Minimum Wage (Contractor Remuneration) Amendment Bill

on behalf of the Hon David Parker (Labour): I move, That the Minimum Wage (Contractor Remuneration) Amendment Bill be now read a second time. The purpose of this bill is quite straightforward: it is to ensure that everybody working in New Zealand has the right to receive the minimum wage. Everybody in New Zealand who is an employee has that right, along with various other employment rights that are secured for them in the Employment Relations Act.

However, a large number of people who are working in New Zealand do not enjoy the benefits of the rights conferred upon them under that legislation because they are engaged as contractors, not as employees. We are seeing an increasing use of contracting relationships and an increasing number of people who fall into the category of dependent contractor—that being someone who is, for all intents and purposes by law, a contractor, but who actually receives the bulk of their income from one principal. In other words, they are more or less in an employment relationship; however, for the purposes of the law they are in a contractual relationship. Those people are not entitled to a minimum wage. Despite the fact that they may be working 5 days a week or in a regular pattern of work, and receiving all of their income from one employer, they are not entitled to the minimum wage. A large number of people, particularly in more precarious forms of work, such as the delivery of flyers and newspapers, in particular, actually find themselves receiving remuneration that works out at considerably lower than the minimum wage—particularly after their costs are accounted for.

This bill seeks to confer on those workers the same rights as people who are employed in employment agreements that are regulated by the Employment Relations Act. As the Labour Party’s minority view outlines, there are two options for how to proceed here. One is to legislate protections for a subset of contractors called dependent contractors, including as to minimum remuneration; and the second is to legislate to apply minimum remuneration to contracted workers, not just to employees. This bill takes the second approach.

We heard a range of submissions. A number of submitters were in support of our approach, a number of submitters were in support of the concept but urged us to take another approach, and then there were submitters who were simply opposed to the approach altogether. As a result of that, the member in charge of this bill, the Hon David Parker, and Opposition members on the Transport and Industrial Relations Committee did ask for a number of amendments to be drafted, which they were. Unfortunately, the committee chose not to adopt those amendments, because the committee was voting the bill down. Often, committees will decide to improve a bill—regardless of whether they are going to recommend that the bill proceed or not. Unfortunately, in this case the committee chose to vote those amendments down.

So we propose to bring those amendments, by Supplementary Order Paper, should this bill proceed to the Committee stage. I say to members who are contemplating how they are going to vote at this second reading that I know that for some who supported the bill to select committee that was as far as their commitment went, and that they are reconsidering their vote after the select committee stage. I say to those members that because we were not able to bring the amended legislation back to the House, please send this bill on to the Committee of the whole House so that we can have a debate with the whole Parliament about those amendments, and consider your vote then—at the Committee stage—and, potentially, at the third reading stage. If you are still not sure where you want to land on this, please send the bill to the Committee of the whole House, because there is more work to do.

I would like to quickly go through some of the amendments that we proposed. First of all, we would like to clarify to whom the bill would apply. A new clause 6 would insert definitions in section 2 of the principal Act. We would recommend some amendments to make the definitions clearer. We would recommend amending the term “specified person” to “specified contractor” throughout the bill. We believe this would make it clearer as to whom the bill applies to, and would help the public in understanding this legislation.

This bill is intended to apply to companies only where the company consists of a single person as a shareholder and director who personally provides the specified service. For clarity, we would recommend amending the definition to specify that the bill would apply only where such a person provides the service exclusively—that is, not simply in a managerial capacity alongside employees. We believe that this intention is not fully clear in the bill as it was introduced.

There are some technical changes we would like to make around numbering. We would like to add some guidance on the actual rate of remuneration not being necessary. Clause 7 proposes to insert new section 4B, containing guidance for the courts to use in establishing the actual rate at which the contractor has been paid. We do not consider it necessary to give this level of guidance and would recommend that new section 4B be deleted.

The relationship with the adult minimum wage—in the bill as introduced there is no mechanism for ensuring that a minimum rate of remuneration for contractors is consistent with the adult minimum wage. That certainly was not the intention—the whole point of this bill is to ensure that the minimum rate for contractors is the same as the adult minimum wage. So, for clarity, it would be desirable to make an explicit link to the adult minimum wage set under the primary legislation. We would recommend amending clause 7, new section 4C(2), to make it explicit that if a minimum rate of remuneration is set, it must not be less than the minimum adult wage rate. We would also recommend technical changes to clause 8, amending section 5, to ensure that a minimum rate of remuneration be reviewed annually.

We would also like to make amendments to clause 10, inserting new section 6A, to provide that contractors working for more than one principal at the same time, such as a truck driver delivering goods for more than one principal at the same time, would not be entitled to receive the minimum rate of remuneration from each principal. This was one of the issues that was raised by submitters—that, often, people are working on multiple contracts at the same time. The truck driver is a good example: you might have multiple contracts’ worth of goods in the back of the truck at the same time, and it would not be appropriate for each of those contracts to deliver a minimum wage rate. What the bill would therefore require is that the combination of those contracts adds up to a rate that at least delivers the adult minimum wage.

We would also like to make some changes around the retention of remuneration records. Obviously, it is important that remuneration records are retained, if we are to establish whether or not a person on a contract is actually receiving a rate that is comparable to the adult minimum wage.

I appreciate that there were some concerns raised by submitters around costs, especially for some industries—that this is going to increase costs for certain industries. Well, to a degree, I have to say that if your industry only survives by paying people less than the minimum wage, then you are, effectively, being subsidised by the State. Lots of industries have to pay people the minimum wage. There is no escaping that—and if they are not able to survive paying people the minimum wage, then they are not able to survive. That is the nature of capitalism. Unfortunately, some industries are using this as a way to circumvent those rules and pay people less than the minimum wage. The minimum wage works for most industries—why not for those that rely on this system?

There were some technical issues that were raised by people, about the complexity of this bill. Again, the amendments that we propose seek to address this.

Ultimately, this legislation comes down to a fundamental belief, on this side of the House, that if you are working in New Zealand, you should be entitled to income that is at the very least equivalent to the adult minimum wage. Some people are not afforded that right. That is wrong. We should change that. This bill is the way to change that, and I urge members, particularly those considering their vote this afternoon, to support this bill through to the next stage.

I rise on behalf of the ACT Party in opposition to this bill. I have to commend the member who has just resumed his seat, Iain Lees-Galloway, and the member in charge of this bill, David Parker, for the intentions that led them to bring this bill to the House and to advocate for it. I think that everybody in this Parliament broadly shares the intention that people who work in New Zealand should be well remunerated, that their work should be safe, and, ideally, enjoyable, and that it should give them the money required to live well. There is no question that that intention is broadly shared by every party in this House and by every MP, including myself.

But where the differentiation begins to occur is when you start assessing the bill—or any policy, for that matter—on the basis of its consequences and its outcomes, rather than merely its intentions. Although I commend the soft hearts of the Labour Party members that led to their bringing this bill to the House, I worry that the softness has extended to their heads. It is possible that the member in charge of the bill, being from very, very cold Dunedin, where they have very, very cold winters, has not been able to think rapidly enough, as the cold temperature has got to his brain.

The issue at hand is that a good piece of legislation should address a well-defined problem. One has to ask oneself: “What exactly is the problem that this bill seeks to solve?”. The problem appears to be, if you take the bill’s author at his word, that not everybody is earning quite as much as the minimum wage when they are contractors. It is interesting to see that they have not included taxi drivers in the list of professions. The problem that they have, it seems, is not actually a natural problem or a market failure. It is just that there is a wide range of different types of work that people do, and not every kind of work is remunerated on an hourly basis, for a wide range of reasons.

In the case of taxi drivers, the reason is that they spend a large amount of time waiting for trips. People who choose to make themselves available, waiting to do a job, might not be able to do that if they require the minimum wage amount of revenue for every hour that they spend doing it. So, ultimately, you have to ask what the Labour Party is saying to those people. Is it saying that they should stop working, or that working should become illegal? It simply does not make sense, and that is when we come to the unintended consequence of this bill, which is that if we are going to require all contractual work to be done on a minimum wage basis, then what should be said to the many small-business people out there who often have very few employees and who are actually often unable to pay themselves the minimum wage?

I have been in this situation myself—technically breaking the law when I started hiring myself out as a consultant at one point in my career. I spent a huge amount of time at the beginning attempting to get busy, and I did not actually get paid anything for all of that time. Under this bill, technically I would be breaking the law. Of course, eventually, the members will be pleased to know, I did actually get some very lucrative contracts and paid myself out in the end, but for a time I, like many small-business people, would find myself actually breaking the law if this bill was to pass, because when you own a small business, when you start a small business, when you are busy trying to get busy and bring in work to contract with, often you actually cannot pay yourself the minimum wage.

So this bill does not apply to taxi drivers. It cannot apply to people in any kind of small business if it is in one of the 16 types of work that are scheduled. But what about those who it does apply to? Labour seems to believe that the Government can costlessly raise the amount of income that people have. I thought it was very interesting to hear what Iain Lees-Galloway said. He said: “We believe on this side of the House that if a person is working, then they should get the minimum wage.” The key word there is “if”, because the reality of this bill is that by trying to require higher wages than people are currently earning, in many cases their employer will go out of business. Mr Lees-Galloway said that would happen, and he seemed to almost relish the thought that a business owner would go out of business.

But if he was to complete the thought, he would ask himself what would actually happen to the person presently doing that work. Is it the case that when the Labour Party asks whether a person is working, it would rather a person currently contracted under these provisions stopped working altogether? That is the real trade-off. Because we have not got a properly defined problem for this bill to solve, it is not actually bringing any good. But to the extent it is effective, it is also going to reduce employment, and that is before we start talking about all the additional compliance costs.

It was an observation, funnily enough, by an Auckland University economist, whose name is going to escape me—Tim—that one of the things that has happened in the New Zealand economy in the last 30 or 40 years is that we have an enormously greater amount of compliance, transactional management activity, and far less activity in actually producing valuable stuff as a proportion of the economy. This is one of the reasons why productivity growth has been a bit weak lately. Once you start to look through the select committee report and think about what the bill would mean, it would mean that a whole lot of types of work in which people are paid to deliver a service are going to have to, effectively, become employment and that people are going to have to start measuring how many hours they spend on the job—

💬 Andrew Little: Shocking! Absolutely appalling!

—so that they can divide their income by that amount of time. Once they have started doing that, you are going to have to be able to verify whether it is actually true. Of course, the Leader of the Opposition says that it is shocking that you would have to do that, and I understand he is being sarcastic. He is right at one level that, of course, it is perfectly plausible that people could adjust to that extra cost if this law passed and if they were required to do so. It is perfectly plausible that it could be done.

But you have to ask yourself how many more costs business people and employers—people who, in many cases, at the start of their business do not even earn the minimum wage themselves—should have to take in order to comply with a law that does not have a clearly defined problem to be solved and a law that, if anything, will have the more damaging unintended consequences of making it harder to start businesses and making it illegal to do many types of work that people are currently gainfully employed in. And, for all of that, it will put on additional compliance costs for those meagre benefits and, in some cases, negative unintended consequences.

This Parliament, I hope, can find far more productive things to debate than simply trying to add additional compliance costs for what really, from the Labour Party’s point of view, is more of an exercise, in my view, of political branding than actual policy improvement. For all of those reasons, I proudly oppose this bill.

Well, that was a speech of which I think the totality was easily encapsulated by that member David Seymour’s admission that when he was self-employed he was incapable of negotiating a decent rate for himself. The member who has just spoken gave an account that is the basis of the real road to serfdom, which is—and he asked the question—“Well, if people can’t be employed being paid at this exploitative rate, who else is going to do it?”. That is the question that exploiters ask. They just want somebody to whom they can pay as cheap a rate as possible.

On this side of the House, we stand for the dignity of labour, the dignity of work, and the decency of work. The way the world is going at the moment, it is not about jobs; it is about work and it is about people being treated fairly for the work they do. That is regardless of employment status. Whether you are an employee, whether you are a contractor—a so-called independent contractor or otherwise—it is about ensuring that the work you do is fairly rewarded. The problem that this bill is trying to remedy—and is pretty clear and explicit about, if one takes a moment to read the bill, with its schedule 2 and its specified list of services—is that it is clear that there is a range of jobs about which it can be said that there is a growing number of New Zealanders engaged in them, for which they are not being paid even the minimum wage as prescribed in current minimum wage regulations. That is the issue we have to come to grips with.

Let me tell the House this story. I had a businessman who chanced upon me, actually, in the Christchurch airport recently. It was not in the Koru lounge, where I would otherwise have been mixing with “ordinary” New Zealanders, but in the public area of the airport. He came up to me, and I thought I was blocking his path, actually. I said: “Oh, excuse me. Sorry, Sir, I’m blocking your way.” He said: “No, I actually wanted to come and speak to you.” He described himself as a businessman. He said he owns a business that operates in both Auckland and Christchurch, and also has an operation in Australia. He described himself, curiously, as one of the top - 2 percent supporters of the National Party. I was not quite sure how he quantified that, but he said: “I’ve long been a supporter of the current Government, but I have increasing disquiet, on two issues.”

The first issue he raised was the rate of wages that New Zealanders are being paid. He proudly told me—and it was very admirable, from what he told me—that the minimum rate of pay in his business, which is a manufacturing and distribution business, is $21 an hour. He said that if somebody comes in off the street into a semi-skilled role, that is what they will get paid. He provides training. He has got a skilled level of labour, and technical and professional levels in his business as well. But he said that he finds it unbelievable that people are being paid at $15.25 an hour, and sometimes just above, for responsible work. We talked about it—you know, the fact that, for example, in aged care rates of pay for a lot of those workers are at $15.25 or just above. He said that that is not right. He said that we have a major problem in this country: too many people are being paid too little for the work that they do.

We know that one of the developments over the last few years is that, increasingly, workers are being shifted off conventional employment arrangements and put on to these contractor arrangements, sometimes with not a great deal of real choice. It may be of interest to the previous speaker, David Seymour, to know, actually, the reality of employment relationships. Where you have the owner of a business, or a manager representing the owner of the business, dealing with somebody who provides their skills and time and talent to that business, the relationship is not an equal one. Most people, you know, they want to work. They want to do their best in their work. But if they are told “Your position is being disestablished, but we have this role over here, under a contract that we will call an independent contract.”—actually, a lot of people feel compelled by circumstance to accept that as an arrangement. So they become a contractor. For many of them, they are doing the work that they were doing previously as well—the same workplace, often using the same tools, working with the same colleagues—but then they find that they are assuming a level of cost and a level of risk in that employment relationship.

That is what this bill is seeking to address, because that is wrong. If we value work and, most importantly, if we value the people doing the work, we will make sure that comparable work done, under whatever employment status, is paid at a comparable level—paid at a fair and decent level. There is no reason, there is no justification, for why somebody who shifts from an employment status to a contractor status, doing comparable work, should be paid differentially simply because they are a contractor—or, worse, be paid, effectively or in real terms, less than the minimum rate because of that change in status. That is what this bill is seeking to address.

It is interesting—and the Transport and Industrial Relations Committee’s report acknowledges this—that other countries have addressed this problem. This is an issue in many parts of the world, but other countries have found the means to deal with it, including our nearest neighbour, Australia. I remember that when I was involved in the union movement, the New South Wales Government conducted an inquiry into just this issue, and it was horrified by what it discovered. It was able to regulate at a state basis, and now there is federal regulation, as well, which ensures that if you are doing work of a specified nature on a contract basis, and it is quite clear that it is not dependent on a client walking in the door—as might happen with a taxi driver—you ought to be paid at least at the regulated minimum wage level for the work that you are doing.

The world of work is changing. That is why, in the Labour Party, we established our Future of Work Commission. We take that issue seriously. You would expect us to, as the party whose name is the Labour Party. It is disappointing that members opposite—or at least their Government—do not appear to take the issue as seriously. But the world of work is changing, and more and more people will be working in different ways, including working under contractor-type arrangements or even, as Mr Seymour talked about, self-employment arrangements—but, hopefully, they will be better at negotiating better pay rates for themselves. We have to have a regulatory framework that acknowledges that but also accepts that there is a real risk of exploitation if we do not get that regulation right.

This bill is about accepting that there is a real risk of exploitation of some if we do not get the regulatory framework right. This is a good bill. This is a bill that deals with a problem that is around today and is only getting bigger. It is a problem that other countries have managed to solve and it is a problem that this bill solves, if the House is prepared to support it. It is disappointing to see that the majority of the select committee has recommended that it not proceed, but it is within the power of this House—those members with a conscience and those members who want to be part of a country that celebrates good and decent work—to do the right thing.

Support this bill in its second reading. Let us have a Committee stage debate, tease out each part of the bill, and, if Mr Seymour and his colleagues on that side of the House have concerns about specific aspects of it, let us consider their alternatives. Let us see the Supplementary Order Papers that will provide alternatives to the issues. But let us accept—as the select committee in its summary did, I think, at least impliedly accept—that there is a problem. There is a problem. The committee was just concerned that maybe it was too hard to fix or that there were too many fixes required to be made. Well, this bill is very explicit and it is very specific. It shows that it is capable of fixing the problem, and that would benefit at least some people who are otherwise going to suffer as a result.

Mr Seymour talked about the productivity problem that we have in this country, and that is a big problem. It is a problem of investment, it is a problem of our technology, but it is not a problem that gets fixed by paying those doing the work less and less and less. That is a way of fixing the productivity problem: you just pay people less and less. That is the exploitative way. That is the road to serfdom. This bill is about a road to prosperity for the people affected—for contract workers, but, actually, in the end, for all of New Zealand. That is why we are supporting this bill.

It is a pleasure to be talking on the Minimum Wage (Contractor Remuneration) Amendment Bill. Just as a backdrop to this bill that is before the House, this is obviously a bill that had been put forward by the Labour Government some time ago, under the Darien Fenton bill, which was put forward but was actually rejected by the House. This is now a rewrite of that original bill proposed by Darien Fenton. Today what we are doing is having another go at trying to introduce similar provisions.

I think we have got to ask ourselves what we are actually trying to achieve. I have just heard the previous speaker, Andrew Little, talk about trying to deal with exploitation, and I think all of us agree that no one wants to see exploitation take place in New Zealand, with regard to New Zealand workers doing a proper job. But it is also a question about choice—choice about the way people want to work, and the relationship that they want to have with their employer.

I think it is a fundamental tenet that we need to have a very close conversation around, because choice is something that permeates everything that we want to do, and, provided we are not getting to a point of exploitation, that is a legitimate—in fact, a fundamental—right of everyone in New Zealand.

The third thing is around risk and reward. What is adequate risk and reward for doing a proper day’s work? I think, again, this Minimum Wage (Contractor Remuneration) Amendment Bill is sort of starting to cut across a lot of those original propositions. That is why we are not supporting this proposed bill.

One of the things that I just want to pick up on is that, if I look at clause 14 of the bill, “New Schedule 2 inserted”, which lists all of the different services that would be caught under this bill, they are quite wide ranging. We had a number of presentations from different industry players and workers, on a number of the related industries listed here, for instance: cleaning services, courier services, food catering, and fast-food delivery, right through to truck-driving services, telemarketing services, and newspaper and pamphlet delivery services, just to name but a few of the different companies that came and gave us very thoughtful presentations on this bill.

You know, when you look at some of those, particularly around the courier industry—and we had a number of submissions from that industry. This is around risk and reward—we had certain operators who were saying that they very much liked the arrangement of being able to be an independent contractor. That was their choice, and they saw that as adequate risk and reward. They did not actually have a view around exploitation. So in that case you have the contractor voluntarily wishing to enter into these arrangements, and actually finding them very satisfactory.

On the other side we had a company—a very reputable company—making similar representations, that they found these arrangements perfectly acceptable and preferred them. It does not preclude the arrangements of actually employing employees, but for that model it worked very well. The other one, which was the most obvious industry where this level of exploitation is perceived to occur, is the newspaper delivery service. Again, we had some presentations on that to the Transport and Industrial Relations Committee.

This is the issue that I think that people have got to consider a little bit further: companies want to make sure that they get good value for money from their employees, and employees want to be paid adequately for doing a proper day’s work. How do you measure that? In many industries it is appropriate to actually set targets about what sorts of outcomes you want to achieve during the course of the day, and the delivery of newspapers is one such case. Particularly in that industry it was providing jobs to many disadvantaged people, particularly people with disabilities, younger people, and older people who would not otherwise find getting employment easy or were not in the situation of wanting to take full-time employment. So entering into a contractual relationship in that case was actually perfectly feasible and acceptable to all concerned.

I think the issue around cleanliness services is another area in which there is a lot of debate about whether we are allowing these people to work late at night, endlessly doing jobs and not getting paid a suitable remuneration. One point I want to make—and the member from ACT noted it earlier—is that no one wants to see anyone exploited, no one wants to see anyone being underpaid for what they do, but the right to have a conversation and enter into a voluntary relationship with a contractor is perfectly legitimate. Even as a professional contractor—many are the times I have seen and witnessed where professionals determine what they are going to incur in doing a job, whether it is writing a report or providing some form of advice, and subsequently find that they overrun that time estimate and therefore will exceed the agreed budget that they have entered into with the contracting firm.

That is, in a sense, a contract. It is a contract between two parties who have all of the information and who make a willing decision, and it is almost a willing buyer situation. That is a perfectly legitimate circumstance. If we took this bill to its extreme we would be suggesting that even those professional relationships involving highly skilled people—we would seek to renegotiate with them if, for instance, we found that their overall rate was less than the minimum wage.

I just think that is fundamentally wrong. I think the right for people to enter into proper arrangements is fair and reasonable and equitable and should be provided for. We do not want every person to be a contractor. We certainly want to see employment arrangements continued in that regard. But that flexibility is, I think, a very strong issue that we need to maintain in our employment relations.

I do want to just add that as a Government we have been very focused on making sure that we stop some of the less attractive and unwanted practices that have been occurring. I note particularly how we have banned zero-hour contracts, where employers do not guarantee any hours of work. I think that is a fundamental change and a very important one that this Government has brought into play.

We have also sought to increase the minimum wage, and I am glad that the Government has progressively increased the minimum wage from $12 back in 2008, now up to, currently, $15.25. The issue is: can we get there quicker? Should we be imposing a higher minimum wage, which many have advocated for? But I think for the many thousands of business owners out there—and there are about 500,000 small businesses in New Zealand—the owners of those businesses and the shareholders in those businesses would be concerned that we are not doing that in too fast a progression. We have set about doing it in a logical way, which means people can budget and, at the same time, all New Zealanders can share from that upside as we progressively increase the minimum wage.

We have also extended paid parental leave, reduced ACC quite significantly—a reduction of $232 million for ACC cuts—and I think all of those things go together to make the work environment that we currently have in New Zealand far more robust and appropriate for New Zealand’s circumstances.

The last thing I just want to home in on is the cost of this proposal, which I do not think many people have actually thought about. I just want to lay out a comparison between the minimum wage and what it means to a salaried employee versus a contractor. An employee would be paid 8 percent of their gross earnings as holiday pay, on top of their wages, and an ACC levy would be deducted through the PAYE system, as we all know. If we were to compare this with regard to a contractor, a contractor receiving a similar amount of remuneration—and let us say that is the minimum wage—would not receive holiday pay but would have to pay both the earners levy and the work levy. The levy rate varies according to the employment sector. It ranges from 10c in the dollar, to several dollars per $100 of liable earnings. So, actually, what this means, excluding the tax consideration, is that the contractor would be approximately 9 percent worse off in a week than an employee. I think that is one of the financial constraints we should really think about when we talk about this bill. So, on those grounds, I oppose this bill.

Kia ora, Mr Deputy Speaker. I rise to speak in support of this good bill, which has been presented by the Hon David Parker, the Minimum Wage (Contractor Remuneration) Amendment Bill. This is a good bill because it aims to close some gaps around workers and fairness, about what people should actually get when they are doing some work, and the gap that is caused by employers seeking to exploit various workers.

The purpose of this bill is to amend the Minimum Wage Act to ensure an extension of provisions to apply to payments under a contract for services that end up being paid at less than the minimum wage—this is about correcting that. Certain sorts of work—and one that has been mentioned a lot is pamphlet deliveries—are not currently subject to the same provisions as wages that are paid through other contracts. This aims to fix that.

Contractors are exempt from most minimum employment standards, and in a way this bill does not go quite far enough. The previous speaker, Andrew Bayly, was referring to some aspects. He did not mention ACC in there. This bill appears to still not quite be fixing that, but it will ensure that a number of workers will actually get, at least, the minimum employment standards of financial gain.

The Green Party supports raising minimum wages—always has—and supports the Living Wage movement. During the election campaign our policy was to ensure that all relevant Government contractors were to make sure that a living wage was paid when their contracts came up for renewal. That is just one example. We support workers and we try to ensure that inequality is reduced all the time. We are consistently looking at bridging the gaps around inequality. We support the concept of contractors being able to receive a decent wage equivalent to at least the minimum wage, and for good reason.

These workers are, effectively, subsidising those who are contracting them. Just think about those people—we see them delivering leaflets, pamphlets. Maybe a reduction in the amount that is delivered will mean a reduction in junk mail, but it is appropriate that they should be working in a safe way. They should be treated fairly, they should be treated with dignity, and that means they should be being paid at least the minimum wage. They are not always working in a comfortable position, either—wind, rain, hot and cold, steep, slippery, different situations, dogs, and whatever. To think that those people would do that and not be getting paid the minimum wage is totally wrong.

In the Transport and Industrial Relations Committee, I noticed the Government bleated a lot about the cost of enforcement. Well, if it costs a bit to enforce this, so be it. It is absolutely critical that enforcement is carried out, because I have seen in my region that contractors for the grape industry have needed enforcement to actually get fair pay for those who are working for bit payment and otherwise.

I notice in schedule 2 here we have got quite a list of different services that may be affected: building and construction services; cleaning services; courier services; food catering; fast-food delivery; the newspaper and pamphlets, which we talked about; personal home-care support to individuals in an individual’s house; a number of entertainment services; the manufacture of clothing, footwear, and textiles; telemarketing; market research; security guards, even; and also forestry industry services related to planting, pruning, or felling—that industry has had one hang of a hiding in terms of deaths and employment issues. If this bill can go any way towards helping there, it is a very good bill. It also affects truck-driving services delivering goods.

It is important that any contract in any related service like that is covered and that anyone there is getting at least the minimum wage. We will be supporting that and will continue to support it because this is a good bill. It will work for fairness for those people. It will allow them to at least have the dignity of the minimum wage, and if there is a cost of enforcement, so be it. We need good enforcement in the workplace for health and safety reasons, but we also need it to make sure that people are getting the minimum wage.

So the Green Party supports this and is grateful to the Hon David Parker for bringing this bill to the House. Thank you.

Thank you for the opportunity to speak in the second reading of the Minimum Wage (Contractor Remuneration) Amendment Bill in the name of the Hon David Parker. As a member of the Transport and Industrial Relations Committee, I want to acknowledge the Hon David Parker for the work that he has done on the bill and the work that he did on this bill during the select committee process, but I am taking this call to oppose this bill because this bill is to apply the minimum wage to contractors in the same way it applies to employees. This would mean that individuals and businesses hiring contractors will be required to keep a record of their remuneration and, if broken down to an hourly rate, it should come down to at least the minimum wage, so this means that they will also have to keep a record of their number of hours. It is not just one side—a business or an individual hiring a contractor—but the contractor providing their services would also be required to keep a record of their hours as proof, if required. To me, this is just adding unnecessary rules for businesses, and businesses do not need that. In my view, businesses need to be set free so that they can invest, reinvest, and create more jobs. We want our businesses to grow. We do not want unnecessary rules and regulations imposed on our businesses.

I was not surprised to see that a number of submitters opposed this bill for these reasons. Those submitters who opposed this bill were from the business sector—business representatives or firms—and they had a very, very similar view, because these are the people who are out there in the field, and we should be listening to them.

Some very interesting points came out during the select committee process. A submitter said that moving to a time-based model for contractors in the way we have it for employees would actually restrict contracting opportunities because contractors like to have flexibility. Some of them just work part-time. What people look at when they go out to hire a contractor is the time line they can provide their service in and also the fees for their service, and normally businesses or individuals wanting to hire a contractor will be going out and asking for more than one quotation. Once they have compared that quotation, they will give that job to the one who is most satisfactory, according to their business or their needs. Sometimes these people going out to hire contractors have no idea about the number of hours that job will take to finish, so it is really unfair to put this responsibility on these businesses or individuals to make sure that the contractor they are hiring is going to earn at least the minimum wage when the total amount the contractor is charging is broken down to an hourly rate.

Coming from a manufacturing background, I have first-hand experience of dealing with contractors, and I know that contractors know what they are doing. Coming from a manufacturing background where there are several machines, I know that on a regular basis these machines are serviced, and these companies that service these machines do not provide that service for just one company, but that is their job. They go out and service machines in several businesses. What they do is they come in on a regular basis, they grease and oil the machines, run them, and show that they are running fine, and they do that after hours so that the regular business is not interrupted. So no one is actually sitting there and monitoring the number of hours those people who come to service those machines spend on those machines.

Sometimes in such businesses where there are lots of machines, machines can break down, and my experience is that contractors will never provide a quote over the phone. What they do is they will come to the site, they will assess the machine, and then they will provide their quote, and most of the time the quote is subject to various conditions, such as if they find there was another fault inside the machine or if they require a new part, which, of course, would require an additional quotation for buying that part and also for the time they spend on sourcing that part. If the machine is small—I am just picking one example from one industry—then sometimes these people will offer to take the machine to their workshop, because that is convenient for them. That works well for them, and in gaps they can fix that machine and then deliver it back to the site where it is required. And if the machine that has broken down is huge and cannot be transported, in those situations these people will come on site and fix that machine, and normally, again, it is done after hours because no one wants to interrupt their business during normal working hours.

Again, when they come to fix any broken machines, normally they will be given access, in my experience, to the factory or the site. They come and do the job, they take 5 hours or 10 hours—no one is sitting there and monitoring the number of hours they actually spend on that machine. No one wants to know whether they are just sitting in the tearoom and having their dinner; what they want is the assurance that the machine is fixed and they know how much they are paying for the job that the contractor is doing for the business. So, in my view, this bill is underestimating contractors out there, and this bill would do the opposite of what the member actually wants to achieve. I believe there are enough protection mechanisms for contractors if they feel they are being exploited. What we should actually do is spread the awareness that there are provisions available for contractors if they feel that they are being exploited.

I also feel that this bill will bind contractors to the minimum wage, because if this bill goes through, the signal will be that contractors should be earning just the minimum wage. As a result of this bill, people will start looking at the number of hours they will be asking contractors to break—the number of hours—and will also start calculating the amount that they are charging based on the minimum wage. I am a supporter of having a free market. I think we need the flexibility that is in the market place, and we do not want to bind contractors to just the minimum wage because some contractors are more efficient than others, some contractors like flexibility, and some contractors just like to work part-time. That is why a lot of people come out from their regular professions and start up their own business as a contractor. So we would be taking away that freedom from contractors, because, as I said before, it is not just the business or an individual hiring a contractor who would be required to keep those records but the contractor offering those services would also be required to keep those records. We want to see that the market is giving that flexibility for businesses to grow and for people to do well and to support our businesses.

I do not understand why the member is so fixated on the minimum wage. On this side we are focused on growing our economy because if the economy is strong, we have more new jobs and higher-paying jobs, and that is what we want our businesses to do. To support our businesses we are diversifying our economy. We are getting free-trade agreements signed—for example, we already have a free-trade agreement with Korea. We are very supportive of the Trans-Pacific Partnership agreement, which is going to be worth $2.7 billion by 2030. These things are to support our businesses. We know that wages are rising faster than inflation, and there will be around 195,000 more people employed by mid-2020. These are the things we need to do to support our businesses. If the economy is strong, then people will have higher earning power.

As one submitter said, it is not a good idea to mix two models—the employee model and the contractor model. First of all, it is not desired by the business sector, and also it is not practical. My colleague who spoke before me from this side gave an example of where contractors will actually be earning less than employees if they are put on just the minimum wage, because they will have to pay ACC levies and also they do not get holiday pay. It is not a good idea, so I oppose this bill. Thank you.

I was sitting there listening to this absolute rubbish from across the House. It was like a pit bull chewing a wasp. I just could not believe the absolute nonsense coming out of Parmjeet Parmar’s mouth. The reality is that this is the winter of that party’s discontent. Its members are so disconnected from reality when they think that it is all about business. They forget the point: it is about people. People make business. People operate business. People are the very ones who create economic growth and development for this country. The whole speech was all about how this is not good for business and we cannot afford it.

I want to start my contribution for New Zealand First by supporting strongly this bill that has been put forward by David Parker, the Minimum Wage (Contractor Remuneration) Amendment Bill, and talk for a moment about that very thing, the minimum wage. The reality is that some employers out there would pay their workers less but they cannot because it is illegal. Think about that for a minute. There are employers out there who would pay less than the minimum wage if they could. So let us focus for a moment on the $15.25 that we heard Andrew Bayly talk so feverishly about—that this party, the National Party, came into office in 2008 and took the minimum wage from $12 per hour up to $15.25. Annualise that. We are talking about $31,000 a year, working full-time on the minimum wage, at the current rate. Take your tax off that and you are taking home around $480. Your rent is around $300 to $350. How can you expect somebody to live on the minimum wage?

This Government over there is justifying paying people less because they are contractors. It talks about choice. We are not talking about choice. People are forced into taking these jobs because they have got no options open to them. You think $15.25 is acceptable. You can pay people less, because they have got the choice to do so. It is an absolute disgrace. What about talking about a wage that is sustainable? What about going back to the days when you could do a hard, full day’s work and get a genuine pay that you could actually sustain and live on and get by on, and move forward. The National members are quibbling—quibbling—saying: “$15.25, we’re not going to justify. We’re not going to support our workforce to make sure they get that very thing.”

Let us talk about the choice. We are talking about, in many cases, contractors who are forced to take jobs because there are no other jobs available to them. Take this job, but it is a contractor’s job. In Australia they have gone through some massive reforms to tighten up on exactly this thing, because people—not all people, and not all businesses—are out there exploiting our hard-working people. They have legislation in Australia that says if you are employed from a single source for 80 percent of your income, then you are not a contractor. What about implementing that? This is a way of getting around the law. At the end of the day, when you are comparing employees and contractors, employees get a raft of protections. They get a raft of benefits. They get 4 weeks’ paid annual leave per year. They get sick leave. They get bereavement leave. They even get KiwiSaver contributions paid to them by their employer. When you are a contractor, you are responsible for that entirely yourself. When they are not paying you a fair day’s pay for a fair day’s work, then you are going backwards fast.

The reality is that this bill is a very sensible bill. We did have a number of people and submitters coming through, and the majority of those people were very responsible employers, contractees, and businesses. We also heard equally from a number of people who fully support this bill looking after the rights of employees and contractors. The reality is that we have to make sure that we have got a balance, that people working in a contract situation or, in fact, as an employee have a balance with their employer or their contractee to make sure that they are not exploited.

I commend the people who came and spoke to us at our Transport and Industrial Relations Committee, because there were genuine businesses out there that were absolutely not having any impact on making any overtones towards paying people less than the minimum wage. We commend them for that. This bill goes no way to disenfranchise good operators—businesses that are actually working within the confines of the law, with morals, and working inside a legal framework to ensure their workers are looked after. Some of those contractors have been working as contractors for years. Why would they not? “I enjoy being a contractor working for this organisation. They look after us, and I’m certainly getting paid more than the minimum wage.” This is commendable. But we are talking about the vulnerable workers. We are talking about the shysters, the mongers who are actually out there doing a disservice to the goodwill of employers and businesses in this country—the ones who will take absolute advantage if they can. As I said when I opened, they would pay you less but they cannot because it is illegal.

The minimum wage is an absolute doddery figure. It needs to be brought back into line. On average, 40c an hour over the last 8 years of your Government—that is what you are putting your hand on your heart about? You cannot live on that sort of money. Nobody here could. You go and stay a night in your car and you think “well, look, I’m supporting the homeless”, but I would like to see you live off $480 a week. You will not be able to do that. Nobody can. You cannot raise a family on that, you cannot live, and you cannot put food on the table.

💬 Chris Bishop: Of course you can’t. That’s why you get Working for Families.

The reality is that this Government is out of touch. Chris, you are absolutely out of touch when it comes to knowing how to run a business or being involved in running a business. You live in a bubble. You have never been outside this bubble. You have never employed anybody, and I bet you have never been on the minimum wage and actually lived off the minimum wage.

💬 Chris Bishop: I have, actually.

You were probably living on the minimum wage when you were living with your mum and dad. Try living under the minimum wage.

The reality is that we need to be supporting this bill. I hope that we have the sensibility to make sure that we look after those vulnerable workers who are forced into this situation. People engaged as contractors have few of the protections of employees, and this bill is about tightening up on that. Absolutely, 100 percent, we need to make sure that they are playing on a level playing field.

We have got a situation with a number of these points. In my first speech I said we had some reservations with regard to pamphlet deliveries. One of the offshoots from this is the fact that if you have got an aged population who are out there delivering pamphlets, and they do it as a bit of a sideline—they do it as much to be social in their neighbourhood, to go and deliver pamphlets around the streets. They might take 3 or 4 days to walk around the streets—Mrs McClintock, as she goes and talks to the Bradley family down the road. They stop and have a chat and a cup of tea. This bill actually caters for that. They are not going to be disenfranchised because they can employ a 16- or 18-year-old on a pushbike who can whizz around the entire place in 2 hours flat. They want to take their time to do it. New section 11AC, inserted by clause 13, exactly covers it off by saying, regarding recovery of minimum remuneration: “Specified person may not recover minimum remuneration for time that exceeds agreed reasonable time to provide service”. So a negotiation can come in, and it is about fair and reasonable time. If the speakers on the other side think that it is too hard to hold on to records for 6 years because that is more of a burden and a cost and an issue for those businesses, the Inland Revenue Department expects us to hold on to all of our information for 7 years. So how can they justify keeping hold of your records? You have to keep hold of your records anyway.

There is no downside to this bill. It is a positive bill, looking after the best interests of positive businesses so that they can be put on the same level playing field with each other. You have got a positive contractor working within the confines and the rules and regulations of this country, and you have got some of those businesses that do not, and under this legislation those businesses that do not will come up. It will actually make for fair trading across all sectors, making sure that we are looking after the most vulnerable people in our community. I hope that today it gets support.

I look forward to hearing more absolute rhetoric rubbish from that Government. Chris Bishop is like a pit bull chewing a wasp now, waiting to jump up and justify that “I was on the minimum wage and I wasn’t living with my mum and dad.” Well, I have to say that I betcha you have not employed people and I bet you have never seen the hard side of what poverty looks and smells and tastes like. I would like to see you raise a family on $600 week, $31,000 a year. Thank you.

Chris Bishop. How are you getting on with that wasp?

What pretentious nonsense. I do not know whether Mr Clayton Mitchell knows what the phrase “pit bull chewing a wasp” actually means. I suggest he google it. It is actually reasonably offensive to me and also Parmjeet Parmar, but that is generally in keeping with the tone of debate from, you know, “Bernie Sanders - lite” over there from New Zealand First.

He stood up and said: “Mr Bishop’s going to get up here with his rhetoric.” Well, that was a speech full of rhetoric. That was a speech full of highfalutin rhetoric about the minimum wage, and I do want to respond to three of the points he made about the minimum wage. Firstly, he said “We can’t expect people on $15.25 an hour to provide for families.”, and that is true. That is why if you are someone who is earning at the minimum wage and you have children, the Government provides Working for Families payments so that you can look after those children. It is why the Government provides social support through the $2 billion a year we provide in the accommodation supplement. He talked about high rents. That is why we have the accommodation supplement—to make sure that families can afford rental housing.

It is true that there are some people out there who are earning the minimum wage. Often they are people who are students—people who are working part-time. I have worked on the minimum wage. I was a barman and was actually working below the minimum wage in the United Kingdom. Lots of people have. The point is they are often entry-level jobs. They are often the jobs you get as you move up the career ladder. There is a role for that.

The second point I want to make is about the quantum of the minimum wage. We have one of the highest minimum wage rates in the developed world. Whether or not you measure that as a percentage of the median wage or as a percentage on a per capita basis, the reality is we have one of the highest legislated minimum wage rates in the developed world, and study after study and official advice after official piece of advice demonstrates that we have that.

The third point in response to Mr Mitchell about minimum wage rates is that he just pretends that you can legislate for higher wages. That was the theme of his speech—we need higher wages. Well, everybody agrees with that, and, actually, the wage increases have been outstripping inflation rates for the last 8 years, but the Government cannot just turn around and legislate to give everyone more money. This is the fantasy land economics that New Zealand First lives in. If the Government could do that, we would.

Mr Clayton Mitchell thinks that this is a flinty and hard-hearted Government, but surely he cannot pretend that this Government is so hard-hearted that if, with a wave of the magic wand, with a piece of legislation, or with the stroke of a pen, we could just give everyone $25 an hour and give everyone on the minimum wage $30 or $50 an hour, we would not do that. Of course we would, but the reality is that is not how wages are worked out, and, actually, that would come at the cost of jobs. That is why every time those members stand up and say “We need to make sure everyone gets a living wage, and we need to increase minimum wage rates.”, they neglect the importance of actually making sure that there are sustainable jobs out there in the economy.

We have increased the minimum wage rate, and we have done so in a sustainable way. It has been increased every year that we have been in Government because it is important to make sure that those who are not earning a large amount of money do share in the benefits of economic growth, and that is what we have ensured. So that deals with the silly speech from Mr Mitchell.

Let me talk about the bill. My colleague Maurice Williamson, in the first reading of this bill, talked about how this bill was an example of the “Maharey principle”—the “Steve Maharey principle”. I was reading back through the Hansard—because I was not on the Transport and Industrial Relations Committee, so I have come to this bill a little bit late—and I thought that was a really apt description of the bill. Steve Maharey was famous—and I actually cannot remember what he said it about—for saying that “There are things that you say you’ll do in Opposition that you never do in Government.” It is this sort of populist, cheap rhetoric that—actually, fairly like what we hear from Mr Mitchell—

💬 Jami-Lee Ross: “Keep Kiwibank”.

And “keep Kiwibank” is a good example. My colleague Jami-Lee Ross names the example of the Keep Kiwibank Bill, which Clayton Cosgrove introduced into Parliament, and then he gave up the portfolio and landed the hospital pass to end all hospital passes over to poor old David Parker, who has also got control of this bill. So I do not know what David Parker has done inside the Labour Party caucus recently, but he seems to have—

💬 Tim Macindoe: He must have gone to dinner with Phil Quin.

Ha ha! Yes, that is right. Mr Macindoe says he must have gone to dinner with Phil Quin—gone out for kai and kōrero with Phil Quin and the right-wingers in the Labour Party caucus. We cannot possibly have dissenting views inside the gulag that is the Labour Party.

Anyway, this is an example of a “Maharey principle” bill, because, actually, Labour looked at this when it was last in Government and it decided not to do it. Darian Fenton got lumped with introducing it as a member’s bill, where “We have got to do something for the unions, so let us introduce it as a member’s bill.”, and all the advice was: “Don’t do it.” Cabinet heard the advice. Clayton Cosgrove knows that that was the advice. Phil Twyford, thank God, was not in Cabinet back then. He was still struggling to try to win selection to get into Parliament. But those members know that the official advice was against it. They rejected it when they were in Government, but then they went into Opposition, and it is like a lot of bills we get from Labour members. Twice now—

💬 Phil Twyford: How many elections have you won?

Just wait, son—just wait. They have twice—

💬 Phil Twyford: How many?

Well, your mate up on the backbenches scarpered off, so ask yourself why. They have twice now tried to reintroduce the thermal ban legislation, they have twice, I think, tried to reintroduce the biofuels obligation, and this is just another example of a retread bill, reintroduced into the House by Labour. This is a classic example of the “Maharey principle”. The select committee had a good look at this bill, as it did in the 48th Parliament, I think it was, between 2005 and 2008, and on both occasions it recommended that it not pass, and the majority has recommended that it not pass in these circumstances because the reality is that contractors are different from normal employees. They are costed differently. Their earnings are calculated in different ways. The structure and methods of their payments are different. They are different, and they are legally distinct for a very good reason.

Actually, my good colleague Andrew Bayly gave an example of how the bill was sort of well-intentioned, but with the way the bill is drafted it could lead to situations in which contractors are actually worse off—in some cases, reasonably substantially. Parmjeet Parmar made that point as well, and I notice that Maurice Williamson and other speakers in the first reading made that point as well.

We are yet to hear in either the first reading debate or the second reading debate—or from Mr Clayton Mitchell, in his voluminous contribution to the House—an adequate response to how the bill will actually make contractors worse off. The whole point of the bill is to make contractors better off. Actually, there have been examples provided by officials—and I will not relitigate or regurgitate the examples given—that have been mentioned in the House as to how the bill will make contractors worse off not better off, and we are yet to hear any adequate response to that. Actually, Parliament has an obligation to legislate not just with good intentions—because too often Parliament just legislates good intentions—but for things that will work and that are actually based on evidence, and this is a classic example of how this bill is not.

The officials advised that the costs outweigh the benefits. The select committee came to the right conclusion that this was an unworkable bill that would not lead to the improvements for contractors like the bill aims to do, so that is why National stands in opposition to it.

Tēnā koe, Mr Deputy Speaker. Thank you for this opportunity. The previous speaker, Chris Bishop, just actually proved the point of the New Zealand First member’s assertions that, in fact, he does live in a bubble, and that there is a world outside of this place and outside of Cabinet papers and outside of the numerous reports that are given to select committees and to members across the House.

There is a world outside of this place, and that world exists with real people. That world exists with people who are trying to make a living—trying to make a living for their families, trying to make a living for a better future for themselves, to make sure that they are able to compete in a job market that allows them to compete fairly, that allows them to be able to compete fairly against some of those other operators out there who actually do go out seeking to undercut and do go out to force these types of wages down.

Furthermore, I take the point of Mr Mitchell in saying that it is also the reality out there that there are some dodgy employers. There are some fantastic ones and, I dare say, for the most part, many of them are operating well within the law, and others, and I want to commend Te Whānau o Waipareira Trust at this time, who have committed to paying their staff a living wage; a living wage—not the minimum wage—a living wage. For Te Whānau o Waipareira Trust in Tāmaki-makau-rau, you have got to appreciate that the cost of living in Tāmaki-makau-rau is extremely high, so I congratulate Te Whānau o Waipareira Trust and all of the good employers out there that actually do right by the contractors—do right by the people. Mr Mitchell is right when he says it is about people. It is not simply about the businesses, it is not simply about the market and “We’ll let the market sort it out.”; it is, fundamentally, about people.

With this particular bill, I stand, obviously, to support my colleague the Hon David Parker in his attempts to bring fairness into this space, and I take the point from Mr Bishop, who talks about retreads. What this actually speaks to—and the Leader of the Opposition hit it on the head—is that we are committed to these things. The Labour Party is committed to fairness in the labour market. We are about good jobs, we are about allowing people who work hard to get paid fairly, and that is what we are here for, so it is no surprise to see an attempt in the last decade to get this bill across the line and, when it did not succeed, to come back and do it again—because we are committed to that. We do not flip-flop. We do not make policy or decisions on the hoof, off the cuff, or as we run, and “We’ll pay people to leave Tāmaki-makau-rau” and all of the other things.

Mr Bishop also spoke about intentions versus outcomes. Well, I think that is pretty rich, given the brightline legislation around property and capital gains tax that was recently introduced by this Government. It is, as those members have mentioned in the debates on that particular bill, well-intended, but it actually does nothing. It does absolutely nothing, and we challenge them on that.

At its core, this bill is about being fair. It is about making sure that, as already mentioned, if someone works hard they are paid fairly. It also seeks to close a loophole that sees contractors exploited. The Leader of the Opposition spoke at length about the exploitation that is out there in the current workforce today. It is everywhere—contractors, young people, and workers right across the entire work spectrum are suffering from exploitation from far too many employers, so this seeks to close one of those loopholes that see some of those dodgy practices by employers exploiting contractors.

We on this side also believe that this bill is fair—that it actually does not hold back business. We do not believe that it holds back business. In fact, one of the reasonable aspects of this particular bill is that where a contractor—like a truck driver—has a contract with two separate employers, they cannot take advantage of that position. You know, this is a reasonable step for this particular bill, and it does not disadvantage the employer in any way. In fact, it puts the onus back on the contractor to operate within these particular rules, so we recommend an amendment to new section 6A in clause 10 to provide for that particular issue.

One of the growing concerns for this country—and we have been fighting and advocating for this particular issue to be forced on to the agenda of this particular Government—is around poverty. It is around low wages. Despite the Government’s assertions that wage rises are outstripping inflation and that everybody is doing better, that is actually not the case. We see it far too many times in our electorate offices across Tāmaki-makau-rau and even in the regions now, where we are seeing families struggling out there. We want to see this first step in bringing equity into this particular field—to make sure that contractors are paid fairly and that employers are looking after those people who actually make their business.

We also, in this particular bill, would recommend that the minimum rate of remuneration be reviewed annually so that we do not come back in 10 years’ time trying to seek another equitable position for contractors in the market place. We need a constant review process that happens annually, to make sure that the wages that are being paid to contractors will keep up with, or at least track, the cost of living for many of our people out in in Aotearoa New Zealand.

Finally, we, I, the Labour Party—this side of the House—stand to support this bill, to congratulate the Hon David Parker on his hard work in this space. There were many challenges in the select committee process where Mr Parker, along with my colleagues on this side of the House, put up a good fight, and we hope that this Government realises that these particular bills are actually for the betterment of all Kiwis, for all New Zealanders, and not just for the very few. Kia ora.

The aim of this bill is to amend the Minimum Wage Act 1983 to extend its provisions to payments under contract for services that are remunerated at below the minimum wage. Under the proposals advanced by the bill, labour inspectors would be authorised to seek remuneration arrears and penalties on behalf of certain independent contractors in instances where a contractor’s remuneration has allegedly been below the minimum wage proposed by the bill.

We believe that the bill is not workable. As Business New Zealand says in its submission, “The Bill is impracticable, uneconomic and breaches basic legal principles.” The bill seeks to fix something that is not broken, according to a submitter. Independent contractors and related remuneration models operated in, for example, the express package industry have been there for over 50 years. Throughout its lifetime, the industry has not been dogged by issues relating either to the independent-contractor model or related remuneration models. The fundamental reason that this is the case is the partnership that exists between the principal’s needs and the independent contractor’s needs. Both parties need each other in business to stay in business.

This model has provided New Zealand with a highly, highly efficient and essential express package industry. The bill is uneconomical because it changes a productivity-based remuneration model to a partially fixed remuneration model that is not based on productivity. The bill artificially and inappropriately orders contractual relationships that are mutually agreeable to both parties. It does not account for the different types of remuneration common in the contract industry, including, for example, hourly rates—time-based; piece rates, which are volume based—and fixed price on completion, or outcome based. The bill artificially makes contractors working on the basis of piece rates, or for a fixed price on completion of work, move to time-based remuneration, despite the former being their preferred model of remuneration.

Despite the fact that the bill will be applicable only to self-employed contractors and not staff, the bill makes an incorrect assumption that every contractor within the prescribed schedule is taken on as a contractor when they would prefer to be an employee. This is not correct. Many contractors have multiple clients, giving them an adequate income from all sources while preserving a level of flexibility and variety that they value and do not get in a more traditional employment relationship.

Comprehensive enforcement of this bill’s provisions will be impossible to achieve without a very significant increase in regulatory capacity. Enforcement, therefore, is likely to be based on grievances and complaints of non-compliance, and, therefore, will mostly benefit only those very few who take and win a case. So the consequences of forcing a time element into contracted outcomes are significant, including the possibility of encouraging unsafe practices by contractors in order to meet artificial deadlines, and it is unlikely that outcomes will be gained. For example, people may want to purposefully delay their work in an attempt to get better pay or more money. Delays in contract performance, or cost overruns arising from minimum wage claims, would be inevitable.

These, in turn, could lead to contract performance complaints, claims for compensation, and the like, which normally leave neither party the winner. Also, we do have existing laws to regulate the market. Any breach of the current Minimum Wage Act caused by improperly treating someone as a contractor rather than an employee can already be challenged. All occupations specified in proposed schedule 2 will suffer negative consequences if the bill is introduced.

The courier service is very important to our economy. In the main, independent courier contractors are engaged on the basis of pick up, haul, and deliver, and the courier segment itself has several sub-segments. The largest is the network courier segment where items are picked up from A by one courier and delivered to B by another courier, either locally or elsewhere in the country. So, between these functions, the post trucks, planes and so forth are required to underpin the service. So this segment typically remunerates couriers on piece rates. Another primary segment is the point-to-point segment, where an item is picked up from A and delivered to B by the same courier. In this segment couriers are often remunerated by way of a pre-agreed revenue split between the contracting company and a courier, or on a job-by-job basis.

Both these sub segments have existed from the outset of the modern courier industry in the 1960s, without drivers being exploited. Independent contractors in this industry make business decisions based on their equity investment in vehicles. They can be leased or owned, new or second-hand, and maintenance plans, operating costs, including their employees’ labour and general overheads, are included there. Investment and other business decisions are unique to each contractor and to the type of contract holder.

The generic, time-based model proposed by the bill would not recognise independent contractors’ unique input costs, nor would it incentivise productivity. Instead, it is likely to disincentivise productivity, leading directly to higher costs and reduced service levels. Market intervention such as this would be destructive to the courier industry, its customers, and the many thousands of couriers who have invested in their own businesses and are currently working productively and positively in industries. The current law is sufficient to prevent misuse of contractor status. Therefore, I would like to oppose this bill.

I think that last speech just personifies the struggle that National members are having trying to justify why they think it is OK for people who are working hard in New Zealand to be paid below the minimum wage. That is what the National Government is arguing here in this Parliament—that it has such a strong future in mind for this country, that its brighter future actually involves people being paid less than the minimum wage for working hard in this country. Well, that is not the vision that we have on this side of the House. We actually want people to be paid well. We want to improve wages. We want people to have decent living standards, and that is what this bill is all about.

I want to congratulate the Hon David Parker on bringing it in front of the House, but I also want to commend former colleague Darien Fenton, who was absolutely passionate about this, and was the original drafter of this bill. If National is trying to pretend that it wants to fix this issue but it just has not thought of the right way to do it yet, it has had many years to think about how to do that because this bill has, in fact, been before the Parliament before. So no one is going to believe that bit of nonsense from the National Party.

I want to agree with Labour leader Andrew Little, when he said earlier in this debate that we are after the road to prosperity, not the race to the bottom that the National Government seems intent on taking this country down. Government members were trying to pretend that this is about a question of choice. What choice is there in someone working hard and being able to be paid less than the minimum wage, because that is what the National Government is arguing for. That is what it is arguing for. And that is the very reason the Labour Party has brought this bill before the House.

As it stands right now in New Zealand, it is legal to pay an independent contractor, a self-employed person, below the minimum wage, and in this day and age, in 2016, in Aotearoa New Zealand, that is morally and ethically wrong. The fact that the laws book allows this to happen under a National Government is ethically and morally wrong. Forty percent of the children living in poverty in New Zealand are actually living in families where there is a parent in paid employment. I will say that again because it is a national disgrace. In terms of the 40 percent of children living in poverty in New Zealand, one of their parents actually goes out and works hard and tries to earn a decent living. But it is because of the attitude of the National Party that those parents often cannot make enough money to actually ensure that they are paying the rent, that they are putting decent food on the table for the children, that their children are going to school with a pair of shoes on their feet and going out with a warm coat in these cold temperatures that we are suffering right now in New Zealand. These are the effects of that Government and its inability to actually address issues like the one we are putting in front of this Parliament this afternoon.

So what are we asking for? We are not asking for a lot. It is the fact that anyone who may be employed as an independent contractor has the right, as every other worker does in New Zealand, to be paid the minimum wage. It is an audacity for the National Party to argue that this would be far too onerous because it might require that employers have to understand and know the hours those people are working. It is just an outrage. It is not that long ago that that same Government passed a piece of legislation to improve health and safety in this country, and I say good on it. But for goodness’ sake, if Government members think it is OK that employers can pay people a paltry amount without understanding the number of hours they are going to have to work to earn that paltry amount, then they have no understanding of the issues that drive bad health and safety practices in this country, either.

They talked about piece rates. I want to say that the piece rates that are paid in the forestry industry are probably one of the main drivers of bad health and safety in that sector. That is right, Mrs Goodhew—do not raise your eyebrows and look like it is the first time you have heard it, because you will know all about it. The fact that people have to chop down X-number of trees—

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

💬 Mr DEPUTY SPEAKER: Tēnā koe e Te Whare. Tēnā koutou e te whānau o Te Whare Pāremata. Kia ora mai tātou, tēnā tātou katoa. Members, when we adjourned for the dinner break, we were debating the Minimum Wage (Contractor Remuneration) Amendment Bill. Sue Moroney was speaking. She has exactly 5 minutes remaining.

I do not intend to take the full 5 minutes, because this is a members’ day, which means that the really great legislation is in front of the House today because it is largely from the Labour Party. So the things that are really relevant to New Zealanders are being debated on members’ days. The good news is that next year the New Zealand voting public can make members’ day become Government bill day, where the really relevant issues will be debated.

Tonight it is about ensuring fairness—fairness in work. That is the sort of thing that the New Zealand public can expect to see from a Labour-led Government. What we are talking about tonight is the right for people who are self-employed, independent contractors, to be paid at least the minimum wage—not a big ask. That should just be a basic entitlement, but not according to National members. They are voting against this because they do not believe in fairness at work, and they do not want self-employed people to be paid at least the minimum wage. But the rest of us do, and I am hoping that the Hon David Parker will get this bill through its second reading, because he certainly got the support of the House on its first reading. I believe that he is going to get majority support again. I certainly hope that he will, because I think that most New Zealanders would agree with the Labour Party that it is just a basic right for people to know that when they work they should expect to be paid at least the minimum wage.

National members brought back the ghost of Bill Birch before the dinner break. They brought back the ghost of Bill Birch. Apparently they are voting against this because it is all about choice; the choice to be ripped off, the choice to be exploited, the choice to work hard but not even get the minimum wage. Well, the Labour Party is on the side of hard-working people. We are on the side of the self-employed people of this country. We are on the side of the families who want to feed their children and make sure that they can go to school with shoes on their feet and a warm coat. We are on the side of hard-working New Zealanders who believe in justice, who believe in fair pay for a fair day’s work. We are on the side of the majority of New Zealanders.

Well, what a lot of pious, sanctimonious commentary in the last couple of minutes from Ms Moroney that she knows best, she knows what self-employed people would prefer. They are self-employed because they want to be self-employed. They are independent of other employers. They want to go out and work for themselves. They want to take the risk and better themselves and their families.

💬 Sue Moroney: Not to have the minimum wage?

At some point they will have to—they do. People make a sacrifice when they start out in a business.

I will give you an example. Let us imagine there is a builder who is enjoying being part of this construction boom that we are in. It is the biggest construction boom that we have had ever: more apprentices in construction than ever before; more money in construction, building houses, than ever. So we have got a young fella and he wants to set up his own business. He wants to be one of these self-employed people whom Sue Moroney wants to protect. So he goes out and he decides that he wants to set up a business. He has not done it a lot. He has not done many houses himself off his own bat, because he is a journeyman. So he contracts. He writes a contract with someone who wants to build a house. He makes a few mistakes and he takes a bit longer than his uncle, his father, or the people before him. Heaven forbid he does not—

💬 Sue Moroney: $15.25.

Not only does he get less than $15.25 an hour, he gets less than zero. He might lose money on that contract. He might lose money on that contract because he is starting out, he is taking a risk, and he wants to give things a go. But he has learnt from that. He has learnt from that mistake. And then he goes out again and he does not give up. He gives it another go.

Just imagine if that poor fella—according to Sue Moroney, the poor fella; but I say good on him—was obliged to be paid $15.25 an hour. Just imagine if he went to the customer—this is who it is—on a fixed-price contract for a house and he said: “I’m sorry, mate. I have taken a bit longer than I expected. I’m sorry it rained for a week and I could not put the concrete pad down. I’m sorry—the law says I deserve $15.25 an hour.” What is the person who wants that house built going to say to him? He is saying: “Sorry, man, I am not going to reference you. You have not done the building on time and at the right price. You are going out of business.” That is just an example.

So my point here, Ms Moroney, is that there is confusion on your side of the House whereby you do not understand the difference between a minimum wage, an employee-employer relationship, and a contracting relationship where one pays for services. It does not matter how long they take to complete the job—they get paid for the job, whether it is pruning a row in a vineyard or painting a house. It is not about the time that you take; it is about the job that you complete. If you can do it faster, if you can do it more efficiently, good on you; you will get paid very well. But if you do not, I am sorry—

💬 Sue Moroney: Might risk your health and safety. Yeah, well.

That is right, but it is for you to decide how fast and how slow you go. We heard from—you were there Ms Moroney; you were there listening to them—people who deliver pamphlets, who said: “We do not want to support this bill because we will be out of a job if this bill is passed, because we want to take our time. This is a social occasion. We want to walk and take our time—walk the dog and talk to our friends. While we are doing that we can be paid something for delivering these pamphlets.” We know that if we make the employer pay those people $15.25, which they have no interest in receiving because they want to take their time doing it, they will not be in a job—they will not be in a job.

So there is confusion about the minimum wage, which I absolutely support. The minimum wage at $15.25 is not what this is about. But a lot of speakers on your side have talked about the minimum wage. Waipareira Trust was talked about. Mr Henare was talking about how the trust was paying a living wage, I guess: $19 an hour. Good on them. Fine. Go for your life. Pay the people whatever you like, but this is about contractors and contracting for service. The only way we are going to increase the minimum wage—and I agree we want the minimum wage to be higher; we want people to be paid more—and the only way we are going to get people paid more is if we become more productive, more efficient, we export more stuff, and we sign free-trade agreements.

This is what it takes for minimum wages to be raised. You cannot legislate for it. You have got to support water storage projects. You have got to encourage people to say “Yeah, we want irrigation.” The Green members are your partners. They do not want water storage projects. These are the things that we must do to raise living standards in this country. That is the only way you are going to raise the minimum wage. You cannot legislate for a minimum wage just like that. It does not happen like that.

See, this is the benefit of being in Opposition. You can shoot from the hip, you can say all these things and make a headline, but there is no consequence for the Opposition members, is there? It does not have to deliver. It does not have to deliver on the other side. “Let us make everyone get $15.25 an hour, whether they are slow or fast.” I mean, how fair is paying $15.25, in the pamphlet example, if someone takes a long time, and then you have got some young fella on a bike and he delivers those things at twice the speed. That is not fair. That is not fair on the guy who ends up making $16 or $17 an hour. So that is the point: there is only one way to increase the minimum wage, and I agree the target and the aim on both sides of the House is to increase the minimum wage or standards of living—call it what you like—of all New Zealanders, but the advantage, I guess, for the Opposition, is that those members do not have to think about the consequences of their policies. So, again, they do not have to think about free tertiary education. Who pays for that? It does not matter. It is bums on seats—everyone is entitled to free education. Here we go again—we have got 100,000 houses. Where are they going to come from? Who is going to pay for that? It is another badly thought-out policy—and, again, for the headline.

This bill is simply for the headlines, and there is a confusion on that side of the House about—I will come back to the point—what we agreed is the minimum wage. And remember, of course, that there are a lot more labour inspectors in the market place, so if there is an issue around employers or employees then there are a lot more labour inspectors to reinforce the law. I agree, people should not be taken advantage of. People should not be paid below $15.25 when they are entitled to be paid $15.25, but do not go and force a young fellow who wants to get on with it to be paid $15.25 when he is quite willing to take the risk. He is quite willing to work slower, and he is quite willing to build up a business on his own account, take the risk, and even make a loss. There is nothing wrong with that, and that is why we cannot support this bill, because this bill is trying to fix a problem that simply does not exist. This bill is trying to fix the wheel that is spinning very effectively and efficiently today.