behest of that single-member, irrelevant, and unpopular support party that it has, the ACT Party—and pursued it, without even looking at any other options to reduce youth unemployment.

How do we know it did not look at any other options? Because it says so in the regulatory impact statement for this bill. I quote: “The starting out wage proposal is a pre-election policy commitment. The Ministry’s analysis has therefore not considered other options for achieving the objectives of the proposed starting out wage package.” That is right: it did not even look at any other options to achieve the objective of reducing youth unemployment. This is not evidence-based policy. It is—to borrow a phrase that I learnt last week from my colleague who has just spoken, Iain Lees-Galloway—policy-based evidence. Having come up with the policy, it then got its officials to come up with some evidence to support it. That is no way to make policy, and what is in this bill is no way to reduce youth unemployment.

Before I go on to talk a bit about the provisions of the bill and how harmful and discriminatory they are, I want to spend a little bit of time talking about some of the other things that the Government could do to assist more young people into employment, education, and training, instead of what is in this bill. The reason I want to do that is that I am aware that there are probably quite a few young people following the debate today, and they will have heard a lot if they are listening—

💬 Hon Simon Bridges: Really? Really?

Yes, because they are directly affected by it, Mr Bridges.

💬 Hon Simon Bridges: I doubt it.

They will have heard—and if they are not listening, there is a reason for that. They will have heard how hopeless the youth unemployment situation is and how they should be satisfied with any paid job they can get—even if it is paid at less than subsistence wages. They will have heard a lot about how bad the bill is, and it is very bad. But I do not want any young people listening to this debate to lose hope or lose faith in the ability of this Parliament and us as MPs to advocate for them and for policies that actually work for them. I would not blame them if, having heard all that doom and gloom, they switch off. And if, indeed, as the Minister of Labour says, they are not watching—and he, as the Minister responsible for this bill, should be very concerned if they are not—it is because politics has become irrelevant and hostile to them. Indeed, the voting statistics from the last election show that more and more young people are doing exactly that—turning away from Parliament and politics and disengaging from our political system. It is because of bills like this that they are doing that.

I want to assure young people that some of us at least have ideas and solutions to put on the Table and a genuine commitment to engage with young people about what works best for them. Had the Government done that for this bill, I think it would look very different. The Green Party, for example, is committed to better pathways to employment, education, and training for young people, including more equitable access to student support for higher education; greater investment in apprenticeships—even more than the Government has recently made, which is nowhere near enough—greater investment in job placements and partnerships with businesses and employers; and better financial support for young job seekers. The Transport and Industrial Relations Committee heard many practical ideas about how to achieve these things from the young people who submitted on this bill, who were full of good ideas about how we could address the problem of youth unemployment. Sadly, they were ignored by the select committee. They were ignored by the select committee, like all but seven of the over 500 submissions that were received by the committee. Out of those over 500 submissions, most of them—over 500 of them—were opposed, and only seven submissions were in favour of the bill. Yet the Government went with the seven, not with the 500.

Why were those 500 submitters opposed to this bill? Well, I will tell you. It is because it introduces unacceptable discrimination into our law. I have said this in the first reading and in my second reading speech. It is not acceptable in our country any more to pay women less than men for doing the same job. It is illegal to do that. It might still happen, but if it does, we do our best to find out about it and prosecute. Similarly, it is not acceptable to pay people from ethnic minorities less than others for doing exactly the same job. It is illegal, and when that happens we do our best to prosecute and report it. Similarly, it is not acceptable to pay young people who are doing the exact same job as older workers less for the same job. Since 2008, thanks to a member’s bill in the name of the former Green MP Sue Bradford, it has been illegal to do that too. But this bill reverses that change and reintroduces lower minimum wages for three categories of young people: 16 and 17-year-olds in their first 6 months with a new employer, 18 and 19-year-olds who have been on a benefit for 6 months or more, and 16 to 19-year-olds who are in industry training.

Not only is it discriminatory and retrograde to do this, it is nonsensical, because where is the incentive for young people on a benefit to move into paid work if they will not get even the minimum wage when they do? How is it fair for a 16 or 17-year-old to have to go back to subsistence minimum wage rates if they move to a new employer, even if they had been paid at the full adult minimum wage for months, even years? If they start a new job, they have to go back. How does that make sense? What we will actually see are young people who are taken on for 90 days under the 90-day trial period. When they finish that 90 days, they will be flicked on to a new employer, and many of them will be locked into these low wages for much longer than 6 months, because they cannot get a foot in the door.

This bill reinforces New Zealand as a low-wage economy. It will help to keep wages down, not just for young people, but actually for all workers, and subsidise employers. But, worst of all, I think it sends a terrible message to young people about the value that we in this Parliament place on them. It says that they are not worth as much as older New Zealanders, that their skills and their labour are less valuable, that their expenses and their costs are not as important, and, essentially, that they as human beings are simply not as important as older New Zealanders. It is no wonder that with a Parliament that sends that message, young people are turning away from us in droves, Mr Bridges. As I said in the second reading last week, there was a glimmer of hope last week when we passed the second reading of the Marriage (Definition of Marriage) Amendment Bill. We threatened to look relevant and interesting to young people for about 5 minutes, and the galleries were full of young people, but we have completely undermined that message this week with the passage of this bill. It tells young people they are not worthy of our respect, and, as I said last week in Parliament, I am ashamed of this House for passing it.

We have heard from both the Labour Party and the Greens about people leaving in droves to go to Australia. Well, I ask members of this House: why? Mining—mining and the opportunities that mining brings. Yet both those parties in the last debate voted against the very bill, the Crown Minerals (Permitting and Crown Land) Bill, that will open up the opportunities for people here in New Zealand. So it is a little bit rich when those members get up on that moral high ground that they seem to think they should occupy and start voting against a bill like this, the Minimum Wage (Starting-out Wage) Amendment Bill.

New Zealand has got some real challenges around youth unemployment, and there are a number of reasons for that. Two of the primary reasons are the global financial crisis and the economic impact of the Christchurch earthquakes. When the employment market gets tough, it gets tough for employers, and the follow-on for that is employees. Who is right at the bottom of that ladder? Unfortunately, it is young people who lack the skills and lack the work experience, and they are often most hard hit when times are tough. This is not unique to this Government—this is not unique at all. This is something that you clearly see evidence of when times get tough, so we have to meet that challenge. When employers are struggling, the reality is that they have to sail closer to the breeze; their margins are less. So what do they do? They look at ways in which they can be innovative and ensure that they can produce the products that will yield the profits that help them employ and grow their business. When you have youngsters who lack experience, who lack the job skills, and who lack even a simple work ethic that often only comes when people are in work, and then you have employers looking to take someone on, and on balance they have someone who has more skills, who has a work track record, and who has experience, the choice becomes a very easy one for an employer. What we need to do, what is incumbent on members in this House, is ensure that employers have the appropriate incentives, have the appropriate assistance, to give those young people a chance. That is exactly what this bill is about—it is exactly what this bill is about.

I know that members on the other side of the House agree with this, because one Darien Fenton in 2007 was on record, on Hansard, saying this: “the inexperience of first-time workers or new entrants deserves the recognition of a short period while the new worker becomes more socialised to work.” They deserve the recognition of a short period while the new worker becomes more socialised to work. Well, I thank the member Darien Fenton for agreeing on what this bill is about, and I commend this bill. We have heard the Opposition saying this is classic National Party. Well, you know what? The classic Labour Party’s failed socialist ideology is why it is there, and this National Government is getting on with what needs to be done.

I rise on behalf of New Zealand First to oppose this bill, the Minimum Wage (Starting-out Wage) Amendment Bill. New Zealand First opposes this bill because it is an out and out attack on young people—the vulnerable young workers who are at just the beginning of their working careers. Cheap labour is not the silver bullet to create jobs, which are vanishing every day under this Government.

More tax, lower wages—that seems to be the way of this National Government. It has raised GST after saying that it would not, inflicting pain on those people on fixed incomes. Then it has gone and taxed paper boys, another set of young workers. And here it is again, launching an attack on our young workers. This is obviously not a Government that is intent on solving the big issues. Job creation for all New Zealanders must be the primary focus of the Government, and this bill will not provide additional jobs.

On this side of the House we are quite concerned for older workers. It is hard enough for anybody over the age of 50 to get a job anyway, so how stable will their jobs be? We have heard from the other side of the House that these are hard times for employers. Mike Sabin said that. It is easy for some employers to employ young people at a far cheaper rate, particularly in these hard times.

With this piece of legislation the National Government shows how totally disconnected it is from the harsh realities that are faced by most of our vulnerable young workers. It is really a slap in the face to those young workers. This bill does not affect just teenagers earning a bit of extra pocket money while they are living at home with their parents. Many of them will not have financial support from their families, at all. Some of these affected people will for all intents and purposes be independent or trying to be independent. So how are these independent young people any different from people a couple of years older than them? Will these people get a 20 percent discount on their rent? Perhaps a 20 percent discount on their electricity bills? Or even their groceries? No, they certainly will not, definitely not on their petrol.

💬 Sue Moroney: Could be the “YoungerGold Card”.

Perhaps we will have to have a “YoungGold Card”. You never know—we could perhaps come up with that. The passing of this legislation is definitely going to make all of these people’s lives 20 percent harder. Their living costs are exactly the same as other, older New Zealanders’ living costs, so why is this Government so intent on kicking young workers into the gutter, especially at a time when people are struggling? In the last year alone we have seen the number of young people looking for work increase from 80,000 to 90,000—90,000 young people not in work or any form of training. It is a real disgrace and a sad indictment on this Government.

If we are not careful, New Zealand will see a bubble of young people going out into the world without any real work experience. What a total waste of a young, vital resource that we need here in this country. I do not believe that we should be sending these people off to Australia in ever-increasing numbers. This piece of legislation is not going to help young people, despite Mr Auchinvole laughing and smiling about it. This piece of legislation will not encourage young people to go out and seek work. If anything, it really encourages them to give up. By the time young people have paid to travel to work in their cars, because petrol is not cheap, they are worse off than they would be if they were on welfare.

So where is the incentive for these young people to try to find these nonexistent jobs? And what exactly is the rationale for this change? Where is the demand? Well, the Government is claiming that the bill will create more jobs, but we have not seen any valid statistics to back up this claim. It claims that reducing the minimum wage for one sector of the population is going to create more jobs. The truth is that this bill will not create more jobs. It is just another hurdle for young people trying to stay afloat in these pressing economic times. We all know that prices are increasing dramatically in every part of the economy. With this piece of legislation this Government is ignoring the plight of hard-working young New Zealanders. It treats them as second-class citizens.

It is a bit like a Back to the Future piece of legislation. We have seen it before. Within living memory it was women who were allowed to be paid less than men for exactly the same work, but, fortunately, those days are passed. We know that it is totally unacceptable to pay one sector of the population a lower wage. It is illegal discrimination. It is very concerning to see ideologically driven policies emerging that would once again treat one part of the labour force worse than the rest. Youth rates will not encourage employers to create additional jobs. It is a sad reality that under this Government there are families who rely on their children working in order to be able to make ends meet. This is the harsh reality for many families—young people working after school, bringing the money home so that the families can actually make ends meet. So what good will this change bring to them? What good is it going to do? It is simply going to make their lives harder. And, as my colleague Asenati Lole-Taylor said, Māori and Pacific Island families will find it very, very challenging.

Before we came into this House I had the opportunity, thanks to my colleague, to find a good quote from someone whom we more than likely all know of. He is a very successful businessman called Robert Bosch. We no doubt have got dishwashers and fridges in our homes that bear his name. He said: “I don’t pay good wages because I have a lot of money; I have a lot of money because I pay good wages.” I think that is a very good message there.

New Zealand First believes that all people, irrespective of age, should be given equal pay for equal work. We believe that this Government is now on a very slippery slope. With this bill the Government takes another step towards a low-wage economy. If this Government believes that reducing the minimum wage for some people will create more jobs, perhaps it is keen to abolish it entirely. Is that part of the plan too?

New Zealand First is disappointed with this bill, and, quite honestly, we cannot support it. We have listened to the National members of the House speaking, listening for good reasons to support this legislation, but, sorry, we have not heard any to make us change our mind. Where is this brighter future that National promised us? We keep looking and waiting and looking and waiting, but to no avail. The future looks very gloomy for some people, and particularly for young people. The horizon is not bright for them. New Zealand First will not be supporting this bill.

I rise with pride to support the Minimum Wage (Starting-out Wage) Amendment Bill, introduced by the Minister of Labour, the Hon Simon Bridges. My goodness me! We have just heard from Barbara Stewart, who is always a very pleasant person, but my goodness me, the response to this bill reminds me of that line from Shakespeare: “Methinks she doth protest too much.” I cannot see where the problem is. Where is the problem with providing opportunities for young people to get into work and off the dole? Where is the problem with giving young people a job, instead of being on welfare? Those members would rather they stay on welfare. They would rather they did not have a job. Do the Labour Party or the Green Party not like young people? Because that is the only conclusion we can come to.

Is the real reason, lurking in the depths of the Labour Party mind, to protect the union-established hierarchy of employment practice? I think that is the case. We heard Mr Goff give it voice. We heard Mr Goff say: “This will lead to job displacement.” That is the real reason. Andrew Little was right up there behind him, saying: “We’ve got to protect existing jobs.” National does like young people and does want to help them. This bill is pro-youth, pro-employment, and pro-opportunity. I honestly commend it to the House. Thank you.

This day, sadly, will go down in history as the day that the Government officially gave up on young people—the day that the National Government officially gave up on young people—and the day that the Government, the National Government, officially gave up on the brighter future. This bill, the Minimum Wage (Starting-out Wage) Amendment Bill, does both of those things. It gives up on young people. It says that they are not worthy of a fair day’s pay for a fair day’s work. It says that this country is not going to have the brighter future that that Government promised in two consecutive elections and still has not delivered on. This bill is the reason why. Government members think that actually lowering wages is the way forward for this country. Lowering wages, for whatever group in our society that may be, is a downward economic spiral and it is going in the wrong direction to where this country needs to go. When wages are lowered—in this instance, for those people aged 15 to 19—workers have less money to spend. If they have less money to spend, then there is less work in our economy. When money is not being spent, then we have fewer jobs in our economy, not more.

I think that that is where this Government has got it so wrong. It is a very basic economic theory. It is not hard to understand. It has been proven time and time again that a high-wage, high-skill economy is the way forward for countries like New Zealand. When we have high wages in our country, then spending occurs and the whole economy lifts up. That is how work is created—there is a demand driven up because people have money to spend. If people have their spending power reduced, then that is the path to economic decline. That is exactly what this Government is up to. It has also given up pretending that this piece of legislation creates jobs. Even the Government itself, when it started out on the first reading of this bill, argued that this was going to create jobs. But Government members have all stopped arguing even that, because it is plainly ridiculous—plainly ridiculous—to keep up the pretence that cutting wages creates jobs. It does no such thing. In fact, as I have just demonstrated, it actually reduces the number of jobs available in our economy.

I want to give some very real information to the House about where the real problem exists. In the Waikato Times 2 days ago, on the front page, the banner headlines screamed out to people in the Waikato “Jobless fight for work”. That is the true reflection of where that Government has got this country. The jobless are indeed fighting for work. What that story detailed was that in the Waikato the number of people on the unemployment benefit increased by 33 percent between September and December last year alone—33 percent more unemployed people in the Waikato region just in the last 3 months of last year. If you compared those unemployment figures in the Waikato with December 2008, there is a massive 65.9 percent more people getting the unemployment benefit in the Waikato now than there were in December 2008. That is what the real problem is. It is not the amount of wages being paid to young people. It is the absolute dearth of jobs available in our economy. And until the Government gets real, fixes the real problem, stops blaming young people for their plight, and starts looking at itself in the mirror about its lack of a plan, we are going to continue to struggle as a country. It is, sadly, the day that the Government gave up on young people, and the day that the Government gave up on a brighter future for New Zealand.

I think that when the new Minister Simon Bridges came into his new role as Minister of Labour—it was a significant promotion for him—there was a lot of hope that he might bring a new, young, shiny approach to National Party policy in that portfolio. But what this shows is that he is just following the same tired, old, lazy policies of every National Government that has ever been in power in this country. Every time we have a National Government in power—it does not matter what part of the economic cycle we are in, whether we are in a recession, whether we are in good times, or whether we are in the middle of that cycle—it always has the same tired, old approach, the same lazy answer to what it wants for New Zealanders. And what it wants for New Zealanders is low wages. It has proven that time and time again. Every single time, that has been its formula. This time it thinks it can get away with it under the cover of a recession, but if you look historically, it shows that every single time we have had a National Government in place it has gone after workers’ wages.

This time it is using the cover of high youth unemployment. It says that because young workers are overrepresented in the unemployment figures, therefore the solution is to actually discriminate against them by having lower wages. Well, what is to stop this Government from using exactly that same theory when it comes to Māori workers, who are also overrepresented in the unemployment figures? Is it going to use the same justification? Is it going to say—

💬 Darien Fenton: They should.

That is right. That is where its argument leads us. Is it going to say that Māori should get only 80 percent of the minimum adult wage? Because that is exactly the argument that it is using for young people. Pacific Island workers are also overrepresented in the unemployment figures. Is Simon Bridges going to have the same solution for those workers as well? Because if National applies its failed thinking for young workers across the whole—

💬 Hon Simon Bridges: It’s very different.

Simon Bridges says that it is very different. I will be interested to know why it is very different, because the only argument that this Government is putting forward is that it has failed young workers. They are overrepresented in the unemployment figures, so therefore the Government has to actually lower their wages. The Government has also spent its time talking down young people.

💬 Hon Simon Bridges: Oh, rubbish.

Well, according to Mike Sabin—if the Minister listened to his contribution to this debate—they all lack skills. All 15 to 19-year-olds lack skills.

💬 Mike Sabin: I didn’t say “all”.

Well, now he is saying that he didn’t say “all”, but the only thing he had to say about young workers and their contribution to the workplace was to denigrate them, say that they lack skills, and say that they lack experience.

The Government has no understanding of the value of young people. That is why it is quite happy for the youth of this country to be exported to places like Australia, because it does not understand the value of young workers to this country, to their families, and to this economy. It is no wonder we are losing our brightest and best—our young, bright future—to Australia. That is where they are headed under this Government. This piece of legislation will make that departure happen at much faster rates. Families will lose their young people to Australia because there is no brighter future for them in New Zealand under a National Government.

It is a great pleasure to take a brief call in the third reading of the Minimum Wage (Starting-out Wage) Amendment Bill. This is a bill that improves the chances of our young people to gain skills. It improves the chances of our young people to gain experience. It improves the chances of our young people to earn money, find a sense of purpose and a feeling of belonging, and find the dignity of work.

We do have challenges around youth unemployment, which we are addressing at a number of levels. Youth unemployment is unacceptably high for this Government, and we are working in many different areas to bring it down. Looking at the global picture, of course, we are doing a lot better than most economies around the world. Recent figures that came out just today add emphasis to that fact, coupled with the imprimatur of the IMF just a few days earlier about how this economy is tracking.

The Ministry of Business, Innovation and Employment suggested that this bill will help 2,000 sixteen to 19-year-olds into the workforce in the next 2 years—2,000 more of our young people in work. I commend my colleague Chris Auchinvole’s comment and will repeat it for the House. This bill is pro-youth. This bill is pro-work. This bill is pro-opportunity. I commend it to the House.

Split call—5 minutes.

I rise to give a short contribution to the third reading of this bill, the Minimum Wage (Starting-out Wage) Amendment Bill. Three words came to mind when listening to the speech from Cam Calder, before me, and they are “humbug”, “poppycock”, and “not true”. Labour believes in the dignity of work. We in this party here believe also in the living wage, and because this bill undermines the living wage and because this bill attacks the dignity of work, Labour opposes this bill.

Māngere, my electorate, has the youngest population of any other community throughout New Zealand. With 30.4 percent of our people aged 15 years and under, we are ranked No. 1. If you add the age group of 15 to 19-year-olds, that whole collective becomes 39 percent. For that reason I promote Māngere as the gateway to the nation, the land of the young, beautiful, and gifted. That statement expresses a desire by our parents that we have great hope for our young people. We see them as the future leaders of this particular country. For that reason, Labour has a plan that is different from what this Government proposes. We want to produce the future leaders of this country through education, through skills development, through opportunities, and through higher wages—not the kind of future this Government is building for our young people. Government members want our young people to become used to second-best rates. They want our young people to become used to low wages. Labour’s plan is to create wealth through innovation, to ensure that our young people are earning while they are learning. New Zealand parents right now are doing it tough under this particular Government. The future is bleak for hard-working families across this nation, the majority of them wanting to believe what they were promised—the brighter future.

But, alas, 72,000 young Kiwis aged between 18 and 30 have left this country for Australia because they see that as the country of opportunity, the country where they can get ahead while this Government is here. It promised all of New Zealand a brighter future. I want to ask Peseta Sam Lotu-Iiga and Alfred Ngaro: where is the brighter future in paying workers low wages? Where is the brighter future for Pacific communities when those members continue to support low wages for workers? I do not hear a response from that side, so they are content to drive wages below. They are content to make sure that our young people—the future of this country—become used to low pay and second-best.

Since this Government has come into power it has presided over the worst economic period in 51 years, the worst and highest unemployment numbers in 13 years, and 175,000 people without jobs. The report of the Salvation Army that was released not too long ago identified that we have got people who are on the unemployment benefit and cannot find jobs, because this Government continues to sit on its hands. The future for New Zealand families has to be about high-value jobs, it has to be about full employment, even, it has to be about skills, and it has to be about high wages. John Key has failed our young people. John Key has failed to deliver for young people—30,000 under-20-year-olds are not in education, not in employment, and not in training. That is more than 4,000 since that Government came into power, and if we include the age group of 20 to 24-year-olds, that becomes 90,000 people not in education, not in employment, and not in training. The Government simply acknowledging that there is a problem is not fixing it. It has got to fix it. It has got to fix it, but it is content to drive wages down. It is not prepared to do anything, so Mr Peseta Sam Lotu-Iiga, where is the brighter—

💬 Mr DEPUTY SPEAKER: Point of order, Peseta Sam Lotu-Iiga. The member’s time has expired, but there is a point of order.

I raise a point of order, Mr Speaker. I know the sound system is not working, but we are not far from Mr Sio. He does not need to shout in this Chamber in order to get a little bit of attention for the man. So, please, just—

💬 Mr DEPUTY SPEAKER: I am sure that the sound will be adjusted.

Kia ora, Mr Deputy Speaker. Ngā mihi nui ki a koutou. Kia ora. It is good that this House is looking at youth unemployment. It is the right question that we are asking, but what we have in front of us, the Minimum Wage (Starting-out Wage) Amendment Bill, is clearly the wrong answer.

I am proud to stand to oppose this bill—this flawed, ideological, and discriminatory bill. It is flawed because the entire premise is wrong. Cutting wages does not create jobs. Cutting wages does not encourage people into work. I have not heard a single economic report or a single piece of economic research being quoted by the Government members. The fact is that there is limited research. In fact, the research is strongly in the other side of the camp, which says that higher wages do encourage work. We saw it in New Zealand when the Green Party ended discriminatory youth rates in the mid-2000s, and it had no impact. If anything, more young people were in work. So it is flawed, the premise is wrong, and it is ideological.

We know it is plainly ideological, because the regulatory impact statement says as much, and because there were no alternatives canvassed by officials. It is ideological, because it is 1990s thinking in 2013. The Government’s whole plan for the economy is to cut wages and to make us even more of a low-wage, high-work economy. Mr English said as much on competitiveness. John Key said he would be fine with seeing wages drop.

This is not the way to build our jobs and our economy. All it is doing is ideologically supporting a small—and I mean a very small—number of some employers who see their future in cutting wages and flicking workers off. It is flawed, it is ideological, and it is discriminatory. It is clearly discriminatory because it is picking on one group. This bill targets 16 to 17-year-olds and sets up two types of employment in New Zealand: those 16 and 17-year-olds who are paid a discriminatory rate, and those 18 and 19-year-olds who have been on the benefit and will also get a discriminatory rate. So it is flawed, ideological, and discriminatory.

In fact, I would call it nasty. The Government did not look at the alternatives, and now we know from an Official Information Act request, as well, that even the Ministry of Education advised against it because it is contrary to the Government’s own education goals. But I would also contend that from the Government’s perspective it is counter-productive, because this sends a terrible message to young people that they are second-class citizens who should be earning less. It sends a message to employers to flick off young people after 90 days so that they can keep paying their workers at the discriminatory lower rate. But also for all New Zealand workers, be they aged under 20 years or above, it is driving down wages across the entire New Zealand economy.

Again it goes back to that flawed approach to the economy. The way to build prosperity and growth in jobs is not about reducing wages and working conditions through 90-day trials and picking on paper boys and paper girls, as in the last Budget, and it is not about damaging the environment and racing other countries to see who can cram as many cows as possible in a paddock. That is not our future. That is not a way to provide solutions for the 90,000 young people who are right now, today, not in employment or training—at similar rates to Spain and other countries.

What young Kiwis and our economy need is a plan for jobs, a plan for sustainable prosperity. Every week we get bad news. We see Mainzeal Property and Construction and Solid Energy—and Telecom might be on the cusp of losing 1,500 jobs. We have lost 30,000-plus jobs in manufacturing. Kiwis want to hope. They want a vision. They want a plan. That is what we went with to the election in 2012: a plan to create 100,000 green jobs. This is the way the future is going. This is where capital investment trends are going. It is what the influential business leaders are saying. They said we could see 50,000 jobs in clean energy.

I was at the Wind Energy Association conference last night. Its plan for 3,500 megawatts of wind electricity would deliver 1,500 jobs for New Zealand. What we know from the oil and gas report—the industry Minister Bridges was quite happy to subsidise to the tune of $130,000—was that this industry could see, in the most likely scenario, 199 jobs. Yet this region lost 910 jobs in the first 3 years of this Government.

Under National we are going backwards. Kiwis want real solutions. That is why we are working with Labour and the other parties on the manufacturing inquiry. That is why we are supporting employers and exporters. That is why we are promoting information and communications, which was up 17 percent in the last year. It has grown $3 billion in the last 2 years. That is why we are putting forward our innovative proposals for a second cable, greater training and education incentives, sensible patent reform, and better Government procurement. And that is why we are looking at clean energy options and the 50,000 jobs we are seeing there, and the $600 million we could be saving per annum, and the Greenpeace report—

Order! The member’s time has expired.

“More good news” was, I think, a phrase that my colleagues in a previous generation used to say. The Minimum Wage (Starting-out Wage) Amendment Bill is good news, and why it is good news is because National believes in young people. People listening out there today would have been hearing all these terrible things about youth. In fact, it was not National saying any of it; it has been the Opposition. National believes in young people. Young people in New Zealand, we believe you have an opportunity. We believe you can develop the skills and develop the experience to be a positive contributor to this country. You know what? This National Government is not going to keep obstacles in the way. If providing a slightly lower wage allows an employer to make the choice of you, a young person, over another, then, yes, this Government is prepared to back you.

This is a positive bill. This is good news. Young people of New Zealand, this is an opportunity that the Government is providing for employers to employ you—sorry, not you, Mr Deputy Speaker, but youth; yes, let us put a “t” and an “h” at the end of that—and to actually get an opportunity over 6 months. I pointed out the other day when we went through the Committee stage that the Opposition was attempting to argue from principle, but it, of course, has its own youth—

💬 Chris Hipkins: Who chose that tie?

I believe you might have a similar one, Chris; maybe we could have a cross-party discussion here. This is an opportunity, though, for young people. We believe in young people. We believe they should get into jobs. We want to support them. I commend this bill to the House.