Minimum Wage and Remuneration Amendment Bill

DARIEN FENTON (Labour) Link to this

I move, That the Minimum Wage and Remuneration Amendment Bill be now read a second time. The second reading of this bill is very timely. Over the last two episodes of Fair Go a story has been running about children who are employed as independent contractors to deliver junk mail. The children, some as young as 12 and others aged nearly 16, are earning as little as 25c an hour, and to make matters worse, they have recently had their pay cut. Fair Go reports that it has had more responses to that story than to any other story this year. There has been outrage about what is happening to those children, but there were, interestingly, as many stories about adults who are employed as contractors being pressured in the same way as those children. I am not surprised at that. This bill started with a concern about leaflet deliverers, but since the bill was introduced almost 2 years ago many workers employed as contractors in a wide variety of occupations and industries have come forward to say that this kind of abuse is happening to them, as well.

It is a privilege to speak up for those workers who are currently without minimum wage protection. It is a privilege to speak on behalf of those workers who will not have had the benefit of increases to the minimum wage this year, and who will not have them next year or, indeed, in any year unless this legislation is passed. Labour has done a lot to restore fairness for workers over the last 8½ years, but this bill does break new ground at the harder end of the labour market. Most submitters to the Transport and Industrial Relations Committee agreed that the principle behind this bill is absolutely correct: no one who works in this country should be paid less than a socially acceptable minimum wage. In the select committee process we heard of contractors who are in need of minimum wage protection in many occupations and in many industries. For some workers, the situation is so bad that they cannot even prove whether they have been paid fairly or paid at all, because the contractor who engaged them does not keep any records.

Contract workers have told me about how they have been affected by the lack of any minimum wage protection. For example, a pizza delivery man told me he was employed as a contract driver, not as an employee. Then his franchise boss decided that he should work 10 hours straight on, at well below the minimum wage. A home-care worker on 24 hour shifts, looking after a man with Alzheimer’s disease, signed a contract with an agency that said she was self-employed and therefore not entitled to the minimum wage. A waitress was told she was not an employee but an independent contractor with a waitressing business. A hotel housekeeper was contracted on a room by room cleaning basis. A worker, in her brief experience as a subcontractor hired to mop floors and dust offices, later discovered that other workers had also signed an independent contract with the licensee of a commercial cleaning company. She was told where and when to clean, and told to buy hundreds of dollars worth of supplies. Ten months after signing her contract, after working for what amounted to less than $6 an hour, she has no cleaning business and the company is still recruiting workers with employment ads that say: “Be your own boss”.

Under these and other types of shocking contracting arrangements, many low-paid workers who deliver services are being denied the minimum wage. But, actually, it is not just those workers whom we think of as vulnerable who are being affected. Actors Equity and the Musicians Union are also calling on politicians today to support this bill. They say that the poor pay and conditions of many actors and musicians are not commonly known, and that because they are classed as dependent or independent contractors, they are expected to work for a whole lot less than the minimum wage. Under New Zealand’s labour laws, minimum standards protect an employee’s right to annual holidays, statutory holidays, sick leave, the minimum wage, and holiday pay. But the catch is that one has to be an employee. So at the end of the working week, the wages of many contractors can amount to a lot less than half the legal minimum wage. The most disturbing part of this trend is that big and small companies alike are passing on the risk and the cost of doing business to the lowest-paid workers.

I talked to a truck driver who was employed as an independent contractor. He was promised $1,000 a week worth of driving work. He thought that driving would be the perfect job for him and would deliver a decent income for him and his family. For 2 months he received no jobs. Then he received a call to come in for training, and he watched an hour-long video on how to drive trucks. Then he heard nothing again for weeks. Frustrated and worried, he made repeated phone calls to the principal contractor, and was finally assigned a job driving every Saturday on a contract worth less than $100 a week. The driver eventually got two more contracts, but the three jobs altogether paid only $450 a week, less than half of what he had been promised, and he had to work long and sometimes dangerous hours. When the driver approached the principal contractor, he was told that every driver the principal contractor employs runs an independent business, and that the principal contractor bears no responsibility to the workers. The principal contractor told the driver it was up to the drivers to do their own thing, and that he had nothing to do with the workers. His advice to the truck driver was that if he had a problem, he should go to the disputes tribunal.

That kind of employment practice is a real problem here in New Zealand. It has the potential to grow if we do nothing. We have the opportunity to do something about it, and my bill provides that opportunity. The changing labour market in New Zealand needs to be acknowledged. Study after study has found that non-standard work has become a mechanism for lower pay, fewer benefits, less job security, and fewer career opportunities.

I know that National members will stand up in a minute and say that this bill interferes with commercial relationships, and that they will utter other homilies that would be quite at home in a Bill Birch speech from the 1990s. If they have a problem with basic minimum pay and protections for such workers, they should tell us that and also tell the people of New Zealand, so that when they vote later this year they will do so with their eyes wide open. And a similar question can and will be directed to New Zealand First, United Future, and Gordon Copeland, who are not supporting this bill.

This bill is about workers who are paid substandard wages in cash, and who do not exist in any records. It is about the businesses that hire those workers, which claim they have no legal responsibility for them and use contracting arrangements to avoid labour rights and decent pay. The basic principle behind my bill is that it is not fair that some workers should be paid less than others, simply because they happen to be in a working arrangement that does not fit within our current employment laws.

During the select committee process the Labour members of the select committee accepted that the bill needed to be narrowed in its application. As is evident from our comments in the select committee report, we acknowledged the validity of some of the concerns around individual arrangements, such as those involving the person who mows lawns, paints houses, or provides catering for a family wedding. So in the Committee stage I intend to move a number of amendments by way of Supplementary Order Paper to limit the scope of the bill to specified occupations. There will be no differentiation in pay between workers aged 16 and 17 and older workers in the Supplementary Order Paper amendments, as well. Other amendments will also spell out how minimum remuneration could be calculated when many contracts for services are not hours based. Others will provide more clarity to the definition of principles, and will specifically exclude householders.

In finishing, I thank the previous and present Ministers of Labour, the officials, the advisers, and my colleagues on the select committee for their dedicated work on this very important bill. I thank the submitters and all of those workers who have spoken out. I also thank the Greens and the Māori Party for their support. I say to them that by supporting this bill they are helping to provide the most basic of protections to minimum pay—in other words, a fair day’s pay for a fair day’s work. I look forward to this bill progressing through its stages in the House. Thank you, Madam Assistant Speaker.

Dr WAYNE MAPP (National—North Shore) Link to this

When the Minimum Wage and Remuneration Amendment Bill was originally introduced National was very clear that it considered the bill to be fundamentally flawed. The reason we did so is that we considered that Labour, and in particular the member promoting the bill, was trying to turn people who are self-employed into employees, essentially against their will. By and large it is a matter of choice as to which status one has—whether one is self-employed or whether one is an employee. Over a long number of years both the Employment Court and the income tax legislation tribunals have set up a series of tests so that, for instance, employers cannot just say of their employees that they are independent contractors and assume that is the end of the matter. The independent tests rest on whether a person has a level of independence in how he or she conducts the work, when it is conducted, and under what conditions it is conducted. It is known as the control test.

I suggest that many of the cases referred to by Darien Fenton would not pass the level of control that would make them truly independent contractors. I would be very interested to know, if some of those people have taken cases to the various tribunals, whether the Employment Relations Authority determined the true status, and, similarly, whether the Inland Revenue Department determined it. As I say, it is not something that is determined just by people saying they are something even if the objective reality says that they are not. I think that the test would not be satisfied in many of the cases the member referred to. It is a pretty tall ask to suggest that children delivering pamphlets are anything other than employees in truth. How many children can determine the nature of their work, the way in which they do it, and so on and so forth? These things do have an element of objectivity.

Along with most New Zealanders, I am sure, I was shocked and surprised at what has occurred in relation to the delivery of pamphlets, and it is a genuine concern. However, the question is whether this bill is the way to resolve those kinds of problems. National members concluded at the time of the introduction of the bill, as did those of our members who were on the Transport and Industrial Relations Committee, that the answer was no, and that the bill was altogether far too sweeping in that it effectively turned people who were self-employed into employees and gave them all the protections of the Employment Relations Act as if they were employees. The truth is that most people who are self-employed have made that a deliberate choice. They want more flexibility. They want different working hours. They want less accountability to the employer—to their boss, so to speak. In short, they want a separation between themselves and the employer so that they have a certain level of control over their lives, and the law has always recognised that free choice by people.

As I have said, there is a series of independent tests to see whether the threshold is achieved. So, for instance, if people become self-employed, they end up having to register for GST, they are responsible for accident compensation levies, and they have to provide a business tax return, as well. Those are the responsibilities of being in business. In short, the self-employed take risks that employees do not. The principle risk that is taken is the business risk, and the business risk is that one’s income is not guaranteed. But, conversely, there is the prospect of much greater income, if one was to measure it on an hourly basis, than otherwise would be the case. That is effectively the distinction between those people who are self-employed and those who are employees.

The bill as drafted was flawed at the most fundamental level. The select committee sought to rectify those problems. It is clear from reading the select committee’s report that they were unable to be rectified because of, as much as anything I guess, some fundamental drafting problems. However, I also note that many of the submitters did not think this bill was capable of satisfactory rectification. That was certainly the conclusion of the National Party because ultimately the bill would cut across the choice people have made. It cut across their choice to stay away from the Employment Relations Act precisely because they wanted more flexibility. In short, those people wanted to be business people, and that has the status of being self-employed.

Labour will always have us believe—and I have heard this from Green Party members also—that there is a third category that is not a legal term but rather a term of art, and it is the dependent employee. It is someone in some sort of middle status who is not self-employed or an employee, but who is a dependent contractor. Along with my colleagues, I will be very interested to see the nature of the Supplementary Order Papers that Darien Fenton proposes to introduce. Certainly it was clear that she was unable to satisfy the National members on the select committee that those amendments would be suitable and practical.

My colleagues who have worked right at the forefront of industrial and employment relations know the challenges. Paula Bennett, in particular, has a very clear understanding of those issues, because she has worked in the area of human resources. So, more than most people in this House, she has a very clear understanding of the impracticability of the issues that were raised by the member—that is, the way in which law is not always a satisfactory solution to those issues.

National will be voting against the report back in the second reading. We are not satisfied with the way things initially turned out with the bill as introduced. I spoke in the first reading debate and said that this bill was perhaps one of the most ill-conceived measures that I had seen in my time in Parliament. This bill is just a blatant crossing over of long-established legal distinctions between the self-employed—that is, business people—and employees, as if the two could be just easily and smoothly meshed. It is clear the select committee was unable to resolve that particular dilemma. I suspect the reason was that the bill as introduced has fundamental flaws. Can those be fixed during the Committee stage? Frankly, based on the advice of my colleagues, the answer would have to be no. But this is an issue that one has to keep under advisement.

Hon MARK GOSCHE (Labour—Maungakiekie) Link to this

The previous speaker has never been in touch with the issue. There is no fear about his getting out of touch, because he has never ever been in touch with the realities of what he was just talking about. He is advising these people who deliver pamphlets that they are really in it, because they are business people, and that they have to understand the risk they are taking in self-employment; that they have to line up and register for GST. Yeah, right! Those people, who earn 25c an hour from Reachmedia to deliver pamphlets into letterboxes, really do need to be able to go and get a highly paid lawyer like Dr Wayne Mapp to challenge Reachmedia and prove that they are not actually contractors, but employees.

Dr Wayne Mapp says Labour members are out of touch with reality. Well, anybody who just listened to that nonsense coming out of his mouth would be just astounded that the National Party thinks this bill is about self-employed business people getting out there to deliver Countdown supermarket leaflets into letterboxes, or for the Warehouse, or Farmers, or Michael Hill Jeweller, or Progressive Enterprises companies that use Reachmedia to deliver their pamphlets into my letterbox for a pay of 25c an hour because, to quote the company’s chief executive: “We think our pay structures are appropriate for the work that’s undertaken … we believe the contract model works successfully for Reachmedia.”

Of course it does! It is slave labour, basically, to pay somebody 25c an hour. That is not acceptable to this side of the House; it is not acceptable to the average New Zealander out there to think that people, whatever their age, should be made to work for 25c an hour. Members on this side of the House get out on the streets regularly and we notice that a huge number of these pamphlet deliverers are adults. They are not kids. At the Transport and Industrial Relations Committee we heard that they are, quite often, elderly people who look for a bit of income to supplement the pension. We heard a great deal about the people who do this work. We heard it from the industry itself, which said that it would not be fair to reward a fit young 18-year-old who can get out and deliver the pamphlets in an hour, less than the elderly person who took it easy, had a stroll along, met some of the people in the neighbourhood, had a chat to them, maybe stopped for a cup of coffee, and took 4 hours to deliver the pamphlets, whereas the fit young 18-year-old did it in an hour.

So we listened to that, and that is why my colleague Darien Fenton, who has already spoken, said we would change the bill to reflect that issue. We would make sure we could strike a reasonable rate between the deliverer and the principal, and that would be what a person would be expected to be paid. So the 18-year-old who could do it in a reasonable time of, say, 2 hours would get paid 2 hours and the person who decided to stop along the way, admire the view, feed the ducks, have a cup of coffee and a chat, and took 4 hours, would not get paid for 4 hours but for 2 hours, which is the reasonable amount. So we listened to all of that, and we think it is sensible. That is why there would have been changes made by the select committee to reflect that sort of thing.

We heard also about a lot of people who get essentially put into the situation where they are on a contract rather than in an employment situation. That is not uncommon; it is not just pamphlet deliverers. We heard from people who are being employed in this city as security guards and being told they were contractors. In that way the employer could subvert the minimum wage provisions of the Act. Well, we are just not prepared to cop that on this side of the House. The National Party might be prepared to; it might be able to say: “Good luck to them, and if the workers don’t like it, they can go and get some lawyer to prove that it’s wrong.” That is not how fair, industrial law should operate. That is not how fair contracting should operate. All we are asking for is a fair contracting situation, so that people do not get misused by being labelled as contractors so that the minimum wage legislation can be subverted.

That is happening. I tell Dr Mapp to get out into the real world, stop reading his textbooks, and stop advising people that they are really entrepreneurs looking for a self-employed situation when they are actually young people, or elderly people, looking to supplement their income either at the beginning of their lives, as they are wanting to study, so they go out and get work of this nature, or at the end of their working lives where they are wanting to get a bit of extra money to supplement their savings or their pension. They should be treated the same as anybody else who is out there trying to do that. They should not be used by way of some slippery practice in the law to say that they are a contractor, and that we should be able to get them to work for as little as 25c an hour.

Nobody on the other side of the House will be able to get up and convince any New Zealander that this sort of rort should be allowed in law. Nobody on that side of the House will be able to get up and convince anybody of that. What they are convincing them of is the fact that National supports that practice, they condone it, and they want the law to stay the way it is. Well, thank goodness, in this House there are people who say that the practice is not acceptable. During the Committee stage we expect to tidy up the bill so that we deal with some of the very valid issues that were raised by submitters and that the select committee, or, at least, five of us, felt would be able to be sorted out. So if members of the House would like to look at the committee’s report, they will see the Labour Party’s view on this matter.

In terms of the scope of the bill, I say that no, we do not want to get the people who are catering at the family wedding caught by this bill. No, we do not want to get in the way of people who have a fixed-price contract to paint a house. We do not want to be able to force that sort of situation in law. Therefore, we will alter the bill to take away those sorts of fears. We will put in a Supplementary Order Paper to make sure that that happens, because any good select committee—and it was a good committee, after Dr Mapp left—will do this sort of work. The National Party kicked out Paula Bennett, because she was starting to agree with the members on this side of the House, so National transferred her to another committee. But she knows, in her own heart, that this is good legislation. She would love to support it, but she is not quite brave enough to do so. We will forgive her that, because that is what happens to women in the National Party; it bullies them into submission. On this side of the House—

DAVID BENNETT (National—Hamilton East) Link to this

That was a very offensive speech from the member who led the Transport and Industrial Committee through the select committee process. I felt offended by his comments about the women in our caucus—the first woman Prime Minister of New Zealand was the leader of the National Party. That member should look in the mirror at his own party and see its treatment of women. Our party certainly has a proud history and in no way will we stand for those comments to be made in this House by that member.

I think that member also made a number of comments that are plainly just not the case. He said that in a number of instances this legislation is a matter of fairness for the Labour Party. It is a matter of “fair” but not “fair” spelt the way he was talking about; it is “fear”, in that that party is trying to build an element of fear amongst New Zealand’s hard-working public by saying that the National Party has a problem with workers and seeing workers get their just rewards. It is the “fear factor” that the Labour Party is known, and always has been known, to be campaigning on. The Labour Party will campaign saying that National will do this, that, or the other thing. It is trying to build fear into ordinary New Zealanders because its members know that is how they get votes. It is really a shame for a major political party to do that and for a member of that standing to talk about fairness when the real “fair” he was talking about is the fear that members of his party use to try to convince voters to vote for them.

There is an issue out there and I do not think anyone denies that. Nobody wants to see anyone get taken advantage of. But we have some limits in our law. Some people are determined as independent contractors and some people are determined as employees. An employer-employee relationship is quite different from an independent contractor relationship. There is a whole vast body of case law that dictates what some of the differences may be. The Inland Revenue Department has spent much time defining what an independent contractor is.

To have a two-page piece of legislation put before us by a new member of this House to try to rectify a body of law that has gone through years and years of trials and tribulations is a real sham. This is not an attempt to deal with this issue; this legislation is just part of the Labour agenda of trying to create fear in the body of voters out there. It is not legislation aimed at dealing with the issue. Labour members are going to deal with the issue through Supplementary Order Papers because they had no idea, when they set up this legislation, what they were dealing with. They are just flying by the seat of their pants. They are just waiting to see what is going to happen at the next level and then determine what they want to put in the legislation.

That is simply not good enough. If this is such a big issue, why has the Minister not been promoting it? Why have the unions out there not been fighting on this issue? No, the unions have been campaigning for the Labour Party. They do not worry about the workers; they just want the money to campaign for the Labour Party so they can get their old mates into power. That is all they are about; it is nothing to do with what is best for the workers. We would not get a two-page piece of legislation coming up in the ninth year, as a member’s bill, to solve what the Government sees as one of the biggest problems for vulnerable workers.

The process does not work that way. The legislation would be the first thing off the rank if Labour were a genuine party looking at those issues. But the Labour Party is not; it is after self-preservation. It is after using fear tactics against the ordinary punters out there to try to get them to vote for the party. That is what that party is about and that is what this legislation is about. That is all it is about. It is not about trying to define what an independent contractor is—that is what it should be doing, if anything. But it is not. Labour members are just going to pass the legislation and say they have solved the problem. They will not have solved the problem because they have no idea what they are going to do about it. They are going to have to have all those Supplementary Order Papers to try to fix problems as they come up in the negotiation of this legislation through this House.

Another thing that this political party—the Government—is talking about is that it knows best. That is its one rule—it knows best for people. It does not believe it is important for New Zealanders to have choice. It does not believe it is important for New Zealanders to have freedom. It does not believe it is important for New Zealanders to want to make something out of their own work. It believes that everybody can be put in a box and be told he or she is a member of an employment relationship and therefore has to join a union and have a collective and be represented by that. That is its theory; that is what it is trying to do in this legislation. This is another blatant attempt to get more people to join more unions so that Labour can have more power in this Parliament. That is what it is about.

Labour does not look at what makes a country strong. What makes a country strong is the ability of people to follow their dreams and to achieve what they want to do. How many businesses have been started by people who have started off as independent contractors, built up a business, built up the number of staff they employ, and built a recognised brand in our country? That is the history of New Zealand business—people getting out there and having a go by themselves. If you want to take that away, you are taking away the heart of New Zealand small business, you are taking away the heart of the future of New Zealand medium-sized business, and you are taking away the heart of the future of New Zealand economic growth.

But that is what that Government is all about, because what has it done to economic growth? It has stifled it, and it has made this country one in which it will be very difficult to get through the economic conditions that we are coming into. Legislation like this is not going to assist in that process. We are getting into a situation where people struggle to get jobs. They are going to be losing jobs over the next year. We are probably going to have 100,000 people out of work before the end of this year. There is an election campaign coming up at a time when people cannot feed their families, they cannot buy petrol, they have high interest rates, they probably have a new car and a new house, and they are going to lose the second income in their household. That is the reality of what is happening out there and you want to make that harder for those people? You want to go out there and make it harder for those people to get ahead? Well good on you, because there is only one result you are going to get if you do that, and it is not going to be in your best interests. The reality is that we have got—

SUE BRADFORD (Green) Link to this

The Green Party is supporting the Minimum Wage and Remuneration Amendment Bill being read a second time tonight. I would like to congratulate Darien Fenton, and to thank her for her work in championing the cause of this particular group of vulnerable workers.

I must say, however, that, as I mentioned when speaking recently on the Holidays (Transfer of Public Holidays) Amendment Bill and on the bill that deals with breastfeeding and breaks, it is a pity that the Government has not been able to put together an omnibus reform of the Employment Relations Act that could contain all these smaller matters, important as each of them is, in one bill and deal with some other matters, as well. We would have preferred one big bill to deal with all the defects, but at least they are being dealt with, and we will continue to support the reforms step by step.

I am also disappointed that the Transport and Industrial Relations Committee was unable to make a recommendation on this bill. That means that we will be dealing with a plethora of amendments by way of a Supplementary Order Paper during the Committee stage, and that is always a bit of a confusing experience, especially for members who were not on the select committee, and always bears with it the problem that mistakes can be made. New Zealand First members must take some blame for this. In their view, as reported from the select committee, they stated that they had sympathy with the intention of the bill, but that it creates “too many administrative grey areas”. That reveals New Zealand First as a party perhaps lacking some rigour—

PETER BROWN (Deputy Leader—NZ First) Link to this

New Zealand First, with some degree of heavy heart, has to say that it cannot support the Minimum Wage and Remuneration Amendment Bill. When the bill came before this House initially, and then to the Transport and Industrial Relations Committee, it was dramatically flawed—it was hopelessly flawed, I would suggest. It would have embraced the painter who worked 20 hours, or put in a contract for 20 hours, painting a house. If it rained and it took 40 hours because of rain or something else, that reduced the hourly rate, and then the person who engaged the painter would have had to make up the contract to the minimum wage. That is how the bill came to the House initially. I have to say to Sue Bradford’s assertion that New Zealand First has given up, that I think Darien Fenton will tell this House, if she is truthful, that nobody worked harder than the New Zealand First member on the select committee to get this into an acceptable shape.

The bill is so complicated now that it is still not acceptable. Let me try to explain why. Basically the bill covers 14 occupations. Half of them are occupations where the individuals are just selling their labour, like pamphlet deliverers. But there are four occupations that would include a significant capital cost in the contracted price. Truck drivers have to have a truck—that is included in the price they will put up to the principal. A courier driver has to have a van. It could be argued that there are a couple of other occupations—namely fast-food delivery services, where the guy might have a motorbike or a car, and it could well be that a musician has to have an electronic organ, or what have you—where all capital costs are encompassed in the price. In other words, this bill covers a mixture of people who are just selling or offering their labour, and people who are offering their labour plus a significant piece of capital equipment.

Let us talk about the truck driver. In this day and age, when petrol and interest rates are going up, the principal who has engaged this driver to conduct deliveries around town will say: “Right, it will cost X dollars per tonne to deliver that.” Fuel goes up, the lease of the van goes up, or the driver might change his or her van so that the cost structure is quite different. So the driver has to go to the principal and say that he or she is not making the minimum wage per hour. The principal is then forced into a position of assessing, if he or she is doing his job correctly, how that trucking company is working financially. But the reason for engaging the trucking company on a cost per tonne basis in the first place is to avoid getting into that sort of detail. Mixing these sorts of occupations together creates confusion. The bill, assuming the member promoting it, Darien Fenton, has the numbers to pass it, will create a lot of difficulties for some businesses. It will compel them to do homework on an activity that they have tried to buy themselves out of, or to engage contractors for, so that they are not directly involved. That is why New Zealand First is not supporting the bill.

Yesterday morning I was given, on behalf of New Zealand First, a Supplementary Order Paper that amends the bill. That was just before I went into caucus. I was asked to look at it and get the view of the caucus by 5 o’clock last night. We had a full caucus agenda. I was lucky. I pleaded with my colleagues to give it some consideration. But just dropping that on us at such a late time is really beyond belief. Here is the Supplementary Order Paper: it is almost as thick as the bill; it is thicker than the initial bill. To digest this in a matter of minutes, to explain it to caucus, and to get our members to review the position is not on. I would suggest to the member promoting the bill that this is not acting in good faith. She could have given me this Supplementary Order Paper, had she been inclined to do so, weeks ago, or she could have, as she suggested to me last night, postponed this bill until New Zealand First was fully briefed. I put to her that my caucus told me to get a thorough briefing from the member, and then we would consider it in more detail. But, no, the member pushed ahead, and New Zealand First is not in a position at all to change its mind on the issue.

This bill is dealing with occupations that are not really compatible. How can one compare the engagement of a young person to deliver pamphlets with a truck driver who is delivering tonnes of cargo around an area? How can one compare that? It is very, very difficult, and I do not know how one can do that in a reasonable way. How can one compare a young guy who can deliver pamphlets—100-plus an hour—with an older guy who goes around, talks to his neighbours, and delivers 20 an hour? I heard the Hon Mark Gosche try to explain that, but I have to say that if the older guy gets 12 bucks for delivering 50 pamphlets an hour, at a slow rate, and the young guy is delivering 300, 400, or 500 an hour, is the young guy not going to say, sooner or later, that on a per pamphlet basis he is entitled to a good bit more. The next person will say: “Under precedence this guy is getting X cents a pamphlet, and this guy is making a dollar a pamphlet.” It is not the way to do things.

Contracting was actually set up to avoid the complications of employment. That is not an excuse for not paying a reasonable rate, and New Zealand First would support any move to ensure that the contractor got a fair return on his or her efforts. We do not want people here in this country getting less than the minimum wage—certainly if they are over the age where they are entitled to that wage—that is not the aim of the game, at all. But we want legislation that is workable, that is easily understood, that is straightforward to apply, and that generally works, without having industrial disputes or involving lawyers every 10 minutes.

I can say with sincerity—and I am sure that the member who has this bill knows this—that New Zealand First has looked at this bill inside out and upside down umpteen times. We have spoken to union officials, we have spoken to the member herself on umpteen occasions, and she has spoken not only to me but to my colleagues. I do not know of anybody who has shown any concern about this bill—actually, there was one; a lady sent me an email the other day, and I have not been able to speak to her. If anybody has sent us communications of concern in respect of this bill, we have sat down and spoken with him or her and addressed those concerns. We have put the issues, as I have briefly outlined them tonight, to these individuals, and nobody has given us a satisfactory answer. I am sad if the situation is that people are earning less than the minimum wage—I genuinely am, and my colleagues share that concern—but this bill is not the solution. I say that on behalf of my colleagues. Thank you, Madam Assistant Speaker.

Dr PITA SHARPLES (Co-Leader—Māori Party) Link to this

A report hit the headlines yesterday that should be compulsory reading alongside this Minimum Wage and Remuneration Amendment Bill. The Growing Pains: Evaluations and the Cost of Human Capital report described an underclass of New Zealanders: those who constitute the highest number of unemployed in every age group; those who are disproportionately more likely to be in the lower-income bands; those whose median income is a shattering 78 percent of the national average. The report describes such workers as likely to be working in forestry, construction, courier services, transport, labour hire, personal care, pamphlet delivery, and other industries where the contract workforce is regularly exploited through unfair contracting.

KATE WILKINSON (National) Link to this

I am rising to speak to and oppose, on behalf of the National Party, the Minimum Wage and Remuneration Amendment Bill at the second reading. This member’s bill has gone right through the select committee process. It was well scrutinised and came back with the recommendation that it not proceed, and that is exactly what should happen.

The bill started off intending to impose the minimum wage on all independent contractors, and one has to wonder why. It was ostensibly drafted to—as the author of the bill proclaimed—set out “a process for minimum remuneration to be determined for contractors and [enable] that to be enforced.” What exactly was the mischief that this bill was trying to address? Well, worryingly, the Minister of Labour at the time herself stated with such authority that this bill “addresses a very fundamental flaw in our employment relations legislation, in that we do not have a minimum wage provision for those who are working under a contract for service … not only will this bill give those contractors legislative provision under the minimum wage legislation but it will also ensure that we have fair competition when we are looking at the contracts we provide for.”

That Minister thought there is a fundamental flaw in our employment relations legislation because, for example, painters who are painting a house may have underquoted, for a variety of reasons—perhaps the weather or a deliberate loss-leader. The owner of the house would have to make up the difference if it turned out that the painter did not earn the minimum wage for that job. Then there is the question of what the job entailed. Did it include all the paperwork, the travelling to and from the job, the cleaning, the painting, etc.? Independent contractors have their own incentive to get the job done as efficiently as possible. They are accountable for their productivity and, therefore, their rewards. This bill would be a bizarre incentive for contractors to prolong the job, especially if they had no other work.

Then the Minister made the extraordinary claim that “we should not have people who are able, because they need to undercut another competitor, to do a contract for something that may be doing them or their subcontractors no good at all.” Well, I would have to say that it is no wonder we lost the Rugby World Cup—we are taught to compete but not to win. We had a Minister of Labour who said that competition is bad. She said that one cannot possibly quote less for a job than another contractor does, and I say that that is bizarre.

We have to try to work out what mischief this bill is intending or attempting to address. Why do we even need such a bill in the first place? Well, that answer may indeed be addressed in the recommendations of one of the submitters, the National Distribution Union, which “urged the committee to recommend that the scope of the bill be extended to include an extension of collective bargaining rights to contractors.” That would mean that all contractors—all self-employed persons—would have to be members of a union, because, as we all know, collective bargaining is the monopoly of the unions. So maybe this bill is really a hidden agenda simply to augment the membership and power of the unions.

Nobody condones the exploitation of vulnerable workers, whatever their occupation and whatever their employment status. If this bill is intended to prevent, as much as possible, the exploitation of workers, then that is how it should have been drafted. But what it does is to absolutely confuse contract of service with contract for service. It says to contractors that they can quote whatever they like for their services, they can paint houses for whatever price they think appropriate, but if it turns out that the hours worked have been miscalculated—perhaps the weather has conspired against the contractor—if, for whatever reason, the hourly rate turns out to be less than the minimum wage, then the house owner, the innocent party, has to make up the difference.

Independent contractors should be free to set their own price and their own terms of the contract. I want to quote from a recent article that I have seen: “contractors should be regulated by commercial, not industrial, law. … unions should not be able to interfere in commercial arrangements involving contractors”. One might ask who the author of those quotes was. I would have to admit that it was Julia Gillard, the Deputy Prime Minister of the Australian Labor Government.

If we look at the mechanics of the bill, we also have to ask what work is to be remunerated here. If a musician—an independent contractor—spends time rehearsing and practising, is that chargeable time? Does that time have to be taken into account for the purpose of determining the hourly wage rate? If writers are contracted to write something, do they get paid for just thinking? If they have a blank on creative thoughts—writer’s block—do they still get paid the minimum wage for that block? Practically speaking, we would have legislation that is unworkable and impractical.

If this bill is passed, we would have situations where quotes are not worth the paper they are written on and are no longer able to be accepted at face value. People wanting their house painted will not be able to rely on a quote given to paint that house; they would have to get a quantity surveyor or a similar expert to determine how many hours the painting should take, then allow a bit for weather, allow another bit for unforeseen circumstances, work it out, and see whether it tallies to the minimum wage. There will be no such thing as a loss-leader, and no such thing as a contract being performed just to advertise and market how good and reliable that contractor is. We would have a situation where some people will be able to demand payment for work that has not been completed, for something that they have not produced, or for a service that they have not provided. Writer’s block for several hours, days, or weeks could be very costly, yet nothing has been produced. Real estate agents being paid on a commission basis would be paid even though not a single, solitary sale was achieved.

Requiring a principal to keep records for 6 years, particularly if the principal is not even aware that the contractor may be a specified person, or fall within the ambit of the bill, is impractical, unwieldy, and another compliance burden. An example has been given of personal home-care support, where a private carer is engaged on a per visit basis rather than an hourly rate basis. I ask whether we should expect elderly people needing such care to keep timesheets for 6 years. Even if, unfortunately, they subsequently die, those records still have to be kept for 6 years, just in case the caregiver falls within the ambit of this bill as an independent contractor, and just in case, for a variety of reasons, the actual hours worked meant that the carer was paid less than the minimum wage. They would then have to try to explain or justify exactly what it was that the carer was being paid for—whether it included travel to and from the house, sitting down for a cup of tea at the end of the job, or whatever.

If we look at the author’s justification for this bill, we see that it was that contractors have few of the protections enjoyed by employees, and are able to be paid at rates that are less than the minimum wage. But those workers have other freedoms and choices. They have the choice to work when they want to. They have the opportunity to deduct proper expenses from their taxes. They have the choice to work for less pay than others, maybe because they want to market themselves as good-quality contractors. They choose to be independent contractors, they choose not to be wage earners, they choose to have some control over what work they do and what work they do not do, and they choose, within realistic parameters, the hours of work they want to work. If they make a mistake in quoting or in the contract price, then they have other remedies under other legislation, such as the Contractual Mistakes Act or the Contractual Remedies Act.

So what does this bill do? Firstly, it blurs the distinction between a contract of service, which is an independent contract, and a contract for service—an employment contract. The bill creates uncertainty as to what work is to be remunerated—for example, rehearsal times for musicians. It is not the right instrument to prevent the exploitation of vulnerable workers. Its record-keeping requirements would be unwieldy and impractical. It will impose administrative burdens on many who cannot meet them. National opposes this bill, not because it condones the exploitation of vulnerable workers but because this bill is simply unworkable and unrealistic.

RUSSELL FAIRBROTHER (Labour) Link to this

Of course National opposes this bill. Of course National wants to get rid of any restriction on the rate of payment to vulnerable workers. Of course that is the mantra National will take to the next election. National destroyed the common law relationship between employee and employer when it brought in the Employment Contracts Act in the terrible early 1990s. National removed entirely the balancing power of unions to negotiate with an employer in order to bring in just terms and conditions. National brought in the Employment Contracts Act, which saw the proliferation of contracts replacing arrangements of employment. Employers engaged in these contracts in order to avoid their responsibilities as good employers.

If Kate Wilkinson had bothered to read the bill that she so sternly criticised, she would have read clause 4, the purpose clause. What does the purpose clause state? It is not long, so I will read it out for that member: “The purpose of this Act is to amend the principal Act to extend its provisions to apply to payments under a contract for service which are currently remunerated at below the minimum wage.” This Act is aimed specifically at vulnerable workers. Vulnerable workers cannot employ the likes of that member to take a matter under the Contractual Mistakes Act or under any common law provision. Vulnerable workers cannot bargain, because they are not employed in a position where they have any power to engage lawyers to argue such esoteric laws.

I will give that member an example. In Wairoa there is an AFFCO freezing works that employs about 700 workers. In the lamb cuts division, the company negotiated with the union a contract for payment, and commenced paying the workers. But, lo and behold, it was discovered part-way through the contract that during negotiations the employer had made a mistake in the calculations, and had offered in the agreement to pay more than it wanted to pay. So what did the company do? Did it ring the union and say “We want to talk about this.”? No, it sent out a note to those vulnerable workers, who start work at 5 a.m. and have lunch at 10 a.m., saying they had made a mistake, and that from that week the hourly rate would be going down to what the company wanted it to be, despite the fact that the union and the employer had negotiated in good faith an agreed remuneration. That type of behaviour exemplifies the need for bills such as this.

My friend Mr Finlayson would do well to remember the motto that used to appear on the top of the old courthouses, when courthouses were a matter of pride. It was, I think, a Justinian quote: “Jus est ars boni et aequi”, which means, I think, “Law is the technique of justice”. So when a member stood in this House earlier and said that the law of contracts is quite simple and straightforward, it is about independence, it is well-settled law, and we should not be interfering with well-settled law, he forgot that the law and Parliament have an obligation to step in when things are not going well. What that speaker failed to recognise, as did the speaker before him, is that the bill, under clause 6, outlines what remuneration is. All the fears and concerns that the previous speaker, Kate Wilkinson, raised about people having uncertainty in contracts are removed by this quite elegant definition of the word “remuneration”. Under the bill, remuneration is defined as “includes any payment made under a contract for services.” The contract for services will address such things as rehearsal time for musicians, thinking time for writers, and pondering time for politicians. The contract for services will cover those things, so the hourly rate will be determined from that.

LESLEY SOPER (Labour) Link to this

I rise tonight to speak in support of my colleague Darien Fenton’s Minimum Wage and Remuneration Amendment Bill. I say to the House that this bill is essential. Once again, Labour is the voice of the working people, the vulnerable workers, on an issue where minimum employment protections are very much at stake. Those protections need to be in place for all New Zealand workers. Ms Wilkinson, who spoke before my colleague Russell Fairbrother, knows very well that my colleague Darien Fenton has already very well signalled that there will be Supplementary Order Papers that deal with all the issues that she has tried to raise as problems—that list the occupations, that exclude the painter of the house—that mean that this is workable legislation, and it is.

Are there vulnerable workers in New Zealand to whom the minimum wage protection legislation does not apply because their employment status does not fit within current legislative protections for employees, and who do not get the benefit of increases to the minimum wage that this Government has now legislated for every year we have been in power? Yes, there are. They are called contractors. They may be in a large range of occupations—everything from forestry, to construction, to the driver I was speaking with last weekend, to the personal care worker, to the pamphlet deliverers who work for Reachmedia and have had their salaries reduced from $2 an hour to 50c an hour. We found that out in the last few days.

Those are the vulnerable workers, known as contractors and defined by their employers as contractors, who do not have any choice at all about the way in which they are employed. They are the people who are being employed and exploited on chimney sweep, Victorian wages. They earn far less than anywhere close to the minimum wage—the minimum wage now or the $7 minimum wage that the National Party was so proud of in 1999. Those are the workers this Labour Party is supporting through this legislation from my colleague Darien Fenton, and we are very proud to do so.

By contrast is what we have from the wittering of the National Party, their spokesperson Kate Wilkinson, and every National Party speaker. They have shown a total lack of acknowledgment that there are vulnerable workers for whom we have an obligation to bring in such legislation. This is the National Party that has voted against every decent piece of employment policy we have brought in over the past 9 years. This is the National Party that has a spokesperson at the present time who sounds exactly like the Bill Birch of the 1990s. It sounds exactly as though she would like to bring back the Employment Contracts Act, and if there is any suspicion about that, may I point out that Mr Bill English was heard on Agenda as recently as the 18th of this month, saying: “We’ve also floated the idea in the last few years about the 90-day trial period for new employees.”

We all know what that means in employment legislation. The bill is already in place and would be used by that party to attack every single worker, every single new employee, and everyone who changes his or her job. Indeed, it might affect some members opposite who will not be here after the election but will be starting a job. It would affect the youngest and newest employee starting a new job. The National 90-day probation bill would affect every single worker throughout his or her career.

Let us have a look at a few more quotes from Ms Wilkinson, as recently as today’s Dominion Post: “Ms Wilkinson: ‘Workers should be able to offer their services to an employer on terms and conditions that they want.’ … But Ms Wilkinson has also indicated that National will cut into public holiday pay, letting employers offer contracts with three rather than four weeks’ annual leave.” National is also considering reducing rights for workers in small businesses, and I have already mentioned the 90-day probation bill. She wants to repeal—

SUE MORONEY (Labour) Link to this

I rise to speak to the second reading of this bill and to congratulate my colleague Darien Fenton on having the fortitude to bring this very important bill forward. Of course the National Party opposes it, because it has to do with guaranteeing the minimum wage to a group of hard-working people, and National has never liked that. When members opposite were in Government for a whole decade in the 1990s they made that very clear by ensuring that they did not move the minimum wage, except once. In a whole decade they moved the minimum wage just once. Of course they do not want the minimum wage extended to another group of vulnerable, hard-working New Zealanders.

Before the dinner break David Bennett, a member who is more famous for his after-dinner speeches, spoke about freedom of choice. He sounded just like Bill Birch but without the pizzazz and without the ability to actually be able to sell it. David Bennett talked about the freedom to pay hard-working New Zealanders less than the minimum wage. That is David Bennett’s freedom of choice. I oppose that and I support this bill. Thank you, Madam Assistant Speaker.

Hon DAVID PARKER (Minister of State Services) Link to this

I congratulate Darien Fenton on the Minimum Wage and Remuneration Amendment Bill. This bill started as an amendment to the legislation I drafted.

The ASSISTANT SPEAKER (Hon Marian Hobbs) Link to this

Before I ask for members’ order of the day No. 3 to be called, can I just give some clarification. There was a lot of noise earlier, and I was coping with interjections. I am perfectly happy—and I think the House is happy—when interjections are related to the bill. When the interjections become more personal, and are totally unrelated to the bill and more about elections and whatever, I will call for order. When the noise in the House gets to such a level because of personal conversation, members will see me gesturing, but I will also call for order.