Annual Review Debate — Transport

It gives me great pleasure to rise as the chairman of the Transport and Infrastructure Committee, and I see members of my hard-working committee here in the Chamber tonight. This year, we heard from City Rail Link Ltd (CRLL), Maritime New Zealand, the Ministry of Transport, and Waka Kotahi—New Zealand Transport Agency. We basically adopted it as a sector, which is an excellent way to do it, because the sector is organised into aviation, land, rail, and maritime transport.

Of course, the Ministry of Transport is responsible for transport policy and for monitoring most parts of the sector. The strategic planning and the implementation of regulation is carried out by the transport agencies Waka Kotahi—New Zealand Transport Agency, KiwiRail Holdings, the Civil Aviation Authority, and Maritime New Zealand. The independent Crown entity the Transport Accident Investigation Commission provides the investigation service. These agencies work collaboratively.

A significant proportion of the funding for land-based transport and coastal shipping comes from the National Land Transport Fund—the NLTF. The fund is funded from fuel excise duties, road-user charges, motor vehicle registration and licensing, and other Crown revenues, including Crown funding.

Much of our work was talking about the decarbonising of the transport sector, and we discussed what work is being done to reduce carbon emissions in the carbonised sector. The ministry told us that it is focused on creating a more sustainable transport system and encouraging more people to use public transport or active transport. We also discussed how Waka Kotahi sets ambitious emissions reduction targets and what Maritime New Zealand is doing to develop environmentally friendly practices. Transport is responsible for 43 percent of New Zealand’s domestic carbon dioxide emissions and 21 percent of greenhouse gas emissions.

The ministry has a green paper. Hīkina te Kohupara was developed and consulted on—this green paper—and this discussion document sets out potential ways of reducing emissions across the transport system. It also outlines the policies that will support this. It uses the avoid, shift, improve framework—or the A-S-I framework—to identify these opportunities. Of course, “avoid” means to improve the overall efficiency of the transport system through interventions to reduce both the need to travel and trip lengths; to “shift” is to improve the efficiency of trips by promoting mode shift to low-carbon modes such as walking, cycling, public transport, coastal shipping, and rail freight; and, finally, to “improve” is to lower the emissions of transport, vehicles, and fuels. We asked the ministry whether reducing fares for public transport or making it free would encourage people to use it, and they agreed that it would be one of the ways to increase use.

No report would be replete without mentioning COVID-19’s effect on the transport sector. Obviously, it affected all parts of the transport sector, and we heard how the ministry remained responsive to COVID-19 on the City Rail Link project, how Maritime New Zealand undertakes regulatory work, and how the Auckland boundary supply chain issues were managed.

In March 2020, the Government committed $372 million to fund the International Air Freight Capacity scheme—and I might just ask the Minister, who might like to elaborate on maintaining the scheme for maintaining international air capacity with that additional $170 million, and the success of that. We also spoke with City Rail Link Ltd, and they acknowledged that COVID-19 has caused significant disruptions to work. It said that the effects were broad and ongoing. During 127 days of alert level 3 restrictions, work was able to continue at about 80 percent of usual efficiency. Overall, CRLL has been affected by some level of COVID restrictions for 271 days. They were also affected by severe shortages.

So that really covers a lot of the work that the committee did and what we heard from. Now, I would particularly ask the Minister to elaborate back on that air traffic—the essential transport connectivity scheme and maintaining international air capacity.

Thank you, Madam Chair, and thank you for the opportunity to take a call in this debate on the transport sector. I do just want to start with a couple of introductory comments before asking the Minister some questions. I think what became incredibly apparent during the select committee hearings of the annual reviews was that this Government is leaving an infrastructure hole in New Zealand. We have seen project after project which was under way being cancelled: East West Link, Mill Road, Whangārei to Port Marsden, Woodend bypass, Cambridge to Piarere, Ōtaki to Levin cancelled and then restarted, Tauranga Northern Link cancelled and then only partly restarted.

The number of projects which are now coming up to completion started by the last Government is awkwardly coming up to completion, meaning there is going to be a massive transport infrastructure hole left by this Government. We’ve had Transmission Gully opened a couple of weeks ago; Hamilton bypass, which National started, almost complete; Pekapeka to Ōtaki almost complete; Pūhoi to Warkworth almost complete; but nothing new is actually under way under this Government. I think that’s something which this Government is going to have to be held to account for at the next election.

Then you’ve got big promises: $29.2 billion for the light rail, and we’ll get to that shortly, but first I’d like to ask about some of the New Zealand Upgrade Programme projects. The first one is regarding Mill Road in South Auckland, a critically important piece of infrastructure, which we discussed at the select committee. We were told the Minister would have advice around the rescoping by March of this year. I would like to know: has that advice come, has a preferred option been decided, and will that road be a four-lane highway or is it now only going to be a two-lane highway?

Just responding to a couple of queries from members. Firstly, acknowledging and thanking the chair of the Transport and Infrastructure Committee, Greg O’Connor. I did notice a small typo on page 15 of the report, though; I have to inform the member the total value of the New Zealand upgrade package is $12 billion, not $12 million—apart from that, an excellent report.

In response to his question about the Maintaining International Air Connectivity Scheme, that has been a critical part of our response to COVID-19, in maintaining freight connections for imports and exports that otherwise would have collapsed, potentially, given the lack of passenger travel to support air freight. There’s been a total outlay, up until this point, of nearly $1 billion, but that has supported approximately $20 billion of imports and exports to New Zealand and retained significant and important air corridors that will be critical as New Zealand recovers from COVID-19; so a really good example of Government having an active and positive role in supporting New Zealand through that difficult period.

In response to the member opposite’s comments, I do just have to set the record straight here: this Government has a record investment that’s going into the transport sector. The total investment going in through the National Land Transport Fund is approximately $24 billion over the last three years, which is a 40 percent increase on the previous period; $8.7 billion going in through New Zealand Upgrade Programme (NZUP). Many new projects are going ahead across that programme across road, rail, walking, and cycling. There is certainly no lack of investment; in fact, the critical challenge we face from the sector is making sure that the sector has enough capacity to keep up with the investment that we’re putting in.

In respect of Mill Road, I started to receive initial advice through on the South Auckland NZUP package and I expect to receive further advice before joint Ministers make decisions in the coming months.

Thank you, Madam Chair. Noting the climate crisis that we are facing and the initial comments by the chair regarding our emissions profile in the transport sector, I wanted to get an understanding from the Minister, looking back at the period we reviewed, as to whether he’s confident in the capabilities of the Ministry of Transport and Waka Kotahi to prioritise investment into public transport infrastructure and cycling and walking infrastructure that meet the needs of our diverse communities and lowers emissions.

Another question that I had for him was regarding the status of KiwiRail as a State-owned enterprise, and, again, noting the urgent need to reduce emissions, and the fact that that will involve higher investment and prioritisation into the electrified rail system, whether he thinks, looking back at whether the status that prioritises shareholder profits over sort of other paradigms, such as operating in the public good, is fit for purpose.

Thank you, Madam Chair. What interesting comments from the Minister the Hon Michael Wood, talking about the amount being spent. This is the problem with this Government. They’re all very good at saying “We’re spending this; we’re spending that; and we’re spending this.”, but the reality is: they have a problem with delivery. Mill Road is a classic example of a project which they said they were going to do, then they cancelled it, then they said they were going to do it again, and the costs keep going up. And the Minister has just admitted to the committee that he still hasn’t even got an options report as to what he might be able to do with it. That is the reality up and down this country, with the New Zealand Upgrade Programme.

I could come to the point around the light rail, and I think that’s a very good segue through to the Auckland light rail project. We were told at the time of the hearing that approximately $50 million, at that point, had been spent on consultancy fees and other things for Auckland light rail. Is the Minister aware that the amount spent on Auckland light rail amounts to something like $7 million per metre of press release that this Government has issued on light rail in Auckland?

💬 Hon Scott Simpson: How much?

$7 million per metre of press release this Government has issued on light rail. And that project’s been through so many different iterations. We’ve had the initial announcement fanfare before the election. We’ve had the twin-track process. We’ve had the super funds getting involved. We’ve, then, had it cancelled. And then it’s back on the table, and there’s still no delivery.

So can the Minister please tell me: will the final business case for Auckland light rail be completed before the next election?

Minister, one question tonight. Why does the New Zealand Infrastructure Commission say that other countries could deliver six, seven, or eight times as much track for the estimated $14.6 billion cost of Auckland light rail? Is this an indictment on the Government’s ability to efficiently deliver transport projects?

If I can respond to a number of the questions that have been raised. The first from Mr Menéndez March, who asked about the capacity of both the ministry and Waka Kotahi to prioritise and lead the decarbonisation efforts that are needed across the transport sector. Yes, I do have real confidence there. The Minister of Climate Change, the Hon James Shaw, has been on public record as particularly recognising the role that the Ministry of Transport has taken in leading efforts to work out how we can develop credible policies to decarbonise the sector as we develop the emissions reduction plan. We’ve had a significant programme over the last year of engaging with the public, through Hīkina te Kohupara, that was mentioned by the chair, as we develop up our decarbonisation plans for the sector. We’ve already started the work there. Of course, the Clean Car Programme—policy designed by the ministry, operationally delivered by Waka Kotahi—already delivering exceptional results in terms of rapidly transitioning our light fleet. So I think that the answer there is yes.

In respect of KiwiRail: yes, more investment will be needed to support KiwiRail as it takes more freight and more passengers on to rail, which is incredibly important in terms of reducing our emissions. Worth noting, the Minister of Finance would be very pleased if, in fact, we had received dividends from KiwiRail. We’re not taking them out of KiwiRail; we’re investing to make up for 20 years of neglect and managed decline under the previous Government.

In respect of the member opposite’s—Simeon Brown’s—question, he’s quite wrong about projects not being delivered. I do note that, when the previous Government came into office at the beginning of its nine years, it committed to seven roads of national significance; I think it completed three by the time they’d finished their term in Government. This Government has a massive infrastructure programme under way across transport. Northland’s one-way bridges at Taipā and Matakohe were replaced. Auckland’s $250 million Southern Corridor improvements have been delivered. The new Puhinui station is open. Work is under way under Tākitimu stage one. The North Canterbury Transport Infrastructure Recovery project in the South Island is finished. State Highway 1 on the Southern Motorway is under way. The electrification between Papakura and Pukakohe is under way. Significant works on the Waikato Expressway are completed. And more coming later this year. There is a massive list of improvements that this Government is leading. The difference between this Government and the previous one, that that member can’t quite get his head around, is that we’re not solely focused on delivering four-lane highways as the only solution to New Zealand’s transport problems; we’re investing in a wider range of transport infrastructure, consistent with the climate challenge that we face.

In response to Mr Court’s question, there are real challenges that the Infrastructure Commission has laid down in terms of the efficient delivery of infrastructure in New Zealand, not just in transport but across the suite. I think there are real issues that we need to delve into there. They’ve identified, for example, the need for New Zealand to really address our consenting systems if we do want to lower the cost, particularly through the time that it’s taken to get infrastructure delivered efficiently. This is something that I continue to work with my agencies on because we do want to make sure that we get the best value for taxpayer dollars to deliver the most infrastructure that we can for the benefit of our country.

Well, we just heard that this Government said they won’t be delivering four-lane highways, and I think that’s something which the people of the Waikato will be incredibly disappointed about: Cambridge to Pirere cancelled and never coming back under this Government. The important roads of national significance, which improved road safety and made the lives of New Zealanders better, getting people home quicker and safer but also moving trucks and freight around our country, are critically important. Well, the reality is we know they can’t deliver a four-lane highway, because they can’t even deliver a cycle bridge—can’t even deliver a cycle bridge. If they can’t deliver a cycle bridge, how on earth can New Zealanders believe them when they say they’re going to build a light rail?

💬 Hon Member: Well, New Zealanders can’t.

Well, they don’t. That’s the reality. They don’t. How on earth do they believe this Government’s going to deliver light rail? Well, we know they can’t.

I’d like to ask about the money that is being wasted under this Government. I note the New Zealand Herald ran a story yesterday. There’s a shortfall in money coming through from fuel excise duty of about $350 million. I just want to point out to the Minister: $51 million on a cycle bridge which was cancelled, $98 million for Te Huia train, which, by the way, is running on diesel, emits more fuel than if you drove a ute between Hamilton and Auckland, takes longer, and actually the passenger patronage has been pretty, pretty disappointingly poor, Megan Woods. And the cost? A $280 subsidy per person. Let’s Get Wellington Moving: 35 million bucks on consultants and $250,000 on construction. That’s what is happening under this Government.

But back to the Auckland cycle bridge. Can the Minister please explain to the House: why is money still being spent on the Auckland harbour cycle bridge since it was cancelled? After the announcement around its cancellation, $1.2 million has been spent, and so can the Minister please answer that question. Also, can the Minister please answer the question: why is the New Zealand Transport Agency still now considering reallocating lanes on the existing bridge when we were told at select committee that was not going to be happening?

I’d be interested in the Minister’s insights on the move towards Auckland’s bus services now becoming predominantly foreign-owned and whether he thinks that this is something that we should be concerned about, particularly as this model of ownership prioritises profit over potentially the wellbeing of people? And, in light of the information regarding Kinetic’s purchase of Go Bus, I’m just wondering whether he’s got any insights into what he’s seen in the past and how that may shape the future debate on the ownership of public transport.

Briefly, in answer to Mr Menéndez March, those matters ultimately aren’t my responsibility; the tendering of those services does sit with local government rather than central government agencies. I do note, however, that we do have the review of the Public Transport Operating Model under way, which is examining the questions and issues that Mr Menéndez March is pointing to, and I expect there to be further announcements there in the coming two or three months.

In response to Mr Brown and his comments, look, the reality here is that for 50 years, New Zealand has under-invested across a range of modes. We’ve under-invested in public transport. We’ve under-invested in our rail network. We’ve under-invested in safe walking and cycling networks. This is a Government which has a deliberate policy of giving New Zealanders more transport choices across all of those modes, and we’ll continue to do so.

In respect of his particular question, there is no further money that is being spent on the cycling bridge option. There were some costs that were incurred after the decision that was made, because there were contracts that were entered into with people who were doing the design work, but there is no ongoing cost.

The Minister of Transport hasn’t answered a couple of my questions. One of the ones around the cycle bridge was why is the New Zealand Transport Agency reconsidering the reallocation of lanes on the existing bridge as part of a Northern Pathway programme? At the select committee—and it’s mentioned in the report—this was expressly ruled out, so can the Minister please tell the committee why that is now being reconsidered? I’d like the Minister to actually answer that question, because it’s actually a question that many Aucklanders, on one of New Zealand’s most critical pieces of infrastructure—the Auckland Harbour Bridge, critical for moving people around Auckland, and freight in and out of Auckland—why is the Government reconsidering reallocating lanes for a cycle bridge, after cancelling that cycle bridge? Why are they considering reallocating lanes? I think that’s a question that Aucklanders and New Zealanders need to know. How many more millions of dollars is the Government going to sink into that particular programme?

The other question the Minister hasn’t answered is regarding the Auckland light rail. The Auckland light rail is something which is, well, $14.6 billion and up to $29.2 billion dollars, according to Treasury estimates. And the question that Aucklanders and New Zealanders have is: when is that final business case actually going to be delivered? I asked the question before, and I ask it again. Will that be completed before the next election? We’ve had lots of announcements from this Government about light rail, and the Minister stands up and says, “Oh, we’ve just got to bite the bullet.” Bite the bullet! Well, it’s a very slow-moving bullet, because they announced that in 2017 that it’d be completed by 2021; it’s now 2022, if the Minister hadn’t quite noticed, and, well, I’m not sure if the bullet’s gone right past us or it’s still on its way. But—

💬 Hon David Bennett: It’s in a time warp.

—or in a time warp—not 1 metre of construction has actually been done.

💬 Hon Members: It’s The Matrix!

Yes, it’s The Matrix—it’s The Matrix. We don’t know where their bullet is, but they’re going to bite us. That’s all we know, from this Government. But will they even deliver a business case? I’m not even asking for a metre of light rail by 2023. I mean, I don’t think it should be built then, because I think it’s going to be an incredibly expensive waste of money. But will we even get a business case before the next election? Guess what! This country doesn’t believe this Government when it comes to light rail, because they have promised, promised, promised and issued, issued, issued press releases, but we’ve seen absolutely nothing which gives us any confidence. Will we get that business case before the next election?

Madam Chair, thank you. Minister Wood, one final question for this evening. In November last year, I asked you a written question: what is the forecast final cost to complete the City Rail Link? And you said that we needed to wait, the Government needed to wait, until significant milestones had been reached. Yesterday, after Cabinet, you said that you were aware that there was a significant cost blowout coming. The Auditor-General has said they’re aware of a significant cost blowout. Yet, in response to my written question of a few weeks ago, you’ve said that you refer back to last year’s response. You don’t know what the final cost will be. So, Minister, could you give the committee and the people of New Zealand some confidence that the Government can actually deliver a project like City Rail Link, with some confidence around the budget and timing? Or are we to expect that this level of performance would continue with light rail?

I do thank the member for his question, which is a serious and reasonable question, and, increasingly from the Opposition benches, he is taking on the role as the member who does ask serious questions about the transport sector. In respect of that particular question, I have noted for a period of time that the City Rail Link (CRL) does face cost pressures, particularly relating to the very real impacts that COVID has had on that project. There have been points over the course of COVID where that project has had to be closed down or has been significantly impacted for periods of time. There have been points where it has been difficult to secure supplies. And, of course, there are significant cost pressures that come on because of supply. All of that sits alongside the general nature of a project of that scale, where often the final allocation of costs will not be known until more towards the back end of the project. Broadly speaking, CRL advised Ministers that a much firmer picture as to the final allocation of costs is likely to be clear by approximately the end of this year. But, in the meantime, we are working closely with them to examine the particular COVID impacts, and we hope to have a greater handle on that sooner.

The other member who asked questions really does demonstrate why, increasingly, the National Party is just not seen as a serious commentator on transport issues by anyone credible in the transport sector.

💬 Hon Members: Ha, ha!

And they can mock and guffaw and make jokes about significant infrastructure projects, because they take some time, but the reality is that in the major metropolitan centres of New Zealand, we have for 50 years failed to make the investment in mass rapid transit system. That’s why our cities are congested. That is why we have poor air quality. That is why we have high carbon emissions. And this Government is setting about those tasks. It does, of course, take time at the beginning of very significant infrastructure projects through built-up city areas to do your planning right, to do your consultation right, to make sure that you have a detailed design that stacks up. These kind of projects internationally take some time to get under way. None the less, in the space of one year since this Government has come into office, we have an indicative business case on the table—

💬 Hon Members: Ha, ha!

And the members, again, refuse to engage in a serious debate. They know and everyone knows that in the previous term of Government there was not agreement amongst the governing parties about proceeding with that project, and so it couldn’t. That’s the reality. Everyone knows that. From the beginning of this Government, we have set about that task. We have an indicative business case under way, detailed planning that is now under way, a firm political commitment to move forward with the project. I think that New Zealanders of all of our major metro centres want a Government that is ready to actually make these investments, to make these cities better after many years of neglect, and that is what we will continue to do.

I do expect the detailed business case to be finished by approximately the end of 2023, which I have informed the member of several times previously.

Before I call Simeon Brown, a reminder that we have about two minutes left on this issue. Simeon Brown.

Thank you; I’ll be very quick. So we’ve just heard that that business case won’t be completed before the election, which means it’ll be over six years since that was first promised, and they’re trying to rewrite history as if the last three years or the previous term didn’t even happen—didn’t even happen. Well, the reality is this Government can’t be taken seriously on transport, because they just spend time talking and talking and nothing is actually being delivered. In what year will construction begin under this Government’s plans on the Auckland light rail?

💬 Hon Scott Simpson: Which generation?

Which generation?

The Government has already put on record that we expect early works to begin in 2023.

Members, our time with the Minister of Transport has ended. The Minister for Workplace Relations and Safety is now available for 30 minutes to respond to members’ questions.

Thank you, Madam Chair, and it’s a great honour to kick off this debate in the annual reviews on the workplace relations and safety portfolio. I acknowledge the Minister for Workplace Relations and Safety, the Hon Michael Wood, who just swapped his hat, and my select committee colleagues across the Chamber who are taking part in this debate. This year, alongside the other select committees, we considered the sector as a whole for our report, combining the annual reviews for WorkSafe as well as for ACC.

I’ll start off with an outline of the process that we followed, and then I’ll talk about the findings of the committee. With the help of the almighty Zoom facility, we met several times in March, between the 2nd and the 30th, to consider this annual review, and on 9 March we met and heard evidence from the Minister. We also heard from WorkSafe New Zealand and received advice from the Office of the Auditor-General. I want to thank all of our officials and our team of parliamentary clerks, who helped us with this process.

The impact of COVID-19 on the labour sector was one of the predominant themes of this review—quite unexpectedly! Border closures have resulted in worker shortages in sectors that rely on migrant labour and specialist skills, such as healthcare, as well as in sectors that have lost third-party revenue, such as tourism. The Minister shared with us his view that the COVID-19 response is a really good story about how key stakeholders, from regulators to policy agencies, employers, and unions alike can come together and work really well in what are very unprecedented and challenging circumstances. The Minister noted the development of measures to support people to stay in work and weather the short-term impacts of COVID-19 on workforces—of course, with the help of the COVID-19 leave support scheme and the COVID-19 short-term absence payment.

COVID-19 also increased WorkSafe’s workload, as we heard, with one aspect of this being the increased work on ensuring that there is compliance from businesses with COVID-19 obligations—including things like vaccine pass scanning and contact tracing technology. The Minister told us that WorkSafe’s education-first approach is good, modern regulatory practice. Seven thousand conversations took place with employers to help them meet their obligations, and in the majority of cases, that actually resolved the issue. Related to this education-first approach, the Minister also told us that WorkSafe is increasing its investment in prevention programmes. He told us that intervention and prevention is more cost-effective, and increasingly WorkSafe have adopted the “at the top of the cliff” approach. They provide the employers, the employees, and others with the tools they need to actually prevent harm from occurring in the workplace, which is obviously always the preferred way of doing things.

The Minister told the committee that in dealing with the COVID challenges in his portfolio, there is still a firm focus on the long-term challenges. We heard about the significant reform programme that’s been under way, such as the implementation of the 10 days minimum sick leave, work on the Matariki public holiday, Holiday Act reform, and good progress being made through the modern-slavery legislation advisory group to deal with that issue of modern slavery. The Minister also told the committee that introducing a new fair pay agreement system was a top priority in order to deliver a fairer and more productive labour market which encourages collaborative relationships between key stakeholders, such as the employers, the unions, and peak bodies. The Minister noted in that relay that the New Zealand labour market had been largely deregulated for around 30 years, during which New Zealand has seen some of the worst productivity performances in the world. The Minister also noted that sector-wide pay agreements are common in countries with more productive economies.

Just to finish, in the review of the Standing Orders 2020, select committees were encouraged to conduct these overall sector-wide reviews to assist us picking up more themes across an entire sector. The Standing Orders Committee also encouraged us to invite Ministers to a hearing, and that particular increase in ministerial accountability and participation in this new style of annual review debate means that Ministers in this current Government are subjecting themselves to far greater scrutiny than has previously been the case. Thank you, Madam Chair.

Thank you, Madam Chair for the opportunity to talk in this important debate on a highly relevant issue for many New Zealanders, which is the way in which our workplaces in this country are organised and regulated, and asking some basic questions of the Minister in charge. Because we’re all conscious of the fact that these are challenging times in the economy facing New Zealand. We look around the world, we see what’s going on. We see inflation rising everywhere, we see the retreat of globalisation over the last few years—which for a small trading nation such as New Zealand is a considerable threat and a real cause for concern. So our focus needs to be on strengthening our economy so that we can maintain our living standards, so that we can allow New Zealanders to look after themselves and their families and be prosperous, and a focus on that growth in the economy.

When we look at the workplace relations rules, there’s an element which is focused on ensuring redistribution and fairness and security in the workplace relations rules that we have. There’s also an element that should be focused on our international competitiveness and how we can do well internationally. I suppose the point I would—or the worry that I have about this Government’s current trajectory is that it focuses very much on the redistribution side and very little on the international competitiveness side.

So I’m very keen to hear from the Minister, he having so far refused to accept that there is any connection between adding more and more costs on to New Zealand businesses, small and large, either through very substantial minimum wage increases—30 percent over the last three years—through adding extra entitlements such as an extra week of sick leave, extra public holiday, and his proposed fair pay agreements. He refuses to accept any link whatsoever between those additional costs and either an impact on our international competitiveness for those businesses that are seeking to trade with the rest of the world or on the cost of living for New Zealand consumers, which, as we all know today, more than any is a highly relevant topic, as New Zealanders struggle, particularly those in the squeezed middle, middle-income earners who are not the focus of any attention from this Government, who are facing those higher costs that they are struggling to deal with. So I’m very keen to hear from the Minister whether he has rethought that and whether he does acknowledge any connection whatsoever between the many additional costs that he and his Government have imposed on businesses and either our international competitiveness or the costs of living facing New Zealanders.

Then I want to get on to the question of the mandatory union deals that he is pushing through the House under the falsely named fair pay agreements. I want to know how he arrives at the characterisation that he makes of New Zealand’s workplace relations framework, the many thousands of businesses up and down this country, as all engaged in a “race to the bottom”. I want to know where he comes up with this, why he chooses to, kind of, characterise the efforts of New Zealand businesses as engaging in a race to the bottom, particularly given the fact that our minimum wage, for example, is one of the highest in the world. There’s no exaggeration in that; it is one of the highest in the world. Certainly in relation to the median wage, it is very much amongst one of the highest in the world. So I’ll be interested to understand where he comes up with the idea that in that context and with all the other provisions that we have in the New Zealand context, there is a race to the bottom going on, and that New Zealand workers are in this parlous state, notwithstanding imperfections that we see all around the world, and the desire for everybody to have higher incomes, which is very much the focus of all Government activities.

I suppose the point that we would make is that the best and only sustainable way to improve to generate higher incomes is ultimately to have more productive businesses and selling products that the rest of the world are prepared to pay for or our local consumers are prepared to pay for. That should be the appropriate focus of this Government rather than characterising all those New Zealanders who are engaging in enterprise as being engaged in a race to the bottom.

Thank you, Madam Chair. Just following on from Mr Goldsmith, I just wonder if the Minister would like to comment on the OECD’s economic division noting that centralising and co-ordinating negotiations over wages and working conditions has a tendency to compress pay differences among workers. As a result, it can weaken the link between individual performance, wages, and working conditions, and could negatively impact productivity growth, given that last year there were approximately 160,600 workers being paid the minimum wage in New Zealand compared to 2018 where there were only 71,500. Thank you.

In response to the member who’s just resumed his seat, I’d note a couple of things. The first is that if one holds the view that we have undesirable income inequality in our country, which I do, then some compression of wages may not be a bad thing.

The second thing that I would note is that the OECD, through its labour, work, and social services directorate, does recommend—and the Government has taken this advice on board—that the most effective, functional, productive, and equitable labour markets do tend to have a degree of sector-based bargaining within them. And again, I point the member and also Mr Goldsmith to the very clear international evidence that New Zealand, with its highly deregulated labour market over the past 30 years, has, in fact, had a lower rate of labour productivity than most economies who have sector-based bargaining, including Australia. Mr Goldsmith’s speech could have been a speech given by a National Party backbencher in this Chamber back in 1991 when they brought the Employment Contracts Act to this House and promised that going down that track would lift our productivity, would lift our competitiveness within the world, and none of it happened. We went in the other direction, in fact.

If we take Mr Goldsmith’s commentary to its logical conclusion—he almost said it himself, in fact; he believes that we become more competitive by having a lower wage economy. That is not the policy and that is not the vision of this Government. The most effective, competitive, innovative, and dynamic economies around the world invest in their workers. This Government has a policy programme under way that is about making us a more innovative and productive economy: our work with regional skills leadership groups, our work driving local economic development through infrastructure provision, our work boosting apprenticeships to record levels, our work reforming the vocational education system are all about driving those outcomes.

Fair pay agreements, consistent with sector-based bargaining systems around the world, actually support the workforce and employers to come together to deal with some of the long-term challenges that we face, whether it’s around productivity, whether it’s around skills and training, whether it’s around critical work shortages, which actually most employers identified to us is the biggest handbrake that they currently face on their future growth prospects. We actually believe, on this side of the Chamber, that workers and employers working together on those issues through sector-based frameworks is a good thing. That side of the Chamber has never been able to accept that workers have anything valuable to contribute to those discussions, and that’s just the fundamental difference between us and them.

Well, I’m conscious I only have 2½ minutes left according to the allocation, but I’d be interested to know, given the fair pay agreements, how the employers will be represented by employee associations, and given the New Zealand businesses’ indication that they won’t be fulfilling that role, who will? And how will they go about coming together? If you take a sector, you might have thousands of employers all around the country doing their own thing, no association. They’ve got three months to come together to form a negotiating half to go into negotiations with the unions. How does the Minister expect that they will actually form themselves into a group? Who takes the lead on this? Who pays for it, importantly? Who is nominated as the employer lead? How does it all work?

Then, if it falls over and the backstop is brought in, which he brought in as an addition to this legislation after two years of getting it all organised—he wasn’t well organised and please explain how that happened—it goes to a fall-back position whereby a default bargaining party will be appointed. Who will do that and how will this default party be able to really engage effectively with all the employers and businesses involved in order to get their views and to represent them properly? I’d be interested in the detail from the Minister of how that will be organised.

Finally, I’d be very keen to know from the Minister how these complicated mandatory union deals being imposed on businesses up and down the country under this proposed so-called fair pay legislation—how that is going to make New Zealand businesses more agile and more flexible to respond to the massive changes that they’re dealing with on a daily basis, on a monthly basis, and a yearly basis at the moment, so that they can continue to survive. How will it make them more agile and flexible? I know he doesn’t have an answer. I know he will engage in cheap political points, attacking us and dreaming up nonsense about productivity over the last couple of decades, which is quite wrong—the figures that he outlined before—but I’d be grateful if he could give us a clear, unpolitical answer as to how these fair pay agreements will make those businesses more agile and flexible so that they can continue to survive and thrive in a changing world.

Before I call the Minister, may I just remind members that the session for workplace relations and safety actually ends at 8.45, so there’s still a bit of time left.

Briefly, in response to the member, I mean, I think to a large degree in the previous interchange, I responded to the member’s final question. We actually believe that employers and workers working together can improve outcomes for businesses and for sectors. In fact, we’ve seen that over the course of COVID, where, repeatedly, workers, unions, and employers have come together to deal with a fast-changing and extremely challenging situation. We’ve been able to work through the challenges around, for example, workplace vaccination issues by having employers, unions, Government working together in a tripartite way that hasn’t actually taken away flexibility. It’s enabled each party to bring its views to the table and arrive at good solutions, and I expect the same to happen on a sector basis. Of course, none of that takes away from the very many fundamental ways in which individual businesses will continue to make their own decisions.

In respect of the more specific question the member asked about employer bargaining units, employer associations exist across many sectors and we expect them to have a lead role in terms of taking on that role in fair pay agreement (FPA) bargaining. They will have a duty of good faith to engage with the employers that they represent in the course of FPA bargaining, and that duty of good faith will be similar to the duty of good faith which currently exists in collective bargaining. So, for example, across a large multi-employer collective agreement like the metals agreement, the employer representation organisations have to go back and engage with a large number of employers in that sector. In respect of many collective agreements, unions have to represent in good faith sometimes many thousands of members and engage with them, get their views, and report back to them. The same will need to occur in respect of fair pay agreements for both the union party and also the employer association.

In the event that the employer association is not able to form for some reason, there is the ability for Business New Zealand, if it wishes to, in accordance with the parliamentary paper, to take on that role. If they do not wish to, then there is a facility for that agreement to be determined. In respect of support and where costs might be assisted with, the Government in the Budget last year did confirm that up to four FPAs per year would have financial support provided to them to assist with some of the costs that will be incurred by both parties on each side.

Thank you, Mr Chair. I’d like to ask some questions around workplace health and safety of the Minister, particularly in relation to upstream responsibilities in the health sector; noting how disturbed I was to hear the reality that WorkSafe is focusing on three sectors in our country where they have the most concerns around the health and safety of workers. Those sectors are forestry and construction—possibly two sectors we’ve come to expect to be focusing on—but the third is our health sector, which is primarily Government-funded and where Government has primary responsibility for, and they have been having some significant conversations with the Ministry of Health and DHBs around funding as an upstream decision that leads and has an impact in terms of levels of staffing that impact on safety of workers.

I’m aware that right at the moment, Allied Health workers are balloting to strike and they’re calling on the Government to extend the mandate to ensure that the DHBs are able to come to the table with an offer that will address the very significant health and safety concerns of those workers. I’d love to know if the Minister is taking his role, in terms of advocating around the Cabinet table, for that extension of that mandate to protect the health and safety of those workers and to protect the Government from potential upstream enforcement.

Obviously, I don’t have responsibility for funding, which comes out of other Votes to fund—for example, the health system. What the member is referring to is WorkSafe’s approach, which is to engage with employers to make sure that health and safety responsibilities are being considered upstream. This is a shift from the old-school approach—which was more about the ambulance at the bottom of the cliff—to actually engaging with employers, engaging with boards, engaging with funders to make sure that health and safety considerations are looked at much further upstream; we consider that to be a much more effective approach in terms of preventing harm to occur to workers.

So WorkSafe is shifting in that direction and they do believe in a free and fearless way, and in that respect engage with both private and public sector employers to that extent. In respect of the particular issues that come up, say, in the Allied Health bargaining, I will let the parties work through those issues themselves in what is a sensitive and sometimes challenging collective agreement negotiation. But the member can rest assured that the Government does want to see a fair and equitable settlement in place there that deals with the legitimate issues that have been raised by that workforce and which, frankly, have been ignored for too long.

I move, That the committee report progress on this bill presently.

Motion agreed to.

Progress to be reported.