Holidays Amendment Bill

I move, That the Holidays Amendment Bill be now read a second time. I would like to thank the members of the Transport and Industrial Relations Committee for their diligent work on the bill in the short time frame that they were presented with. The minor amendments that they have recommended to the bill further ensure that the unintended consequences of the Holidays Act 2003 are removed. I note that the bill addresses only the unintended consequences of the Holidays Act, and that the Government’s core policies in this area have not changed. The underlying policy of the Holidays Act was to give all employees basic minimum rights to holidays, and sick and bereavement leave.

The Government remains committed to ensuring employees are guaranteed an additional payment for working on a public holiday. Most New Zealanders think this is fair. We also are bringing in 4 weeks’ annual leave from 2007, to bring us in line with our key trading partners, notably Australia, which has had 4 weeks’ annual leave for about 30 years. I point out to the House that the National Party has pledged to remove the right to 4 weeks’ annual leave, notwithstanding the fact that the Leader of the Opposition had 4 weeks’ annual leave as of right when he was the Governor of the Reserve Bank.

However, putting that aside, there have been concerns about the implementation of the Holidays Act, and in July this year I established a working-group to look at the issues and discuss how the Act could be amended to remove any actual or potential unintended consequences. The working-group consisted of employer and union organisation representatives, as well as some large employers. I commend the working-group for the constructive approach taken by all participants, despite their varied interests.

The bill amends the requirement for an employee to be paid time and a half on a public holiday, to ensure that the employee is not paid this on top of an amount already designed to compensate for working on a public holiday or a particular day of the week. This amendment will prevent double-dipping. In response to concerns from submitters, the select committee has also clarified that payments for a sixth or seventh day of work, or other, similar payments, are not considered payments for a public holiday or a particular day of the week. This formulation will mean that employers are fairly remunerated with a minimum entitlement of time and a half, while preventing a windfall for employees who already receive a superior entitlement under their employment agreement.

The Holidays Act provided for situations where an employer has, in the past, incorporated public holiday penal rates into an employee’s regular or composite pay rate. The Act currently allows employers to pay for work on a public holiday with the employees’ regular pay until 1 April 2005, to give the parties time to determine whether the penal component of the pay rate has been included. The bill proposed to extend this transitional provision for collective agreements until the later date of either 1 April 2007 or the date when a replacement collective agreement comes into force. In addition, the bill now provides, with recommendations back from the committee, that where individual employment agreements incorporate public holiday penal rates in the employees’ regular pay, these employees can also be paid on this basis until 1 April 2007.

The bill clarifies the position regarding an employee who is sick or bereaved on a public holiday. The bill provides that the day will be treated as an unworked public holiday rather than as sick or bereavement leave, and the employee will not receive any extra payment of time and a half or a paid day in lieu. This change addresses a significant area of concern and was well received by submitters to the select committee.

At present, an employer may seek proof of sickness or injury if an employee has been absent for 3 consecutive days. The bill entitles the employer to seek proof of sickness within the 3-day period where the employer has reasonable grounds to suspect that the sick leave is not genuine, informs the employee as early as possible, and bears the cost of obtaining the proof. The bill now clarifies that an employee is entitled to visit a doctor of his or her choice to obtain proof of sickness, as an employer does not have the right to direct the employee as to which doctor he or she must visit. The select committee also considered that employers should not be required to pay for any unnecessary expenses incurred by the employee in obtaining proof of sickness. Therefore, the employer will now be required to pay only the employee’s reasonable expenses in obtaining the proof.

Some submitters expressed concern that an employee may be unable to provide proof because he or she may not be able to afford to, or because a dependant refuses to go to a doctor. Under the Act an employer is not required to pay an employee for sick leave if the employee does not provide the proof. In response to that, the select committee considered that the bill should be amended to provide that an employer does not have to pay an employee for sick leave if the employee unreasonably fails to provide proof.

To conclude, the bill retains the integrity of the Holidays Act and its emphasis on ensuring basic holiday leave, sick leave, and bereavement leave entitlements for employees. At the same time, the bill makes some changes to clarify areas of uncertainty, and to accommodate legitimate employer concerns about how particular aspects of the Act may be impacting unfairly on employers. I congratulate the select committee and the people who made submissions. It was a short period of time, and the select committee has come back with a very good piece of work.

I am very keen to hear from the Opposition spokesperson whether the National Party still continues to pursue its policy of pledging to remove the right to 4 weeks’ annual leave, which will come into force on 1 April 2007. That, of course, was a right that the Leader of the Opposition had when he himself was the Governor of the Reserve Bank. If that is the case, the member should know that there will be a campaign based along the lines of this statement: “The Leader of the Opposition wants to take a holiday—everyone else’s.” I recommend the bill to the House.

This Holidays Amendment Bill is an enormous missed opportunity. It is as if the house is falling down and Labour’s response is merely to straighten the furniture. The Labour members of the Transport and Industrial Relations Committee know full well that the major grievance with the Holidays Act relates to a new concept introduced into that Act, and known as relevant daily pay. That was a concept, introduced after all submissions had been heard last year, that was invented by officials. The problem is that people can actually end up getting paid more when they are sick or on holiday than when they are working. That is an absurdity, and it is exactly the problem that every submitter from business had with this legislation.

Why is that the case? It is because section 9 of the Holidays Act defines relevant daily pay as the ordinary pay a person would have received, plus productivity bonuses, incentive-based payments, payments for overtime, and the cash value of any board and lodging. All those things added on top of ordinary pay can mean that a person who is on sick leave or on holiday will get more than someone working. That is the absurdity that Business New Zealand wants to fix. Businesses right across this country want to fix that.

What is particularly serious about it is that the Government inserted that provision at the very last possible moment, knowing full well there was no possibility of people making submissions on it. That is the flaw that people want to fix. We in this House all know that that kind of legislation is visited only now and then. This was the opportunity for the Government to fix that particular problem, and it chose not to do so.

The facts speak for themselves. There has been an enormous increase in the numbers of sick-leave days being taken. For instance, in the Riverlands meat plants, sick leave alone has cost an extra $6.5 million per year, and members should remember that the legislation has been in force only since April of this year. That is a huge increase—way more than any additional week’s leave might be. Air New Zealand, the Government-owned airline, felt that in its annual report it had to bring directly to the attention of the Government the fact that the increased costs due to the Holidays Act—which can all be pinned to that concept of relevant daily pay—were an extra $17. 5 million. That is 5 percent of its payroll. Those are enormous increases that no one in business could have reasonably expected to plan for.

At the select committee, business submitter after business submitter made it very, very clear that that was the problem they wanted fixed. Mr Carlaw was actually asked whether he would sooner have the minor tinkering with the legislation that the Minister referred to as being done by Labour weekend, or a proper review dealing with the problems arising out of relevant daily pay. Mr Carlaw was very clear: he would sooner scrap this bill and deal with a proper review. When given the clear choice, that is what he wanted. Well, the union officials—otherwise known as Labour members of Parliament—sitting on that select committee—

Hon Maurice Williamson: All of them.

Dr WAYNE MAPP:—all of them—simply ignored that. Their response is to shift the furniture whilst the house falls down around their ears.

The Government, I guess, thought that business would embrace this bill. Government members have gone out and said: “We’re here to help.” But when given the choice, business has said: “Don’t do this. Fix it properly.”, and that is the heart of the problem.

One of the facts that was brought to our attention was the case of Heinz-Wattie. In that case, due to the way the relevant daily pay works, an employee could receive a rate of $82 per hour—four times more than his or her ordinary rate. That is extraordinary! The problem is not fixed in this bill, I might add. The problem was all to do with relevant daily pay but the Government, again, just ignored that kind of submission. This bill is an enormous missed opportunity. As I said, there are not many opportunities to fix those kinds of problems, and the Government has blown it.

I said at the outset that the problem with relevant daily pay is that it can pay one more to be sick than to work. How would that actually happen? If we picture a meat trader—and the Meat Exporters Council brought this evidence directly to the select committee—we know that chains work on the basis of people being there who are able to fulfil productivity and incentive bonuses. They do the work, and they get the money. It is pretty straightforward and pretty simple. The relevant daily pay is based on previous 4-week averages. So if workers are sick, they get the effects of the previous 4 weeks’ productivity incentives, overtime, and so on and so forth. But what happens when the chain is so short of people that the people at work cannot achieve the productivity incentive on a particular day? Well, they will not get the productivity incentive, but the person who is sick will get it.

That is the problem that was clearly and directly brought to the Government in evidence by responsible people, yet the Government has chosen to ignore it. In fact, it went out and defended the concept of relevant daily pay, and seemed to think it reasonable that people should be paid more for being sick—or for being on a holiday—than for working. How on earth can that be justifiable?

The facts speak for themselves. Most industries have 10 or more days available for sick leave through their various agreements, and in every industry there has been an enormous upsurge in sick-leave days being taken. What happens is that in many cases they are taken on Mondays—surprise, surprise! Some people have heard the phrase, “taking a sickie”. Well, that is what is happening. We know the truth of the situation. When there is such an enormous increase in sick leave being taken, it is not a coincidence. It is because the legislation passed by the Government last year has incentivised that kind of behaviour.

This Government had an opportunity to fix the problem. It refused to take that opportunity, and we will see rort after rort in certain industries. There will be a greater increase seen in the so-called Mondayisation of sick leave, which we all know to be a rort. Every New Zealander has heard the phrase, “taking a sickie”, but the Government has passed law to encourage precisely that behaviour. That is not the action of a responsible Government; it is the action of an irresponsible Government. It had the opportunity to fix it, but it refused to. That is negligence. That is incompetence.

Hon Maurice Williamson: There will be another one.

Dr WAYNE MAPP: No, there will not be another bill. This Government believes in that kind of incompetence and negligence, and we are opposed to this appalling legislation.

I rise to take a brief call on the second reading of the Holidays Amendment Bill. It is interesting to follow on from Dr Mapp, who finished his address by talking about what the Opposition believed in. I guess that although this bill is only a technical bill that corrects any unintended consequences from the Holidays Act of last year as the Minister of Labour has rightly said, it does come down to quite a big difference between the philosophy and the beliefs of members on the Government side of the House and what the National Party would believe.

We know that even though this bill does not address the issue of 4 weeks’ leave, for example—the principal Act does that—Dr Brash, who comes down to the Chamber to lead the National Party Opposition on measures like this bill that improve the lot of workers, is one of the people who like to take 4 weeks’ leave themselves. I ask whether there is a National Party member in the House today who would pledge to take only 3 weeks’ holiday next year. I ask Dr Mapp that question: will he take 3 weeks’ holiday next year, or will he take more than that? I know he will take more than that. Every single one of the 27 incompetent, lazy, hopeless National Party Opposition members of Parliament will take the maximum number of holidays for themselves, and then deny 4 weeks’ holiday as a minimum for other people in this country, because those people do not do the jobs of members of Parliament. National Party members say other workers are not entitled to that. So the issue is about a fundamental difference between the Labour Party members of Parliament, supported by other parties in the House, and what the National Party believes in.

I want Dr Brash to say—

Hon Maurice Williamson: How many days do you get at your school?

DARREN HUGHES: Well, of course, at university one gets 6 months’ annual leave when the amount is considered completely and altogether. But this legislation is for workers. We are limiting them to just 4 weeks, and that is probably a bit tough in some regards, when one compares it in that way. But the issue is not just that Dr Brash gets 4 weeks’ minimum leave now as a member of Parliament. I think that he should come down to the House and tell members what he got when he was Governor of the Reserve Bank. Dr Brash is going all around the place, and saying that there are too many people working in the State sector. What was he doing before this job? He was a public sector employee himself. I think that he should tell us what was in his employment agreement, because I tell the House that I will bet it was more than 4 weeks’ holiday. I bet that Dr Brash took more than 4 weeks’ holiday himself when he was a worker. [Interruption] That is confirmed by his No. 3. Mr Power says that Dr Brash did take more than 4 weeks’ holiday when he had that job as Governor of the Reserve Bank, and now those members oppose that being provided for other workers.

So, as my friend and colleague the Minister of Labour has said, with this bill we are to correct some unintended consequences of the Act, which the Transport and Industrial Relations Committee has looked at. But the principles that this party is committed to in Government about fairness, security, and equity for workers are well upheld. I support the bill, because I support workers in this country getting at least the same holidays as members of Parliament get.

That was an interesting contribution from the member who has just resumed his seat, but I have to tell him, because he obviously does not know this, that there is no mention of 4 weeks’ holiday in this current bill. That all went through in the Holidays Act of 2003.

Simon Power: Is the member’s party abstaining?

PETER BROWN: I say to Mr Power that in due course he will get our answer. Let me make New Zealand First’s position clear. We support people in this country getting 4 weeks’ leave, particularly low-paid people who have been on 3 weeks for umpteen years, while Australia has had 4 weeks’ leave for—

Hon Member: Since 1972.

PETER BROWN: Since 1972? I can hardly remember back as far as that, I am so young. We are supportive of that provision, which comes into force in 2007. We are quite comfortable with that part of the principal Act. We are also comfortable with low-paid workers, in particular, being paid time and a half for working on a public holiday. We find nothing wrong with that. Again, our Australian cousins across the Tasman have been doing that for quite some time.

Having said that, I say we made some real blunders in the principal Act. When I say “we”, I mean the parties that voted for the Holidays Bill. We voted in relevant daily pay, we voted in almost unlimited sick leave, which is out of control, and unbeknown to ourselves, we voted in a provision that somebody could be off sick on a public holiday and still be paid penal rates. That is absolutely stupid. New Zealand First welcomes this bill to tidy up the Act. In fairness to New Zealand First, we did warn that it would not be very long before the Act came back to the House to be debated. We knew there were errors in the original bill, but the errors are greater than we had foreseen. I suggest they are greater than most of the submitters foresaw, also. The honourable Wayne Mapp outlined a very good case when he said that the Act had cost Air New Zealand $17 million—is that the figure? I was not aware, until I heard the honourable member speak, that that was 5 percent of its payroll. Is that correct?

Dr Wayne Mapp: That’s what they told me.

PETER BROWN: Its representatives told you that privately. I do not remember Air New Zealand saying that at the Transport and Industrial Relations Committee.

Dr Wayne Mapp: Seventeen point five million dollars is in the annual report.

PETER BROWN: I knew the $17 million figure. That is a horrendous figure, and therefore we are obliged, for that reason alone, to relook at the Act.

I recall that when Simon Carlaw was pressed on whether he would prefer this bill to go through now, or for us to leave the whole thing and tidy it up later on, he did not sound terribly emphatic to me. He did not make that statement with any real conviction. I suggest to the honourable Wayne Mapp that most employers want some of this legislation to be tidied up forthwith, particularly small employers.

To answer the question Mr Power posed to me a little while back, New Zealand First will support this bill for at least the next step. Having said that, I advise members that we have real concerns over the relevant daily pay. We believe that that is not what we should base holiday payments on. That is in section 9 of the Act, I think. It bases holiday pay on bonuses that are earned over an average period of 4 weeks, from memory. We think that is too generous. We believe it will have to be reviewed again, but that should not necessarily stop this bill from proceeding. If we can solve some of the errors in the Holidays Act, then I think we should do that. But I say to the Minister, the Hon Paul Swain—because I know he is listening intently—that the relevant daily pay clause in the Act, and sick leave and bereavement leave, are too generous and must be addressed.

The question that we in New Zealand First posed to ourselves was whether we should support this bill, knowing it is flawed, until it can be tidied up. We asked whether we should support it thus far and tidy it up at a later stage, whether we should abstain from voting and let it go through, or whether we should try to halt its progress and tidy the whole thing up. I will say that again. The question New Zealand First posed to itself was whether it is better to tidy up some of the Act, or better to—[Interruption] I thank the honourable member, but I will just say that we find ourselves in a catch-22 situation as to whether to tidy up the legislation partially—because we know there is more to be done—or to leave it and tidy it all up later on. We have come to the conclusion that we will support this bill going on to the Committee stage. I tell the Minister that we will make an effort to tidy up some of the concerns. Relevant daily pay is one such concern. From listening to Wayne Mapp, I think he may have an idea of where that should go, so if he wants to come up with some sort of position paper on it, New Zealand First would be keen to look at it. We think that the relevant daily pay clause is awful, in a nutshell, and that it has to be tidied up.

The second thing we believe is that people on a salary should be able to have a salary that has been freely negotiated between employer and employee, and that does not take any cognisance at all of public holidays and what have you. I know that when I was—

Hon Richard Prebble: That is how ACT would like it.

PETER BROWN: Sometimes I agree with the honourable member. ACT is not totally wrong, just wrong for 99.5 percent of the time. It is the luck of the draw that one will get something right sometimes; even ACT can manage that. We believe that people on a salary, and executives in particular, should have an all-embracing salary that accommodates them for working on a public holiday, whether it is on every public holiday or some public holidays. I know that when I was the manager of a stevedoring company, I was given a salary that I agreed with. I worked every hour that God made, to be honest. I did not receive any extra remuneration for that—I did not ask for it—and I had no problems with regard to that, at all. I believe that many New Zealanders would like a clean-cut employment contract just like that. They want a fair reward for doing the job required of them, as and when it is required of them.

So those are two areas, in particular, that New Zealand First is keen to look at in the Committee stage. We think the relevant daily pay should not apply to public holidays. We believe that the pay for a public holiday should revolve around the hourly rate of pay, plus any industry allowances on top of that, plus any bonuses that are earned on that day—but not be multiplied by the factor of time and a half. If necessary, and if the employer wants to be more generous, he or she could establish an extra rate for working on a holiday. I know that has been done in the past, and I presume that it has been done in recent times in some organisations.

I repeat that New Zealand First is in a catch-22 situation. We do not like what the holidays legislation will be when this bill comes into force, but it will be better than the legislation we have right now. So we are voting for this bill to proceed through to the Committee stage, and we will reserve our decision as to how we will vote when we come to the third reading.

There is a classic headline in the Dominion Post of 2 September of this year, which states: “Unions retreat as Swain removes socialist edges of employment law”. The article goes on to state: “On Tuesday, Mr Swain delivered the first leg of the double with a package of distinctly business-friendly measures on the Holidays Act.” I do not think it is exactly the unions that are retreating with regard to this bill. Rather, I lay the blame firmly at the doorstep of the Labour Party, which for some reason has found itself convinced by employers that certain measures must be taken to address unintended consequences of the Holidays Act that was so recently passed last year. Although the Green Party agrees that there is one unintended consequence, in particular, that is worthy of attention—an anomaly that may allow some workers to claim penal rates twice for working on a public holiday—we certainly do not accept that a core achievement of the Holidays Act in the area of obtaining proof of sickness or injury should be reversed. Labour last year boasted of the fact that finally, with its new holidays legislation, workers could not be required to produce a medical certificate until after they had been away for at least 3 days with a sickness or injury either to themselves or to their children or other dependants. This amending bill, in effect, partially reverses that erstwhile progressive measure, by allowing employers to require staff to produce medical certificates during or after they have taken even 1 day off if the employer has so-called “reasonable grounds” to suspect that the sick leave that is being taken is not genuine.

There is a whole raft of problems with this amendment. Firstly, there is no clear proof that the kind of abuse this measure is aimed at is occurring on a greater scale than would happen anyway, with or without the Act of 2003. Although the Council of Trade Unions has been assiduous in seeking hard evidence from employers as to whether an increased level of inappropriate sick leave is happening, as far as I know none has been produced. Allegations based on hearsay have been bandied about, but that is not the same as hard evidence of the widespread flouting of the rules and of the abuse of sick leave in that way. I do accept—and I have been an employer myself—that there will always be people who, at times, have a tendency to take Mondays or Fridays off as sick days for reasons that are not down to sickness or injury. Anyone who has ever worked on a big site, or who has been an employer or manager, knows that. But, in fact, with only 5 paid sick days a year, there is a limit to how much the rules can be flouted. As well, I believe that good employers have in the past treated this kind of problem, and will continue to treat it in the future, as a human resource issue, by working with the staff member if there is a problem in order to try to see what is going wrong, and, if the problem persists, by dealing with it through the normal and regular disciplinary procedures available to the employer. This age-old problem does not require a wholesale reversal of the Government policy on medical certificates.

Secondly, employers and the Government keep on talking about a pattern of behaviour that will lead employers to be suspicious of an employee’s absences from work. Like many union people, I find it hard to imagine how much of a pattern of behaviour can be established by workers taking somewhere between 1 and 5 days’ sick leave. Has the Government considered how an employer will prove reasonable grounds after 1, 2, or 3 days’ absence? From an employee’s point of view, working one’s way through this labyrinth of definition and mistrust with an employer on the worksite will be possible, barely, if the worker has an active union to help advocate for him or her. But I despair of the ramifications of this new law for the 80 percent of our employed workforce who are not members of trade unions. I guess that one unforeseen consequence of all this, from a big-business point of view, may well be that more people will decide that it may make sense to join a union.

A third problem with this amendment is that there will be real financial difficulties for workers who are required to provide proof of sickness or injury. Although the Government has at least seen fit to require employers in this situation to agree to meet employees’ reasonable expenses for obtaining such proof, that does not address the fact that people are usually required to pay a doctor, emergency centre, or other provider upfront, and will only be able to seek reimbursement later on. A huge number of workers in this country are on wages of somewhere between the adult minimum of a pitiful $9 an hour, and around $12 to $13 an hour. Those people are trying to house, feed, clothe, and generally support themselves and their families. Being required to pay up to $60 or more, especially if it is on the weekend, in order to get a medical certificate—or even the lower fees of $15 to $20 if they are lucky—will often simply not be possible. The money is not there. I do not know whether the people supporting this law change really understand what life is like on the margins. When will workers be paid back for the money that they have to front up with? That is, if they can find it in the first place. What happens to them if they cannot afford to pay the doctor or clinic? Will they still be subject to disciplinary action for the non-production of proof of sickness or injury, basically because they are poor? What if there is a dispute with the employer about the responsibility for costs later on? All of that creates a further unnecessary tangle, and potential extra costs in terms of time, money, and compliance for both a staff member and an employer.

I know that the Government’s response to that may well be to say that we now have primary health organisations everywhere, which are offering lower charges. However, it has become all too apparent that in some cases the primary health organisations are actually charging their patients as much, if not more, than their component doctors or medical practices were charging before joining the primary health organisation.

A fourth area of concern for the Green Party is that this amendment covers not only the worker who is taking sick leave because of his or her own ill health, but also people who take time off because they need to care for their sick or injured children. I wonder to what extent the Government has considered that aspect, and the fact that sick children may have to be dragged off to the doctor to satisfy an employer’s suspicions, even when they do not need to go and would be better to be tucked up safely in bed at home with mum or dad. One could end up with a nonsensical situation in which an ill child or a frail, elderly dependant becomes subject to the costs and inconvenience of an unnecessary medical examination, simply because his or her primary caregiver cannot risk not taking proof to the employer. What privacy rights will dependants have in relation to an employer, with whom they have no connection, reading medical certificates that relate to them? There is no clarity at all in the bill about who owns those medical certificates, and what happens with the private health information that is held within them.

The only good thing that can be said about this part of the bill, as reported back from the Transport and Industrial Relations Committee, is that at least the Government has agreed to add a clause that specifies that an employer does not have the right to force an employee to see a company doctor, rather than his or her own doctor. As the bill was first drafted, we would have seen an even worse situation comparable with that which faces so many accident compensation claimants, in which employers could require staff to see a doctor of the employer’s choice, with even more alarming consequences than those we are left with this afternoon. However, that mild improvement to the original amendment does not go anywhere near to justifying or ameliorating all its other negative impacts. The Green Party firmly believes that the clauses in this bill around proof of sickness or injury are inconsistent with the intentions of the Act, and are simply an attempt by the Government to pacify some elements in the business community.

Turning briefly again to the matter of penal rates, we were pleased that the Government saw fit to amend new section 50 in order to clarify that the definition of penal rates includes payments only for particular days of the week or for public holidays, and not payment for other days such as the sixth and seventh days of work. However, that improvement, like the one around allowing workers to see their own doctor rather than a company one, is not enough to bring us to support the bill. Overall, the Green Party does not see the need to amend the Act along those lines, and does not think sufficient evidence has been brought forward to justify the changes. We will vote against this bill today, and at all further stages of its progress through the House, as we believe it introduces unnecessary, retrograde, and punitive measures, especially in the area of sick leave, that run counter to the intentions of not only the Holidays Act but also the Employment Relations Act. This bill unfortunately panders to a culture of distrust and suspicion found among a minority of employers. It is a real pity that Labour has chosen to head off in that direction, despite the good moves in other employment legislation that is currently before the House.

I rise on behalf of the ACT party to speak to the Holidays Amendment Bill—and the ACT party recommends to the House that we do not vote for this bill. I will start with the point raised by Sue Bradford from the Greens with regard to medical notes. Of course, it is the Green Party’s fault. They are the ones who wanted to have amendments introduced into employment law setting out various requirements with regard to medical certificates. For 50 years we have had no law on the matter and no problems at all. There is no need for the Government to start getting involved and telling employers and employees when they need to produce medical certificates.

Sue Bradford: That was nothing to do with us.

Hon RICHARD PREBBLE: I have heard the Green Party raving on about medical certificates and wanting the laws changed on that. The best law change would be to have no law at all. There was no problem prior to the “Green” Labour Party deciding that it had to tell employers and employees when or whether they should produce medical certificates.

But let me turn to a second point—the major claim of the Government that this was an inadvertent mistake. Well, that is interesting. The inadvertent mistake was that people could get paid double time on double time. I say that that is interesting, because the Council of Trade Unions turned up to the select committee and said: “No, it wasn’t. We always knew that that would be the intention.” Why is that interesting? Well, one of the reasons it is interesting is that, under the Official Information Act, we now know that the original legislation was the result of secret talks between the Government and the Council of Trade Unions, when they wrote the Holidays Amendment Bill. Only after that did they go through the sham—and I call it a sham—of asking the rest of the country what it thought about it.

Employers warned the Government earlier this year. The ACT party warned the Government that it should not be passing a law of this sort. I agree with the Council of Trade Unions on this matter that this is another bungle by the Government, and that it is not an unintended consequence. All that has happened is that the Government has found it impossible to publicly justify the fact that some people are able to receive what is really a very large sum of money indeed, for working on a statutory holiday, especially when their contract of employment contemplated that they would be working on that statutory holiday, and they would be paid accordingly. I will give one example that I know of personally, as a former Minister of Railways. When I was Minister of Railways—

Hon David Cunliffe: As if we could forget!

Hon RICHARD PREBBLE: I thank the member—he says that he remembers.

Hon David Cunliffe: He will be long remembered for that.

Hon RICHARD PREBBLE: I thank the member. The railway engine drivers had their own union. They approached the railways and said that they would like to go on a salary, and no longer wished to be paid penal rates for overtime, shift work, or for working on Christmas Day. That was a proposal from the union. Members might wonder why the union would make such a proposal. Well, it had a very good reason. It had quite a good superannuation scheme—not quite as good as ours, but quite a good superannuation scheme—which is fixed on their base pay. They worked out that if they lifted their base pay, then their superannuation would be better, and over their whole lifetime they thought they would be better off.

The railways agreed to the proposal. Why was that? Because the actual cost of working out penal rates, overtime, triple rates on Christmas Day—and the engine drivers used to get paid all sorts of different things, such as wet money, etc.—ran into millions of dollars, and the railways would be better off if all the employees went on a salary. Under this bill, even though those engine drivers voluntarily agreed to be paid an extra amount of money and that they would not be paid those payments, along has come a Labour Government and said: “We override those freely entered into agreements and rail must now pay penal rates at Christmas time, even though the engineers are getting paid a higher base rate because of what they gave up.” That story is repeated time and time again, right through our shift-work industries.

But there is another matter that is even more serious. The select committee is very ideological. The Labour members on the select committee are all former trade union officials of one sort or another. The select committee, without consultation, after it had heard submissions, changed the whole basis of holiday pay, which has been fixed in New Zealand for more than 60 years, from ordinary time, which we all know, to a concept called “relative day’s pay”. What is a relative day’s pay? Well, one goes back over the previous 4 weeks and works out all the penal payments that a person might have received, including, for example, a payment for attending, and that is put into the sick day or the day off on a statutory holiday.

The effect of that is not that some people get paid more for staying at home; it is actually that all people do. The reason that they do is that it costs something to go to work, and when that cost is deducted, one is, under the law now, always better off to have a sickie. When we consider the shift-work industries like the meatworks and like Wattie’s—crucial export industries—the effect of establishing this on a relative day’s pay has actually been devastating—and I do use the word “devastating”.

One example was given to us by Wattie’s, which said that it had a worker—in this case it did not think he was trying to work the system—who went off sick just after he had received his 4 weeks’ production bonus. The result of that was that a worker who normally gets paid $16 an hour got paid $38 an hour for being sick. If he had turned up to work that day, he would have been paid $16 an hour. But by not going to work he got $38 an hour.

We were then told—as we were told by the meat industry—that people have worked out that there are certain days, like just after they have received a bonus, on which, if they do not come to work, they can get twice as money as they would get if they did go to work. Human beings, being human beings, are suddenly discovering they are sick. We have just heard the Green Party repeating the Labour Party line and saying that in the meat industry there has been no evidence of this sort of behaviour. The meat industry, which is still our biggest export industry, says that since April—that is not long ago—sick days have gone up more than 70 percent. Because sick days cost more, they have gone up—they have doubled—and that is in only 6 months.

We understand how human beings are. In fact, this is an invitation for people to be sick on days when they can get paid double, as in the example I gave. We are crippling those industries. Carter Holt Harvey, which is the second-largest company in New Zealand, has told us that its average employee has 100 days’ sick leave due. How is that firm even supposed to enter the contingency costs now? Under the relative day’s pay, they cannot work it out. What it has worked out is that this is a statement by the Government to an international company like Carter Holt Harvey, which has not invested at all in any job in New Zealand under Labour, that it ought to move to Australia or somewhere else. One hundred days’ pay, on average, is owed to every single worker at Carter Holt Harvey, and under this proposal its sickness bill has just doubled. We are talking about tens of millions of dollars.

I say to the Government that we should reject this bill. It is better to get holiday pay fixed up than it is to pass a bill that is fixing up only a small part of what is a very substantial problem. This Labour Government, which boasts that it is business friendly and boasts that it is doing well, has actually passed a bill that will cripple our export industries.

I rise on behalf of United Future, which will be supporting this bill. United Future did not support the original Holidays Bill, mainly because we foresaw a lot of the challenges that we are dealing with today. But I give credit to the Hon Paul Swain for seeing some of the issues that are a real challenge to business and industry at the moment and addressing them. I address what Wayne Mapp said, by saying that, as an employer, yes, I would rather have this minor tampering now than wait another few years to get the whole issue addressed.

Hon Roger Sowry: That’s not what they say.

PAUL ADAMS: It is what they say. The member is not speaking to the right people. What I believe we are now able to deal with in an employer-employee relationship is genuine sickness, because an employer has the ability to ask for a medical certificate from the person who is taking the sick leave. I disagree with Sue Bradford when she says that we are doing this because of a few dishonest employers. I think that for every dishonest employer there are probably 25 dishonest employees when it comes to sick pay. I agree with Peter Brown that employers should be free to agree to a salary that would include days that workers would have to work on public holidays.

This bill, I agree, is by no means perfect. There are many areas that need to be addressed. I refer to the motor industry, as an example. It is an industry I am involved in. Commissioned sales people sell on a 7-day-a-week basis. They may have a retainer that they are paid of, say, $10,000 per annum, but their annual income over a year may be $100,000.

When it comes to the relevant daily pay for working on a public holiday, this becomes a huge cost to those employers, yet they still have to pay the same amount of commission to those salespeople for the product that they sell on that particular day, whereas the person who takes on that job well knows that the major part of his or her income will be derived from what he or she sells.

So, yes, there are certain problems like that. But on the other side of that coin I agree that it should be based on ordinary pay rather than relevant daily pay. Let us have a look at an example where we have a genuine worker who relies on the pay from working on a special day such as a statutory holiday, or whatever it may be, and is genuinely sick on that day. That person knows that on that particular day he or she would normally get a substantial increase in his or her take-home pay.

If people are genuinely sick on that day—and I believe that this brings in checks and balances for the employer to be able to check that they are genuinely sick—I personally think it is more than fair that people get that to which they would normally have been entitled. Personally, I believe that most good employers respect their staff, and especially in the small-business industry they do intend to try to look after them. I have found many times when I have spoken to employers that even when workers have run out of their sick leave entitlement, if they have been genuinely sick employers take the well-being of their workers’ wives and families upon themselves many times. I know in many, many cases that employers pay sick pay if there is genuine sickness.

United Future believes that this is a step in the right direction. We are a common-sense party. When we see legislation that is at least stepping in the right direction we will not be so ideological that we will throw the baby out with the bath water. This legislation is heading the legislation back in the right direction, and as such, United Future is pleased to support it.

I rise to take a short call in favour of this bill. It is about correcting an unintended consequence that may have arisen out of the original drafting of the bill. Let me restate that the Government remains committed to the principle that if people work on a public holiday they deserve to get some recompense for that, and, of course, we are here to defend the principle that 4 weeks’ annual leave should be a minimum for all workers, not just parliamentarians.

This bill brings to the House the work of a joint working-group of employers and unions that was set up to look at issues arising out of the Holidays Act. It found an unintended consequence, and it is the same consequence that the National Party had objected to. The bill corrects it, and so National opposes it. Let me say that again. There is an unintended consequence that National objects to; the bill corrects it, so National opposes it. It seems to me that that is proof positive, as if anybody in this House, and, indeed, anybody in the nation, needed another demonstration, that National has a political death wish. National knows that most New Zealanders are proud of the spirit of fairness and decency that says a person who is a wage labourer with a family deserves 4 weeks’ holiday, in the same way that some upper middle-class—

Hon Maurice Williamson: There is nothing to do with the 4 weeks in this bill.

Hon DAVID CUNLIFFE: We are defending the 4 weeks principle, and we are making sure that it works as intended. This bill corrects an unintended consequence that the party the member belongs to objected to—and he opposes the bill. Mr Williamson is without logic, not unusually, on this point. National Party members get themselves deeper and deeper into trouble. They cannot help themselves. They oppose provisions that are harmonised with Australia’s, yet they go on about wanting harmonisation with Australia. Aussies get 4 weeks’ annual leave. But Don Brash said he would repeal that. That is part of the reason National opposes this bill, as well.

I say, ladies and gentlemen, members, and the listening public, the National members are contradicting themselves, and like possums in the headlights they can see the third term of the Government coming at them. They have a political death wish, and they are proving that again today.

That was, indeed, an amazing speech. When the Minister started he said that he would only be brief. He actually was not brief in terms of my clock, but his content was incredibly brief. He talked about a bill that has nothing to do with this. This is about a “Holidays (Fixing up the Botch-up) Amendment Bill”. It has nothing to do with the 4 weeks. The botch-up was created by this Government and by the Minister, but did he tell us that? No. Did he then get on to what this bill is trying to fix up? No, he talked about the 4 weeks stuff. Let me tell that Minister what is wrong with this bill Let me tell him in no uncertain terms. I will give him a nice little easy example, and I will take him through it carefully. Unfortunately, I do not have any pictures, which would have made it easier for him to understand it better. However, I will take it through slowly.

The Government has introduced something called relevant daily pay, so that when workers go on holidays, instead of their holiday pay being a week of ordinary pay for each week they are on holiday, this genius Minister has decided he will try to aggregate up all the payments that workers have been getting—that is, overtime, bonuses, penal rates, and all sorts of extra pay—and then work out what is an average daily pay they have been getting while they are in the workforce, and that is what workers will get as an average daily pay when they are on holiday.

Members of the public need to think about this, because it is bizarre. I thought about it for myself. While I was at university I drove a truck for Wattie’s and Refrigerated Freight Lines. I could not believe it: I got a job as a truck driver, and within a few days of being there I was told that not only did I get my wages as a truck driver but there were all the extras. I would get wet money, trailer money, cover money, and rope money, so that when the pallets are not put on and locked with bolts, one could get extra money for having to put ropes on to hold them. If it was raining I would get extra money, even though as a truck driver I would have expected at least half the days to be wet, and certainly in the case of Wellington, three-quarters of the days to be wet. Yet what is so bizarre is that the Government is now saying that instead of holiday pay being based on the number of days of a person’s ordinary pay, it will aggregate all those special things that that person got for the circumstances of the day. For example, when it was wet, when one had to put covers over pallets, and when one had to rope them down and do all those extra things, the Government would make that part of a person’s holidays.

I tell Government members that when a person is on holiday he or she does not have to put ropes or tarpaulins over things, and get wet money. Most people would be on holiday at a beach resort somewhere, enjoying the sun. What is bizarre about that? I will tell members. If workers at the trucking company have a fine day and do not need to put tarpaulins, ropes, and covers on, they will not get a special payment. However, their colleague who is on holiday for the day will get a higher rate of pay than they would get, because of the accumulated equivalent rate of daily pay. How stupid is that? A person is on holiday, and the rate at which he or she is being paid is higher than the rate some of his or her mates who are working are getting, because it happened to be a fine day, covers did not need to be put on, or the pallets are containers and they are not carrying palletised stuff that would need to be roped down. How bizarre!

Another issue members of this House need to address carefully is to do with one of the worst diseases that has spread across this country. I know that my colleague Lynda Scott would have seen this disease a lot closely through her medical practice. It is called “Mondayitis”. It is a shocking disease. When I was at Air New Zealand I talked to people in the human resources department who had graphed by the day how many sick-leave days there were—that is, by the day of the week, Monday to Sunday, because Air New Zealand is a 7-day operation.

Members should get this. A big chunk of Air New Zealand staff work on the 7 days of the week, so weekends do not mean a lot if one is a pilot and is away, and so on. It applied only to a percentage of the staff, at any rate. There was a gigantic tower on the bar graph for the number of people who were sick on a Monday. Then it just dropped dramatically to Tuesday, down to Wednesday, Thursday, and Friday. To be fair, it did tick up a little bit on Friday. There could easily be a “Fridayitis” disease as well, but it was nowhere near as severe as “Mondayitis”. Clearly, the penicillin had been working, but “Mondayitis” had been sweeping across that company.

Employers keep saying to us that they are just not prepared to carry the cost of all that, over and over again, and what are we seeing with the legislation the Labour Government put in place? I have to say that my colleague the Hon Roger Sowry has just presented me with some tables from the Meat Industry Association submission to the select committee that one simply needs to look at, and I wish I had a big overhead projector and a big screen to enable members of this House to see it up close. However, members can see it from a distance.

They can see how the tower on the left in each of these graphs is so small, and how the tower on the right is so huge. I shall tell members what those graphs are. The first graph is sick days taken, and the cost. The yellow line is the actual number of days taken, and the blue towers on the graph are the cost. They compare what happened last year, before the legislation was passed, with what happened in the same period this year. What was interesting was that I went two pages over and I thought I saw the same graph, but the numbers were slightly different. I thought that that was the same thing—sick days taken, and so on. But no, it states in brackets “This data is adjusted to create identical employee numbers.” In case the Government turned round and said that there was a different number of employees then, so of course, one could expect that, this is corrected. It is normalised data, corrected to base it on the same number of employees.

If members look at this graph, they will see it is worse. The number of days taken as sick, and the cost, is of the order of 70 percent up on what it was for the same period of time last year. How can the Minister hold his head up in this House without absolute shame written all over his face because that is a cost he has imposed upon the nation?

But it gets worse. I suddenly wondered what the second graph down the bottom of the page was for. There are two. The top is sick leave. The second graph is bereavement leave. It is unlikely that one would have many relatives, friends, or neighbours die more in one particular time frame than another, on average. I understand that someone might have a bad trot and might lose two or three members of the family within a couple of years, but on average over the workforce one would expect the same number of deaths to be occurring over a reasonable period of time. Again, this graph is adjusted to normalise it to get to the same comparative data—and I wonder whether Sue Bradford could answer this—so how could there be such a huge leap in the number of bereavements between one year and another, simply because some legislation was passed? Did the legislation make a lot of people die? Let us hear from the Minister. Is that what happened? Once the Labour Government passed this legislation did a whole lot of people die? I do not think so.

However, there has to be an explanation for that, and it is quite clear. It is shocking legislation and now we are trying to patch it up. When I say “patch it up” I mean that. I know that a lot of employer groups said that they would rather that than nothing. I tell you what—they would probably rather have 15 years’ solitary confinement than the death penalty. But it is not a terribly good choice. One would rather not serve any time at all. The employers begged the committee to take time to fix it up properly, but it was quite clear why that would not happen. Every Government member on the select committee was ex - trade union. They were not going to give a damn about the facts, they were not going to give a damn that the graph showed that things were now absolutely out of control, and they were not going to give a damn about the poor old employer who has to try to foot the bill. No, they realised that they had made such a botch-up that people were being paid treble time just when they were off sick. They realised that that was a bit much.

I repeat to this House: even when this legislation is passed, the Government would have created dramatic anomalies and it would have created dramatic incentives for people to take time off sick. Because, as I said before, there will be examples, and we have given some already and we can give plenty more, where people will get for that specific day more money than if they went to work. How can any Minister stand in this House and justify the sort of regime where this legislation is saying to people that if they want to take these days off, they will be paid more than their colleagues who have turned up to work? No wonder this legislation is opposed! No wonder it is seen as an outrage! I am really happy to say the National Party is going to vote 27 votes “No” to this bill.

I am very honoured to stand to contribute to this debate in the second reading of the Holidays Amendment Bill. Our Government remains committed to the principle of the Holidays Act, which is about fairness and security. Like most New Zealanders we think it is fair that employees receive an additional payment for working on a public holiday. We remain committed to 4 weeks’ annual leave, taking effect in 2007, to bring us in line with our major trading partners. Australian workers have had 4 weeks’ annual leave for 30 years.

I am horrified to be speaking in this Parliament on such junk legislation as this Holidays Amendment Bill. It just makes me so damn angry to look across the House at people like Darren Hughes, who has just popped his golden head up. He has never employed anyone at his own risk in his life. He has no damned idea what is involved in actually employing people. Has he sat down and tried to work out the full cost implications of the Holidays Act, which this bill amends—and fails to address? Has he ever sat down and tried to work out the costs for a business of relevant daily pay? I bet he has never even filled in the Inland Revenue Department forms for registered employers. Is he even an employer?

Opposition Members: No.

Dr the Hon LOCKWOOD SMITH: No. Does he know what an IR330 is? Has he ever had an employee fill in his or her tax code? Does he fill in PAYE forms every month? Do any of the members sitting on the Government side of the House do that? Are any of them registered employers? I do not know whether any of the Labour members in this Chamber today are employers. I see the Minister of Police, and Paul Swain. Let us hear from either of them. Are any of the Labour members registered employers today? Will any of them have to implement this junk?

I am a registered employer, and every month I have to comply with the crazy legislation of this Labour Government. One of the reasons why we have a House of Representatives is to have people from a range of walks of life—with experience in life—who can bring to this place the wisdom of knowing what it is like to do the things that a Government expects the people of this country to do. What do we have in the Labour bunch on the opposite side of the House? They are mostly former union members, have never employed anyone, and certainly do not employ anyone under the legislation that they seek to amend in this House today.

The Labour members may say Lockwood Smith does not know what he is talking about, but the Transport and Industrial Relations Committee heard successive representations from significant employers in this country, who told the committee that this amendment bill would not fix the problems associated with the principal Act. When a business as important to New Zealand as Air New Zealand comes to the committee and says that the Act has cost it, so far, $17.5 million more than previously, one would think the Government would take some notice. The amendments in this bill, which simply makes changes in respect of how the Act affects sick leave, will not fix the problem. The amendments contained in this bill do not fix the problem, at all.

I guess one could say that Air New Zealand is a bit special because it flies at all hours of the day and night, and flies all days of the week. Therefore, maybe one could argue the Act may affect Air New Zealand more than it does other businesses. But it was not that way. The select committee heard submissions from other businesses, where they identified the costs of this Act that Labour has imposed on the businesses of this country. The meat industry is right at the heart of this country’s success, and I am told the select committee heard from one meat company, Riverlands. The committee was told that the cost of the Act to that company had been $6.5 million so far. Now, Riverlands is not exactly—if my advice is correct that it is Riverlands that told the committee that—like AFFCO or Richmond Ltd. What on earth is the Act costing our really big meat companies? What is it costing Auckland Meat Processors to implement the dopey legislation that this inadequate bill seeks to change?

I think this is a very, very serious issue for New Zealand, and what troubles me so much is we hear Michael Cullen, the Minister of Finance, come into this Chamber and pout and preen about the wonderful way that the economy is going under this Labour Government’s policies. What the Labour members do not seem to realise is that the economy is going quite well despite what they are doing to it. They inherited an economy that was growing at 5 percent, back in 1999. They have slowed it down since then, but they have not destroyed it totally—the growth has carried on. But what the Labour members do not seem to acknowledge is that the growth is not because of what they have done. It is not the employment law they introduced, nor the Employment Relations Act, nor the Holidays Act that have helped the economy to grow on.

When the Labour members came into office they so scared foreign investment, as we heard today in question time, that investors’ dollars fled—billions of dollars fled the country, and the exchange rate collapsed down to 39c against the US dollar. The export sector got a huge boost from that, and it sure did lift the economy’s performance—for a short period. Then, just as that boost was starting to die off as the exchange rate slowly recovered, some crazed Arabs flew some aeroplanes carrying real human beings into the World Trade Center. As a consequence of that tragedy, thousands more immigrants—thousands more people—came back to New Zealand, and so boosted the domestic economy. That was nothing to do with this Labour Government, unless it claims it is related to those crazed Arab bastards.

The ASSISTANT SPEAKER (H V Ross Robertson): The member knows that he cannot use that last word. I ask him to withdraw.

Dr the Hon LOCKWOOD SMITH: I withdraw. I am sure you will find it in the Oxford Dictionary, though.

The ASSISTANT SPEAKER (H V Ross Robertson): I do not like that word to be used in this House.

Dr the Hon LOCKWOOD SMITH: OK. Unless the Government claims that it somehow had influence over those mad so-and-so’s, it cannot claim that it was responsible for that boost to our economy. Now, just as the domestic bubble is bursting and the number of people flowing into this country has reduced by thousands in the last few months, we have world record commodity prices. I guess Darren Hughes will claim that he and Labour are responsible for the 20-year highs in our beef commodity prices. So OK, the Government preens itself about how well the economy is going, but that is nothing to do with what it has done. The economy is going well despite what the Government has done, and the Act that this bill seeks to amend is simply one more nail in the coffin of the New Zealand economy. The economy cannot stand all these impediments to growth. One item on its own would not destroy it, but the successively mounting impediments to growth that Labour has imposed on our economy will stifle it.

If this Government had any experience at all in employing people, this bill would contain far greater amendment to the Act than these trifling changes to how public holiday pay is determined and in respect of sick leave. It is totally inadequate. The National Party members on the select committee gave an excellent minority view, following the select committee’s consideration of this bill. They pointed out the problems caused by the new definition of “relevant daily pay”, and the problems that the way that sick leave is now being used under the Act are causing for whole hunks of the New Zealand economy. The National Party cannot more strongly oppose this totally inadequate type of legislation. The Act remains an absolute mill wheel around the necks of many businesses in New Zealand. All I can say is, rest assured, rescue is on its way. A future National Government will properly amend the Act so it no longer stifles the excellent businesses around this country.

I think that last speech contained more heat than light, and ended up with the awful threat of a National Government to take us back to the era of economic doom in the 1990s. I am proud to be part of a Government that has made this country the easiest in the world in which to set up and do business. The Holidays Amendment Bill is a short, sharp bill that is designed to tidy up the unintended consequences that have arisen as a result of the application of the Holidays Act, and it is excellent legislation. We are about to go to the vote on the bill, and I endorse it to the House.