First Session, Fiftieth Parliament, 2011-13
(subject to minor change before inclusion in Bound Volume)
Thursday, 14 March 2013
(for inclusion in Volume 688)
WELLINGTON, NEW ZEALAND
Published under the authority of the House of Representatives—2013
THURSDAY, 14 MARCH 2013
TABLE OF CONTENTS
BUSINESS STATEMENT ....................................................................................8547
Papal Election—Pope Francis ...........................................................................8547
QUESTIONS FOR ORAL ANSWER—
Questions to Ministers—
Solid Energy—Financial Position.................................................................8547
Economy—Monetary Policy Statement, March 2013 .................................. 8550
Solid Energy—Financial Position.................................................................8551
Methanol—Methanex Expansion of Production...........................................8553
Solid Energy—Financial Position.................................................................8554
Maternity Services—Neonatal Intensive Care Units .................................... 8556
Accident Compensation Corporation—RugbySmart and ActiveSmart
Injury Prevention Programmes ..................................................................... 8557
Family Court—Proposed Legislative Changes.............................................8557
Tax System—Proposed Changes to Fringe Benefit Tax ..............................8559
Child Health Services—Free General Practitioner Visits for
Education Sector—Resignation of Secretary for Education......................... 8561
Gambling—Spot Prize Draws.......................................................................8562
Correction—Marriage (Definition of Marriage) Amendment Bill....................8562
PLUMBERS, GASFITTERS, AND DRAINLAYERS AMENDMENT BILL—
MINIMUM WAGE (STARTING-OUT WAGE) AMENDMENT BILL—
Second Reading .................................................................................................8578
BUILDING AMENDMENT BILL (NO 4)—
Second Reading .................................................................................................8597
14 Mar 2013 Business Statement 8547
THURSDAY, 14 MARCH 2013
Mr Speaker took the Chair at 2 p.m.
Hon ANNE TOLLEY (Deputy Leader of the House): When the House resumes on
Tuesday, 19 March the Government will look to progress the Appropriation (2011/12
Financial Review) Bill, the Minimum Wage (Starting-out Wage) Amendment Bill, the
Local Electorate Amendment Bill (No 2), and the Marine Legislation Bill. On
Wednesday, 20 March, with the agreement of the Business Committee and effective on
Thursday, 21 March, the House will have extended hours to progress a number of bills
on the Order Paper, as notified in the determinations of the Business Committee on
Tuesday, 19 March.
Papal Election—Pope Francis
Hon CHRISTOPHER FINLAYSON (Attorney-General): I seek leave to move a
motion without notice and without debate concerning the election of the new pope.
Mr SPEAKER: Is there any objection to that course of action being followed? There
Hon CHRISTOPHER FINLAYSON: I move, That this House note the election in
Rome earlier today of Jorge Mario Bergoglio of Argentina as Pope Francis I. He is the
266th Roman pontiff, the first pope from the southern hemisphere, and the first pope
from the Americas. He has been for some years the Cardinal Archbishop of Buenos
Aires and is well known for his humility and commitment to social action. On behalf of
the House, I wish him the best for his term of office and congratulate the people of
Argentina on a hugely significant day in the history of their country.
Motion agreed to.
QUESTIONS FOR ORAL ANSWER
QUESTIONS TO MINISTERS
Solid Energy—Financial Position
1. Hon DAVID PARKER (Labour) to the Minister of Finance: Does he agree
with the Prime Minister that one of the three main reasons for Solid Energy’s precarious
financial position was that “they added gearing to a company that historically had not
had gearing”; if so, why?
Hon TONY RYALL (Minister of Health) on behalf of the Minister of Finance:
Yes, I do. The fundamental cause of Solid Energy’s problems is that the investments
that the board made did not generate the returns that the board expected, and the
situation became a perfect storm when coupled with the collapse of world coal prices in
Hon David Parker: Does the Minister of Finance stand by his own acknowledgment
yesterday that in the case of Solid Energy it “would have been better with no debt. In
retrospect, that is easy to see; at the time it was not.”; if so, can he understand why New
Zealanders are so disappointed to have a Government that can be wise only with
Hon TONY RYALL: Yes, and, of course, that is the benefit of hindsight. At the
time that the former Minister for State Owned Enterprises wrote to that company, it was
8548 Questions for Oral Answer 14 Mar 2013
clear that, as we were expressing to all State-owned enterprises, there was a need to lift
Hon David Parker: Why does his Government continue to deny responsibility for
foolishly pressuring Solid Energy to hugely increase its debt and dividends at a time
when coal prices were dropping?
Hon TONY RYALL: The Government did not hugely pressure Solid Energy to
increase its dividends and its borrowing. The Government is absolutely clear: it is the
responsibility of boards to balance dividends, debt, and capital, and that is exactly why,
in 2008, Mr Mallard wrote to the board of Solid Energy and said that a long-run ratio of
dividends to net profit after tax—65 percent—was something that Ministers were not
Hon David Parker: Is the Minister aware that Mr Palmer, at the Commerce
Committee this morning, said that he had said to the Government that this call for
higher gearing for a company that was exposed to a volatile price for commodities and a
volatile exchange rate was wrong, and that his Government had said to do it anyway?
Hon TONY RYALL: As the member heard this morning from Mr Palmer, dividend
decisions are made by the board, and the board takes responsibility for those dividend
decisions. If asking boards to consider debt and dividend policies is not right, why did
Mr Mallard do it in 2006 and 2008?
Hon David Parker: Did the Crown Company Monitoring Advisory Unit, as it was
then, and the Minister of Finance’s own Treasury—of which the unit is a subset—say in
advice dated 26 May 2009 to the Minister of Finance, to Mr Joyce, and to the Minister
for State Owned Enterprises that setting a blanket 40 percent debt target risked being
seen as simplistic and unrealistic?
Hon TONY RYALL: Probably they may have said exactly the same about the
Labour Government’s 35 percent debt target, which Mr Mallard told them about in
2008. But, look, let us be absolutely clear here. The board’s responsibility is to manage
debt, dividends, and investment. Clearly, wrong decisions were made in terms of some
investments that have not generated the return that that company wanted. What the
member fails to tell the people of New Zealand is that in the second half of 2009, coal
prices strongly rebounded, reaching substantial price levels that continued right through
Hon David Parker: Does he agree with Mr Palmer that after the then Minister of
Energy and Resources, Mr Brownlee, had put out his “Sexy Coal Brownlee” video,
after the Minister of Finance turned the first sod for lignite developments and the Prime
Minister also expressed support, and after the Government said it wanted Solid Energy
to expand solid coal production and borrow more money to do it, the Government knew
it was asking Solid Energy to both increase debt and increase risk after Mr Palmer said
that it was wrong to undermine its balance sheet?
Hon TONY RYALL: That member is trying to rewrite history for his silly political
purposes. The fact of the matter here is that after 2009 international coal prices
rocketed. They went up significantly. In fact, under that party opposite, the value of
Solid Energy went from about $500 million to $2 billion. The fact is that it is not the
debt that has caused the problems at Solid Energy; it is the fact that a number of
investments have been made that have not generated the return that the board expected,
and, coupled with a major collapse in coal prices in 2012, we have what has been
described a “perfect storm”.
Hon David Parker: In respect of one of those failed investments, is he aware that
Don Elder and Mr Palmer both said that the reason the biofuels investment did not make
any money was that Mr Brownlee and his Government removed the biofuels sales
obligation that was previously legislated?
14 Mar 2013 Questions for Oral Answer 8549
Hon TONY RYALL: Mr Speaker—[Interruption]
Mr SPEAKER: Order! [Interruption] Order! A question has been asked. It requires
and deserves an answer.
Hon TONY RYALL: The member seems to be suggesting that this would have been
a profitable investment only if it was subsidised by the New Zealand taxpayers. The
company must have known about that decision when it was made, and it can make
investment decisions in response to Government policy change. The fact is that those
investment decisions, dividend decisions, and debt decisions are the responsibility of the
board, as set out in the State-Owned Enterprises Act 1986—passed by a Labour
Hon David Parker: Did the letter from the Minister of State Owned Enterprises on
behalf of himself and the Minister of Finance as shareholding Minister in 2009 ask
Solid Energy to increase its debt levels?
Hon TONY RYALL: Together with every other State-owned enterprise, Ministers
did write and ask the board to consider increasing the debt levels. Mr Palmer,
recognising that this is the prerogative of boards, wrote back to the Minister and said
that the board is best placed to understand the earnings volatility and balance sheet risks
of the company, and I am sure that that is the view that the board had when Mr Mallard
was writing to it about dividends and debt in 2006 and 2008. Goodness me, have they
not forgotten a lot?
Hon David Parker: Would the Minister be surprised that, given this company had
one shareholder—the Crown—Mr Palmer found very influential the request from the
Government, its only shareholder, to increase production, increase dividends, and
Hon TONY RYALL: Now Mr Parker is saying that the board should not increase
coal production when we had record coal prices from the end of 2009—
Hon David Parker: I raise a point of order, Mr Speaker. That was not my question
at all. My question, if I would be able to re-put it—
Mr SPEAKER: Well, I think that is the quickest way forward, but it would be
helpful if I could actually hear the question as well. If we could have a bit of silence
from both sides of the House.
Hon David Parker: If I can recall—I will not be able to recall the exact wording—
Mr SPEAKER: Order! The member has—[Interruption] Order!
Hon David Parker: Is the Minister surprised that former chair of Solid Energy Mr
Palmer said that, given that the company had only one shareholder, the Crown, the
request from the Crown to increase production, increase dividends, and increase debt
was very persuasive?
Hon TONY RYALL: It is the responsibility of boards to make these decisions. If
they cannot make those decisions, why bother having them? Labour passed the Act in
1986, and the fact here is that we are now hearing from Labour that when the coal prices
were at astronomical levels in 2009, 2010, and 2011, the company should not have
increased coal production. That is bad economics.
Rt Hon Winston Peters: Is it not the case that forcing greater debt and extracting
excessive dividends from Solid Energy was fraudulent in that there was no real revenue
stream behind them—
Hon Steven Joyce: What a load of rubbish.
Rt Hon Winston Peters: I know you are—
Mr SPEAKER: Order! [Interruption] Order! That is a good demonstration of what
happens when there is an unhelpful interjection across the House. Would the Rt Hon
Winston Peters please ask his supplementary question.
8550 Questions for Oral Answer 14 Mar 2013
Rt Hon Winston Peters: Is it not the case that forcing greater debt and extracting
excessive dividends from Solid Energy was fraudulent in that there was no real revenue
stream behind them over those years, and that the dividends, in fact, came from
increased borrowing, because otherwise would Solid Energy be bankrupt today; and
why should not we believe an experienced business operator and Government appointee
like Palmer, rather than a bank teller like you?
Hon TONY RYALL: What I can tell the member is that this is a situation where the
board made investment decisions that simply did not generate the rate of return that was
expected of them and, coupled with a significant collapse in world coal prices, the
company found itself in the position that it did. There is nothing fraudulent about the
behaviour of the board, and I think the member should reflect upon that accusation.
Rt Hon Winston Peters: Why should we not believe Mr Palmer, who was a serious
Government appointee in the past and has a serious business record, when he points to
the Government using the device of forcing greater debt and extracting excessive
dividends from Solid Energy as a deceptive way of massaging and flattering the
Government’s true fiscal position; why should we not believe Mr Palmer, and not a
former bank teller like you?
Mr SPEAKER: Order! Would the Minister answer just the first part of that
Hon TONY RYALL: On behalf of the Minister of Finance, who I think was actually
a Treasury official and did not work at the bank, I am sure that Mr Palmer did not say
some of the things that Mr Peters has alleged that he said. But I agree with Mr Palmer
when he told the committee this morning that dividend decisions are made by the board
and he takes responsibility, as I am sure Mr Palmer said that the board takes
responsibility for its investment decisions. Coupled with the significant collapse in
world coal prices, that is why the company finds itself in the position that it is in.
Economy—Monetary Policy Statement, March 2013
2. Dr JIAN YANG (National) to the Minister of Finance: What reports has he
received on the outlook for the economy?
Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of the Minister
of Finance: The Reserve Bank today issued its latest Monetary Policy Statement for
March. It kept the official cash rate unchanged at 2.5 percent. The Reserve Bank also
slightly revised up its outlook for the economy from its projections in the December
Monetary Policy Statement. However, it did note that the recovery remained somewhat
uneven, with demand and output expanding and consumer confidence increasing. On
the other hand, it noted that a continued drought would have a negative impact on
economic output. Overall, the central bank now expects annual average real GDP
growth to rise from just over 2 percent in the year to March this year to around 3 percent
in 2014 and 2015 before easing back a little in 2016.
Dr Jian Yang: What are some of the factors driving the Reserve Bank’s forecasts for
growth over the next few years?
Hon STEVEN JOYCE: The Reserve Bank notes that reconstruction in Canterbury
is picking up and will be a key driver of economic activity over the forecast period.
Residential investment in other parts of New Zealand is also expected to increase as a
result of mortgage interest rates remaining low. The Reserve Bank also expects export
growth to be slightly stronger in the latter part of the 4-year forecast period than it
projected in December. It notes that the outlook for growth among our trading partners
has improved since that December statement. The bank’s projection for private
consumption is broadly in line with its December Monetary Policy Statement forecast.
14 Mar 2013 Questions for Oral Answer 8551
It expects household savings to pick up to 1.2 percent of total disposable income by
2016, from a negative 0.1 percent in 2012.
Dr Jian Yang: What are the Reserve Bank’s latest forecasts for the cost of living
over the next few years?
Hon STEVEN JOYCE: The Reserve Bank expects consumer and price inflation to
remain subdued through the rest of 2013 before gradually rising to the mid-point of its 1
to 3 percent target band. Headline annual inflation is projected to be 0.9 percent, 1.4
percent, and 1.8 percent in the March years to 2013, 2014, and 2015 respectively. These
forecasts of low inflation are good for New Zealand households, particularly those on
lower or fixed incomes. In addition, average floating home mortgage interest rates are
now around half what they were 5 years ago in 2008. For a family with a $200,000
mortgage, that is saving them around $200 a week.
Dr Jian Yang: What alternative economic and monetary policy approaches would
put at risk the low inflation and low interest rates currently enjoyed by New Zealanders?
Hon STEVEN JOYCE: Well, there are a number of alternative policies that would
put the substantial benefits of current low inflation and low interest rates at risk, and
that would, of course, cost New Zealand households dearly—for example, trying to
artificially and substantially devalue the exchange rate or going soft on inflation, or, for
example, opposing the Government’s share offer programme and instead borrowing
billions of dollars more to pay for priority assets like schools and hospitals, or, for
example, just pulling out the photocopier and printing more money. All of those things
would send interest rates and inflation through the roof, directly affecting New Zealand
households and families. They are, of course, the cornerstones of the Labour-Green
Mr SPEAKER: Order!
Hon David Parker: How can the Minister of Finance claim to be a responsible
manager of the economy when, as shareholding Minister of Solid Energy, he so clearly
mismanaged that at the cost of many, many jobs and many tens, if not hundreds, of
millions of dollars just a year after he had the debacle of the loss of hundreds of millions
of dollars extra through the mismanagement of the Crown Retail Deposit Guarantee
Scheme, where they did not even look as to whether there was interest and increased
loans on the back of taxpayers following the grant of the guarantee?
Hon STEVEN JOYCE: The member has an interesting take on history, given that it
was the former Labour Government in 2008 that set up the deposit guarantee scheme,
with the support of the Opposition at the time because of the difficulties of it. Of course,
that deposit guarantee scheme has come at some cost to the country, as the member
points out, but has actually helped underpin the New Zealand financial markets, which
is one of the key reasons why we have come through the global financial crisis
alongside Australia in better shape than just about every other OECD country. Once
again, we learn that the member has very little understanding of finance whatsoever.
Solid Energy—Financial Position
3.GARETH HUGHES (Green) to the Minister of Finance: Why did the
Government approve increased debt for Solid Energy on 28 May 2009 despite the latest
company report at the time stating that coal prices were falling and “we expect this
downward trend to continue through 2009 and into 2010?
Hon TONY RYALL (Minister for State Owned Enterprises) on behalf of the
Minister of Finance: The Government did not approve the debt at Solid Energy. It is
the responsibility of the board to make investment decisions on the structure of the
balance sheet. I would say to the member that, in fact, coal prices bounced back
significantly in the second half of 2009 and peaked in 2011, which I think demonstrates
8552 Questions for Oral Answer 14 Mar 2013
the level of volatility in this area. As Mr Palmer said, the board is in the best place to
understand the earnings volatility and balance sheet risks of the company.
Gareth Hughes: Does he dispute, then, the testimony of John Palmer this afternoon,
and why did the Government ignore the clear opposition by the Solid Energy board to
increasing the debt loading that has seen its debt just balloon?
Hon TONY RYALL: I cannot comment on the first part of the member’s question
but I can say quite clearly that it is the responsibility of the board to manage the balance
between debt, dividends, and capital investment. The problem here with Solid Energy is
that a number of investments were made that have not delivered the returns that might
have been expected of those. Coupled with the significant collapse in world coal prices,
that is why the company finds itself in this position.
Gareth Hughes: Is John Palmer then correct in saying that the National Government
encouraged Solid Energy to take on debt to adopt an expansionary strategy, and if so,
was it smart to take $164 million in dividends out of the State-owned enterprise in the
same period when debt ballooned from $13 million to $313 million over the same
Hon TONY RYALL: The level of dividends that were paid by Solid Energy is
extremely moderate in comparison with the cash flows that that company was
generating during a period of huge international coal prices. Everybody in this House
knew about what was happening in Australia—the huge boom in coal prices, profits,
and investment happening over there. The Government did ask for increased dividends,
but the dividends that it received would not be at all unusual compared with the 65
percent of net profit for dividends that Mr Mallard indicated in 2008 was appropriate for
a company like Solid Energy.
Gareth Hughes: Has the Minister subsequently instructed or requested Solid Energy
to see a reduction in debt or a reduction in debt expansion?
Hon TONY RYALL: The Government is working very closely with the banks and
the board of Solid Energy in respect of the future of the company. The company has
been severely impacted by the significant collapse in coal prices—40 percent during
2012. Its export volumes fell 27 percent in one quarter alone. This is the reason why Dr
Elder, I think it was, described the company as facing a “perfect storm”.
Gareth Hughes: I raise a point of order, Mr Speaker. My question was not about
Solid Energy or the banks. The question was what the Minister is doing about debt—
Mr SPEAKER: Order! And I have listened very carefully to the question and I am
quite happy that the question was adequately addressed with that answer.
Gareth Hughes: Was he ever advised that the high New Zealand dollar was, to
quote John Palmer this afternoon, “A major factor in Solid Energy’s demise.”, and is
this yet another victim of this Government’s monetary policy?
Hon TONY RYALL: The world coal prices and the returns to Solid Energy are
impacted by a whole lot of things, but the most significant driver was the collapse in
world coal prices. There was, actually, a 27 percent drop in exports in one quarter alone.
That is the reason why this Government is now working closely with the banks in
respect of how it gets this company moving into the future. I would say that that
member opposite has opposed everything that Solid Energy has done to try to get its
books back in order.
Gareth Hughes: I raise a point of order, Mr Speaker. I do not think the Minister
addressed the question at all.
Mr SPEAKER: Yes, he did. If you listened to the answer, he clearly did address it.
He said it was one of the factors, and then went on to elaborate with others.
Gareth Hughes: Why does the Minister continue to blame biofuels for Solid
Energy’s demise when it was his Government that removed the biofuels obligation, it
14 Mar 2013 Questions for Oral Answer 8553
was his Government that reduced the financial support, and it was his Government that
has seen the carbon price drop from around $20 a tonne to about $1 a tonne?
Hon TONY RYALL: I simply do not believe that a Government commitment to
remove the biodiesels obligation is responsible for the collapse of Solid Energy. I would
ask the member to look at what is happening in Australia, where, I think, Mr Tinkler is
on the verge of being arrested because he will not front up to the collapse of his coal
company. A number of American companies’ values have collapsed by almost 70
percent. This is an international phenomenon that has affected coal companies
throughout the world. That is the reason why Dr Elder today described the matching of
the collapsing coal prices with the investment decisions that had been made as a
“perfect storm”. This Government is responding to that by working closely with the
banks and the board of Solid Energy to see what we can do, because we have got so
many people who rely on this company.
Gareth Hughes: Does the Minister think that the perfect storm he is referring to is,
in fact, National Party policy and National Party decisions, and that that is the reason we
are seeing Solid Energy in such strife?
Hon TONY RYALL: I am sure the Minister of Finance is very impressed to know
that his policies have an impact on the coal companies in the United States, coal
companies in Canada, coal companies in China, and coal companies in Australia that
have all been dramatically affected by the collapse in world coal prices. The problems
with Solid Energy come from the investment decisions not generating the returns that
were expected, together with the collapse of world coal prices during 2012. This
Government is responding to that by working with the banks and the board to do what
we can to salvage as much of this company as we can.
Methanol—Methanex Expansion of Production
4. JONATHAN YOUNG (National—New Plymouth) to the Minister of Energy
and Resources: What recent reports has he received regarding increased production of
methanol from New Zealand gas?
Hon Member: Speaking of gas!
Hon SIMON BRIDGES (Minister of Energy and Resources): There is a lot of
natural gas over there. I have seen reports that Methanex plans to invest almost $80
million to increase its New Zealand production of methanol. This reflects the improving
and secure natural gas supply in this country. This will involve adding capacity at its
current Motunui site as well as restarting the Waitara Valley site later this year. By the
end of this year its operating capacity is expected to increase from 700,000 tonnes to 2.2
million tonnes. I am encouraged that businesses such as Methanex are confidently
expanding their operations in this country.
Jonathan Young: How will Methanex’s expanded operations in New Zealand
benefit both the local and the national economy?
Hon SIMON BRIDGES: There will be many benefits to the member’s region as
well as to New Zealand. There will be more jobs—some 500 more, a mixture of
contractors and full-time workers—there will be more equipment and materials bought
mainly from within this country, and, of course, there will be wider benefits to the
economy. The increased scale of Methanex’s business will also generate more taxes
over the long term and, through increased export revenue, assist with the country’s
balance of payments.
8554 Questions for Oral Answer 14 Mar 2013
Solid Energy—Financial Position
5. Hon CLAYTON COSGROVE (Labour) to the Minister for State Owned
Enterprises: Does he stand by all the statements he, his predecessor and other
Ministerial colleagues have made regarding the State-owned Enterprises portfolio?
Hon TONY RYALL (Minister for State Owned Enterprises): Yes, within the
context they were made, though. I suspect in the next 30 seconds I may want to change
my mind. I can vouch for most of my predecessors, though I probably could not vouch
for Mr Mallard when he said: “It will be up to SOEs to come up with robust business
plans that can preferably be funded off their own balance sheet …” .
Hon Clayton Cosgrove: If the intent of the 2009 letter to Solid Energy penned by
his predecessor in respect of increasing gearing and dividends was not to encourage
borrowing by Solid Energy at increased levels or a demand for increased dividends,
why was it sent? What was its purpose?
Hon TONY RYALL: Letters were sent to all State-owned enterprises in 2009—
Hon Clayton Cosgrove: Solid Energy.
Hon TONY RYALL: —including Solid Energy. They are—[Interruption] To make
it clear that the Government did expect—
Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. My question was about
the letter sent directly to Solid Energy—not letters sent to a variety of State-owned
enterprises but the letter that was sent, which the Minister has, to Solid Energy directly.
Mr SPEAKER: I appreciate that, and the Minister was answering the question—
Hon Clayton Cosgrove: No, he wasn’t. He was talking about the other letters.
Mr SPEAKER: Order!
Hon TONY RYALL: The Government wrote to Solid Energy, as it did to every
other State-owned enterprise, seeking to have improved levels of performance and
contribution to the economy. It is up to the boards—
Hon Members: More debt.
Hon TONY RYALL: Members opposite seem to think that the debt is the problem
for Solid Energy. I have said so many times today that it is not the cause of Solid
Energy’s problem. It is the board’s responsibility to manage the structure of the balance
sheet. The purpose of the Minister’s letter was to say, just as Mr Mallard wrote to them
a year earlier, that we expect better performance in dividends.
Hon Clayton Cosgrove: Is he aware of the Treasury proposal document of 2009, the
recommendations of which his Government signed off, whose purpose was to increase
the gearing of Solid Energy and, to quote the document, was designed to “stretch” the
State-owned enterprise; if so, has that stretch been successful, or has in reality that
stretch perpetrated the almost total breakdown of that company at his Government’s
Hon TONY RYALL: No. As I have said earlier on, it is not the debt that is the
cause of Solid Energy’s problems; it is the fact that a number of investments were made
that have not generated the level of return to sustain those investments or their
continuing, coupled with the collapse in world coal prices. In respect of the Treasury
advice, it would not surprise me, because Mr Mallard in 2008 told the company—
Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. The document and
advice that I referred to was not from one Trevor Mallard. It was the 2009 advice—
Mr SPEAKER: I appreciate that.
Hon Clayton Cosgrove: —that talks about stretching—
Mr SPEAKER: Order! But if you think about the member’s question, it started with
whether he was aware of the Treasury document. The Minister was just going on to talk
14 Mar 2013 Questions for Oral Answer 8555
about what was in that Treasury document. If the member is satisfied with the answer,
we will move to the next supplementary question.
Hon Clayton Cosgrove: Is former Chairman of Solid Energy John Palmer correct
when he told the select committee clearly today that contrary to the Prime Minister’s
claim that Solid Energy had asked for a billion-dollar capital injection and that the
Prime Minister had refused that billion-dollar capital injection, no billion-dollar capital
injection request was ever made—no figures were mentioned?
Hon TONY RYALL: I would have to accept what the Prime Minister and Mr
Palmer said, because I do not think they are necessarily divergent. What I can tell you is
I do know that the Prime Minister received advice on the financial implications of what
was being discussed with Solid Energy. I have got to remind the member again that the
company’s problems come from the investments that were made and the lack of return,
and the collapse of coal prices.
Hon Clayton Cosgrove: Is he aware that former Chairman of Solid Energy John
Palmer confirmed to the select committee today that no action, none, was taken by any
Minister in this Government since 2009 to require a change in direction—in business
direction—no request was made to change business direction or to reduce expansion,
and the only action that one can find on the record was 18 months of discussions with
the company, which generated in zero action by this Government as it was asleep at the
Hon TONY RYALL: I am advised by comments made by colleagues on this side of
the House that that is not a fair representation of what Mr Palmer said, and therefore—
Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. Nick Smith was not on
the select committee, other Ministers were not at the select committee, and yet again
this Minister makes it up.
Mr SPEAKER: Order! But that is very much now debatable. I was not at the select
committee—[Interruption] Order! The Minister is attempting to answer the question,
and I would like to hear the answer to the question.
Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. The Minister has
questioned my word. First, that is out of order. Secondly, he has said that from
comments around him—
Mr SPEAKER: Order! Frequently Ministers disagree with words that are quoted by
an Opposition member. That happens quite frequently in this House.
Hon Clayton Cosgrove: I raise a point of order, Mr Speaker.
Mr SPEAKER: Is it a fresh point of order? I will take a fresh point of order. If the
member is intending to continue a repeat of the same point of order, then no, I have
ruled that the question was being answered. I will give the Minister the opportunity to
further answer the question, if the member so wants. But if he does not want a further
answer, he does not have to have one.
Hon Clayton Cosgrove: I raise a point of order, Mr Speaker.
Mr SPEAKER: Is it a fresh point of order?
Hon Clayton Cosgrove: Yes, it is. With respect, I am not challenging your ruling at
Mr SPEAKER: Would the member just come to the fresh point of order.
Hon Clayton Cosgrove: Certainly. You stated that it is a precedent in this House
that members say the member is incorrect, and you are absolutely right. That Minister
did not say that. He challenged my word—
Mr SPEAKER: Order! I think we are now relitigating what I have already ruled on.
I am giving the Minister the opportunity to complete the answer that was interrupted, if
8556 Questions for Oral Answer 14 Mar 2013
the member so wants. If the member does not, then we will move to further
supplementary questions or to the next question.
Hon Clayton Cosgrove: Yes, I do. Get him to answer. Yes, I do. I have accepted
Mr SPEAKER: Does the Minister want to further elaborate on the answer that the
Minister had given?
Hon TONY RYALL: The Government has made it very clear, and this is certainly
my view, that, following the scoping study in 2011, this Government took action to deal
with the issues that were raised in Solid Energy’s scoping study. That scoping study
identified a number of issues that made that company vulnerable, including investments
in a number of areas that were not generating—[Interruption]
Mr SPEAKER: Order!
Hon TONY RYALL: It also identified very high head office costs—[Interruption]
Mr SPEAKER: Do not continue to ask me what I did.
Hon TONY RYALL: —and vulnerability around the projections for coal prices.
And, together with the collapse in coal prices during 2012, the company finds itself in
this difficult position.
Maternity Services—Neonatal Intensive Care Units
6. BARBARA STEWART (NZ First) to the Minister of Health: Is he satisfied that
the current number of beds and staff in neonatal intensive care units throughout New
Zealand is enough to service our growing population?
Hon TONY RYALL (Minister of Health): Yes. There are six neonatal intensive
care units, which provide specialised intensive care services for very unwell or
premature babies, for the whole of New Zealand. From time to time mothers and babies
are transferred between the units. This can be a very difficult time for families. The
most important consideration is the safety of the baby. A new $7.3 million unit is
currently being built at Dunedin Hospital and is expected to be open by the end of this
Barbara Stewart: How can he be satisfied when 33 expectant mothers in 2012 were
transferred out of the Waikato to a location away from their families; and can he assure
the public that the safety of these women and unborn children will not be impaired?
Hon TONY RYALL: The number of these neonatal intensive care unit beds has
increased by about 10 percent since 2008; the birth rate has dropped and slowed in those
last few years. It has always been the case that babies are moved between these units. I
know it is incredibly disruptive. That is why we are investing to improve the one in
Dunedin, because it was substandard and not up to what you would expect. I am
confident that the safety of mothers and their babies is the priority for all of this being
dealt with by the national clinical neonatal network.
Barbara Stewart: Does he believe that transferring expectant Waikato mothers to
cities as far away as Invercargill, at a cost of $8,000 to $11,000 on air transfer alone, is a
good use of Government funding?
Hon TONY RYALL: Yes, I do, because it is about protecting the mother and the
baby, and that is why they go to a neonatal intensive care unit. I know it is incredibly
disruptive for these parents, but we have a level across the whole country. It is a
network. Mothers and babies at times do need to move around those units and that is
why we provide support around that. But the priority has to be the baby and the mother.
That is the commitment of this Government, and that is why we are moving to improve
neonatal facilities, particularly in Dunedin, that have needed upgrading and
improvement for many years.
14 Mar 2013 Questions for Oral Answer 8557
Barbara Stewart: Does he have any plans to increase the number of beds and staff
in other neonatal intensive care units throughout New Zealand to ensure that expectant
mothers will not have to undergo lengthy, costly, and potentially unsafe hospital
Hon TONY RYALL: Yes. I can tell the member that the Government is investing
$7.3 million in the new neonatal intensive care unit in Dunedin, which is expected to be
open by the end of this year.
Accident Compensation Corporation—RugbySmart and ActiveSmart Injury
7. CHRIS AUCHINVOLE (National) to the Associate Minister for ACC: What is
ACC doing to encourage safe sporting and fitness practices?
Hon JUDITH COLLINS (Minister of Justice): ACC is working with industry
leaders and other partnering organisations to reduce injuries suffered in sporting and
fitness activities. Two examples of this are RugbySmart and ActiveSmart. For example,
since the inception of RugbySmart, serious rugby neck and spinal injuries have gone
down, from double digits annually to three or fewer per year. The British Journal of
Sports Medicine regards this as the world’s best community injury prevention
programme. In 2013 RugbySmart has the potential to reach 12,000 coaches, 2,000
referees, and 150,000 players.
Chris Auchinvole: Is there an initiative that is more widely focused on general
Hon JUDITH COLLINS: Yes. ACC has also launched ActiveSmart, which is a
programme for walking, running, cycling, and multisport—although, obviously, not
boxing. ActiveSmart has a free website and smartphone app that give easy access to
tailored training plans and tips. The New Zealand Rugby Union has endorsed
ActiveSmart—and I understand, from the interest shown by members on the opposite
side, I could arrange a briefing for them.
Family Court—Proposed Legislative Changes
8. DAVID CLENDON (Green) to the Minister of Justice: Why is she proposing
changes that may deny people legal representation in the Family Court?
Hon JUDITH COLLINS (Minister of Justice): The member’s question is,
unfortunately, misconceived. Where people need legal representation in the Family
Court they will get it. This is not changing.
David Clendon: Given research shows 88 percent of New Zealanders in the Family
Mr SPEAKER: Order! I am sorry to interrupt. I cannot hear the supplementary
question. Could we have a bit of decorum, particularly on this side of the House.
David Clendon: Given research showing that 88 percent of New Zealanders in the
Family Court elected to be represented by a lawyer, why is she denying them that
chance when the Family Court’s own website says self-litigation in the court “requires a
substantial understanding of the legal process.”?
Hon JUDITH COLLINS: Again, unfortunately, the member’s question is
misconceived. Most of the cases that will come into the Family Court relating to care of
children matters will be able to move through to mediation in the family dispute
resolution process, which was, in fact, suggested by the expert reference group set up to
look at the Family Court system. In fact, what we are looking at is up to six different
sessions of mediation to help people resolve their issues. Unfortunately, that—
Andrew Little: The Minister’s misleading the House.
8558 Questions for Oral Answer 14 Mar 2013
Hon JUDITH COLLINS: I raise a point of order, Mr Speaker. I would ask that the
member be asked to withdraw and apologise for that comment.
Mr SPEAKER: If the Minister has taken offence, then the member who made the
comment should stand and withdraw and apologise.
Andrew Little: I would like to know what the comment is that the Minister has
taken offence at.
Mr SPEAKER: I do not need to repeat the comment, but I heard it. The Minister has
taken offence. The member will stand, withdraw, and apologise.
Andrew Little: I withdraw and apologise.
Hon JUDITH COLLINS: After six sessions of mediation a judge will then be able
to actually triage the matter. So if it were a simple matter about where, for instance,
Johnny is going to spend this weekend—
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. The Minister began by
saying, for a second time, that the question was misconceived. The question regards the
issue of legal representation at the Family Court. At no point—even now, after that long
answer—has she got anywhere near traversing the issue of the absence of legal
Mr SPEAKER: No, I think the Minister is certainly attempting to address the
question. It is difficult because of the interjections, but it certainly is absolutely
appropriate for the Minister to stand and start her answer by saying that she does not
accept the arguments that have been put forward. I call the Hon Judith Collins, if she
wishes to finish.
Hon JUDITH COLLINS: Yes, I would like to say to the member that if he would
like to have a full briefing—and I understand that he is on the select committee and he
is working really hard on it—I can provide that to him, with more detail that he might
not already have.
David Clendon: Although I am sure that the Justice and Electoral Committee and
others would appreciate information that is clearly not in the Family Court Proceedings
Reform Bill, what is her response to the six Christchurch Family Court judges who
warn that explosive violent incidents will be more likely to occur, leading to an increase
in domestic violence and an increasing risk to the safety of court staff and judges?
Hon JUDITH COLLINS: That was an opinion expressed by a judge, but there was
no evidence to support it, and it seemed to be that he was speaking about lawyers
apparently stopping their clients from becoming violent in court. Well, I have never
seen that happen yet.
David Clendon: Why does the Minister dismiss the concerns of Whangarei lawyer
Dr Christopher Perry and the 4,740 other concerned New Zealanders who signed a
petition asking for her reforms to be scrapped?
Hon JUDITH COLLINS: Because the petition included completely incorrect
statements, and, actually, I thought that the comments by that particular person were, in
fact, not only misconceived but actually all about self-interest.
David Clendon: I raise a point of order, Mr Speaker. [Interruption]
Mr SPEAKER: Order! I am dealing with a point of order from David Clendon.
Does the member want to table some documents?
David Clendon: I seek leave to table a document. The document is titled “2013
Family Court Reform: The impact on NZ families’ access to justice in an age of
Mr SPEAKER: The source of the document, please.
David Clendon: The author is Maria Kazmierow, a family law barrister and
mediator, and the document is dated 11 March of this year.
14 Mar 2013 Questions for Oral Answer 8559
Mr SPEAKER: Leave is sought to table that document. Is there any objection?
There appears to be none. It can be tabled.
Document, by leave, laid on the Table of the House.
Tax System—Proposed Changes to Fringe Benefit Tax
9. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Revenue:
What reports has he seen regarding his proposal to apply fringe benefit tax to employee
car parks in the Auckland and Wellington central business districts?
Hon STEVEN JOYCE (Minister for Economic Development) on behalf of the
Minister of Revenue: Mr Speaker—[Interruption] If I could just address the member, I
have received a number of reports—[Interruption] Oh, thank you.
Mr SPEAKER: Order! If the Minister would proceed with the answer, please.
Hon STEVEN JOYCE: I have received a number of reports.
Hon David Cunliffe: I raise a point of order, Mr Speaker. I am not offended by the
Minister having trouble seeing the questioner, but he would not look at the Minister
sitting next to him during—
Mr SPEAKER: No, that is not a point of order, but it is a good example of how
points of orders can come if the Minister does not get on with the job of answering the
Hon STEVEN JOYCE: I have received a number of reports from Inland Revenue
Department and Treasury tax officials on proposals leading up to and following the
consultation paper for recognising salary trade-offs as income, which, I note for the
benefit of the member in the House, was released back in April 2012. Policy
consideration of this issue began, in fact, in 2010. The review was part of a package of
base broadening and integrity measures, which included other matters such as the
treatment of mixed-use assets and widening the income definition for social assistance
purposes. As the member will be aware, the bill is currently before a select committee
and the Government will carefully consider the select committee’s report to the House.
Hon David Cunliffe: Does he agree with analysis by independent accounting firm
Lock and Partners that shows that the compliance cost of collecting his car-park tax is
over $30 million per annum, about double the revenue that the Inland Revenue
Department suggests it would collect?
Hon STEVEN JOYCE: On behalf of the Minister of Finance, it is fair to say, I
think, that the report is perhaps a bit of a stretch in its estimate of compliance costs.
Hon David Cunliffe: I raise a point of order, Mr Speaker. To assist the Minister, he
was asked as the Minister of Revenue but he is replying on behalf of a different
Minister. Perhaps he is confused or would like to start again.
Mr SPEAKER: He is to answer the question on behalf of the Minister of Revenue.
Hon STEVEN JOYCE: Can I thank that member for his assistance, and say that my
view is that the numbers on the report that the member raises are perhaps a bit of a
stretch, indicating, as it does, a cost of $5,000 per annum for medium businesses and
$8,000 in compliance costs per annum for large businesses. But, nevertheless, officials
have been asked by the Finance and Expenditure Committee to look at compliance cost
issues and it certainly would be unreasonable to have a tax if the compliance costs are
very high. So, once again, we look forward to the response from the select committee.
Hon David Cunliffe: Given these compliance burdens, why did he break John Key’s
pledge to “not entertain suggestions of applying FBT to on-premises carparks” and to
“remove a substantial amount of the paperwork” from the fringe benefit tax system, or
does he agree with the finance Minister, Bill English, that Mr Key’s promise is now
worthless because “the tax environment has changed”?
8560 Questions for Oral Answer 14 Mar 2013
Hon STEVEN JOYCE: I would say that I think a fair amount has changed since
that statement was made back in April 2005, which was when Don Brash was leader of
the National Party. Since that time we have had three leaders of the Labour Party, and
maybe a fourth leader of the Labour Party—
Mr SPEAKER: Order! That does not help the answer.
Hon David Cunliffe: Does he agree with commentator Vernon Small that the car-
park tax is one of “a series of petty tax increases that are more about the elusive Budget
surplus than fairness and good tax design.” and includes measures like the paper boy
tax, increased prescription charges, increased petrol excise, student loan costs, and his
equally popular proposals to tax private cellphone use and accommodation for rebuild
workers in Christchurch?
Hon STEVEN JOYCE: That was a very long question, but in terms of the
characterisation reported by the eminent Dr Small, the issue in regard to fairness is
actually quite an interesting one. I think the officials can make the case that this actually
would create more fairness, because currently different types of car-parks in cities are
treated in different ways. Nevertheless, the compliance costs are important. In fact, if
the Government chose not to go ahead, it would actually be, I think, characterised as not
particularly fair in relation to different car-parks. But, of course, practicality comes into
it as well, and that is why we are watching closely to see the outcome of the select
Hon David Cunliffe: Does the Minister of Revenue consider that he can now
continue in his portfolio, given that there are reports that “National Party officials at the
very highest levels” have told media that they are “trying to shift the heat to Dunne”,
and that this is a blatant abrogation of the confidence and supply agreement with United
Future, which demands “confidentiality, collective responsibility, and recognition of his
position as Minister of Revenue”?
Hon STEVEN JOYCE: I think there is an old statement about believing half of
what you hear and a third of what you see, and I think it would apply in this particular
Hon David Cunliffe: I seek leave to table analysis by independent chartered
accountants Lock and Partners showing that the compliance cost of this tax is twice the
Mr SPEAKER: And is it available publicly? I suspect that it is not.
Hon David Cunliffe: No, not publicly.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? No,
there is none.
Document, by leave, laid on the Table of the House.
Hon David Cunliffe: I seek leave to table a copy of the confidence and supply
agreement between the Minister of Revenue’s—
Mr SPEAKER: No, that is certainly available.
Hon David Cunliffe: I seek leave to table this rather endearing little moniker “No
car-park tax. Stop John Key’s—”
Mr SPEAKER: No. That is not necessary to inform the House.
Hon David Cunliffe: I raise a point of order, Mr Speaker. This is not yet readily
Mr SPEAKER: And it certainly—[Interruption] Order! The member will resume
his seat. [Interruption] Order! And it will not be tabled, either.
14 Mar 2013 Questions for Oral Answer 8561
Child Health Services—Free General Practitioner Visits for Under-sixes
10. SHANE ARDERN (National—Taranaki - King Country) to the Minister of
Health: What progress is the Government making on access to free GP visits for
children aged under 6?
Hon TONY RYALL (Minister of Health): More children than ever are now able to
see a general practitioner at no cost, thanks to the Government’s $30 million zero fees
for under-sixes scheme. More than 350,000 children are now receiving free doctors
visits during the daytime, and 95 percent of children aged under 6 have access to free
general practitioner care after hours. In 2006, under the previous Government, only
77,000 children were receiving free doctors visits during the day, and there was no
scheme providing free after-hours doctors visits.
Shane Ardern: How many general practices are now providing free doctors’ visits
to children under 6 during the day?
Hon TONY RYALL: Of the just over 1,000 general practices in the country, 1,004
have opted to provide zero fee doctors visits to children under 6. Recently 12 general
practices located in the North Shore, Auckland, Blenheim, Templeton, Rolleston, and
Invercargill joined the zero fees scheme, which has enabled 3,500 more children under
6 to see a doctor during the day at no cost. So that is 96 percent of children under 6 who
can go to a general practitioner for free during the day and after hours, compared with
only 23 percent in 2006. I am sure the member will join with me in thanking general
practices around the country for helping out children in this way.
Education Sector—Resignation of Secretary for Education
11. CHRIS HIPKINS (Labour—Rimutaka) to the Minister of State Services:
What reasons did the State Services Commission give him for Lesley Longstone’s
resignation when he was briefed by them on 6 December 2012?
Hon Dr JONATHAN COLEMAN (Minister of State Services): On meeting with
the State Services Commission on 6 December, I was advised that Ms Longstone and
the State Services Commissioner were in discussions about her standing down as chief
executive. This reflected their joint view that there had been a number of issues that had
not gone well during 2012, including the relationship with her Minister, and that a
change of leadership was necessary to enable the Ministry of Education to move
Chris Hipkins: Did the Minister of Education convey any specific concerns about
Lesley Longstone’s performance to the State Services Commission; if so, what was the
nature of those concerns?
Hon Dr JONATHAN COLEMAN: It made it clear that there were issues in the
relationship, but I have also had advice from the State Services Commissioner that to
discuss performance issues would be a breach of confidence.
Chris Hipkins: Did the Minister of Education indicate to the State Services
Commission that Lesley Longstone had undertaken any action that was inconsistent
with the Government’s direction; if so, what did she do?
Hon Dr JONATHAN COLEMAN: I am not sure whether there was an indication
that Ms Longstone had undertaken any such action, but it was clear that there were
issues in the relationship between the Minister and the chief executive.
Chris Hipkins: Did the State Services Commissioner indicate to him at the briefing
that Lesley Longstone’s resignation was contingent upon her receiving a payment; if so,
did he indicate his agreement that such a payment should be made?
Hon Dr JONATHAN COLEMAN: To the best of my recollection, the resignation
was not contingent on a payment. However, as subsequently became evident, there was
8562 Questions for Oral Answer 14 Mar 2013
discussion around a payment. But I would emphasise, as I did the other day, that I did
not sign off on any payment until after the resignation.
Chris Hipkins: When did he indicate to the State Services Commission the
Government’s agreement to Lesley Longstone receiving $425,000?
Hon Dr JONATHAN COLEMAN: My recollection of it is that it was on 18
December, when the package was put to me following her resignation—or following
not the public announcement but the formal conveying of her resignation to the State
Chris Hipkins: Does he agree with the State Services Commissioner, who described
Lesley Longstone as “a highly competent and dedicated individual” and stated that she
could be re-employed elsewhere within the Public Service; if so, why does he believe
that the public do not have a right to know exactly why it is that she received a
$425,000 payout as part of her resignation?
Hon Dr JONATHAN COLEMAN: I am happy to say why she received that
payout. As I said the other day, there was a certain part that was part of her contract
around paying out holiday pay, but there was also a view that to move the—
Sue Moroney: She’d only been there 12 months.
Hon Dr JONATHAN COLEMAN: Well, it was contractual. There was a view that,
actually, in the context of a $12 billion vote there were things that needed to be done
subsequently in education, and there was a mutual agreement that a change of
leadership at the ministry was necessary in order for that to occur.
Gambling—Spot Prize Draws
12. KANWALJIT SINGH BAKSHI (National) to the Minister of Internal
Affairs: What recent announcements has he made about reducing unnecessary red tape
under the Gambling Act 2003?
Hon CHRIS TREMAIN (Minister of Internal Affairs): This week I announced
that the Government is considering changes to regulations around spot prize draws. I
have released a consultation document, which includes a proposal that spot prize draws
at these events should not be classified as gambling. This would mean event organisers
do not need to apply for a licence to run spot prizes and can focus on their events rather
than red tape.
Kanwaljit Singh Bakshi: Why are the changes to the current regulations necessary?
Hon CHRIS TREMAIN: Changes have been called for by organisers of events such
as fishing competitions and sports events. Problem-gambling organisations report that
there is little risk of problem gambling, if any, associated with spot prizes at these
events, so I do not believe that rigorous rules are necessary. Event organisers should not
have to worry about complying with the Gambling Act when considering spot prizes.
They should be able to get on with providing fun activities for families and for their
Correction—Marriage (Definition of Marriage) Amendment Bill
JAMI-LEE ROSS (Junior Whip—National): I seek leave for the votes of the Hon
John Banks and the Hon Peter Dunne against the amendment in the name of the Rt Hon
Winston Peters on the second reading of the Marriage (Definition of Marriage)
Amendment Bill to be recorded in the Journals of the House of Representatives.
Mr SPEAKER: Is there any objection to that course of action? There is none. The
result will be recorded as Ayes 33, Noes 85.
14 Mar 2013 Plumbers, Gasfitters, and Drainlayers Amendment Bill 8563
PLUMBERS, GASFITTERS, AND DRAINLAYERS AMENDMENT BILL
Hon MAURICE WILLIAMSON (Minister for Building and Construction): I
move, That the Plumbers, Gasfitters, and Drainlayers Amendment Bill be now read a
first time. At the appropriate time I intend to move that the Plumbers, Gasfitters, and
Drainlayers Amendment Bill be considered by the Government Administration
Committee, that the bill be reported to the House by 22 March 2013, and that the
committee have authority to meet at any time while the House is sitting, except during
oral questions, during any evening on a day on which there has been a sitting of the
House, and on a Friday in a week in which there has been a sitting of the House, despite
Standing Orders 188 and 191(1)(b) and (c).
The bill validates a disciplinary levy and an offence fee set by the Plumbers,
Gasfitters and Drainlayers Board under the Plumbers, Gasfitters, and Drainlayers Act
2006, which have been scrutinised by the Regulations Review Committee.
The ASSISTANT SPEAKER (H V Ross Robertson): Order! Members, please
show some courtesy to the Minister who is speaking. It is contagious, and it is within
the spirit of the Standing Orders and the Speakers’ rulings.
Hon MAURICE WILLIAMSON: I am not contagious!
The ASSISTANT SPEAKER (H V Ross Robertson): I know that you are not
contagious, Minister, but something else is.
Hon MAURICE WILLIAMSON: The bill resolves the issue considered by the
Regulations Review Committee by empowering the board to charge a new disciplinary
and prosecution levy to fund the costs arising out of the board’s prosecution and
discipline functions. In addition, the bill also ensures that all Gazette notices containing
disciplinary levies set by the board under the 2000 Act are valid.
Essentially, this bill addresses inconsistencies between the board’s functions and the
funding provisions in the Act. All of the board’s functions are funded entirely from fees
and levies charged to plumbers, gasfitters, and drainlayers registered under the Act, as is
usually the case with other occupational licensing boards within the building and
The board regulates the plumbing, gasfitting, and drainlaying industry so that the
public can have confidence that people undertaking those trades are qualified,
registered, and regulated. Therefore, it is important to ensure the board has funding for
all of the functions it is required to carry out. One of the board’s statutory
responsibilities is to prosecute people who carry out illegal sanitary plumbing,
gasfitting, and/or drainlaying work. The board had funded this function through part of
the disciplinary levy and then the offences fee. However, the Act empowered the board
to set a disciplinary levy to fund the costs of complaints and discipline only in relation
to registered persons.
In February 2011 the Regulations Review Committee concluded that the disciplinary
levy imposed by the board since 31 July 2010 should be drawn to the special attention
of the House of Representatives, and the Regulations Review Committee recommended
disallowance of the disciplinary levy. As members may remember, on 12 May 2011—in
fact, I am sure they remember it vividly—the chair of the Regulations Review
Committee moved a motion to disallow the disciplinary levy with effect from the end of
the board’s registration year, 31 March 2012. However, this motion was not agreed to.
As a result the board changed its fee and levy structure and removed the part of the
disciplinary levy that was funding prosecutions against non-registered persons and set
an offences fee to fund its prosecution function instead.
8564 Plumbers, Gasfitters, and Drainlayers Amendment Bill 14 Mar 2013
The Regulations Review Committee is currently considering the validity of the
offences fee prescribed by the board. If the Regulations Review Committee also
recommends disallowance of the offences fee, the board could be left unfunded to carry
out its statutory prosecution functions. Therefore, without this validating legislation the
board would be placed under significant financial pressure and would be unable to carry
out its important statutory functions that directly affect the safety and the well-being of
New Zealanders. It is essential that we resolve this matter and resolve it quickly.
I move that the Government Administration Committee consider the Plumbers,
Gasfitters, and Drainlayers Amendment Bill, that the bill be reported back to the House
by 22 March, and that the committee have the authority to meet at any time—and I
think I have already moved all of that accordingly. In fact, I had better finish moving it,
because I think I have to finish the moving. OK?
The ASSISTANT SPEAKER (H V Ross Robertson): Not until the debate is
Hon MAURICE WILLIAMSON: Correct. That is what I thought—that it should
be done at the end, but it is in both parts. Someone in my office is doing a bit of a belt
and braces here by putting it at the start of the speech and putting it at the end. I will
leave it until the end. All I say to the House is that this needs to be done and it needs to
be done quickly.
RAYMOND HUO (Labour): Whenever I have to take a call after the Minister for
Building and Construction, the Hon Maurice Williamson, I feel professionally,
politically, and morally obliged to raise some important points of clarification. The first
point of clarification is that the purpose of this bill, the Plumbers, Gasfitters, and
Drainlayers Amendment Bill, which the Minister has just introduced, is to validate
some actions taken unlawfully by the Plumbers, Gasfitters, and Drainlayers Board—
namely, the board that the Minister appointed. The action concerned referred to the
moneys collected by the Minister’s board unlawfully, so we are dealing with an ultra
The second point of clarification is that the Minister’s bill will apply retrospectively.
The bill in its current form will apply retrospectively in order to address this board’s
ultra vires acts.
The third point of clarification is a bit historical. The Minister lectured the chair of
the Regulations Review Committee quite nicely in relation to the committee’s
unanimous disallowance motion. However, his lecturing in May 2011 was rather
misleading. In his speech on 12 May 2011 the Minister said: “I say to the chair of the
Regulations Review Committee that … if a small group of people from whatever
industry, from whatever sector, come to a select committee and say to that committee
they are unhappy and think something is wrong, then that committee has an obligation
to go out and ask whether there is any industry association or any large body out there
that represents that industry, and to get them to find out their view.”, and so on and so
forth. Of course the committee has such an obligation, and as far as the issues were
concerned, the complaints were not from a small group of stakeholders. The sector is
unhappily divided and, in the Minister’s own words, the whole issue of the Plumbers,
Gasfitters, and Drainlayers Board has been quite shambolic for a long period of time.
The Minister seems to have criticised the Regulations Review Committee for its
diligence and professionalism, so the point of clarification here is that the Regulations
Review Committee is a very important part of Parliament’s processes. Its decision then,
in relation to the Plumbers, Gasfitters and Drainlayers Board (Fees) Notice 2010, was
made unanimously with the support of both the Government and Opposition members
on that committee. The committee did give the board the opportunity to reply and it did
not consider the submissions in isolation.
14 Mar 2013 Plumbers, Gasfitters, and Drainlayers Amendment Bill 8565
Also, it is appropriate for me to point out that there are actually two professional
associations representing the vast majority of the sector. The master plumbers
association the Minister referred to in his speech, the Master Plumbers, Gasfitters and
Drainlayers (NZ) Inc., is one. The Minister said in 2010 that it had 733 businesses as its
members. There is another association called the Plumbers, Gasfitters, and Drainlayers
Federation, and, using 2010 data, it shows that it had 900 or so members. To be fair and
scientifically truthful to the sector the Minister cannot support one and ignore the other.
The federation alleges that the board members are made up largely of members of
the master plumbers association. If it is true, it may help explain why the master
plumbers association was opposed to the disallowance motion of the Regulations
Review Committee. It also helps to explain why the Minister has to resort to such a bill
to bail out the board.
Other allegations made so far include that, firstly, the reason why the Minister has to
resort to introducing such a bill, which has retrospective effect, is to try to stop the
federation from taking more legal action against the board.
Secondly, both the board and the Minister knew the money had been taken from the
industry illegally, and this will prevent the industry from ever claiming that money
back. Therefore, this bill is nothing more than a cynical exercise by the Minister,
Maurice Williamson, to cover his mistakes of the past.
Thirdly, recent events have revealed that some of the information being supplied to
the public by way of the board’s electronic gas certificates is false, incomplete, and
misleading. The federation believes that this affects thousands of gas certificates that
were integrated into the current electronic gas certificate system. This is a very serious
allegation. The complainant believed that the nature of the false and misleading
information places at risk the public and tradespeople alike.
I agree that the board has a colourful history. It has been the subject of a complaint to
the Office of the Auditor-General, Parliament’s Regulations Review Committee, the
Office of the Ombudsmen, the Charities Commission, and the Inland Revenue
Department. I wonder what the Minister might say now in light of his statement in 2011
that the board was poor in the past, OK at present, and “looking to get the future quite
tidy.” Resorting to such a bill to validate unlawful acts does not strike me as something
Labour supports, with reservations, this bill’s referral to a select committee. It is
important that concerned parties have the opportunity to debate and air their concerns
about the bill at the select committee stage. By supporting this bill’s referral to a select
committee, Labour is not uncritically sanctioning the board’s conduct in 2010, when it
acted ultra vires, or beyond the scope of its levy power as defined in section 143 of the
Plumbers, Gasfitters, and Drainlayers Act. Rather, enabling the bill to reach the select
committee stage will give all concerned parties an opportunity to be heard on these
issues. It must be emphasised that validating legislation needs to be approached with
considerable caution, and this is such a bill. It makes actions that were previously
thought lawful and that have since been found unlawful actually lawful.
As Labour’s spokesperson for building and construction, I wish to emphasise that we
are supporting the board, the master plumbers association and the federation. The
sector, namely the board, the members, and all tradespeople involved, protect the health
and safety of the public, and, specifically for the board, it fulfils its statutory duty by
regulating and ensuring the competency of the tradespeople carrying out sanitary
plumbing, gasfitting, and drainlaying work. Although we are facing bigger issues such
as the leaky buildings saga, I urge the Minister to be cautious, because we are talking
about the quality of people’s lives. Thank you.
8566 Plumbers, Gasfitters, and Drainlayers Amendment Bill 14 Mar 2013
CHRIS AUCHINVOLE (National): May I say what a pleasure it is to rise to speak
in favour of the Plumbers, Gasfitters, and Drainlayers Amendment Bill as sponsored by
the Minister for Building and Construction, Maurice Williamson, and indeed to follow
the previous speaker, Raymond Huo, who clearly understands the circumstances and the
situation of this bill coming before the House. I must say it is a pleasant continuum of
my parliamentary career, because in 2005 I served on the Commerce Committee. Even
though we were in Opposition, it none the less had an Opposition chair. At that stage we
handled the Gasfitters, Plumbers, and Drainlayers Bill. I see the Hon Maryan Street
nodding. You remember the event?
The ASSISTANT SPEAKER (H V Ross Robertson): No, I do not actually, so
please do not bring the Speaker into the debate.
CHRIS AUCHINVOLE: Thank you, Mr Assistant Speaker. I notice that the Hon
Maryan Street does remember, and it was a fascinating and very engaging bill. They are
a remarkably dedicated body of people, and I found the whole thing particularly
interesting. They did have problems as an organisation and I like to think that we were
able to help them. The problems continued on for a while, but consistently there have
been improvements in the direction that this very, very important industry has been
I note the concerns of the previous speaker that we should be cautious with this, that
it is retrospective, that it is validating, and that sort of thing. He is quite correct, but it is
a very important bill, which we progress none the less. It is a bill that will capture few,
if any, headlines, but this does not take away from the importance of its field or its
intent. The bill tidies up legislation around the funding of the Plumbers, Gasfitters and
Drainlayers Board so that it can effectively do its job of protecting public safety. The
bill also validates the Plumbers, Gasfitters and Drainlayers Board’s disciplinary levy,
which funds investigations and prosecutions of plumbers, gasfitters, and drainlayers
who are found to have been in breach of best practices or who are practising without the
proper skills or qualifications.
Let us remember the difficulty we had in maintaining the volume of plumbers that
we needed. Recently during a prime ministerial visit to the West Coast we visited a
plumber’s business that had been highlighted by the development trust on the West
Coast as the business of the year. It is fascinating to see the level of skill, qualification,
and dedication that is required to ensure that the services are properly passed on to
houses. Plumbers, in fact, may I suggest, do more for longevity than the health services
do at a medical level, because they look after our well-being prior to illness and disease.
The amendments that are being proposed are in keeping with the original intent of
the law. That is the reassuring bit. It is clear that the Government’s intention was always
for the Plumbers, Gasfitters and Drainlayers Board’s prosecution function to be funded
by the industry. All its statutory functions are funded through fees and levies charged
under the Plumbers, Gasfitters, and Drainlayers Act 2006—that famous one that
Maryan Street remembers. The clarifications this amendment bill makes are simply a
move to reflect the true meaning and purpose of the law as it should have been put
forward. I look forward to working towards this with my colleagues on the Government
Administration Committee, who have proved over recent months their ability to handle
with competence and focus bills both large in prognostication and division as well as
those of a forthright and logical nature like this one. I support this bill coming to the
committee, and I call on the House to do the same.
Su’a WILLIAM SIO (Labour—Māngere): Talofa lava, Mr Assistant Speaker. I
want to say to the member who just spoke, Chris Auchinvole, is this it? Is this all we
have? On this Thursday we are debating plumbers, drainlayers, and gasfitters? Is that all
there is from this Government? What about unemployment? What about the 16 percent
14 Mar 2013 Plumbers, Gasfitters, and Drainlayers Amendment Bill 8567
of Pacific Island people who are unemployed? It would not be so bad if we were talking
about injecting money to create more jobs. It would not be so bad if we were injecting
money for the education of young people so that we would have more plumbers,
drainlayers, and gasfitters. But is this it?
I say that because earlier this week we had a petition of the people—boxes and boxes
of thousands of petitions, signed by over 390,000 people, who are saying to this
Government: “Stop the sale of assets.” And yet on Thursday, instead of debating that,
we are having to debate the Plumbers, Gasfitters, and Drainlayers Amendment Bill—
Hon Maurice Williamson: This will lead the news. This will lead the news.
Su’a WILLIAM SIO: Ha, ha! I would say I think it is the wrong priority for this
Minister for Building and Construction to introduce this bill. It may be important, and it
may be necessary, but in so far as the New Zealand public are concerned this is not the
priority—this is not the priority.
As my colleague Raymond Huo has outlined, it is unfortunate that the Plumbers,
Gasfitters, and Drainlayers Act of 2006, after so long, now requires amendment in order
to correct some anomalies that have occurred. I suppose, to be fair, the board protects
the health and safety of the public by regulating and ensuring the competency of
persons carrying out sanitary plumbing, gasfitting, and drainlaying work. The board is
funded entirely by the fees and levies charged to plumbers, gasfitters, and drainlayers
registered under this Act, and it is very similar to other occupational licensing boards.
But the board made a mistake. Although I am not a member of that particular select
committee I have to ask why it was that the board did not recognise the mistake that it
had made. If it were not for the vigilance of the Regulations Review Committee, which
in 2011 picked up on what had occurred and concluded that the board appeared to have
made an unusual or unexpected use of the levy power, it would not have been picked
up, I suspect.
In so far as Labour is concerned there are some issues in this bill that we have
reservations about, but we will support this bill going to the select committee because I
think the select committee is probably the more appropriate place for those who are
directly going to be affected by the bill, those who are in this industry, and all other
interested parties to raise their concerns, to raise their questions, and to allow members
of that select committee to critique, analyse, and make appropriate recommendations
with regard to making sure that the bill achieves its particular purpose.
I understand that the purpose of the bill is to get rid of the uncertified practitioners in
the industry. I am sort of surprised that whilst collecting moneys from the plumbers,
gasfitters, and drainlayers solely for the purposes of prosecuting them, that the board
also started using this particular money to prosecute those who are not registered. That
is of concern.
Hon Maurice Williamson: Well, every other profession does that. Architects do it.
Electrical workers do that. This only brings them into line with everyone else.
Su’a WILLIAM SIO: Yes. I understand that the board imposed a disciplinary levy
to fund the enforcement of its activities against those who breached the law, but it went
outside that law and began to then also look at those who were not registered.
So I think it is a good thing that we do bring it in and ensure that the industry
maintains its credibility. It is about ensuring that the New Zealand public are
protected—and we see it on television time and time again. In fact, I have had some
dealings in my own personal situation where one plumber came in and carried out some
work, and a few months later I had to call another plumber, and that particular plumber
raised the fact that the first plumber had been using the wrong materials. So in terms of
making sure that we have got protection for our consumers and our communities, I think
that is particularly important.
8568 Plumbers, Gasfitters, and Drainlayers Amendment Bill 14 Mar 2013
I think what needs to be made clear, though, is that Labour is not uncritically
sanctioning the board’s conduct—that it acted ultra vires, or beyond the scope of its
levy power. Rather, I think it is going to be particularly important that this bill goes to a
select committee, and that anybody and everybody who has an interest in this ought to
be given an opportunity to submit.
In essence, one thing that, really, I have difficulty with—and I made this point
earlier—is that what this bill does is takes actions that were previously thought lawful
and have since been found unlawful, and tries to make them lawful again. There are
some other cases around this country that, I think, will cause some serious concerns in
I think that the work the Regulations Review Committee did when it first considered
the Plumbers, Gasfitters, and Drainlayers Board fees notice in 2010 ought to be
commended. The select committee considered that the board had made “an unusual or
unexpected use of the levy power in section 143 of the Act.”, as the board used the
disciplinary levy to fund enforcement action against non-registered persons. I note that
section 143 provides for the board to set a levy to fund only the cost of complaints and
discipline in relation to registered persons. I also note that the disciplinary levy
validated from 1 April 2007 to 31 March 2008 inclusive is $25. Look at how this
quickly picks up. From 1 April 2008 to 30 July 2010 inclusive it becomes $50, and then
from 31 July 2010 to 11 January 2012 it is $266.
Regarding those who are in the industry and those who are practising their craft, I
would call on all of those organisations to make sure they have a say, because I think
that they would be seriously concerned about the quick movement of those particular
levies, particularly when there is such high unemployment currently in our country.
Despite the job opportunities that this Government attempts to spin to the media, the
fact remains that we still have high unemployment. It is the highest in 13 years. In fact,
for Pacific communities it is 16 percent.
But, as I said, is this all that this Government has for us to debate? Is this it—that,
despite the worst economic history in 51 years, we are here tonight debating the
Plumbers, Gasfitters, and Drainlayers Amendment Bill? I think the public listening in to
this will be saying to every member of that Government there: “Is this what we put you
in there to do?”. It is tweaking all around these plumbers and gasfitters, these little
things that the board itself should have taken care of. Instead, we are here on Thursday
debating this when there are the more serious issues of families struggling to make ends
meet. This Government should have made that the priority rather than plumbers,
gasfitters, and drainlayers. How sad is it that this Government is debating this when
there are so many people looking to it for leadership. I think that they will be very, very
disappointed, not only in this Minister but in the entire Government on that particular
HOLLY WALKER (Green): When we were first approached by the Minister for
Building and Construction, Maurice Williamson, about this Plumbers, Gasfitters, and
Drainlayers Amendment Bill, the Green Party was prepared to indicate our tentative
support for the changes that it made. However, we did have substantial concerns about
the process, including the constrained period of time for the select committee to
consider the bill, and at this point we have to say that those concerns remain and are so
substantial that we are unable to support the bill at this time.
We know in the Green Party that the grievances and complaints concerning the levies
and fees charged by the Plumbers, Gasfitters and Drainlayers Board have been ongoing
for some time. As we have heard, in the past that board used to charge a disciplinary
levy to all those registered under the Plumbers, Gasfitters, and Drainlayers Act, and this
levy was used to fund the board’s complaints and disciplinary processes. In 2010, after
14 Mar 2013 Plumbers, Gasfitters, and Drainlayers Amendment Bill 8569
considering a complaint, the Regulations Review Committee recommended that this
levy be disallowed, as it was being used to fund complaints and disciplinary processes
against unregistered people as well as those registered under the Act, while only
registered people were paying the levy. In response to the report of the Regulations
Review Committee, the Plumbers, Gasfitters and Drainlayers Board replaced that levy
with an offences fee, which carried essentially the same function. Now, as we know, a
second complaint about this offences fee is currently before the Regulations Review
Committee, and although that committee is yet to report on this complaint, there is a
risk that if the offences fee too is disallowed, then the Plumbers, Gasfitters and
Drainlayers Board will be required to refund the moneys it has collected under both the
levy and the fee, and that will leave it in a financially unviable position.
When the Act that created the board was passed in 2006 it was arguably and quite
likely the intention of Parliament that the board’s disciplinary and prosecutorial role
would be funded by a levy of this nature paid by those registered under the Act, as is the
case in other construction industry boards. However, the Act as it is currently worded
seems to fall short of this. [Interruption]
I raise a point of order, Mr Speaker. I am finding myself rather distracted by
interjections flying between other members of the House. If we could have a stop to
that, it would be great.
The ASSISTANT SPEAKER (H V Ross Robertson): Yes, can I just advise the
member that interjections from one side to the other are perfectly in order. However, I
recognise that because of where the member is sitting—and the member should know
this now; she has been here long enough—any interjections from the cross benches can
affect the microphone.
HOLLY WALKER: As I was saying, the Act as it is currently worded seems to fall
short of what Parliament intended in 2006. So this amendment bill would fix that
loophole by retrospectively validating the funds collected through both the levy and the
fee, and allow the board to continue to collect in this manner. As I mentioned at the
beginning, when approached about this the Green Party was prepared to offer tentative
support to allow this bill to be sent to a select committee so that the issues could be
traversed. The amendments in this bill are, we believe, potentially sensible and they
may settle what has been a long-running dispute between the board and some of its
However, I think all members of this House would agree—at least, I certainly hope
they would—that legislation with retrospective application should be approached very
carefully indeed and with meticulous precision and scrutiny. The Green Party has
serious concerns about the process and time frames proposed for this bill, to allow that
level of scrutiny to occur. We know that the bill has had to be drafted quite quickly, and
although that is no criticism of the drafters, simply a statement of fact, when legislation
is drafted very quickly it can often contain errors or omissions. These are picked up,
ideally, by the scrutiny applied at the select committee hearing. However, in this case
that hardly seems likely, given that the time frame proposed for the select committee to
consider this bill is just 1 week. I believe we will have a chance soon to debate this
shortened time frame, when the Minister seeks permission from the House for that. But
for now, suffice it to say that, especially because of its retrospective nature, this bill
requires very close scrutiny and it will not get that from a 1-week select committee
Furthermore, as a number of speakers have already noted, the issues and complaints
regarding the levies or fees raised by the Plumbers, Gasfitters and Drainlayers Board
have been controversial and the source of much strife and division over a number of
years. So therefore there are likely to be many individuals affected by this bill, not least
8570 Plumbers, Gasfitters, and Drainlayers Amendment Bill 14 Mar 2013
the authors of the most recent complaint to the Regulations Review Committee who
deserve to be treated with natural justice and due process. The rushed process followed
with this bill, I believe, risks creating a new injustice that will only compound the strife
and bitterness now so ingrained in this sector. Given that this bill is designed primarily
to put a stop to that, we should be very careful about risking compounding the sense of
unfairness and injustice in that sector.
It may very well be that we need to fix the messy situation that the board has now
found itself in. The Green Party could support fair, thoroughly drafted legislation to
achieve this, provided we were satisfied that a proper process has been followed. But we
cannot be confident of that at present. We have indicated to the Minister our willingness
to support changes, like those proposed in the bill, but our concern is about the time
frame as proposed. Retrospective legislation should not be entered into lightly. It should
be very rare, and when it occurs it should be meticulously drafted and scrutinised. In our
view the bill at the moment does not meet this test. The 1-week select committee time
frame proposed would not allow for the appropriate level of scrutiny for a retrospective
piece of legislation, and the Green Party therefore cannot support it.
JAMI-LEE ROSS (National—Botany): I am happy to support this piece of
legislation, the Plumbers, Gasfitters, and Drainlayers Amendment Bill. Clearly, it is a
piece of legislation that we wish we did not have to deal with right now, but it is
important because when Parliament made some decisions in 2006 on the existing Act it
made some mistakes. [Interruption] I hear the member from New Zealand First calling
out. I might remind her that it was a Labour - New Zealand First coalition at the time
that it was in place, so, hey, if she wants to take ownership of the mistake, she is
welcome to. But it is clearly a mistake that we have to fix up.
The reason why we have to fix this up is that the Plumbers, Gasfitters and
Drainlayers Board is an important occupational licensing body that is in place to protect
New Zealanders. We need to give it the mandate and give it the ability to fund an
important part of its job, which is keeping the public safe by ensuring that plumbers are
doing their jobs properly and that gasfitters are not operating without a licence and in an
unsafe manner. There have been situations where members of the public have been put
at risk, have had their lives put in danger, because unlicensed individuals have not been
doing work appropriately. We expect this body that we are debating to be able to go out
and do its job, look after the public, and ensure that unlicensed individuals are not
putting lives unnecessarily in danger. It has to be able to fund that work.
Clearly, there was a situation in 2006 where an incorrect clause in a piece of
legislation was put in place, which has led to us now having to fix it up. It is not good,
but we have to do it. I say to the members who are opposed to this bill that opposing it,
and potentially getting into a situation where the board is unable to fund its activities if
the regulations were ever to be disallowed, would lead to a very precarious financial
situation for the board. The board could potentially become insolvent, and then it just
could not operate at all.
It is not desirable to do this on a regular basis, but sometimes it is important to do so.
We are doing it to protect the public and to ensure that the board can do its work
properly. That is what the legislation is all about, and this party supports that.
Hon MARYAN STREET (Labour): It seems to me to be one of the great
unanswered existential questions as to why the Plumbers, Gasfitters and Drainlayers
Board has had such a fraught and wretched history, because every time I have ever
employed a plumber, a gasfitter, or a drainlayer they have turned out to be perfectly
jolly men and have got on with the job. So to have this level of controversy bedevil this
board over many years is something that some of us in this House find fairly
inexplicable. I do want to make a reference to the fact that this goes back to 2006
14 Mar 2013 Plumbers, Gasfitters, and Drainlayers Amendment Bill 8571
legislation, as the previous speaker who has just resumed his seat, Jami-Lee Ross, said.
That is absolutely true. It was a complex piece of legislation at the time. I remember it
well, as the member Chris Auchinvole referred to earlier, and it had to be divided into
two parts in order to try to get it right. But the interesting thing, perhaps for the member
who has just resumed his seat, is that the fault with this bill did not become apparent to
either Labour or National until 2010. So this is not something about which the National
members can say “Oh, we spotted this years ago, and you guys just didn’t do anything
about it.” It did not come to light. They were not aware of it. We were not aware that the
provision would be misused in this way until 2010, when an additional levy was applied
by the Plumbers, Gasfitters and Drainlayers Board in order, as I understand it, to try to
get the cowboys out of the industry, and that is the purpose of the bill.
But the purpose of the board was to gather revenue in order to prosecute and
investigate any breaches of the Acts that covered their activities. But the Act applied to
registered people only. So perhaps another lesson in this for the public is: for goodness’
sake, make sure you get a registered plumber, gasfitter, or drainlayer, and do not go for
one of the cowboys who say “Oh, I’ve got a spare piece of that in the back of my van—
it’ll just do the trick.” So the lesson to any householder at home is to make sure that you
get a registered person. However, that is not the subject of the bill, although it is the
purpose of the bill, as it says quite clearly, to get rid of uncertified practitioners in the
industry. As I understand it, this is what the board was attempting to do with this levy,
which has turned out to be illegal.
That discovery came through the application of the Regulations Review Committee.
At the time that the original legislation was going through the House, I was also on the
Regulations Review Committee in 2005 and 2006, and most of 2007. I remember this
coming there, and I remember complaints and the board appearing in front of the
Regulations Review Committee as well. But this has come to light because of the
scrutiny of the Regulations Review Committee, which goes to underscore just how
important that committee is, because it scrutinises things that otherwise do not get any
parliamentary scrutiny. That is its purpose, and it performs a hugely important function
in that respect. Everything we vote on comes to this House for a vote. The things we do
not vote on that are exercised by regulation promulgated by Ministers and Orders in
Council do not get scrutinised by this House. So we need to respect the view of the
Regulations Review Committee—not only respect its view but also respect its function.
I need to say that I dislike, to my core, retrospective legislation, and this is the second
time in 2 weeks I have got up to make a speech about retrospective legislation. The last
time was on the Tasman District Council validation of rates that had been misapplied. I
hate it, but we are in the situation where this House has very few alternatives. We either
bankrupt the Plumbers, Gasfitters and Drainlayers Board, which is in nobody’s
interests—not the industry’s interests, not the members’ interests, and not the interests
of ordinary people who require the services of these tradespeople. So I have to bite the
bullet on this one. I do not like retrospective validating legislation. It is correcting an
error. Somebody has done something illegal, and Parliament has to fix it, otherwise
people will suffer as a result. So for that reason Labour is supporting this bill, but not
There is one other item that I want to bring to the House’s attention. I bring it to
attention in this first reading because there is such a short time frame for the
Government Administration Committee to consider this bill—and the previous speaker
from the Green Party, Holly Walker, referred to that substantially—but there are some
things in the content of the bill itself that require some reconciliation. I hope that the
officials of the Minister for Building and Construction will, during the week that the bill
is in front of the select committee, provide the select committee with some way of
8572 Plumbers, Gasfitters, and Drainlayers Amendment Bill 14 Mar 2013
resolving new section 143(1) in clause 4, which provides the new process by which the
board may legitimately apply a levy for disciplinary and prosecution purposes, with the
new section 171B, which comes under clause 5 in Part 2 of the bill, and refers to the
fact that any amendment on the date or after the date that this bill comes into force will
render the previous validation ineffective. So the validation that we are trying to pass
here will cease to apply if the board moves to make an amendment to the fee on or after
this bill has come into effect and become an Act. I think there is a contradiction between
those two things.
I think that if the section 142 power that was used by the board to prescribe the
original offence fee was dubious enough to require validation by this bill, then surely it
cannot be a lawful basis for the board to use in amending the fee. If the bill is enacted,
an argument can be made that the section 142 power, in so far as it was applied in
prescribing the offence fee, is implicitly repealed by the new empowering provision
inserted into clause 4 of the bill. I do think that the policy intent behind new section
171B is to tell the board that if it amends the offence then it will not have the protection
of the validation provided for in the bill. I think this sends confusing signals. I know the
Minister’s office and the Minister are aware of my concerns in this regard, and I would
hope that officials would be able to mend what I see as a difficult set of competing
signals before the bill is passed into law. Thank you.
IAN McKELVIE (National—Rangitīkei): This vexing issue has been before the
Regulations Review Committee for the entire time that I have been part of this House,
which is a bit over a year now. Certainly, as the previous speaker, the Hon Maryan
Street, alluded to, it has been before the Regulations Review Committee since around
Before I make a few comments on that, I do want to comment on a couple of issues
that Su’a William Sio raised, because I think they need some addressing. One could be
depressed by the current cricket score, but, also, you could definitely have been
depressed by the first minute or so of his speech. He clearly lost his way, as the policies
of this Government will almost certainly provide more and better-paid jobs for people,
and certainly for plumbers, gasfitters, and drainlayers in New Zealand.
Having got that off my chest, I just want to go on to make a few points about this
bill, the Plumbers, Gasfitters, and Drainlayers Amendment Bill, because it is quite
important, I think. Although I am not keen on retrospective legislation, and I do not
think anyone in this House is keen on it, it is at times necessary to put in place
legislation that tidies up some issues for us. All boards in the building and construction
sector are funded by fees and levies charged to their industry. This bill validates that
situation for the Plumbers, Gasfitters, and Drainlayers Board, and puts it on a par with
other industry bodies. The matter arises from its desire to rid the industry of unskilled
and unqualified operators. There is no way to protect its members and clients from what
may be termed unskilled or shonky operators other than for the Plumbers, Gasfitters,
and Drainlayers Board to pursue and prosecute as required. We need to remember that
this activity also protects the consumer from this danger or shonky work, and that is
certainly a very important part of this Parliament’s work.
As I have said, the bill has arisen after a number of attempts by both the Regulations
Review Committee and the Plumbers, Gasfitters, and Drainlayers Board to rectify the
situation. I must also defend the Minister for Building and Construction, because I do
not recall him ever criticising the Regulations Review Committee, as Raymond Huo
stated earlier. This is a pragmatic approach to a problem that was clearly an error in
earlier drafting of the Act, both in 2000 and in 2006. It was clearly the intention of the
Government of the day that the Plumbers, Gasfitters, and Drainlayers Board have the
ability to police its own industry, to keep it under control, and to make sure that it was
14 Mar 2013 Plumbers, Gasfitters, and Drainlayers Amendment Bill 8573
run rationally and in a manner that certainly protected its clients and the public from
what was going on.
I have got no problem in recommending that this bill go to the next stage. I am also
pleased to see that it will be back in the House very quickly, as I think it is necessary
that we get this sort of work done quickly, tidied up, and moved on. I also have some
sympathy for the complainants in this matter, as they have spent a lot of time and
energy putting those complaints to the Regulations Review Committee. I am sure that
this solution will overcome those problems for the industry. Thank you.
PHIL TWYFORD (Labour—Te Atatū): I am willing to lay a bet that when the
Hon Maurice Williamson took up his warrant as the building and construction Minister,
sorting out the Plumbers, Gasfitters and Drainlayers Board was probably not high on his
list of strategic priorities—Maurice’s to-do list. I guess one late night 4 years ago he
was sitting in the Bolton Hotel scribbling a list of things he wanted to achieve as
Minister, and sorting out the Plumbers, Gasfitters and Drainlayers Board probably was
not one of them.
It is fair to say that the problems of the plumbing, gasfitting, and drainlaying industry
and the problems associated with that industry’s board have been the bane of the lives
of a number of building and construction Ministers over the last few years. It is a
troubled industry. The dysfunctional relationships in that industry—I think it is fair to
say—have plagued the operation of the Plumbers, Gasfitters and Drainlayers Board, and
that sort of entrenched animosity between members of the board and people involved in,
I think, two different industry associations has tied up what should be an effective
mechanism to regulate and clean up an industry. It has been plagued by fighting and
animosity for some time. This bill, the Plumbers, Gasfitters, and Drainlayers
Amendment Bill, is not the first plumbers, gasfitters, and drainlayers legislation to come
before this House in the last few years. I think we are probably all hoping that it will be
Darien Fenton: Oh, no!
PHIL TWYFORD: Labour supports this bill. Well, you know, I have a lot of
sympathy for the remarks of Su’a William Sio, who pointed out—I think quite rightly—
that the people of New Zealand would like this Parliament to be focusing on things that
are more of a priority for them. They want education sorted out. They want jobs. They
want child poverty dealt with. They want Auckland’s housing crisis addressed. Instead,
the Government, Ministers like the Hon Maurice Williamson, and this Parliament are
having to spend time on what for most Kiwis is a pretty obscure piece of legislation.
I want simply to underline some of the comments that my colleagues Raymond Huo,
Maryan Street, and Su’a William Sio have already made, and that is that Labour is
supporting this bill going to the Government Administration Committee, because we
feel that the issues deserve to be aired and that the various warring parties in the
industry deserve the opportunity to come along, have a say, and see whether or not this
bill can sort out the mess that the Plumbers, Gasfitters and Drainlayers Board has got
We have rehearsed already our discomfort with the fact that this is retrospective
legislation that is seeking to validate a practice that should never have taken place. The
Plumbers, Gasfitters and Drainlayers Board should never have been using a levy that it
extracted from registered members of its industry to prosecute and discipline members
of the industry who are not registered members. As the Minister said earlier, it is
perfectly normal in this kind of situation for an industry body like this, which is charged
with maintaining standards and regulating the industry, to exercise a disciplinary role
for registered and non-registered members. The problem is that the enabling legislation
for this board restricted its purview to registered members of the board. So the board
8574 Plumbers, Gasfitters, and Drainlayers Amendment Bill 14 Mar 2013
has got itself into a real pickle here, and it needs this House to retrospectively validate
those levies that have been spent in a way that they were not supposed to be. As Maryan
Street said, we can thank the Regulations Review Committee, which has done its job
well. It identified what I think it described as an unusual or unexpected use of the levy
power, and it has pursued this issue with some diligence over the last year or so. So we
owe thanks to the Regulations Review Committee.
My colleagues have pointed out also that Labour, by supporting the bill at this stage,
is not uncritically supporting the conduct of the board. We are not endorsing the
behaviour of the board in acting beyond the law—acting, in fact, beyond the scope of its
levy power. Rather, what we want to do is send this bill off to the select committee, try
to get the problem sorted out, and give all the parties a chance to get in the room and
express their views.
I want to just provide some background about the Plumbers, Gasfitters and
Drainlayers Board for those people listening. Its job is to protect the health and safety of
the public by regulating and ensuring the competency of people in trades carrying out
sanitary, plumbing, gasfitting, and drainlaying work. This bill allows the board to
continue to collect offence fees. Currently, it is about $600,000 a year from registered
persons for this 2013 licensing year. This bill validates both the disciplinary levy and
offence fees in the past and changes the rules for the future. The effect of this is that the
board cannot be required by registered persons to refund the moneys that were collected
unlawfully by the board. I think, as Maryan Street pointed out, if we do not do that,
basically, the Plumbers, Gasfitters and Drainlayers Board will go belly up, and that will
make a complicated and difficult situation much worse. So we support the bill on the
basis that it is a necessary evil and something that needs to be done.
The last thing I would like to do is just touch on the main provisions of the bill.
Section 143 of the Plumbers, Gasfitters, and Drainlayers Act is the empowering
provision, allowing the board to impose a disciplinary levy on registered plumbers,
gasfitters, and drainlayers. The board is allowed to use that levy for investigations into
allegations or complaints against registered persons only and for disciplinary
proceedings. Well, what this bill does is it empowers the board to impose those levies
against registered members, but it enables the board to use those levies for prosecuting
or disciplining any—either registered or unregistered—players in the industry. So it
extends the purpose for which the board may impose the levy, and clause 4 of the bill
amends section 143 of the Act in that way.
Finally, Part 2 of the bill is the validation clause. What it does is it retrospectively
validates the disciplinary levy and offence fees that were imposed between 1 April 2007
and 11 January 2012.
MIKE SABIN (National—Northland): Although I am happy to take a call in
support of this bill, the Plumbers, Gasfitters, and Drainlayers Amendment Bill, it is fair
to say that no one takes any pleasure from speaking to a bill that seeks to validate,
essentially, mistakes of this House. All that said, this is not a situation where the
intended purpose of the original Act, drafted in 2006, has not been sought to be
achieved. I am one of the members of the Regulations Review Committee, which has
tangled with this issue over the past year, or certainly since I have been a member of
this House, and it was obviously a problem long before that.
It is fair to say that the Plumbers, Gasfitters and Drainlayers Board has had its fair
share of challenges and troubles over the years, and this has certainly complicated the
challenges that it has. Having said that, it is quite clear that the board, which is funded
entirely through levies, has gone about executing its role, in terms of disciplinary
prosecutions and procedures, in the best interests of the entire industry and, in fact, in
the best interests of all New Zealanders, because of the inherent dangers that would
14 Mar 2013 Plumbers, Gasfitters, and Drainlayers Amendment Bill 8575
come from shonky practices, as alluded to by the Minister. Where the difficulties have
arisen is that in the original drafting of the law there is some degree of difficulty about
the difference between a levy and a fee, and the fact that the Plumbers, Gasfitters and
Drainlayers Board sought to take prosecutions against people who are not actually
registered plumbers. Submissions by plumbers and gasfitters to the Regulations Review
Committee certainly alluded to their concerns about this, but I think it was generally
accepted by all that it is actually in the best interests of the industry as a whole that
those who are not registered and who are bringing the industry into disrepute and
putting members of the New Zealand public at risk are actually held to account, and the
board is really the only body that is geared up to achieve that.
So what we have in this validation legislation is retrospectively dealing with the ultra
vires problems that have arisen through a board that has actually followed the intent of
the law, but the law in itself has not provided the appropriate platform. It sounds black
and white talking about it here, but I can absolutely say that it is not, and that is
something that the Office of the Auditor-General has also had some challenges in
tangling with. But I think the important thing in terms of supporting this bill in a timely
manner is that what we are doing here is validating practices that were in line with the
original intent. It is very important to give this industry some certainty to New
Zealanders and this board, and in that I am happy to commend this bill to the House.
The ASSISTANT SPEAKER (Lindsay Tisch): I am going to give the call to the
Green member. This is normally a 5-minute call, but you can actually take 10 minutes if
STEFFAN BROWNING (Green): I will not need 10 minutes, but I am pleased to
speak to this Plumbers, Gasfitters, and Drainlayers Amendment Bill. It is unfortunate
that there is a retrospective aspect to it, but it would seem appropriate if this
organisation, the Plumbers, Gasfitters and Drainlayers Board, is going to keep its
funding. We oppose this bill at this point but look forward to engaging at the
Government Administration Committee, because we think that if this works well, we
might be able to revisit our opposition to it.
There is clearly a gap in the legislation, but there is also clearly a dysfunctional board
as well. The industry is somewhat split. There is some resentful membership, and it
seems like in some cases it is the small operators versus the larger operators that the
board seems to look after in a much better way. This might be an opportunity for some
amendments that can send signals about the functionality of that sector.
There is the membership, of course, but there are also outliers who still practise
under a mate’s ticket or registration. In some respects, the board and maybe some of this
legislation have helped drive that. There are part-timers or tradespeople who are
working a range of different skills who are not just drainlayers, for example, or
plumbers. I was speaking to one as recently as yesterday, who pointed out that he pays a
$300 levy. It might not matter to some people across the House—it may seem a drop in
the bucket—but for someone who is doing only drainlaying—
Hon Maurice Williamson: That’s a good expression for plumbers.
STEFFAN BROWNING: —it is a good pun—and who is working only
occasionally, but is still very skilled, and has to travel and then has to pay on top of that
a further $380 to do the refreshers to brush up for the registration, this is driving skilled
people out. And it is getting into the grey area of operating under someone else’s
registration and ticket. The board, in keeping its—let us call it—“disputed funds” will
need to look at it. I dare say that the board is listening, and I am hoping that it is
listening to the debates that go on through this rather shortened process.
The board needs to better reflect on what it needs for the whole industry, to be fairly
introspective, to make sure it is not operating with conflicts of interest, and to look after
8576 Plumbers, Gasfitters, and Drainlayers Amendment Bill 14 Mar 2013
New Zealand in total by looking after all the tradespeople, so that we can have good
tradespeople who are able to afford to retain their registration and be kept up to date at
an affordable rate, so that everyone in the community can benefit.
We oppose the bill at this point, to a fair degree because of the shortened process,
although understanding that there is some rationale behind it, and we look forward to
how that is distilled through the select committee process. Thank you.
LOUISE UPSTON (National—Taupō): I am pleased to stand as the final speaker
on this side of the House for the Plumbers, Gasfitters, and Drainlayers Amendment Bill.
One of the things that has disturbed me in this debate was the opening contribution by
the Labour member of Parliament Raymond Huo, who was so disrespectful to this
industry that I was quite shocked. I was quite shocked and I was very disturbed at the
tone in which the first Labour speaker spoke about this group of people, who are hard-
working New Zealanders, who contribute to the economy, who are local employers,
who have trained hard to do the work they do, and who have a really important job in
terms of the health and safety of New Zealanders and the sanitation that is available to
each and every one of us, and to suggest that this was not important work for the
Government I find quite horrendous.
One of the things that I do not know whether I do or do not enjoy about being the
final speaker on this side of the House is that I follow some very able colleagues who
have spoken at length about the bill, particularly my colleagues whom I want to
commend for being on the Regulations Review Committee. It is a committee that is not
often given high profile in this House—
Mike Sabin: We’re the unsung heroes.
LOUISE UPSTON: —but it does do very important work. Unsung heroes—that is
correct, Mr Sabin. Those on the Regulations Review Committee are the unsung heroes
of the parliamentary select committee process and have the very important job of
looking at regulations that are put in place. These ones with the plumbers, gasfitters, and
drainlayers are particularly interesting, and the fact that there has been an issue in terms
of the levies that they have been charging and the work that they are using as a result of
the levies charged. It is an interesting group, because I have had very, very lengthy
conversations with a Taupō constituent about this exact organisation, about the work
they do, about how they are registered, and how their fees and levies are applied. It is
one of the things that as a member of Parliament you have the opportunity to get
involved with and learn about organisations, trades, and employers in areas that you
have not really had the opportunity to learn about before coming to this House.
This bill will tidy up a piece of legislation that has been challenging those important
people who work in the plumbers, gasfitters, and drainlayers field. It will be very
important for them that the board is able to do the work that it is put in place to do, and
this piece of legislation that is brought to the House by the Hon Maurice Williamson
enables it to do that. Unlike the other side of the House, I think the work that the
plumbers, gasfitters, and drainlayers do for this country is important. It is important for
our Parliament to support the work they do, to support their board, and to make sure that
they are able to undertake the work that they need do. I am pleased to support this bill at
its first reading.
14 Mar 2013 Plumbers, Gasfitters, and Drainlayers Amendment Bill 8577
A party vote was called for on the question, That the Plumbers, Gasfitters, and
Drainlayers Amendment Bill be now read a first time.
New Zealand National 59; New Zealand Labour 34; Māori Party 2; ACT New
Zealand 1; United Future 1; Independent: Horan.
Green Party 14; New Zealand First 7; Mana 1.
Bill read a first time.
Bill referred to the Government Administration Committee.
Hon MAURICE WILLIAMSON (Minister for Building and Construction): I
move, That the Plumbers, Gasfitters, and Drainlayers Amendment Bill be reported to
the House by 22 March 2013, and that the committee have the authority to meet at any
time while the House is sitting (except during oral questions), during any evening on a
day on which there has been a sitting of the House, and on a Friday in a week in which
there has been a sitting of the House, despite Standing Orders 188 and 191(1)(b) and
The shortened select committee report-back period is essential, as the new licensing
year commences on 1 April and practitioners are already making licensing payments to
the Plumbers, Gasfitters and Drainlayers Board. This legislation will provide
practitioners and the board with certainty. May I say that if the Regulations Review
Committee does actually disallow the old fees and payments, it could be that the board
would find itself completely insolvent, and there would be no regulatory body
controlling the industry. That is why there is a shortened period.
HOLLY WALKER (Green): I will take just a brief call in this debate on the
shortened process for the Government Administration Committee’s consideration of the
Plumbers, Gasfitters, and Drainlayers Amendment Bill. As I mentioned in my
substantive contribution on the bill, the Green Party is concerned about this shortened
select committee process.
Having sat on a select committee dealing with a bill in a shortened 3-week time
frame and having found it impossible in that case to do justice to the complex issues or
apply the appropriate level of scrutiny to the bill, I cannot imagine how that can be
achieved in the 1 week proposed for this bill. In our view, 1 week would be insufficient
to adequately deal with any bill through the select committee, let alone one that has
retrospective application. In such cases an even greater level of scrutiny should be
applied than to a normal bill, and this will be impossible for this bill in 1 week.
Furthermore, we can predict that because of the long-running issues and complaints
that prompted this bill, there will be a significant number of affected parties wishing to
make submissions and follow the select committee’s process. These people deserve the
opportunity to do so, because in many cases the changes proposed in this bill will
impact directly on their daily lives and their businesses. One week is not sufficient for
these stakeholders to prepare, present, and submit on this bill.
So the Green Party remains strongly opposed to this shortened select committee
process. Although we understand that there is some rationale for that shortened process,
those concerns are very fundamental. However, we will, as always, engage with the bill
at the select committee as constructively as possible.
8578 Plumbers, Gasfitters, and Drainlayers Amendment Bill 14 Mar 2013
A party vote was called for on the question, That the Plumbers, Gasfitters, and
Drainlayers Amendment Bill be reported to the House by 22 March 2013, and that the
committee have the authority to meet at any time while the House is sitting (except
during oral questions), during any evening on a day on which there has been a sitting of
the House, and on a Friday in a week in which there has been a sitting of the House,
despite Standing Orders 188 and 191(1)(b) and (c).
New Zealand National 59; New Zealand Labour 34; Māori Party 2; ACT New
Zealand 1; United Future 1.
Green Party 14; New Zealand First 7; Mana 1; Independent: Horan.
Motion agreed to.
MINIMUM WAGE (STARTING-OUT WAGE) AMENDMENT BILL
Hon SIMON BRIDGES (Minister of Labour): I move, That the Minimum Wage
(Starting-out Wage) Amendment Bill be now read a second time. I thank the members of
the Transport and Industrial Relations Committee and its chair, David Bennett, for
dealing with this bill so swiftly and efficiently. The select committee reported back to
the House on 26 February and recommended that the bill proceed with some
amendments. I agree with the amendments proposed. In addition, I intend to make some
minor technical changes to the bill through an amendment to be tabled at the Committee
stage. These technical changes will provide further clarity around the meaning of
continuous employment, clarity on the timing for which a person is no longer eligible
for a starting-out wage, and changes consequential to the Minimum Wage Order 2013
coming into force.
In New Zealand and worldwide young people have been severely affected by the
recession. The household labour force survey shows that young people under the age of
20 have been more negatively affected in employment terms than older groups of
workers. In the past 5 years there has been a drop in employment for young people aged
between 15 and 19 years of about 42 percent.
International research shows that long spells of unemployment and inactivity may
permanently lower young people’s future employment prospects, particularly where
they are low skilled and inexperienced. Like other OECD countries, New Zealand is
responding to the negative effects of the global recession on young people. A reduced
minimum wage is used in several countries, including Australia and the United
Kingdom, to encourage youth employment. We need to ensure that young people are
ready and equipped for work as the economic recovery gains momentum.
I am confident that the Minimum Wage (Starting-out Wage) Amendment Bill will
assist young and inexperienced workers to gain a foothold in the labour market. To
achieve this aim the bill will enable the setting of reduced minimum wage rates by
Order in Council for certain groups of young people aged 16 to 19 years.
The rates will be set at no less than 80 percent of the adult minimum wage. It is
intended that three groups of young people be targeted for the starting-out wage. These
are 16 and 17-year-olds in their first 6 months of work with a new employer, 18 and 19-
year-olds who have been paid a benefit for 6 months or longer and who have not
completed 6 months of continuous work with any employer since starting on the
benefit, and 16 to 19-year-olds in training in a recognised industry training course
involving at least 40 credits a year.
14 Mar 2013 Minimum Wage (Starting-out Wage) Amendment Bill 8579
The intent of the starting-out wage is to support young people who are new to the
workforce into long-term sustainable employment by providing incentives for
employers to take them on. For young people the starting-out wage will provide them
with an advantage in the labour market so they can gain the necessary skills and work
experience that will assist them throughout their working lives.
The bill limits the period for which an employer can pay a starting-out wage to a
young person working for them who is not supervising or training others to a period of
6 months. After this time the young person will be entitled to be paid the adult rate by
that employer. This bill encourages continuity with the same employer. Young people—
like all employees—with a steady work history are seen as less risky for employers to
take on. This puts a focus on young people gaining work experience at a steady job and
becoming better equipped for their future employment.
This Government recognises that there is a need to provide for more vocational
training opportunities for 16 to 19-year-olds. It is important that young people are given
opportunities to engage in training for industry. Employers so far have indicated that
they are not using the training minimum wage. The bill provides for young people aged
between 16 to 19 years who are required to undergo training as a condition of their
work to be paid the starting-out wage rather than the minimum training wage.
The number of annual training credits will be changed from 60 to 40, through an
Order in Council, for 16 to 19-year-olds to give them the flexibility to choose a range of
courses without having such a heavy workload. Reducing the credit requirements to at
least 40 credits per year for 16 to 19-year-olds will support more young people to gain
skills in their chosen industry. The lower credit requirement means that more people
will qualify for the starting-out wage than did for the training wage, so more employers
will opt to train young people.
The select committee received a range of submissions on the bill, and it has given
thorough consideration to the issues raised by submitters. As a result, some minor
amendments have been recommended. An amendment is proposed to clause 2 of the
bill, which provides the date on which the bill comes into force. The select committee
recommends changing the commencement date of the bill from 1 April to 1 May 2013
to provide sufficient time for employers and young people to be fully informed about
how the starting-out wage will affect them.
This will not affect the making of this year’s minimum wage order, which, as it did
last year, is intended to come into force on 1 April. Nor will it affect those on the new
entrants wage, who will receive the higher of the new entrants rate or the new starting-
out wage rate for 16 and 17-year-olds until they have completed their 3 months or 200
hours of employment under the current law.
Clause 4 replaces section 4 of the principal Act, which authorises the Governor-
General, by Order in Council, to prescribe minimum rates of wages, with new sections 4
to 4B. The select committee proposed a small number of technical amendments to the
bill under clause 4 to clarify its operation. One amendment clarifies that when the bill
refers to “continuous employment”, continuous work counts from the worker’s first day
on the job and is taken to mean any amount of work, regardless of hours per week, done
on an ongoing basis for an employer. Another amendment clarifies that the time before
a young person turns the age specified in the starting-out wage Order in Council would
count towards their eligibility for the starting-out wage. These are sensible
recommendations, and I thank the select committee. I would also like to thank the
people who took the time to make a submission on the bill.
The Minimum Wage (Starting-out Wage) Amendment Bill is the latest in a series of
steps the Government is taking to get more New Zealanders into work and into jobs.
The Government’s continued focus on getting young people off benefits and into work
8580 Minimum Wage (Starting-out Wage) Amendment Bill 14 Mar 2013
has already seen thousands of young people benefit from subsidised work placements
and pre-employment training. The Minimum Wage (Starting-out Wage) Amendment
Bill is part of this wider package to help get more young New Zealanders into work or
training. It provides real incentives for employers to take on young people and give
them the opportunity to gain work experience and skills that will stand them in good
stead for their future working lives and careers. I commend this bill to the House.
DARIEN FENTON (Labour): Well, I do not think there is anything for that
Government to be congratulating itself on, when the time frame for the submissions on
this Minimum Wage (Starting-out Wage) Amendment Bill has been shortened. When
we are considering something as important as cutting workers’ pay, the least the
Government could have done was give the normal period of time, and not rush it
through the Christmas period when people did not have the chance to make
submissions. Needless to say there were more than 500 submissions—531, actually—
received on this bill, of which 522 were opposed; only nine were in favour. The reason
for that is that this bill is going to put young workers back on the scrap heap of youth
minimum wages. It is the economic failure of this Government and it is putting its
failures squarely on the shoulders of our young people.
This bill reinstates youth rates not only for 16 and 17-year-olds but also for 18 and
19-year-olds—something we have not seen in New Zealand since last century. Rather
than making bold plans to tackle the urgent crisis of youth unemployment—27,000
under-20-year-olds are not in employment, education, or training—the Prime Minister
and the Government have once again demonstrated their contempt for young people and
also the fact that they have no ideas. This bill is based on the flawed idea that cutting
wages is a way to grow jobs; it is a tried and failed policy of last century.
We all know that there is a problem. No one is denying that. There is a national crisis
in youth unemployment. But we do not agree that cutting wages for 16 and 17-year-olds
or 18 and 19-year-olds who have been on a benefit for 6 months will make the
difference that is needed. Cutting wages and making workers easier to fire, as this
Government has been doing, has not created jobs in the past for young people, and is
not creating jobs now. There are now 90,000 young people out of work, education, and
training. That is an increase of more than 10,000 in the last year alone, and that is
shameful. That is despite the fact that Government members get up every time they
have the opportunity and boast about the 90-day trial period. It has done nothing. It has
done nothing to help youth unemployment. I find it very astonishing that the Prime
Minister admits he could not live on the minimum wage of $13.50 an hour—soon to go
up by a paltry 25c an hour—and, as he admits, at the same time he still expects young
people, young 16 to 19-year-olds, to live on something like $10.80 or $10.90 an hour.
What young people need is hope. They need hope and the skills to succeed in the job
market and achieve higher incomes and better jobs. Creating a high-skill, high-wage
economy is the way to go about this to give our kids hope for the future, not cutting pay.
We all know that the next generation of this country is hollowed out. Numbers of our
kids are getting on the plane for Oz. Numbers are already saving up their airfare to go to
Australia because they know that even there, where there is a youth minimum wage, it
is going to be a lot higher than here. But this Government does not listen, it did not
listen to the submitters, and it just blunders blindly on.
You know, what was interesting during the submissions was that even employers
were less than enthusiastic about sub-minimum wages. In a survey done by the Ministry
of Business, Innovation and Employment last year it found “a key theme arising from
the quantitative interviews was a lack of incentive that reducing the cost of labour or
wage rates was for employers in hiring staff or filling vacancies. In fact only a small
number of employers suggested reintroducing youth minimum wages would improve
14 Mar 2013 Minimum Wage (Starting-out Wage) Amendment Bill 8581
their likelihood of employing 16 and 17-year-olds.” The employers are saying that they
are not going use this, so it is going to fail in its aim of cutting youth unemployment.
The Employers and Manufacturers Association submission was interesting. It told the
select committee that cutting youth pay is not a silver bullet and that there needs to be a
whole range of measures, of changes, rather than this single, one-eyed approach.
The fundamental question that goes to the heart of this bill, however, is whether it is
fair or right to pay workers less because of their age—to discriminate against them. The
implication of this bill is that the work of younger workers is of lesser value than that of
older workers, it perpetuates its stereotype of young workers as being unreliable and
incapable, and it ignores the fact that many young workers have already had
considerable work experience at the age of 16.
Many people who support youth rates say that young workers need more training and
support when they start a new job. But that same logic applies to anyone who starts a
new job. There was a time in this country when people said the same about women, and
indeed Māori. They said they were worth less because they were women and because
they were Māori. In fact, up until the early 1970s women on the minimum wage were
paid less than men. In the early 20th century Māori were paid less than other workers.
No one today would imagine tolerating that type of discrimination, but here we have the
Minimum Wage (Starting-out Wage) Amendment Bill, which perpetuates
discrimination on the basis of age. We cannot discriminate against older people. We
cannot discriminate against people on the basis of being older. Some argue that older
workers are less productive, yet there is no age-based minimum for them.
As I said at the beginning, this bill will not achieve its aim. It will not deliver on its
stated aim of reducing youth unemployment. The regulatory impact statement, which
was very interesting, said that “the precise nature and extent of the policy’s expected
benefits are uncertain.” All the Ministry of Business, Innovation and Employment could
do was guess. And its best guess is that this bill will create only 400 to 1,100 net new
jobs. Even if true, and that is taking into account the displacement that will occur for
older workers, this is only a drop in the bucket compared with the 250,000, sixteen to
19-year-olds in New Zealand. Even those figures have to be treated with extreme
caution. The Ministry of Business, Innovation and Employment said it cannot project
the impact of the policy. It cannot tell us that this policy will work. It cannot do it with
any accuracy, and it was quite explicit that it did not have the information it needed to
make a credible estimate.
Despite the Minister claiming that youth rates are voluntary and that workers do not
have to accept sub-minimum wages under this bill, if they do not accept a job—these
are 18 and 19-year-olds who have been on a benefit, and let us remember we are not
talking just about the unemployment benefit here, we are talking about sickness and
invalids benefits—and Work and Income judges it to have been a suitable job, they have
to be stood down. They can be stood down from any support from Work and Income for
13 weeks. Poor young worker gets out of bed, having been sick or having been injured,
manages to apply for a job, and then—
The ASSISTANT SPEAKER (Lindsay Tisch): Order! I am sorry to interrupt the
member. [Interruption] No, I am on my feet. The interjections across the benches are
unacceptable. I want to hear what the member is saying. If there are interjections they
should be on what the speaker is saying, and not this other dialogue that is going on.
DARIEN FENTON: As I was saying, the poor young worker who drags himself out
of bed, having been on a sickness benefit or an invalids benefit, has to accept a job at
sub-minimum wages or he will be stood down, with nothing from Work and Income for
13 weeks. What is fair about that?
8582 Minimum Wage (Starting-out Wage) Amendment Bill 14 Mar 2013
Cutting young people’s pay is just the tip of the iceberg of this Government because,
of course, we know that changes to the labour laws, including meal breaks and rest
breaks, are on their way.
Hon Simon Bridges: You bet they are. You bet they are.
DARIEN FENTON: Yes, you bet they are.
Hon Simon Bridges: Then why’d you put out that press release?
DARIEN FENTON: Because I was hoping the Minister of Labour would show
some sense, unlike his predecessor, because that is a stupid bill. This is all going to hit
Kiwi workers across the board, but this bill in particular is going to hit young workers.
It is going to make it much more difficult for them to survive. It is not going to make it
easier for them to get work. The Minister’s own department could not verify that the
aim of this bill, of cutting youth unemployment, would be delivered. So it is a bill that
just goes back to the tradition of the National Party—back to the 1990s. Let us cut
people’s pay. It does not work. It did not work then, and it will not work now.
Hon JOHN BANKS (Leader—ACT): I want to address what the Labour member
Darien Fenton has raised. She has raised two very important issues. She raises the issue
of so-called sub-minimum wages and she talks about hitting young workers. The ACT
Party supports this Minimum Wage (Starting-out Wage) Amendment Bill, and supports
this young Minister of Labour. It is an opportunity for young people to get their foot on
the first rung of employment opportunity. We support the intention but the ACT Party is
on record as saying we need to go further. Since Labour and the Greens abolished youth
minimum wages in 2008 youth unemployment has reached crisis levels. This is the key
point I want to put to the Labour Party Opposition today.
The member talks about sub-minimum wages. I want to talk about the $4.50 an hour
paid every fortnight electronically at midnight from Work and Income to the 40,000
young people between the ages of 15 and 19 who get the dole—$4.50 an hour on the
dole. This is an opportunity to pay young people a fair rate of pay for the dignity of a
working opportunity. Statistics New Zealand put youth employment in December at
30.9 percent. That is the highest rate we have had in three decades. Over 40,000 young
people who want to work cannot find a job and I rise in this Parliament today to
represent them. It is worse amongst young Māori, it is worse amongst young Pacific,
and it is worse for young Asian. Forty percent of Māori aged 15 to 19 are on the dole,
47 percent of Pacific youth are unemployed and on the dole, and 55 percent of Asian 15
to 19-year-olds are consigned to the dole—55 percent. So we are talking about 48
percent of Pacific, Māori, and Asian youth on the dole. Of course, it also has
encompassed in that young European and others.
But we cannot sit back as a Parliament, as a country, and pay so many people, 30
percent of our youth aged 15 to 19, $4.50 an hour to do nothing—$4.50 an hour. I say to
the Labour Party list member opposite who resumed her seat, Darien Fenton, what
about talking about and thinking about the 40,000 young people aged 15 to 19 who
desperately need the dignity of work and a job opportunity to get on with their lives?
Too many of these young people are starting lives with poor education, no jobs, no
hope, and few opportunities.
Le’aufa’amulia Asenati Lole-Taylor: Whose fault they’re getting poor education?
Hon JOHN BANKS: I say to the yapping member opposite that I have been in
business for 50 years this year. I have employed tens of thousands of young people in
the restaurant chain that is 50 years old this year, Tony’s at 27 Wellesley Street.
In December 2007, before Labour and the Greens abolished youth minimum wages,
Māori youth unemployment was 22 percent. Māori youth unemployment before Labour
and the Greens abolished youth rates of pay was 22 percent. Today it is double that
figure and the member who resumed her seat has the temerity to criticise the Minister of
14 Mar 2013 Minimum Wage (Starting-out Wage) Amendment Bill 8583
Labour for trying to do something about getting the dignity of work for so many people
who feel helpless and hopeless without a job. Deliberately legislating to stop young
people from making a successful transition from school to jobs is a violation of their
right to make their own decisions. Deliberately doing that by legislation is a violation of
young people’s right to make decisions for themselves and have a working opportunity.
The Labour Party’s short-sighted policy has had a devastating effect on our young
people’s morale and sense of self-worth. Morale and self-worth—any member in this
House who has had a young boy or girl between 15 and 19 sitting at home, desperately
wanting a job, and without the dignity of work knows exactly what I am talking about.
Do not be hypocritical, I say to members—please do not be—by suggesting that this
is not going to work, because we pay $4.50 an hour to 40,000 young New Zealanders
between 15 and 19 every second Wednesday night from Work and Income by way of
the dole. We believe that 80 percent is still too high as a minimum rate. In the UK the
rate for 16-year-olds is 60 percent. In Australia the rate for 16-year-olds is 48 percent—
much lower than what is proposed today. I would pay those 40,000 young people
looking for work $25, $30, or $40 an hour if we thought we could afford it. The fact of
the matter is the country cannot, business is struggling, working opportunities are not
there, so what we are trying to get here is a measure of sensibility.
Andrew Little: Make the young people pay for it.
Hon JOHN BANKS: That member across there has witnessed a doubling since the
Labour Party and Greens abolished minimum rates of pay. There are twice as many
young Māori on the dole—twice as many young Māori on the dole.
David Bennett: It’s a shame.
Hon JOHN BANKS: It is a shame. These countries that I am talking about
obviously understand that it is important for youth to get their feet on the employment
ladder. We want to see every young man and woman with their feet on the employment
ladder and with the dignity of training, of work, of opportunity, of earning a living, and
of making a contribution. Members on the other side of the House have, as statistics
have proven, wiped out so much of our youth. Not only is the proposed rate too high but
the conditions of this bill are too strict. The 6-month limit is not long enough to gain
work skills and experience. It is not long enough. As someone who has been in business
employing people for 50 years, I say it should be 12 months or longer. Forcing people
to be on a benefit for 6 months before they are eligible for a starting-out wage, again, is
far too long. Why would this Parliament force young New Zealanders to stay on a
benefit for 6 months before they are eligible for the starting-out wage to get some
dignity in their lives? Why would it do that?
ACT strongly supports a return to the situation pre-2008, before we doubled youth
unemployment for Māori, before we doubled youth unemployment for Pasifika, and
before we doubled youth unemployment for Asian people. These people opposite, these
members of Parliament opposite, have never employed anyone, have never had to pay a
wage to anyone, and have probably never had the indignity of joblessness. I say to the
yapping members opposite that they should think about the indignity of joblessness—
think about the indignity of joblessness. For once in their lives they should think about
the 40,000 fifteen to 19-year-olds in this country who are crying out for an opportunity
to work. They look to Labour and the Greens, and what Labour and the Greens have left
us is a legacy of doubling unemployment for Māori youth, doubling unemployment for
Pacific youth, and sending unemployment for Asian 15 to 19-year-olds to 55 percent,
the highest in any OECD country. And now they do not want to give employers the
opportunity to give them some training and some work. We believe it is important that
youth have the opportunity to work, to learn, to gain skills, and to gain habits and
8584 Minimum Wage (Starting-out Wage) Amendment Bill 14 Mar 2013
experience that will set them up for their future careers and for a more prosperous
future. Why would these people opposite vote against that?
ANDREW LITTLE (Labour): I rise to speak on the Minimum Wage (Starting-out
Wage) Amendment Bill. That last speaker, John Banks, was absolutely correct in one
thing he said—that this bill is an opportunity for employers. That is all it is about. I rise
on a day when some in this country are celebrating the arrival of a new pope. Cardinal
Jorge, from Buenos Aires—Pope Francis I—has committed himself to alleviating the
burdens on the poor. So those of that faith now have a new champion on their side, and
the Catholics in this House will know that they have as their religious leader someone
who is committed to alleviating the burdens on the poor. This legislation is no way to go
The Minister of Labour, Simon Bridges, is new in that role. He is learning a lot about
the labour market. He has been to the home of the high-skilled, high-wage economy in
this country, and that is Taranaki. He had a look around at the oil and gas sector last
week, and he came back brimming with ideas and realising that what is happening in
Taranaki is unique to Taranaki. But here is the thing about the way the labour market
operates. Passing laws does not create jobs. Passing laws does not make work. What
does make work is economic activity.
David Bennett: Oh! This can’t be the Labour Party.
ANDREW LITTLE: It is pretty simple economics, and even David Bennett from
the Waikato understands it. In order for jobs to be generated there needs to be economic
activity. People do not sit around saying: “Gee, I’m not an employer today, but if I
could get away with paying nothing or next to nothing, I will employ a whole bunch of
people.” What are they going to employ them for? People take on labour, people engage
workers, when there is work to be done. That is the first part of the equation, Minister.
There has to be work to be done.
The second part of the equation is that there has to be value that can be generated as
a result of it. We can go back to the old surplus value theory of labour, which is that
providing you take somebody on and the return on the value of that work can pay for
the worker and provide the employer with something, then you pretty much have what it
takes to create work. Creating an environment where you just reduce the price of labour
is not about creating work. It is simply about opening exploitation. When the Hon John
Banks said that this is an opportunity for employers, there is only one meaning you can
attach to those words, and that is that this is an opportunity for employers to further
drive down the cost of labour, jobs, and work that they already engage. It is not going to
create a single extra job in this country. It will not help a single extra person. All it will
do is mean that those people who are employed under it will get paid less than they
would otherwise have been paid, and who knows about the quality and the training
The law is very clear, and the conditions for engagement under this legislation are
simply any training. Well, I met an employer recently, and so did my colleague Darien
Fenton, who lamented the fact that the minimum wage that is in place at the moment
meant that it was getting harder and harder for his friend, who runs a business that
requires a lot of envelope stuffing, to engage people. He wanted an even lower wage, so
that young people could be, in his words, trained up to stuff envelopes and they would
have work. Well, actually, I am not quite sure whether that is what this bill is about and
what its objective is. That is not work that we want. The challenge for New Zealand and
the challenge for this Government and any Government is to encourage and incentivise
that sort of economic activity that is going to encourage or create those jobs that are
high value, that are higher wage, not minimum wage jobs.
14 Mar 2013 Minimum Wage (Starting-out Wage) Amendment Bill 8585
The reality is that there are parts of this country now where we have a two-speed
economy operating, where we do have jobs that are well paid, well remunerated. I am
not talking about the chief executives of Government departments when they get well
paid, and they get paid even more when they leave their job. I am talking about people
who leave work in the morning, or might leave at the end of their shift, come home
from doing an honest day’s work, and get an honest day’s pay to look after their family,
have a few hobbies, and stuff. There are some people who live that sort of lifestyle and
do very well. There are a growing number who have that sort of life—a 40-hour-a-week
job or longer—and can still barely make ends meet because they are on the minimum
wage. There is a growing number of sectors where that is happening. It is no longer just
the service sector, either. It is in important industries of ours—for example, forestry,
where a growing number of the workforce are on the minimum wage. This bill will do
nothing to help that. What it will do is give a signal to those employers that if they can
dress up an induction to the workplace as training, they can get away with 6 months of
paying an even lower wage than they have to pay as the minimum wage now. That is all
it will do. It will cheapen labour, make it easier for the ruthless employers and the
employers that we actually do not need more of, and make it even worse for those
workers who are struggling to get work.
This is not going to help young people. The old canard is trotted out every now and
again: “Oh, but what about the 90-day trial?”. The most dubious piece of labour market
research we have seen in a generation from the NZIER, calling itself the New Zealand
Institute of Economic Research, came out and said: “Oh, it created 13,000 jobs.” The
research was done within months of the legislation coming into effect, and every other
worthwhile and self-respecting—actually, decent—economist who ever looked at that
piece of research said that it was a load of bunkum. It failed to take into account the fact
that there were other measures in place to help young people. But it did not even take
into account the displacement effect—the fact that employers were getting rid of some
workers and employing them under the 90-day law because they could get away with it,
because it was low-skilled work and they could manage a high-rotation workforce, and
they did it. There was no evidence that making things worse for younger people,
whether it is in terms of their security of employment à la the 90-day legislation, or
lowering the minimum wage, is going to help young people into work. The labour
market does not operate that way. Economics 101 does not operate that way. You do not
have to be very smart to realise that simply lowering the price of labour does not create
a single extra job. What creates jobs is economic activity, and that is what this
Government has singly failed to do, to achieve, and to do anything about.
So despite all the arguments that were trotted out by employers, by the less than half
a dozen employer representatives who fronted up to the select committee to say that the
current minimum wage is a barrier to work, that this will not create work, they knew,
when pushed, that they could not sustain that argument. They did not believe in it—they
did not believe it. I think this Minister, when he is pushed, and when he looks into his
heart, and when he looks to Pope Francis I, will know that this legislation will not
achieve the objectives that he claims of it. That is why we will be opposing this
legislation. There are fortunately other members in this House who know that cutting
the minimum wage, reducing it even further, does not help.
Darien Fenton: David Bennett.
ANDREW LITTLE: David Bennett, for example, said that when there was an
attempt previously to reduce the minimum wage through legislation, we are, by doing
so, denying young people their success by holding them at a lower rate than their ability
shows as individuals. David Bennett was right. That was David Bennett, National MP
for a Hamilton seat, either east or west—but, anyway, one of the Hamilton seats. He
8586 Minimum Wage (Starting-out Wage) Amendment Bill 14 Mar 2013
knew then; he was right then. It will be interesting to see whether he takes a call today
to talk on this bill, which he knows is wrong.
We are opposed to this legislation. It will do nothing for New Zealand. It will do
even less for young people. What we need is a real plan that is going to create jobs and
lift incomes in New Zealand.
DENISE ROCHE (Green): Tēnā koe, Mr Assistant Speaker Tisch. Tēnā koutou
katoa. The Green Party opposes this bill, the Minimum Wage (Starting-out Wage)
Amendment Bill, in its entirety. It is ironic—it is totally ironic—that the second reading
of this bill should come to this House 20 years and 1 day after the Rt Hon Don
McKinnon, on behalf of the New Zealand Government, signed the United Nations
Convention on the Rights of the Child. Yesterday, I would remind the House, this
House unanimously supported this motion: “That this House notes that today is the 20th
anniversary of New Zealand ratifying the United Nations Convention on the Rights of
the Child,”—UNCROC—“that it is the most well-supported human rights treaty in
history, that it committed this country to consider the best interests of the child in all
activities and make children’s rights known as a priority, and that the House recognises
children as full citizens of our nation, deserving of our most ardent attention to make the
world fit for them to inherit.” In 1993 we committed to bringing our laws into line with
this convention. That convention applies to all young people who are under the age of
18. So why are we today attempting to pass a law that allows for some of our young
people—those aged between 16 and 20, who may be on a benefit—to be discriminated
against in their pay rates?
The explanatory note in this bill, right at the beginning, says: “Minimum starting-out
rates of wages are designed to support young people entering the workforce, including
those who have been on a benefit, and young people who are undertaking industry
training for their work. Starting-out wages provide an incentive for employers to take on
young workers at a reduced rate of pay while foundational work skills, experience on
the job, or training is gained.” We do not believe that this bill will support young
workers. What it is is a new take on the carrot-and-stick approach. The employer gets
the carrot and the young worker gets the stick. Paying low wages is an incentive for
employers to keep wages low. The only incentive that young workers new to the
workforce will get from this law will be the incentive to join the 50,000 or so New
Zealanders every year who leave this country for Australia for better-paid jobs.
Certainly, in this bill I see no incentive for a young worker to get a job, especially when
they are going to be paid poverty wages. But then this bill is more in line with the
Government’s approach to punish young people, especially young people who may be
receiving State support. That includes the young mothers and other young beneficiaries,
who now have less decision making around their own finances, and it includes
university students, who are being increasingly shut out of allowances that would enable
them to finish their studies.
If we are looking at incentives in this bill, then we need to look at what this bill
offers employers. I agree with the Council of Trade Unions, which said in its
submission that this bill will incentivise poor employment practice: “There is a clear
encouragement for some employers to sack young staff after 6 months—and they can
do so at 90 days without any justification—in order to continue to get labour at a 20
percent lower cost.” The Council of Trade Unions was one of 529 submitters on this
bill. Of them, only nine submitters were in support. Surely that tells the Government
something. Of those nine submitters in support, seven of them came from employer
groups and industry organisations—that is, parties with a vested interest in keeping
wages low. Among the 520 submitters who opposed this bill were parents, unions,
community groups, charitable organisations, NGOs, the Human Rights Commission,
14 Mar 2013 Minimum Wage (Starting-out Wage) Amendment Bill 8587
and hundreds and hundreds of young people, many of whom submitted in person. And,
I might add, some of them were not treated with the respect that they deserved by the
chair of the Transport and Industrial Relations Committee. The chair of the—
Hon Members: Oh!
DENISE ROCHE: The select committee heard from economists. We had reports
from economists. There was conflicting evidence from economists, and I was reminded
while I was looking at the evidence and the different opinions from economists that
economics is not a science. There were even two submissions from employer groups
who did not think that this bill would help with the unemployment rate, either. We
could be doing more.
As for the young people we heard from, they were really worried about reducing the
wages from one category of worker and displacing the work for others, for those in the
next age category, the 20 to 24-year-olds. Those ones are at least protected at the
moment by the minimum wage, although it is very paltry, I agree with Darien Fenton.
Really, we did not hear any concrete evidence, or promises for that matter, from
employer groups that this bill would increase jobs. We did not get that assurance. The
way to get young people off benefits and into work is by creating jobs. Simply lowering
the price of labour does not do it. Creating a low-wage economy does not alleviate
poverty and it brings absolutely no new ideas into the mix.
It has been proven that the way to reduce the number of people on the benefit—and
that is whom this bill is targeting—is to get them into jobs, and jobs where they have a
decent job and can support themselves. In 1999 there were 160,000 unemployed people.
By 2007 that figure was down to 17,000. Why? Because there were jobs. Forcing wages
down under the guise of doing young people a favour by getting them into work where,
frankly, they will be exploited does not help the economy as a whole. Doing something
for the manufacturing industry in this country, where 40,000 jobs have been lost in 4
years, would help. The Government could assist by diverting some of its resources away
from offshore interests that demand law changes in exchange for a few thousand short-
term and low-paid jobs and into local industry that is struggling with the high exchange
rate. The Government could also help by ensuring that local companies get Government
contracts, because that creates local jobs.
We reject the notion that this bill is needed because young people are a risk to
businesses. That is discriminatory. All bosses take a punt on any new worker. We do
not need this bill. We have sufficient legislation in place to mitigate that risk. That is
what the 90-day rule is all about. It enables employers to deal with substandard workers
and it reduces their liabilities. For employers who are genuinely—genuinely—offering
training to young workers, there is already the training rate, which gives an 80 percent
pay rate to young workers in training. We could be doing more for our young people to
get them into work and training. The Government could be following the lead of the
Mayor of Ōtorohanga, Dale Williams, who has, with his entire town, created a
wraparound service that mentors and supports young people into work. This model is
also working in Buller, and it could work everywhere else too. I note that the speaker
from ACT, the Hon John Banks, was the Mayor of Auckland City and was one of only
two mayors in New Zealand during his term in office who declined to join the Mayors
Taskforce for Jobs. That was a shame.
This bill sends a really, really negative—
Colin King: Positive signal.
DENISE ROCHE: —really negative—signal to young people that they are not
valued, that the Government will not invest in them, and that the Government is willing
for them to be exploited and discriminated against.
8588 Minimum Wage (Starting-out Wage) Amendment Bill 14 Mar 2013
DAVID BENNETT (National—Hamilton East): I just want to congratulate
members of the Transport and Industrial Relations Committee on the way this bill, the
Minimum Wage (Starting-out Wage) Amendment Bill, went through the select
committee process. I think it was very well done. I would like to pay special tribute to
the fine young Minister, the Minister of Labour, who led this great debate today. He is
doing an excellent job in his ministerial roles—
Simon O’Connor: Inspirational.
DAVID BENNETT: —and is inspirational to young people, as many people through
this country know. This is another fine piece of work from that young Minister, who is
doing so well.
I want to take just a short call on this bill. It was an interesting speech that we just
heard from Denise Roche of the Green Party. That was the economic rationale from the
Green Party. It does not have any economic rationale; it just tells you a lot of weasel
words. But we did get some economic rationale from the guru Russel Norman today.
Russel Norman has given breaking news about the economic policy of the Green Party.
It is no longer printing money.
Chris Auchinvole: What?
DAVID BENNETT: At the Finance and Expenditure Committee—no, no, no, it is
not going to print money any more; it is going to do it electronically. The Green Party is
going to make money electronically now, instead of printing money. You would think it
is doing that for green purposes, to save trees. It is not. It is doing it so that it does not
have to take the hassle of being asked how you print money and change the economy,
how you print money and reduce the exchange rate, and how printing money,
electronically now, actually means that you are going to provide jobs for young people.
The economic rationale of the Green Party is rubbish. Everybody knows that. It is
rubbish, and it will never work.
To prove that, we had a speech from the Labour Party, from Andrew Little. Andrew
Little gave a very good speech. He had one line in his speech that I think we should all
take to heart: “Passing laws does not make jobs. It needs economic activity.” That is
what Andrew Little said in this House 10 minutes ago. The leader of the Labour Party
union movement came to this House and said: “Passing laws does not make jobs.” What
does that do for the whole Labour Party, whose whole life is about trying to get in this
place and pass more laws? That is Labour’s answer to making jobs. It does not believe
in people, it does not believe in the economy, and it certainly does not believe in our
The Opposition is portraying this bill as anti young people. That is not the case. This
is giving young people a chance. Young people need that chance. They need to get in
the workforce, and this gives them that opportunity. In a perfect world we would want
our young people to be getting an education. The days are gone when you could leave
school, just walk into a job, and think that was going to be for life. The modern world
will require those young people to get an education. Everybody in this House should be
saying that and should be believing in that, because that is those young people’s future.
In some cases, some people will leave school and they will be looking to go into the
workforce, when they probably should be going to get higher education. The main thing
we can do is give those young people the confidence and the ability to get a job. This
bill helps them to do that. It gives them the chance to get their foot in the door, to prove
themselves, and to move their way up the economic scale. That is good for New
Zealand’s young people, it is good for this Parliament, and it is good for the future of
this country. Thank you.
BARBARA STEWART (NZ First): On behalf of New Zealand First I rise to speak
to the Minimum Wage (Starting-out Wage) Amendment Bill. New Zealand First
14 Mar 2013 Minimum Wage (Starting-out Wage) Amendment Bill 8589
opposes this bill. We oppose it on the grounds that it is an attack against young,
vulnerable workers who are just starting out on their working careers. Young workers
who want to be independent and self-sufficient often move away from home, and they
have very high ideals and hopes. But with this legislation keeping them right down there
on the poverty line, they just cannot afford to have this hope or any future plans.
We at New Zealand First ask the National members where the demand is for this
change. To date we have heard absolutely nothing from the other side that will help
change our minds or ensure that we know why there is going to be this change. Who out
there, apart from National and ACT, really wants to rob young workers of an extra 20
percent of their wages? The fact of the matter is that there is no real demand for this
change. Youth rates were done away with in the 1990s, and, as we have heard,
employers are not entirely ecstatic over this change either.
With this bill the Government is taking another step towards a low-wage economy—
something that we want to move away from. Hard-working Kiwis have faced numerous
attacks from this Government. It has sold out workers to foreign corporations, it sells
off the assets, it changes the labour laws to suit its ideology, and now it has mounted an
attack on young working New Zealanders. It taxes all fringe benefits—looking for
money everywhere—and now we have got young people. Is this truly a part of the
Government’s plan to catch up with Australia? This bill is creating a further
disincentive for young workers. Is it the way to get ahead? No. Is it the way to bridge
the gap between our two countries, and entice our young people to stay here and work?
Jobs are generated by economic activity, and the reality is that that is not happening
here in New Zealand. The National Party and ACT like to talk about bludgers and
laziness and people doing nothing. Mr Banks was talking about paying $4.50 an hour to
people who are on the dole for doing nothing, but the bottom line is that he has created
this situation of no employment and it needs to be sorted out, and pretty promptly, too.
They like to talk about welfare dependence and people relying on the State. Our
Hon Simon Bridges: Brendan Horan is not that bad.
BARBARA STEWART: We are not talking about Brendan Horan here. Young
workers are not bludgers, and I would say that the Minister, the Hon Simon Bridges,
would say that they are not bludgers. They are not out milking the system; they are
industrious young Kiwis and they are trying to get ahead. They are young people trying
to get a foothold in the working world, which is not easy in today’s world of fewer and
fewer permanent career jobs. Learning life’s lessons and learning what money is all
about and what it buys is what every young person wants to do.
What is this piece of legislation? A slap in the face for young workers. It is an affront
to their dignity. Cheap labour is not the silver bullet that is desperately needed. It will
not help young people to be independent and keep a job and get a job. We know in New
Zealand First that this is going to do absolutely little to nothing to encourage economic
growth, which is what we want, as well as the creation of more jobs. We are not alone
with this particular viewpoint. The Salvation Army too rejected suggestions that this bill
will support more young people into employment. So if it does not believe it, we
definitely do not either. It also rejects the viewpoint that this bill will provide more
incentives for employers to take on younger workers. On this occasion, we agree with it.
It is our belief, in New Zealand First and on this side of the House, I would say, that,
irrespective of age, anyone who turns up and puts in the hard work deserves a decent
wage. It is the Kiwi way. Here in New Zealand we were a country that was founded on
egalitarian principles. From the very beginning, New Zealanders recognised talent.
They recognised good ideas and hard work, irrespective of where it came from. In New
8590 Minimum Wage (Starting-out Wage) Amendment Bill 14 Mar 2013
Zealand First we believe in giving credit, too, where credit is due. We believe in
rewarding the hard-working, the industrious, and the innovative, and we believe totally
in encouraging New Zealanders into their first jobs. Where are the jobs? This bill is not
creating them. They are getting harder and harder to find.
Throughout New Zealand the National Government has been out trying to woo
mums and dads. It has been telling them that it understands how to sort out the
Government’s books, because, after all, it comes from a business background—it
understands business. But although it might understand business, this bill shows it does
not understand people. It shows that National basically does not care about people’s
kids. It shows them that it is nasty and mean. National is not providing the brighter
future that everybody wanted to believe was coming. We all started off very optimistic,
looking for this brighter future, but it is not here.
Le’aufa’amulia Asenati Lole-Taylor: Where is it?
BARBARA STEWART: Gone—gone.
The reality is that mums and dads do not want to be paying their kids——the 16, 17,
and 18-year-olds—extra money to top up their wages. They cannot afford to pay the
extra money. People are poor out there. Groceries are going up, power is going up,
petrol is on the rise all the time, and they want them to be independent and able to
support themselves, and I know that Mr Macindoe agrees with me there totally. They
want their kids to be getting after-school jobs. They want them to be having jobs in the
weekend and in the holidays. It is what has always happened. We have always had
weekend jobs and holiday jobs. They expect them to be learning how to pay their own
way—slowly but surely. In this way, this bill is merely an attack on young workers. It is
also an attack on the entire family unit. The bill does nothing to instil young Kiwis with
confidence for the future. What it does is denigrate them as having the status of second-
class workers. What it does is play off 20 to 24-year-olds against 16 to 19-year-olds.
What it does is get parents—all those infamous “mum and dad” Kiwis—questioning the
brighter future that was promised by the National Government.
New Zealand First is firmly opposed to this piece of legislation. It will not support
young people entering the workforce. It is an absolute affront to young, industrious New
Zealanders. It is discriminatory and unfair. It runs contrary to the Kiwi notion of giving
everyone a fair go and a fair day’s pay for a fair day’s work. We need a real plan to get
the economy going again, and this is not that plan. On these grounds, we are proud to
oppose this piece of legislation.
CHRIS AUCHINVOLE (National): I was going to say what a pleasure it is to
follow Barbara Stewart, as always, but I am finding that a little bit difficult because—I
am sure she did not mean her last remark when she said that New Zealand First will not
support young people entering the workforce. Did you hear her say that?
Colin King: I did. I did.
CHRIS AUCHINVOLE: Mr King heard you say that. I am sure she did not mean
that, but, in effect, that is what her speech said. She said throughout the speech: “We
would prefer people to be staying on welfare, on the dole, sitting and waiting for a job.”
Young people love to work. That is what they want. But what did we hear? New
Zealand First said: “No, we will not support this new opportunity that is being put
forward for a brighter future by National. We will not make it easier for employers who
are doing their level best to employ people, just to make it that skerrick easier for them.
No, we will not support this.” And I am astonished—I am astonished that the Greens
said it too. I would have thought they would be very pleased to be involved in this and
give us a bit of backing. “No, it is preferable that young people stay out of work.”—that
was the message we got. That is the message we got.
Barbara Stewart: We want jobs.
14 Mar 2013 Minimum Wage (Starting-out Wage) Amendment Bill 8591
CHRIS AUCHINVOLE: Would you like some of my speaking time to correct your
statement? I will sit down and let you—
Barbara Stewart: No, we just want jobs.
CHRIS AUCHINVOLE: You do not want to do that. All right. Perhaps a future
speaker from New Zealand First will withdraw the remark and correct it.
I am rising to speak on the Minimum Wage (Starting-out Wage) Amendment Bill in
the name of the Minister of Labour, the Hon Simon Bridges, who is providing such
inspirational leadership on this issue. It is great to see. This bill seeks to deal with what
is an assuredly important issue. It is an issue so important that Su’a William Sio decided
to bring it up during his speech on the Plumbers, Gasfitters, and Drainlayers
Amendment Bill—a speech that should have been on ensuring the best practices of an
industry that is vital to the safety of our homes. No, Su’a William Sio decided to bring
up the issue of employment and getting people into jobs. I thank him for the
opportunity, because, you see, that is exactly what this bill is about. He asked what we
are doing about jobs. Now we are able to respond to him.
The bill is about ensuring that starting-out workers can get their foot in the
employment door. A low wage is surely better than no wage. It is, indeed, better than
young people having to languish on welfare. I have not heard the phrase “dole-bludger”
from this side of the House. Have you heard that phrase?
Colin King: No.
CHRIS AUCHINVOLE: Have you heard it from the other side of the House?
Nicky Wagner: Yes.
CHRIS AUCHINVOLE: Yes. That is what we heard this afternoon. We heard it
from Barbara Stewart. So not only are young people dole-bludgers but they are not
allowed to work, because New Zealand First is not prepared to see people on starting-
out wages—the incentive for employers to take a chance on a younger worker, and it
incentivises these young people to seek out work or training or both. Dave Bennett
made the very good point that you cannot be dependent just on muscle for job security
now—you really cannot—you do need training. However, we do have this system
I would like to talk about it at greater length, but I think we need to give the other
side of the House the opportunity to correct its mistaken approach to this bill. Let us see
whether it does not just swing around in support of it. I commend the bill to the House.
PHIL TWYFORD (Labour—Te Atatū): We took the mickey out of the Hon
Maurice Williamson earlier this afternoon for bringing the Plumbers, Gasfitters, and
Drainlayers Amendment Bill to the House. A number of us commented then that it was
a curious use of the House’s time to be dealing with the minutiae of plumbers,
gasfitters, and drainlayers when there are so many pressing economic, social, and
environmental problems facing the country. But, to be honest, compared with that bill,
this bill, the Minimum Wage (Starting-out Wage) Amendment Bill, is the work of an
Hon David Cunliffe: Pygmy.
PHIL TWYFORD: Pygmy—midget—pygmy. Chris Auchinvole would have us
believe that the choice facing this country is between no work and work on reduced
wages. Is that really what John Key’s brighter future has come to? This is the choice we
face as a country: our young people either should be paid to stay at home all day or they
should be prepared to take a cut in wages and be paid less than the next person for doing
exactly the same work.
That is the kind of vision that Chris Auchinvole has for this country, and that is
where John Key’s brighter future has got to. It is depressing. It is depressing to be
8592 Minimum Wage (Starting-out Wage) Amendment Bill 14 Mar 2013
standing in this House on a Thursday afternoon, debating a bill brought to this House by
a political party that is so bankrupt of ideas. National is so utterly lacking in any kind of
creative thinking about this country’s future, how we build prosperity, how we increase
productivity, and how we unleash the potential of our young people that this is the
best—this is the best—it can do.
If this is Simon Bridges’ attempt at a career-advancing move, then I hope he has got
some other ideas in his back pocket, because this bill is based on the flimsiest of logic,
the flimsiest of policy. The idea that if you cut the wages down from $13.75 to $11 for
16, 17, 18, and 19-year-olds who have been on the dole for 6 months, somehow you
will create new jobs is what this bill is based on. It is pretty simple for the folks at home
who are listening to this. If they have just tuned in, that is really all they need to know.
The National Party is cutting the take-home wages down to $11 an hour for young
people between the ages of 16 and 19 who have been on the unemployment benefit for 6
months. That is National’s solution to the unemployment crisis that is facing this
country. What a depressing, depressing thing—to create a financial incentive for
employers to hire one group of workers over another. It will not create a single new job.
It will simply displace employment from one group to another. This is the extent of the
National Party’s vision for tackling the jobs crisis.
The other thing that I find really dispiriting about this bill is that people in this
country need hope. They need hope that there is a place for them and that there is a
future for them and their families in this country. The fact that so many people are
heading to the airport and heading off to Australia and further afield, looking for
opportunity and looking for hope, is surely a wake-up call. One hundred and eighty
thousand people have left this country under the National Party’s policies of the last 4
years. It cannot find a stadium big enough to fit in the equivalent number of people to
signify how many people have gone to Australia.
Interestingly, we do not hear much from John Key these days about how many New
Zealanders are heading to Australia, but 5 years ago that was all he wanted to talk about.
Now we see a bill that comes to this House to cut the wages of our young people. What
will be the result? Surely they will save up their $11 an hour so that they can buy an
airfare to get to Australia.
It should not surprise us that the National Party’s first response to any major problem
is to cut wages. It is what the National Party has always done. If you go back through
the history of this country to the predecessors of the National Party, you will see that
their idea for a Depression-busting policy was to create work camps in the countryside,
and they shipped unemployed men and women off to those camps to work at starvation
wages. That was their idea of a policy to deal with the Depression.
Hon David Cunliffe: Now they’re paying fringe benefit tax on accommodation.
PHIL TWYFORD: Yes, that is right. As Mr Cunliffe says, now workers are paying
fringe benefit tax on the accommodation—exactly.
It was the National Party that was responsible for the policies of the 1990s to smash
the trade union movement of this country, to get rid of the minimum wage, and to drive
down wages. And, my God, it succeeded, and we are dealing today with the legacy of
those policies that made a low-wage economy. Yet when the election campaign came
around in 2008, the National Party of the time, under John Key, campaigned on the idea
of closing the wage and salary gap with Australia. Yet time after time after time
National members do whatever they possibly can to drive down wages. We have seen
the pathetic increases to the minimum wage that this Government has presided over. We
have seen the 90-day bill, which surely has one objective in mind, and that is to create
insecurity for New Zealand workers, to make them fear for their jobs, and, in so doing,
to drive down the cost of labour.
14 Mar 2013 Minimum Wage (Starting-out Wage) Amendment Bill 8593
This bill is another example in that great National Party tradition to lower the cost of
wages, because National has only one tool in the tool box: “Whatever the problem—
whatever the problem—let’s cut the cost of labour.” That is all National members know
how to do. What an irony that they campaigned so hard about closing the wage gap with
Australia! We have been hearing day after day in the House that the wage and salary
gap, under National—the gap between New Zealand and Australia—has actually
What we need is bold leadership in this country to tackle the jobs crisis, and I am
going to tell you some of the policies that National would be contemplating if it had any
kind of curiosity about the policies that would solve the jobs crisis. For example, it
would be restoring the research and development tax credits so that New Zealand
companies had the incentive to lift their game and invest in innovation and productivity
through research and development. The members on that side of the House would be
considering reform to monetary policy that would stop the endless round of squeezing
the lifeblood out of our exporters every time the economy showed some kind of life.
Instead of the Reserve Bank Governor having this single focus on controlling
inflation, the National MPs would be considering a monetary policy that took into
account economic growth, jobs, and exports. But, no, they will not consider that. They
would be considering skills and apprenticeships that would invest in our young
people—not cutting their wages and taking away their employment rights, but actually
investing in skills and apprenticeships. There is no reason in today’s world that young
people should only either be paid to stay at home or go to work and have their wages
We have seen an increase in the number of young people who are not in education,
employment, or training: 30,000 under-20-year-olds are not in education, employment,
or training, and that is 4,000 more than when this Government took office. If this
Government was interested in a jobs policy, it would be far more wholehearted about
tackling the procurement policy that sees jobs shipped offshore constantly and the
gutting of New Zealand’s high-value manufacturing industry. It would consider a
capital gains tax that would tilt the playing field back in favour of the productive
economy, away from wasteful investment in rental real estate and into businesses that
will produce jobs and livelihoods for New Zealanders. But, no, National members are
National members are not interested in industry policy that would look at how the
State can actively partner with New Zealand firms and exporters to grow jobs and grow
productivity in this country. Their idea of an industry policy is getting problem
gamblers to fund Auckland’s new convention centre. That is their idea. Selling out
employment law to Hollywood corporations and taking away the work rights of New
Zealand workers at the behest of Hollywood is this Government’s idea of a jobs policy.
It is not good enough, and New Zealanders demand something better.
SIMON O’CONNOR (National—Tāmaki): What an array of contradictions we
have just heard there from Phil Twyford. We know that under this Government take-
home wages are increasing. Regardless of the fact that it is by 25c, the minimum wage
is going up. We protected jobs around The Hobbit and so forth—you know, we reacted
there—but that is somehow a problem. One of my colleagues pointed out to me a bit
earlier that this hands-on approach of the Labour Party is really around your throat and
in your wallet. What is the solution? What is the solution for more jobs? A tax—a tax.
Let us have more taxes. Boy, what economic policy there!
Dr Cam Calder: Around your throat and in your wallet.
SIMON O’CONNOR: Absolutely. It is a slap in the face and a kick in the guts to
New Zealand. That is the Labour approach: hands-on Government.
8594 Minimum Wage (Starting-out Wage) Amendment Bill 14 Mar 2013
This bill, the Minimum Wage (Starting-out Wage) Amendment Bill, is a good
opportunity, and I want to acknowledge the Minister of Labour, who is here in the
House supporting this bill. This bill is really about opportunities and incentives to get
young people into work. What we have heard from the other side can be best defined as
utopianism, a world where everyone is perfect, everyone can be paid the same amount
of money for whatever they do, and everything is perfect. Well, some of us live in the
real world. Some of us do not believe in utopianism. We believe we have to do
Someone talked a little bit earlier about, oh my Lord, how dare we pay them a little
bit less. The key comes down—
Hon David Cunliffe: I bet you love Charles Dickens.
SIMON O’CONNOR: Oh, Mr Micawber’s quote does come well to mind again, if
Labour wants to start talking about Dickens. Go and look up Mr Micawber. The key
here is that we want the dignity of work, and a lot of people submitted that to us—the
dignity of work. Andrew Little tried to quote the pope. Well, maybe he should go and
read Rerum Novarum some time. At the end of the day, the dignity of work comes first
and foremost. This party, the National Party, is behind the dignity of work. We want our
young people to get into jobs, and if part of that facilitation in the real world is giving
them a slightly more minimum wage to start on, then we are behind that. I support the
passage of this bill.
Sue Moroney: Mr Speaker—
Mr DEPUTY SPEAKER: Is this a split call?
Sue Moroney: It is indeed a split call.
Mr DEPUTY SPEAKER: 5 minutes.
SUE MORONEY (Labour): I would like to say that I normally start off my
speeches by saying it is a pleasure to rise and speak, but, quite frankly, I am getting
tired of rising and speaking to these bills that have absolutely no vision for a better and
brighter future for this country.
When Simon Bridges was promoted recently in Cabinet, I think the media thought:
“Look, here’s a bright new guy, he might have some new ideas. He’s fresh, he’s got a
bit of energy.” Well, sadly, here he is bringing back the same old tired rubbish to this
House that National has been trotting out for decade after decade after decade. There is
no shiny, bushy, energetic new thinking from that side, just the tired old wage-cutting
regime that National members have rolled out for decades now. So they have not learnt
a thing. Once they used to be ambitious for New Zealand. Do people remember that?
We have not heard it for a while, but when they were in Opposition, John Key claimed
that he was ambitious for New Zealand. I notice that as soon as he got into Government
he stopped saying that. Here is the reason why. They absolutely lack ambition for New
Zealanders, and this bill, the Minimum Wage (Starting-out Wage) Amendment Bill,
proves exactly that point. It is not about creating jobs; it is all about lowering wages.
I listened to a very good speech from my colleague Andrew Little earlier where he
outlined exactly why, of course, it does not create jobs. Work creates jobs, not lowering
wages. Having work to do creates jobs. That is what employers employ people for.
They are not benevolent societies and charitable organisations that employ people
because they just want to help them out. They do it because there is work there to be
done. The real tragedy of this piece of legislation is that, in fact, this will ensure that
there is less work—fewer jobs in our economy.
When that Government lowers wages it will reduce the amount of spending power
that New Zealanders have—in this case, those aged 16 to 19 years of age. But if anyone
listening to this debate thinks it stops here, think again. They are coming after you next.
They are coming after other New Zealanders after they have lowered the wages of 16 to
14 Mar 2013 Minimum Wage (Starting-out Wage) Amendment Bill 8595
19-year-olds, because this is the only thing a National Government knows how to do.
The only answer it has to any economic circumstances, whether they be good, bad, or
ugly, is to reduce wages. That has always been its only answer. When wages are
reduced in New Zealand, that reduces spending in our economy. When spending
reduces in our economy, guess what? More jobs go. Jobs are lost through ill thought
through pieces of legislation like this. They certainly are not created.
Hon Simon Bridges: This is real Labour Party 1990.
SUE MORONEY: He is showing a bit of energy now, that Simon Bridges, but why
did he not show a bit of energy when he was drafting this legislation? Why did he not
stand up to his tired old party and tell them that this is the pathway to a downwards
economic cycle, not an upwards economic cycle at all? All it does is introduce more
exploitation and more discrimination into our workplaces, and that is something we
definitely do not need.
I would like to invite Simon Bridges to have a look at the coverage from Campbell
Live the other night of the hundreds of people lining up for seven jobs. They were stores
jobs, and not very highly paid ones. They were pretty ordinary stores jobs, but a job
none the less. His piece of legislation is inviting that employer to actually exploit
people, to actually say to most of the people in that queue: “Actually, don’t even bother
lining up, because I’m not going to employ you. You are a bit dearer than the other
people.” That is not going to actually fix the deep problems that we are experiencing
with the New Zealand economy. It is no wonder that the economy is going nowhere
under this Government, that it is flatlining, because this piece of legislation is just
another hopeless piece of legislation that does nothing to lift economic performance. In
fact, it does quite the opposite.
HOLLY WALKER (Green): Last night this House took a significant step towards
ending discrimination and eliminating a serious inequality in our law. That, of course,
was passing the second reading of the Marriage (Definition of Marriage) Amendment
Bill. Many of those who supported that bill, including many Government members,
talked about the message it would send to young people about their importance, their
value, their human rights, and their mental and emotional well-being to remove that
discrimination. It was a great moment in this House and it made me very proud to be a
member of it. But in that context it is particularly distressing that the very next day,
after sending such a positive and affirming message to young people about their value
and their future, we are undermining that message with this discriminatory and
damaging Minimum Wage (Starting-out Wage) Amendment Bill, which sends exactly
the opposite message to young New Zealanders.
What this bill says to young New Zealanders is that they are not worth as much as
older New Zealanders, that their work and their labour, even if employed doing exactly
the same job as an older counterpart, or managing them—[Interruption]—that is right,
is not as valuable as that older person’s labour and that their needs, their expenses, and
their rent, food, and living costs are not as important as those of older workers—that
their rights are not as important as those of older workers.
It is no wonder that young people are disengaging in droves from politics and
Parliament and voting when this House passes legislation like this that disempowers and
discriminates against them en masse, just when we might have convinced some of them
of our relevance, our value, and our commitment to them and their future with the
marriage equality bill last night. If you looked around the gallery here last night it was
young people whom you saw. Just at that point we slam them with this bill and
undermine all of that good work.
The discrimination inherent in this bill is not acceptable, in just the same way that it
is no longer acceptable to pay women less than men for doing exactly the same job—
8596 Minimum Wage (Starting-out Wage) Amendment Bill 14 Mar 2013
although arguably that does still take place in some cases—and just as it is not
acceptable to pay workers of one ethnicity less than workers of another ethnicity. When
these things occur and they come to light we are rightly outraged, we prosecute
offending employers, we shake our heads, we tut-tut, and we talk about discrimination.
Yet here we have a Government that is prepared to introduce comparable discrimination
against young people into our employment law.
On the basis of human rights and discrimination alone this bill should be dead in the
water but, as this Government has demonstrated with a number of other pieces of
legislation—like the current welfare changes, which impinge on the rights of women,
young people, and children—rights-based arguments do not have a lot of impact on this
Government. So let us have a look at its own economic rationale for this bill and see
how it stacks up. This Government says that this bill will support young people entering
the workforce and encourage employers to take on young workers. What a joke!
Combined with its other discriminatory policy against young workers of 90-day trial
periods, this legislation means that at most young people can expect to be hired at below
subsistence wages for 3 months and then flicked on in favour of another new cheap
I was not on the Transport and Industrial Relations Committee but I have heard that
it heard no evidence that introducing youth rates would decrease youth unemployment.
In fact, there was conflicting evidence from Government departments and economists
on exactly that point. Even two submissions from employers did not think that the bill
would actually help with youth unemployment. What the bill will do is incentivise
employers to keep wages low, keep New Zealand a low-wage economy, and continue to
encourage the 50,000-plus New Zealanders every year who leave permanently for better
wages and opportunities overseas. If this Government really cared about youth
unemployment it could invest in skills training and apprenticeships more than it has. It
could improve access to student support. It could support the manufacturing sector and
it could look at what is working in places like Ōtorohanga with the mayors task force.
But it has not done that.
This bill does not make economic sense, it will not help youth unemployment, it is
discriminatory, and it sends a terrible message to young people about the value that this
Parliament places on them. I am ashamed of this House for passing it.
Dr CAM CALDER (National): My dad died when I was 6 years old. I was brought
up by my mum, and she used to call me her right-hand man. The reason for that was
that she got me to rake up the leaves and mow the lawns. I mowed the lawns with an old
push mower, and I can remember to this day the joy I saw when I came downstairs and
there was a new Briggs and Stratton 4-stroke Kingfisher mower, which I was able to
use. I fired it up and mum came out in great concern because I was throwing lemons
through the side to see them explode into a myriad pieces. I am telling you this story
because that was my first entry into earning money—earning money. I used to do my
own lawns, then we would tie the mower to the back of the bike, we would ride around
lower Westown in “Taradise”—New Plymouth—and I would sell my labour and mow
old people’s lawns. I learnt to realise that mum was right: money does not grow on
trees. Money does not grow on trees, and I think that if she said that to me once, she
probably said it to me 500 times. But I learnt the lesson. What I learnt also was the
dignity of work—that you get out of life what you put into it. If you want to make a
metaphor, you can say that we got a foot on the pathway to personal responsibility. I got
a chance to get the keys to the Zephyr, buy a surfboard, or, nowadays, get the keys to a
This bill, the Minimum Wage (Starting-out Wage) Amendment Bill, is about young
people getting opportunity, young people getting skills, and young people getting the
14 Mar 2013 Minimum Wage (Starting-out Wage) Amendment Bill 8597
money to survive in a difficult labour market. The axing of the youth wage by Labour
cost up to 9,000 jobs. The Ministry of Business, Innovation and Employment suggests
that the starting-out wage in the first 2 years could provide 2,000 jobs for 16 to 19-year-
olds. I commend this bill to the House.
The question was put that the amendments recommended by the Transport and
Industrial Relations Committee by majority be agreed to.
A party vote was called for on the question, That the question be agreed to.
New Zealand National 59; ACT New Zealand 1; United Future 1.
New Zealand Labour 34; Green Party 14; New Zealand First 7; Māori Party 2;
Mana 1; Independent: Horan.
Question agreed to.
A party vote was called for on the question, That the Minimum Wage (Starting-out
Wage) Amendment Bill be now read a second time.
New Zealand National 59; ACT New Zealand 1; United Future 1.
New Zealand Labour 34; Green Party 14; New Zealand First 7; Māori Party 2;
Mana 1; Independent: Horan.
Bill read a second time.
BUILDING AMENDMENT BILL (NO 4)
Debate resumed from 28 February.
NICKY WAGNER (National—Christchurch Central): I support this Building
Amendment Bill (No 4).
PHIL TWYFORD (Labour—Te Atatū): Well, that is one of the better
contributions we have heard from Nicky Wagner recently. Thank you, Mr Deputy
Speaker. It is a pleasure to spend the dying moments of Thursday afternoon with the
National backbenchers. We are coming to the end of what has been a fantastic week for
the Opposition. They are reeling punch-drunk from the blows on that side of the House.
They have wheeled out the junior Minister Simon Bridges to keep an eye on the
backbenchers this afternoon.
Hon David Cunliffe: He’s on youth rates. He’s on youth rates.
PHIL TWYFORD: That is right: he is on youth rates. That is right—he is. We are
here to speak to the Building Amendment Bill (No 4). It is my pleasure to make a few
comments about this bill. We have said many times that we are broadly supportive of
the Building Act review process. It was begun under the last Labour Government in the
wake of the leaky buildings crisis. There has been a fair measure of cross-party support
for the Building Act review process as together we try to fine-tune and develop the Act
to protect consumers more and to tackle some of the deep-seated problems in the
building and construction industry that were behind the leaky buildings catastrophe.
We have not supported all of the measures that this Government has taken. Indeed,
the last couple of bills, including this Building Amendment Bill (No 4), Labour has not
supported, because we feel that the Government has really fallen down on the job. In a
8598 Building Amendment Bill (No 4) 14 Mar 2013
nutshell we believe that this bill is part of a piecemeal and uncoordinated approach to
the problem, and that is not worthy of support.
For the folks at home who may be just tuning in, given that this is an interrupted
debate, I want to just summarise briefly some of the key provisions of this bill. It is the
second of two bills that are part of the Building Act review process. It attempts to
introduce enhanced consumer protection measures, including mandatory written
contracts for work valued over a particular amount, and mandatory disclosure of certain
information by building contractors. It has a set of requirements around that including
penalties for breaches of those provisions.
Secondly, it clarifies exemptions from the building consent requirements in the Act
by rewriting the whole schedule. It adds some new exemptions as well. So it is a bit of
tidying-up work there. It adds a new power for territorial authorities to deal with
buildings that are at risk because they are adjacent to dangerous buildings. That is
particularly relevant, I think, in Christchurch as it deals with the post-earthquake
recovery. The bill increases the maximum penalty for the offence of doing building
work without a consent. It doubles it from $100,000 to $200,000. It has got a whole
section on dams, and it introduces the concept of a classifiable dam and a referable dam.
It basically applies a risk-based approach to the regulations around dams, which, I think,
the Local Government and Environment Committee has been in agreement is a pretty
sensible approach. It makes a number of other minor and technical amendments.
I want to go back to our criticism, and why Labour is not supporting this bill. First, it
has a very narrow focus on residential properties, and it fails to address the wider
concerns that affect the whole of the construction industry. In the recent case dealing
with Spencer on Byron, that hotel or apartment complex in Takapuna, basically the
Supreme Court held that the council owed a duty of care for all buildings, irrespective
of whether they were residential or not. I think that is a good pointer, or should have
been, to the select committee that the focus on residential buildings is far too narrow
The other thing that it does is replace the old code compliance certificate with a
consent completion certificate, and what this does is attempt to reduce some of the
burden, some of the liability, that councils face, which has left them so often as the last
man standing, with the ratepayer being expected to pick up the tab for deficiencies in
work that possibly, in many cases, should be the responsibility of builders or designers.
We believe, as do a number of submitters—in fact, the Home Owners and Buyers
Association of New Zealand made this point very eloquently at the select committee—
that this is a step too far until some of the quality improvement and accountability
measures come to maturity, particularly, for instance, the licensed building practitioners
scheme. Until consumers can have more confidence that they are going to have
accountability and high-quality work done, then actually removing some of the
responsibility from local government is going to have the effect of reducing the
protection for consumers. That is really the opposite of what this bill is supposed to be
The two really big issues that, I think, have been hanging over the whole Building
Act review process are a consideration of joint and several liability, which is the legal
doctrine that we have in New Zealand, and there has been a lot of debate about whether
we should shift to one of proportionate liability. This debate has been one of the big
kind of ripples after the leaky buildings disaster. That issue was deemed to be in the too-
hard basket by the Hon Maurice Williamson. It has been flicked off to the Law
Commission, which is currently looking at whether or not New Zealand could shift to a
system of proportionate liability. That would mean, for instance, that the different
players responsible for, for example, a leaky home would be financially liable only
14 Mar 2013 Building Amendment Bill (No 4) 8599
proportionate to their share of responsibility for the work done. The other idea that has
been proposed by many, many people is that of mandatory insurance—mandatory
warranties backed by insurance. That would be probably the single biggest thing that
would clean up the industry and give consumers protection and accountability. That has
also been put in the too-hard basket by this Government. So there is a lot of twiddling of
the knobs with this bill and not much that addresses the real issues that are affecting the
very low levels of productivity in our building and construction industry, and the great
vulnerability that consumers have in this country.
The one provision that we would support—and we think it should probably be sliced
off and dealt with separately as a bill in its own right—is the provision dealing with
dams. That is pretty straightforward, and we do not see why that should not go ahead.
We just think, along with a lot of the submitters who came to the select committee, that
this bill does an injustice to the Building Act review process. It is tinkering with a whole
lot of small things, including the liability of local government. It is not likely to enhance
protection for consumers, and it needs a rethink.
The House adjourned at 6 p.m.