Minimum Wage (Contractor Remuneration) Amendment Bill

I move, That the Minimum Wage (Contractor Remuneration) Amendment Bill be now read a first time. Excuse me, Mr Assistant Speaker; there is a frog in my throat.

This bill tries to remedy a loophole in the New Zealand law whereby people can be paid less than the minimum wage under our current law. I think most of us in this House understand that the world seems to be getting to be a more ruthless place year by year, and the employment practices that used to never be seen in New Zealand are starting to creep in. As a consequence we have, in New Zealand and around the world, more and more people working in very precarious situations, so much so that we have books being written about what is called the precariat. These are people who are living in circumstances where their terms of engagement—and they are not always terms of employment, a point I am going to be coming back to—are so insecure that they do not know what they are going to be paid from week to week. They can be, effectively, abused by the more powerful person in the employment relationship, the employer, if the employer is unscrupulous.

The examples that we have in New Zealand where people do not get the minimum that most people are entitled to are growing. If people are not employed as employees but are taken on as contractors, they are not entitled to the minimum wage, they do not get holiday pay, they do not get sick pay, and they do not get their ACC levies paid for them. This bill cannot fix all of those problems. Neither can it fix the problems that we have where, increasingly, people are being expected to work for free during trial periods. These people are being taken on as interns and are not being paid for quite lengthy periods now during a trial period. That did not used to happen previously. These insecure work practices are worrying people in all sectors of society. Older people who are trying to re-enter the workforce are sometimes in a vulnerable position and do not have many choices. Parents are worried for their children, who seem to be, despite a good education, taken on in workplaces that are quite insecure.

The history of this bill is, I think, worthy of mention. This is the first bill I have had drawn from the ballot in over 13 years since I have been here. [Interruption] Well, it is actually not a very good record. A precursor to this bill was drafted by me while I was a Minister in the last Labour Government. As a Minister I could not introduce a member’s bill. Darien Fenton picked up the bill. It was eventually drawn. It went to the Transport and Industrial Relations Committee because the House, broadly, supported it, and the select committee improved the bill so that the bill that came out of select committee is now the form of the bill that I am presenting to the House. It was narrowly defeated in the subsequent readings in the House.

I think that since that time Parliament has increasing concerns, as the world does, in terms of these precarious work practices. Even the Government is moving to a certain extent in terms of zero-hour contracts, acknowledging some of the improper employment practices that have become more prevalent in the years since. We say it is not going far enough, but even the Government is moving to a certain extent on zero-hour contracts. I believe that New Zealanders agree that all people who work deserve to be treated decently, and that includes minimum protections. If we do not protect those minimum protections for everyone, we also undermine the employers who are meeting those minimum protections but competing against people who are not. It is wrong that New Zealand’s minimum wage laws apply to only employment relationships. In a number of overseas jurisdictions the minimum applies to the rate of remuneration; therefore, you cannot avoid the minimum wage by taking someone on as a contractor rather than as an employee. And that is all this bill does.

For the categories of employee who are listed in schedule 2 of the bill, which is a discrete list that was worked out, including with the involvement of Business New Zealand, through the select committee that Darien Fenton was involved in at the time—they decided that most of these problems were in a discrete list of occupations, and therefore they decided that rather than having an open-ended piece of legislation applying to all contractual relationships, they would list those in schedule 2. It may be that that list is wrong and needs to be amended at select committee, but it is a good place to start.

Those who are affected by this gap in our law at the moment are the least powerful people in society. Sometimes they are recent immigrants. Sometimes they are people for whom English is a second language. Sometimes they will be students visiting New Zealand. Sometimes they will be people of not very high intelligence. Sometimes they will be disabled people. Always, they are not in a union. They are never in a union because they are not an employee, and unions represent only employees. These are amongst the most disadvantaged people in society, and I believe that we have a duty to protect them.

I think that most people in New Zealand think you should not be able to avoid paying the minimum wage by taking someone on as a contractor rather than an employee, and so I am hopeful that I will get sufficient support from within this Parliament because I think we are all here for basically the same reasons. We might have a disagreement as to whether the minimum wage should go up or not—that is a fair disagreement to have—but that is a different issue from saying that everyone should be covered by it. I think that at the moment this lacuna in the legislation should be closed, this gap in our law should be fixed, so that we can protect some of these most vulnerable people.

I honestly do not know how many people are in this situation. I do know, from my inquiries through the community law centres throughout the country and through some of the unions that actually skirt around the edges of these things, because they represent service sectors where the lowest income people work, they say there is a problem to be fixed, and I have been given instances of where this is a real problem. I do not know how prevalent it is, but I do know that in this increasingly ruthless world it is more of a problem this year than it was last year, and is more of a problem this year than it was a decade ago. That is not a criticism of the current Government; it is just that the world is becoming a more ruthless and competitive place, and people who did not used to exploit these loopholes in the law do on occasions in a way that did not happen in yesteryear.

This bill will, if passed, help people who are currently falling through the cracks. We have got some bad practices developing. We have people now who are sold franchises to do cleaning contracts and who, effectively, through a contractual rate, I think, get less than the minimum wage. You know, I do not think that is right. This bill might not actually protect those people. It will protect some of them if they are employed as a direct contractor, but not as a—

💬 Alastair Scott: It won’t. It’s not going to help them.

No, it will not protect all of these people. I am not pretending that this is the perfect cure for all of the ills in the employment relationships that we have around the country, but there is a growth in these non-traditional employment relationships where people are not being taken on as employees but are being taken on as contractors. I think that this is a bill that ought to go to select committee, so that we in this Parliament can help some of the most vulnerable people in society not be abused, and protect the employers who pay the minimum wage and should not face competition from people who employ contractors for less.

Before I call a member, the member who just spoke had a frog in his throat at the beginning, and for the record I will indicate that although he had a frog in his throat he did move the bill and nominate the Transport and Industrial Relations Committee.

Perhaps I could just address some of the introductory comments from the mover of this bill, David Parker, when he talked about how the bill, previously under the name of Darien Fenton, went to the Transport and Industrial Relations Committee and its members improved it, as he said. I am sure there were some elements that they did work on, but the report from that committee on the bill at that point in time said that the committee was unable to reach agreement that the bill should be passed. So I believe that the committee at that particular point in time identified some real complexities on why this bill would not work.

In fact, as we think about it, as the honourable member mentioned, he drafted the bill and passed it on to the honourable member Darien Fenton to bring it to the House as a member’s bill. At that particular point in time, of course, the Labour Party was the governing party. So we have a governing party that proposed a bill. The bill went to a committee, which we assume it would have had the majority on, and it could not get it through the committee. Certainly—[Interruption] All right. Certainly, I would say that at that point in time if the member who drafted the bill thought it was such a great bill, why did he not make it a Government bill? Why did he not take it to this House as a Government bill, instead of passing it on to his colleague?

I believe that the Labour Government would have received advice, as we have received advice, that this is another one of the Hon David Parker’s very complex but unworkable bills, just as NZ Power was, just as he tried to persuade New Zealanders last year on a phantom promise of a $300 reduction in their power supply costs. When the industry asked for the means by which that could be demonstrated, it could not. We have a bill here that is proposing an answer to people who are in difficult situations, who are some of our lowest-wage earners. I believe it is another phantom promise. It is a promise that will not be able to be workable.

As Mr Parker has said it, I understand the intent of this bill. The intent of this bill is to make them look good and us look bad. That is what it is. That is all it is. All it is is political propaganda. Here is a party that, in its time of office of 9 years of surplus after surplus after surplus, increased the average minimum wage by 56c a year. And as soon as we came into office and that party was in Opposition, guess what it pushed for? A $3 jump. Why did it not do that in 2007 or 2008? It is because all it is intent on doing in these sorts of pieces of legislation is pushing out political propaganda. We are the Government that for the first time in 42 years increased the benefit. We are the Government that did that; yet that is the party that claims to be the caring and sharing party. We know that Dr Cullen on Q+A on Sunday said “We should have done more.”—we should have done more. It is because that party really did not want to.

What this country needs and has is a plan that is working. This Government’s economic plan over the last 7 years has laid strong foundations.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am just going to invite the member to address this bill. We did have a general debate this afternoon, but we have a specific piece of legislation before the House now and it would be good if we got to it.

Yes, thank you, but often—if I could speak to your point—

The ASSISTANT SPEAKER (Hon Trevor Mallard): No, you cannot, Mr Young.

If I could say that often in terms of addressing the value of a piece of legislation, you have to look at the alternatives, and the alternatives in terms of what we are doing for the lowest-income people are significant, and what that party is proposing to do is unworkable. There is a great proverb that I think Mr Parker needs to understand, and that is that the cleanliness of theory is no match for the mess of reality.

This particular piece of legislation is very difficult. The intent I understand, and I think we appreciate the intent. The committee was unable to reach agreement that the bill should be passed. The difficulty is in “applying minimum wage calculations to contracting situations.” These are just some of the comments that the previous committee reported back to the House of Parliament: “The bill blurs the distinction between a contract for services (independent contract) and a contract of services (employment contract).”

For example, let us say that I was going to build a house. In your schedule, Mr Parker, you put the building industry in there as one of the, I guess, most vulnerable workforces in the country. That is what you have said. So I would say to a contractor “I want you to build this house and I want you to give me a price.”, and he gives me a price, but then he gets rained off. But then he decides that what he is going to do is to go on to the site and wait for that rain to break, and then he is going to be there on site, ready to work. Let us say that somebody is going to paint a wall or paint a fence, all right? And then he gets rained off. You have already agreed a price for a certain job to be done, all right?

Debate interrupted.

The House adjourned at 10 p.m.