Deborah Coddington Speech To North Shore Business Women's Network

Good morning, and thank you for giving up your time to come to this breakfast.

Recently I was reminded how the heavy hand of government policy impacts especially adversely on women. The National Council of Women presented their submission on the Holidays Amendment Bill to the Transport and Industrial Relations Select Committee. They spoke of how the new changes to the Holidays Act will cause stress, financial hardship and increased workloads to women, because the majority of businesses owned and run by women are small to medium sized.

When you consider that the majority of businesses in New Zealand employ fewer than eight staff, you realise that the more this government increases red tape, taxes, and compliance costs, the less prosperous - and happy - New Zealanders will be.

But things have come to a pretty pass for New Zealand business when our liberty rests in the hands of Hon Jim Anderton. Alas, that appears to be the situation.

On Monday 11 August, Cabinet signed off on amendments to the Employment Relations Act, which will take New Zealand back to the dark old days of national awards, compulsory unionism (by stealth), multi-employer contracts, and, as was reported earlier this week in Wellington, a requirement for employers to maintain pay and conditions or pay redundancy when a business is sold.

Only three Ministers baulked at these proposals - Jim Anderton, Paul Swain and John Tamihere - the three responsible for economic growth.

The "Margaret Wilson Slavery Clause" (protection of terms and conditions) was dropped from the 2000 ERA after the `winter of discontent'. But like the would-be Governor of California, it will be back. Hasta la vista free enterprise.

This won't, like Rachel Hunter's haircare, happen overnight. But it will happen, and will move the labour market from collectivisation to unionisation. The rights of workers will be sold off for the rights of union bosses. So what does the government have in store for workers and firms? According to one source, the government's package of retrograde reforms includes:

Compulsory unionism (lite?). Hundreds of thousands of workers voted with their feet when compulsory unionism died, either cancelling their membership or not bothering to join. Union bosses have moaned ever since about individuals claiming the same `benefits' negotiated for members. The proposed changes are expected to include a clause that will see union dues deducted from all employees, whether union members or not, if their bosses and unions agree. What say will individual workers have? None. They won't be asked. Welcome to the new corporatist state.

Widening the `Unjustified Dismissal' net. At present, `unjustified dismissal' (a huge headache for employers) means the procedural process hasn't been legally adhered to. But it gets worse. Under new law, `unjustified' will mean `unfair', so even if you've followed the dismissal process to the letter of the law, because the worker you're dismissing is, say, a problem gambler, chronic alcoholic, has six dependent children and a broken-down car, it's `unfair' to dismiss him in the circumstances so therefore it's `unjustified'.

Multi-Employer Contracts. Unions have been very sore that the ERA did not deliver national awards and have lobbied Labour ever since. The new Bill will make multi-employer contracts much more feasible, and more difficult to block. So say hello to Cook Strait ferry strikes every school holidays, `no room at the inn' signs in the hospitality industsry and higher prices for clothing - especially kids' clothes.

Protection of Terms and Conditions - Til Death Do Us Part?. This was dumped from the ERA in 2000, but obviously not forgotten. Known as the "transfer of undertakings", it means if you buy a business you must also purchase the existing staff on the same terms and conditions, or else pay redundancy awards. This threatens the very dynamics of business enterprise and efficiency. There are usually very sound economic reasons for a business being taken over by a new entity. A new owner might improve a flailing company, drive up profits - improve the terms and conditions for employees. However, under this clause that is unlikely to happen. For example, when a cleaning business takes over a new contract the existing workers would have to be kept on, at the same rates of pay, etc, or paid redundancy. If this is a major hospital or corporate, the very reason why they would be seeking a new contractor is to save on overheads. So if this law comes into effect, why would a public hospital or school (trying to be frugal with public funding) bother to go through the rigmarole of seeking competitive tenders? Why would any firm want to take over another firm when its hands will be tied because wage rates and conditions are fixed by government fiat?

And the mind boggles at what happens if one successful company takes over several other companies. Does that company have multi-layers of staff all on different terms and conditions but essentially doing the same jobs?

Compulsory Arbitration - Three's Company. At present, if a dispute between employer and union is unresolved, it essentially just sits there. Under the new law, arbitration will be compulsory, but not binding. Sounds crazy, but in effect the threat of an outsider making an arbitrary decision means employers will be forced to settle disputes anyway. Even if they don't settle, it involves more red tape, higher costs and less focus on making their business prosper.

Thirty Day Rule. Under current legislation, the only employees who start out on a collective contract are those who are specifically named. These people then have 30 days to decide whether to continue on a collective or switch to an individual contract. Under the proposed changes, classes of workers, instead of individuals, will be named. So, the PSA might negotiate with Treasury for all clerks to be included in the collective contract for the first 30 days - whether they want to or not. These people would then have to remove themselves from the collective at the end of that period if they wanted an individual contract. This is an infringement of their right to choose their employment arrangements. What would people say if, for example, the government passed a law that said all new homeowners and renters must sign up with one particular electricity company for the first 30 days and then could choose either that company or another one at the end of that period. Would that be acceptable? Hardly.

On their own, these changes won't mean the end of the golden weather for New Zealand business. However, kicking in on top of changes to the Holidays Act (Mondayising of statutory holidays, redefining ordinary pay, five days sick leave without proof, penal rates for salaried staff, only one closedown period), Matt Robson's Four Weeks Annual Leave Bill, and the new OSH laws, the new ERA Bill makes mockery of the Government's stated aim to get back to the top half of the OECD.

Don't get me wrong - this is not `big bang' stuff. These things never happen overnight. Just like all the tax increases we've suffered since 1999, they creep up on you. What we are seeing are small, subtle changes to recreate a system that used to exist pre-1990 and the Employment Contracts Act.

In case you've forgotten those days, I'll read you an extract from a speech Douglas Myers gave when he was chief executive of Lion Nathan Ltd in 1992:

"Our Auckland brewery was really a case. Workers used to drink on the job, before and after. In fact, the first time I addressed the staff out there it was eight in the morning and most were drunk. We had mattresses on the floor for them to doze off on should they get a little tired. We had 16 different and complex types of employment contracts that expired in December each year and a strike before Christmas was a predictable as Christmas itself. The unions effectively determined how many people worked in each operation. If you put in more sophisticated equipment, and of course most people did not, the unions still ensured the same numbers of people were employed. To the degree that workers thought about the company, I think it would be true to say that we were the enemy. In fact, the first time I spoke to staff and said `Look, if we do not get our act together, our enemy, that is Dominion Breweries, is going to roll us,' one old delegate at the back said, `No, you are the enemy, they are our friends,' and he was right, they were.

Today, if you were to go to the brewery, you would find that we have a health and leisure centre for staff and their families, we have an international standard squash court and a very extensive gym. There is no drinking on the site. We have one collective enterprise agreement and a strong commitment to training. Throughout the company we will be spending $10 million on training this year. We have had no strikes there for five years. Our total wage bill is down very substantially, but our individual pay rates are up and productivity has increased by 300 per cent.

Recently we had an open day with the shift workers acting as guides. We attracted 8000 visitors and production on the day was the highest in the history of the brewery, which says something, I think, about pride".

So why is this Government, with a leader who prides herself on being `strong', allowing the unions to push her into allowing this country to go from a relatively permissive situation, vis a vis labour regulation, to a position of forcing people to do things the union way?

Is it because she so admires her `new' friends in Europe - Germany for example, where the labour market is heavily regulated and unemployment is up to 10.4 percent?

Last week Geoff Dangerfield, chief executive of the Ministry of Economic Development, reported to Parliament's Commerce Select Committee on progress made by the Government's purported show-pony for prosperity, the Growth and Innovation Framework (GIF).

His news was not pleasant. The GIF's role is to get New Zealand back into the top half of the OECD - although the Prime Minister made an executive decision some months back to abandon any deadlines for this goal.

New Zealand has now been overtaken by 25 non-OECD countries, so perhaps a more realistic goal might be getting New Zealand back on to the radar screen. Dangerfield acknowledged that fact, and pointed out that future economic success is driven primarily by individuals and businesses. But at this point, he said, "labour productivity level and improvement is relatively low, educational attainment is steady within the midpoint of the OECD, and research and development is improving though from a very low base."

Knowing this, how can this government really believe it is acting in the interests of New Zealand, and its place in an international marketplace, when it unhesitatingly agrees to bring in greater compliance costs and more red tape for business?

The people hardest hit, of course, will be the low-skilled, poorly educated, and low paid. They will be shut out of employment opportunities for ever, and locked into state dependency.

I believe condemning people to be dependent on the state for their income is one of the cruellest things you can do to people.

When the Prime Minister chaired an OECD conference in Europe in May, a Herald journalist heard her tell an audience that the New Zealand labour market was heavily deregulated. The journalist chose not to report this, in case future interviews with the PM were jeopardised.

This country's leader might find power in pushing the media around, but look how easily she allows her own cabinet to be persuaded by the union bosses and convince three dissenting Ministers that compliance costs and red tape don't matter.

There's been much talk lately about a new Knowledge Wave Trust, uniting business, union and academic leaders to "answer..Helen Clark's call" to foster debate. These founders may be well-meaning, but they are ingenuous if they truly believe unions have this country's future at heart. These changes signal the Germanification of New Zealand's labour market policies and will, in time, double our unemployment rate to match Germany's 10 percent plus.

This is `death by a 1000 cuts', with ERA amendments counting as number 800-and-something. There is more to come, with pay equity next off the blocks. Now, more than ever before, it is crucially important for New Zealand business to speak with one voice and oppose these union-led demands to re-regulate the labour market.

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