Minimum Wage (Contractor Remuneration) Amendment Bill — In Committee

MINIMUM WAGE (CONTRACTOR REMUNERATION) AMENDMENT BILL

In Committee

Hon DAVID PARKER (Labour): I seek leave for the Committee to take all questions across all clauses, schedules, and introductory parts as one debate.

Hon Member: And voted on separately?

Hon DAVID PARKER: Yes, and vote on the clauses separately. Thank you.

The CHAIRPERSON (Lindsay Tisch): Leave is sought for that purpose. Is there any objection? There is no objection.

Clauses 1 to 14 and schedule

Hon DAVID PARKER (Labour): I might just make a few introductory comments. I was not able to be present at the second reading when this passed through a five-party coalition, including the Labour Party, the Greens, New Zealand First, the Māori Party, and the Hon Peter Dunne.

This bill seeks to close a loophole that exists in New Zealand law, but not in a number of overseas jurisdictions, and that loophole is that in New Zealand it is possible for someone to employ the labour of someone working in New Zealand for less than the minimum wage. That is because in New Zealand the minimum wage applies only to employment relationships, whereas in some overseas countries, like the United Kingdom, it applies to work rather than employees. The loophole has also been closed in countries like Canada, although there they have used a dependent contractor alternative.

I think that many people in this Committee know that there are some problems faced by the people who are at the bottom end of the employment market. They are powerless. They are feeling the sharp end of the fact that the percentage of the New Zealand economy—and indeed a lot of Western economies—that is going to labour is decreasing, and the percentage of the economy that is going to capital is increasing. They are the people who suffer most from the increasing gap between high earners and low earners, because they can be paid less than the minimum wage. They are being exploited.

This bill is not a universal panacea. It does not give those vulnerable people holiday pay. They still will not get their ACC levies paid. They will not get sick pay. They will not get their tax deducted. They will not have remedies through the Employment Court for unfair treatment. They will not get double time and things like that on statutory holidays, but they will, at least, get the minimum wage. I am sure that there will be other questions that arise during this that I am very happy to answer, but the underlying thesis of this bill is that it is wrong that someone in New Zealand who is working should be able to be paid less than the minimum wage. I do not see it as controversial.

Can I just talk on one thing about process. Can I thank the select committee members. I was given a very courteous hearing at the Transport and Industrial Relations Committee. I could see that the issue taxed some people and interested them. Can I say of Andrew Bayly that I could see him thinking through the consequences of what it is like and how it is wrong that we can create incentives for unscrupulous employers who are paying less than the equivalent of the minimum wage to be able to undercut people who do not embark on that unscrupulous behaviour. In the end, I could not get Andrew Bayly across the line, but I was grateful for the consideration that he gave it.

Right at the end of the process, we had actually had eight drafts of this legislation considered by the Transport and Industrial Relations Committee as a consequence of drafting that had been done at the request of the committee by the Parliamentary Counsel Office (PCO). It had responded to issues that had been raised by the select committee, following hearing submissions, in an effort to make this bill narrower so that it did not catch people who were close to paying people the minimum wage in contractual relationships—so we just really narrowed it down to the most vulnerable in society.

Sadly, in the same week that the Minister for Workplace Relations and Safety castigated Labour members for not cooperating on the Easter trading bill to vote up amendments that were needed to that legislation, even if we were opposed to it, the National Party members on the committee then did exactly that. Rather than voting in favour of amendments that made the bill better, which is what we are meant to do at the select committee, even if we are going to vote the bill down, they voted the amendments down, which a lot of work had gone into. All of those amendments are before the Committee in the lengthier of the two Supplementary Order Papers (SOPs) that are on the Table of the House in my name, Supplementary Order Paper 203.

I have also prepared a change-tracked version of this bill, which I will now seek leave to table for the assistance of the members. Mr Chair, if I could seek leave to table this.

The CHAIRPERSON (Lindsay Tisch): Leave is sought for that purpose. Is there any objection? There is no objection. It can be tabled.

Document, by leave, laid on the Table of the House.

Hon DAVID PARKER: Thank you, Mr Chair. I have copies of a change-tracked version, which I hope will assist members. Sometimes Ministers do this to show the effect of the Supplementary Order Paper with the tracked changes. Members will see that it is, in fact, a document that has been drafted by PCO that shows those tracked changes that were before us at the select committee. That is the effect of the SOP. There are a couple of changes to that form, which I have marked in handwriting. I am happy to answer questions. I did it in handwriting so that people would be able to follow those changes that have been made. There is another Supplementary Order Paper, Supplementary Order Paper 204, which is in shorter form, that I anticipate some questions on as well.

I look forward to this debate. I think it is an important issue. This bill is either going to up or down by one vote, if the earlier votes on this bill are any guide. Whether it goes up or down, I hope I have highlighted an ill in New Zealand, which I think is the rising exploitation of vulnerable people in New Zealand. Thank you.

CLAYTON MITCHELL (NZ First): It is a great privilege to stand up and take an early call on this bill, and there may be opportunities for me to speak again. We have come out very strongly supporting this bill, and initially with some reservations around a couple of the points. However, when we went to the Transport and Industrial Relations Committee, we thought that we could iron out some of those points. It was a very, very difficult situation when, of course, we did not have the numbers to get even the discussion to go through to actually make some amended changes that would have made this bill become the bill that I think it is going to become.

Hopefully, today, this will go through with these amendments, because concerns have been allayed to New Zealand First by a number of concerned people out there—particularly by one group. They have certainly rallied around to email us. I will be responding to those emails, of course, once we have seen these changes come through.

These changes are important and they do tidy up some of those unintended consequences, particularly in and around the ability to ensure that for people who are doing a piece-rate or, in fact, are giving a service to multiple principals at the same time, that that can actually be calculated in total. I think some of the new amendments coming through to make this non-retrospective, to leave those businesses in situ—as they stand—for now, and to let time make that change will make it a very subtle and easy-moving change.

As we said right at the very start, we have some serious concerns in relation to, particularly, new schedule 2 at the back of the document, in relation, particularly to paragraph (f), which refers to newspaper and pamphlet delivery services. The unintended consequences of allowing this to remain in the bill, which is now going to be removed, would actually, potentially, inhibit particularly those older people from getting jobs, because they will be going up against younger people, who will be more able and more quick to go and deliver pamphlets and so on and so forth. Despite new section 11AC, which provides for a fair and reasonable amount of time, we believe that this will actually, in effect, go against those people who are trying to supplement their superannuation with a couple of hours—or what may even be 4 to 8 hours—in a job that could be done by a 16-year-old in the same time it would take two to do it, for example.

We do believe that this bill is necessary. We also have some concerns—along with a number of emails from a particular sector that has some concerns—which will be eliminated once Supplementary Order Papers 203 and 204 have been introduced. They were discussed in the select committee. Mr Andrew Bayly, I would certainly like to have your take on that. We hope that we can get some sensibility in the Committee today to get these through, because the emails that we have been getting in support of this bill far outweigh the number of contacts we have had from those people who oppose it, because it does tighten up those dodgy dealers who are taking advantage of vulnerable workers who should, ultimately, be paid a wage as opposed to being forced on to contracts.

This here does not stop those young contractors from being contractors. In fact, I had an email, which I have got, from a father who was concerned that this would stop his son from doing his apprenticeship and being paid a contract wage despite his son getting better than the minimum wage. I said: "This bill will not in any way stop that from happening." All that this bill will do is make sure, from this day forward, that those principal contractors make sure that they hold that data, that information, on the hours, the days, and the way in which their rate of remuneration is calculated, which is currently in law under the employment standards legislation. It is tied in with health and safety legislation. This absolutely encapsulates all those three things and puts them nicely into a package to say that this country is starting to look after those people who are being taken advantage of without actually causing mayhem and chaos for the genuine operators inside the contracting world.

We do support this. We are pleased to see that we have had an amendment made, also, in relation to new schedule 2. That is around public entertainment. That has been amended also after discussions and considerations with the honourable member David Parker, and, of course, there has been the removal of pamphlet deliveries, which we see as a potential problem for a particular sector of the people who do that sort of work. Thank you.

JONATHAN YOUNG (National—New Plymouth): I am pleased to rise and stand—I would like to make some brief introductory comments on this bill that we are looking at in the Committee of the whole House. This is because I chair the Transport and Industrial Relations Committee and I was away from Parliament at the bill's second reading. I am not going to make a second reading speech, but I just wish to make some comments. The Transport and Industrial Relations Committee, by majority, recommended the bill not be passed. I understand that the member the Hon David Parker—and I acknowledge him here today—has brought through Supplementary Order Papers 203 and 204, and I do acknowledge the intent of the sponsor of the bill, the Hon David Parker, was to protect some of the most vulnerable workers in our workforce who, he believes, are working in contracting arrangements but may be receiving less than the minimum wage.

Many of those working in lower-paid contracting industries are overrepresented in New Zealand's low-income statistics. Those overrepresented include women, Māori, Pacific Island people, and disabled people, and I believe the reason why we as a committee cooperated with the member and gave him, and officials, adequate time to look at potential solutions to this problem was that I think we all agree that we do not want to see vulnerable people being exploited. We are not for that by any means.

Some submitters considered that contracting arrangements are becoming increasingly common so that businesses can reduce costs and avoid the duties and obligations that they attach to employees, such as holiday pay, sick pay, ACC compensation and levies, and the like. Those are great concerns. We did hear anecdotal stories, so we are able to understand how some people feel, but we were unable to ascertain actually how big this problem was, which we made comment about in the report. We acknowledged that there are some issues in the workplace for low-paid workers who are classified as contractors, but the issue, we believe, certainly on this side of the Chamber, is not adequately remedied by this bill. Ensuring that a contractor's remuneration is no less than the minimum wage, which is what the intent of the bill is, does not, we believe, meet the bill's intended outcome, as noble as that outcome is. Contractors still have their ACC levies, their sick pay, their holiday pay deductions to be made, after which the balance that a contractor may receive could still be less than the minimum wage.

I think that as we progressed through consideration of these matters, we came to understand that there is quite a distinction between those who are self-employed or are contractors, and those who are employees. There seems to be an opportunity for clarity to come, and, I would say, regulatory monitoring of the classifications that workers are under. I think that it would be fair to say that we believe that this is the nub of the issue that needs to be addressed, instead of actually treating every contractor as an employee—i.e., making their remuneration to be a time-based payment as opposed to other forms of contract arrangement.

We oppose the bill, although we understand the intent and support the sentiment of that. We oppose the bill not for political reasons at all, but for practical reasons. We do not believe that the bill addresses the real issue. Can I just highlight in my time that I have right now—just to touch on some of the reasons why.

We believe that there are existing provisions in the Employment Relations Act that address the problem that this bill seeks to remedy. The problem the bill seeks to remedy is workers placed in employee-like situations, but as contractors without the benefit of employee protections such as minimum wage entitlements, etc., as I have mentioned. The remedy proposed in the bill is to require "principals" engaging contractors and those providing services listed under schedule 2 to record the time a contractor takes to undertake the work and the remuneration paid, then to maintain those records for not less than 6 years as evidence that they have paid the minimum wage or above.

I understand that some of the thinking behind this bill comes from—I am just happy to reference at this point—the International Labour Organization's Employment Relationship Recommendation, 2006 (No. 198). Article 4 states that "National policy should at least include measures to: (a) provide guidance for the parties concerned, in particular employers and workers, on effectively establishing the existence of an employment relationship and on the distinction between employed and self-employed workers;". We understand that the Labour Government in 2006 endorsed these, and rightfully so. It also states that national policy should "(b) combat disguised employment relationships in the context of, for example, other relationships that may include the use of other forms of contractual arrangements that hide the true legal status, noting that a disguised employment relationship occurs when the employer treats an individual as other than an employee in a manner that hides his or her true legal status as an employee, and that situations can arise where contractual arrangements have the effect of depriving workers of the protection they are due;". So we understand those measures in that recommendation that was endorsed by the then Labour Government.

But article 8 says this—and this, I think, is perhaps the point of difference, or the point that we feel should not be contravened—"National policy for protection of workers in an employment relationship should not interfere with true civil and commercial relationships, while at the same time ensuring that individuals in an employment relationship have the protection they are due." So, essentially, what we are doing in order to fulfil articles 4(a) and 4(b) is putting in a process where contractual obligations and commitments are being narrowed down to be based and measured on an employment basis, which is an hourly rate. That I see as an interference of true civil and commercial relationships. I think that the objections that we are hearing from the commercial and contracting fraternity in our country are that although they agree with the intent that vulnerable people must not be exploited, they do not want to see the interference in civil and commercial relationships. But there has to be another way to address this problem, and that is what we believe. We believe that there are many other measures to do that, and no doubt, perhaps in time, I will take another call, hopefully, and be able to address that. Thank you.

IAIN LEES-GALLOWAY (Labour—Palmerston North): I thank the chair of the Transport and Industrial Relations Committee, Jonathan Young, for his contribution, although it troubles me a little bit that there is still a large degree of confusion from members opposite about what this bill does, despite the lengthy consideration it was given by the select committee. So I want to clear up one piece of confusion.

The select committee chairman, Jonathan Young, said that we should not require everyone to be paid only an hourly rate, and we should allow other forms of remuneration, such as piece-rates and other forms, to exist. This legislation does not stop that. In fact, one thing that I think has been completely overlooked is that employees—people who are in a classic employment relationship—can be paid a piece-rate, but our employment legislation requires them to still be paid the minimum wage, regardless of how they are being paid.

So this is not a debate about whether or not we should allow people to continue to be paid a piece-rate. This is a piece of legislation that seeks to close the loophole that says that by having someone in a contracting relationship rather than an employment relationship, that person is not entitled to the basic standards that they are entitled to in an employment relationship, in particular the minimum wage. There are people who are in an employment relationship who are paid a piece-rate, and under current employment law they still need to be paid the minimum wage, whereas someone who is contracted but paid a piece-rate is not required to be paid the minimum wage. So I really want to make that point clear, because I felt from Jonathan Young's contribution that there was still an element of confusion from the other side of the Chamber about that.

I also want to address the issue of people who are self-employed. Again, Jonathan Young referred to the ILO guidelines. This is around ensuring that we do not mask the true nature of the relationship by claiming that someone is self-employed. Someone who is in a contracting relationship where they are receiving most or all of their income from one source—from one principal contractor—cannot realistically be considered to be self-employed. In fact, Supplementary Order Paper 203, which David Parker has put up, seeks to clarify the nature of self-employment, and to exclude those people who are genuinely self-employed but include those who people might wish to deem to be self-employed but who are, in fact, in a contractual relationship—in particular, those who are in a dependent contractual relationship.

As David Parker pointed out, other jurisdictions have done this. Great Britain uses a method that is similar to the one that is proposed in this legislation. Canada has defined dependent contractors and afforded them the rights of employees. So this is not something that is unusual; it has been done in other jurisdictions and overseas. The sky has not fallen. Their economy has not collapsed because their Parliaments have decided to pass legislation that affords the normal rights of employment that everybody working in New Zealand ought to be able to rely on.

I think it is important to note that we are not trying to rule out piece-rates or anything like that, and that we are not trying to impinge on people who are genuinely self-employed—and, in fact, David Parker has sought to clarify that.

I want to support the comments made by David Parker around the decreasing share of economic growth that is going to labour, to workers, no matter what the nature of their employment or contractual relationship, and the increasing share that is going to the owners of capital. That has been driven through a range of different mechanisms, but there is no doubt that substituting traditional employment relationships with contractual relationships, in order to circumvent things like the minimum wage and the other minimum standards that are afforded to employees, is one thing that is driving that decreasing share of the fruits of productivity going to the people who are providing their labour in businesses.

We need to tidy that up. This legislation does that well, and it does it even better with the amendments that David Parker is proposing in his Supplementary Order Papers 203 and 204. The larger of those two is the result of the submissions that we heard at the Transport and Industrial Relations Committee, and there is an additional Supplementary Order Paper that seeks to address some of the issues that have come up since the bill has come back from the select committee. I applaud David Parker for working closely with the business community to try to address the concerns that it has raised, but I must say that a number of the concerns that I have seen raised demonstrate more of a lack of understanding of the legislation, rather than genuine issues that could arise if the legislation is passed.

There was another matter that I wanted to raise but which has escaped my mind momentarily, so in the meantime I will simply look at some of the other changes that David Parker is proposing, to bring some clarity to this legislation. New section 6A is to make it clear that the rate of remuneration is not to be less than the minimum rate. As the legislation was originally drafted, it required a minimum rate for contractors, but it was not clear that the rate of remuneration was not to be less than the minimum rate for employees. That obviously was not the intention of the original legislation.

And that reminds me of what I wanted to address, which was one of the other points that Jonathan Young raised, which was to say that even if you provide a rate of remuneration for contractors that is at the minimum rate, they still have to pay ACC and various other costs—as do employees, in fact. Employees who are on the minimum wage are taxed, they pay their ACC levy, and what they take home in their pocket is less than the hourly minimum wage rate. And it would be exactly the same for contractors. So if that is being used by members opposite as a reason to say that this bill does not meet its intended purpose, then I think it fails. What it actually demonstrates is just another way in which this legislation gives those contractors the same rights as they would have if they were in a traditional employment relationship.

I am keen to hear from members opposite what their response is to those matters. I am keen to hear from them that they are clear about what this legislation does. I urge members who have been using those arguments to oppose this legislation to reconsider their view, because I do not think their fears are warranted. I think that the fears they have expressed have come from confusion about the legislation, rather than what the legislation actually does, and I urge them to reconsider their vote.

ALASTAIR SCOTT (National—Wairarapa): The loophole that Mr Parker has been talking about, I say, does not exist—or the tidy-up that is required, I say, does not exist. Sure, there are dodgy employers, there are employees who can be, and are being, taken advantage of, and there will be employers, essentially, treating their employees as contractors—for sure. But there is no need to change the law. There is no need to change the law, particularly in this manner.

This bill creates confusion around what is a contract and what is an employment relationship. It does not help the people whom it is aimed at helping, and I will give you just one example: the guys who deliver pamphlets. They came into the Transport and Industrial Relations Committee—they are one of the people who are mentioned in schedule 2. They are contracted to deliver pamphlets. A group of pamphlet deliverers came in and said they do not support the bill. They do not support the bill. The reason is that they are not interested in what their hourly rate might be—they are not interested in the hourly rate that they would be receiving under this bill. They want to do the job and get the job done in their own time. And that is just one example; it is not necessarily pamphlet deliverers. It might be guys who are pruning trees, trimming hedges, cleaners, or builders and construction people—all manner of people who are out there willing to give their service for a specified sum.

Think about the people who are employing these contractors. Think about the need to be clear on what cost they are outlaying for the benefit that they receive. There has to be certainty, and that is what a contract gives. This bill would bring in a whole lot of uncertainty around the end result in what is today a very fixed-price contract, and the terms are now no longer clear. The person paying the bills is not really sure what the end result will be because the costs are associated with some person's ability to work quickly or slowly. It relies on keeping time. There are people who would prefer to work faster than, you know, Mr Parker, or faster or slower than me, and that is for them to decide—but the contract, when one writes the contract, is clear about the certainty of the cost for the person who is going to pay the bills. That is very important, and the confusion is the problem with this bill.

The underlying intent is noble and worthwhile, and, as I say, there is no doubt—no one wants to see employees being paid less than the minimum wage. But there are already laws in place to protect those people. There are already minimum wages, there are labour inspectors who go out and about and do exactly that: make sure that people do get paid the minimum wage. They also check whether or not the relationship between the employee and the employer is a genuine employee-employer relationship. And if there is a situation where an employer is contracting someone who is really an employee there are also, today, rules and legislation to ensure that head contractor is not able to abuse the position that he finds himself in, is not able to pay or treat an employee—in reality, an employee—as a contractor. So that is the issue.

The Minister has already dedicated more resource into the labour inspectorate. That is the solution to the problem that Mr Parker is trying to address in this bill. But, in fact, the bill—you know, even in the explanatory note to Supplementary Order Paper 203—is narrowed so that it applies to certain companies: "The Bill is intended to apply to companies only where the company consists of a single person as a shareholder and director who personally provides the specific service." So there are a lot of conditions that have to be met.

Hon DAVID PARKER (Labour): May I respond to some of the points that have already been made. I will start with those that have most recently been made by Alastair Scott. Piece-rates already exist for employees. You cannot get the minimum wage for picking an apple an hour. There is a piece-rate that applies and is agreed by the employer and the employee that is reasonable, and if, after having agreed that piece-rate, you actually go out there and pick an apple an hour, you do not get the piece-rate and you do not get the minimum wage. So let us not pretend that somehow this would be different. The same logic and legal language is implied here in respect of a contractual arrangement as it is for a piece-rate, so I think that argument is a nonsense.

In respect of the idea that the problem does not exist, we know there is a gap in the law. The only question is how often are people being abused. There is no doubt that some people are being abused and, indeed, the Transport and Industrial Relations Committee conceded that. The select committee conceded that some people are being abused in this relationship; we do not know how many. I am personally convinced it is rising. I think we are seeing more exploitative practices, especially in Auckland. Some of them are associated with desperate people. Some of those desperate people are here on student visas and, you know, they are more open to exploitation than people who have other support structures around them if this is their own country. There is no doubt this is happening; it is just a question of how much.

What were some of the instances that we heard at the select committee? We heard an instance of a gym that had fitness trainers who were employees, who were put off as employees and taken on as contractors, and they did not think they were getting the minimum wage. We had some other examples in other industries that had been given to me by law centres. Why do we not see this coming forward? Well, in virtually every one of these instances, the person who gets the payment is a party to tax fraud. If they are getting paid less than the minimum wage and the tax is not being deducted at source, you can bet your bottom dollar that they are not going to the tax department and paying their tax, so they are complicit in tax fraud. They are never going to come forward and say: "Ping me for the tax I didn't pay on the payment that I got that was less than the minimum wage."

The idea that people have remedies in practice because they might be an employee rather than a contractor—and here I want to concede the point that Alastair Scott made, which was that for some of the people who are being abused, even if the pretence is that they are a contractor, at law they probably are an employee if the legal test is applied properly, but in reality they have no effective remedy. They have no effective remedy for a number of reasons. The old guardians of these things are not their guardians now. Most of these practices never occurred in yesteryear, because we had high rates of union coverage, and the unions were effectively the police that stopped this happening. You did not actually have to rely upon labour inspectors. We had advice from the department of labour as to whether labour inspectors are active in this space. It readily conceded that labour inspectors actually go after bigger issues that are systemic, rather than in respect of the issues of one person.

The number of prosecutions we see that come into that category every year throughout New Zealand would be able to be recorded on my fingers—I would not have to go to my toes. They are ones like the Masala prosecution last year, where people were being paid $2 an hour—$2 an hour. I think that is disgraceful. I am sure everyone in this Committee thinks it is disgraceful. But we have other instances.

One of my colleagues, in light of this bill, came up to me just a couple of weeks ago and said that another one had come into his office. Again, this person had come into his office and said: "I'm being offered remuneration where, effectively, I've got to take it. It is a contractual rate for a fixed-dollar amount per day that is much less than the minimum wage." My own secretary in my office, Deb Thornton, whom I have worked with for 10 years, recently came to me about her son's flatmate in Auckland—again, the same thing, and this time it is in the hospitality industry. Doing dishes or waiting at tables—$50 for the night, no matter whether you are there for 5 hours or 8 hours. This is happening.

And when I hear the National members saying "Well, it might not be that bad. It's not that often it's happening."', it sounds to me a bit like the people—and I am not saying that it is quite this bad, but in the old days, you know, when they tried to get rid of slavery, the people who ran those businesses said "Oh, it'd be a terrible cost for me to have to pay for people, rather than to employ them as slaves." And then I am sure that there would have been some people who at that stage said: "Well, it doesn't matter if there are only a few slaves"—because that is, effectively, what we are saying here—"so long as the number of people who are in this vulnerable position is not huge, so long as the number of people being exploited is not large, it is OK." That is not right.

The principle here is that people ought not to be able to get around the minimum wage by taking people on in contractual relationships, and that is what is at the heart of the ILO rule that Jonathan Young read out. The bit at the end about saying you should not stop non - employment relationships—this does not stop non - employment relationships. You can still have contractual relationships; you just cannot pay them less than the minimum wage. That is all this bill does—nothing more.

In respect of the pamphleteers, I agreed to that amendment because, you know, I really value the support of New Zealand First. I am not sure it is right. Maybe we need to tidy up the issues around piece-rates for people—

Jonathan Young: Yes, they're the most vulnerable, according to them.

Hon DAVID PARKER: What was that?

Alastair Scott: They're the most vulnerable.

Hon DAVID PARKER: No, what Clayton Mitchell said was that there are people who are elderly and who choose to do this for a bit of pin money and a bit of social experience, and they should be able to take longer than a piece-rate would allow. I personally think a piece-rate would protect that situation, but I agreed to that in order to get the support of New Zealand First. I do think that might be an area of law that we need to tidy up because I think a piece-rate should be able to be used in that situation.

What about the competitive effects? What about the radio station that also sells advertising, instead of using the pamphleteer? If the radio station has to pay the minimum wage to all its employees, why should the competing advertiser who is stuffing pamphlets through letterboxes not have to pay the minimum wage? We are on a race to the bottom in New Zealand because we still think we are the fair country that we were 30 years ago. We are not that country now, and we have not updated our laws to reflect it. We need to update our laws to reflect it so that the most vulnerable people cannot be abused by toe-rags—and they are toe-rags—who will employ people for less than the minimum wage in order to improve their profitability or to sustain their business. Some of them will say: "We'll go broke." Well, that is true of any business that cannot afford to pay someone the minimum wage. You do not drive down wages in a high-income society by allowing less than those minimums.

The final thing I would say, in respect of the idea that people can go to the Employment Relations Authority and get a remedy, is that I have spoken to labour barristers who operate in this area. They say that in the rare cases—because most of these people, as I have said, are vulnerable and have not got the skills or the money to do it, and they have probably been complicit in tax fraud because they have not paid their tax on the money that they have earned—when they do go, if they have got a written agreement, the Employment Relations Authority, understandably, puts a lot of weight on the written form of the agreement. And even though you might think that it is an employment relationship, if it is written up as a contract, it is very hard to get over the written form of the contract in practice, even though theoretically, at common law, an underlying test should be applied.

So I think that there are people being abused by these sorts of relationships. I think it is on the rise in New Zealand. I think this sort of corruption should be stamped out, and I think this bill would be a good way to do it.

KEVIN HAGUE (Green): I want to thank the member in the chair, the Hon David Parker, for that contribution. I was not part of the Transport and Industrial Relations Committee, and I must say, listening to the debate today, I have actually been a little bit confused about some of what the bill says. I suspect, actually, that some of the members on the Government benches have not understood what the bill does, either, and I noticed, actually, as David Parker was speaking, that Alastair Scott was nodding along. I think that probably suggests that David Parker has the right on his side.

I do have some questions about the bill, and I want to come to those, but, first of all, there are some remarks of a more general nature that I want to make arising out of what other speakers have raised in the debate so far. To some extent this bill goes to the relationship between society and the economy, and social arrangements and the economy, and there is a parallel around the environment as well. I think that we have set up an economy that people need to serve. Any economics student will tell you that capital will extract as much value as it can from labour, if it is allowed to do that. The observations around the changing share of surplus going to capital and to labour I think illustrates exactly this point. Capital, when it can, will extract as much value from labour as possible.

Clearly, we do not believe it should be that way. We believe that we should start out with an aim of having a fair society, and we should design and engineer our economic arrangements to deliver on that goal. The brake that we have currently on extracting the absolute maximum from labour, by capital, is the minimum wage and other protections for workers. But, very clearly, contracting out work is one of the mechanisms that capital has used to evade that brake. The result is that we are seeing more and more people—I think David Parker is right—exposed to that maximal exploitation, as a result. I think that contracting out work goes hand in hand with the casualisation of the workforce. These are both mechanisms that are being used by capital to evade the brake of the minimum standards, that floor that Governments have set.

Of course, capital will exploit contractors if it can. This is kind of a classic case of what do we do now when that situation occurs. Leaving it to the market to resolve—OK, that is never going to work because it is the market that is the problem. One of the roles of Government is to step in, in those cases of market failure where the market will not deliver the social results that we as a society need. I think it is unfortunate that Government members are now speaking against taking that role—taking the role of Government to step in and fix that market failure, to actually protect those people who are employed through contractual arrangements.

I guess I want to come to the particular question that I have, and this may be as a result of not having sat in on the select committee. My question relates to schedule 2, and I would like to hear from David Parker about how exactly those particular occupations have been selected. [Bell rung] Thank you, Mr Chair. When I look at schedule 2, very clearly these are functions that are often associated with the contracting of work, but what I am failing to understand—and I would appreciate hearing from the member—is why these particular ones have been selected and why there is not, I guess, a more general specification of the nature of that work, rather than the approach of itemising and listing that has been taken here. It does seem to me that a problem that is typically associated with this approach is that if we get it wrong, then we end up in an invidious situation where something has been excluded and, properly, it should be included.

We also have the problem of, I guess, futureproofing the schedule for the types of work that may emerge in the future, that we do not currently have to deal with—relating to the issue that I have raised about the general situation, that capital will always be looking for ways to extract more value from labour. What we are likely to see, I think, is that where we have this tightly defined list, the types of work themselves may actually change to enable that to occur. I will not take all of this second call, but that is the first of the big questions that I have. Perhaps we could return to some of those other questions in subsequent calls.

SUE MORONEY (Labour): It is a real pleasure to rise and participate in this debate on a bill that would make a great difference to, I believe, a rising number of people in our society. This bill, brought in the name of the Hon David Parker, seeks, quite simply, to ensure that contractors—people who are employed as independent contractors, or engaged as independent contractors, I should say—should receive no less than the minimum wage. It should not be terribly controversial, but it is very interesting listening to National members trying to find excuses for the reason why they will not allow the minimum wage to be the standard for people who are independent contractors.

We have heard them use arguments like—well, look, I am going to quote from Alastair Scott because I thought what he had to say was pretty insightful. I use that word in both ways of using it: it gave me great insight, but it could incite people as well. What he said was that, yes, there are dodgy employers out there—his words, not mine—but he said that that was no reason to have a law to stop it. Actually, that is the very reason to have a law to stop it. The very reason we have any employment law in this country at all is that if there are loopholes in the law, if there are not laws to prevent it, there are people who will exploit vulnerable people. That is the very reason why we have any industrial relations law at all in this country, Mr Scott. It is not an argument to say that "There are dodgy employers. There are always going to be some. Never mind. Let us not do anything about it." On this side of the Chamber we are not content with that. We do not think that is the sort of country we want to live in. We want a country that believes that if people are engaged to provide their labour, in whatever form—whether it be in a standard employment relationship, whether it be in the role as an independent contractor, however they offer their toil—they ought to have some standards that go alongside that.

There is another spurious argument that is being used by National members, and I think this shows the level of desperation, to try to argue their way out of what is, in fact, a very simple bill. It is not complicated. I think their strategy is to try to make it confusing, try to make it look complicated, but in fact it is very simple. I think when David Parker got up and spoke before, what could have been more simple than the way he put it. This bill is to ensure that people are not earning less than the minimum wage and are not being exploited. It is very, very simple.

National members are arguing that this bill should not pass because if an independent contractor gets the minimum wage, or at least the minimum wage, for every hour that they toil, then they have got to pay their ACC contribution, their tax, and a range of other measures. Well, guess what? So do employees—so do employees. They do not have all those things taken off, and then get the minimum wage applied. Gosh, if they want to move that amendment, I would vote for it, by the way—I would be happy to support that sort of amendment to this bill. But that is not what actually occurs for ordinary, everyday employees in standard employment relationships. They have the law on their side requiring that they have to receive no less than $15.25 an hour, and then they pay their ACC levy, and then they pay their income tax—not beforehand, but afterwards. So that is a ridiculous argument coming from—

Jonathan Young: Sick leave?

SUE MORONEY: Well, it gets paid out of their wages, Mr Young; it gets paid out of their wages. Does the member honestly believe that it gets paid by the employer and then the employer pays them the minimum wage afterwards? Please, because you are going to need to think about that very carefully and change your vote on this if that is what you truly believe actually happens in standard employment arrangements. I think anyone listening to this debate will know that that is complete and utter nonsense; it does show how out of touch the National Party members are. It seems to me that they are voting against this because they really do not want to ensure that people who are in these situations can demand to have at least the minimum wage.

I want to just go through whom we are talking about, so that people listening to this debate are really clear. It is not everyone in every circumstance; the member David Parker has written a schedule of whom this would apply to. It would apply to people who are providing services under a contract for service in the following areas: building and construction services, cleaning services—and I am going to pause on that one there because that, to me, is the one where I see the most exploitation happening in this area. People are supposedly going to gain so much benefit out of being self-employed independent contractors by going and doing a job that most in this Chamber would never have done—to go and toil for hour after hour after hour, cleaning. I know that what is happening in that industry is that more and more frequently, those employees and those self-employed independent contractors are being made to clean larger and larger areas and are being given a shorter and shorter period of time in which to do that. In many instances, they are being given ridiculously small amounts of time—no one, no matter how fast, no matter what their superpower is could ever clean that area in that amount of time. It is this type of loophole that is allowing that to continue to happen, and it is this schedule 2 that will put a stop to it.

So, there are cleaning services. Courier services would also be covered by this legislation, as would food catering services and fast-food delivery services. Food catering services, I think, are another area where there is rampant exploitation going on. Many of the cases that have gone through the courts, that have been picked up by labour inspectors, have in fact been in that particular area of food catering and the hospitality area. The member has brought forward Supplementary Order Paper (SOP) 203, which would remove the next item on schedule 2, which is "newspaper or pamphlet delivery services to letterboxes".

Alastair Scott: He's not sure he wants to. He's not sure. He just said himself he wasn't sure about that.

SUE MORONEY: Well, he is so sure that he brought an SOP forward, Mr Scott, that you can vote for. I look forward to Mr Scott casting his vote in favour of that, because when he spoke that seemed to be the only area that he had a concern about. He did not seem to think it fitted. Well, it turns out that the member is prepared to accept that argument, and is prepared to amend the legislation in order to address that very issue. Personal home care—

Alastair Scott: So they're not entitled to a minimum wage now, are they? Pamphlet guys aren't allowed a minimum wage?

SUE MORONEY: —support to an individual in an individual's house is another area. Pardon?

Alastair Scott: Pamphlet deliverers are not entitled to a minimum wage, according to this legislation.

SUE MORONEY: Well, now Mr Scott wants to include them. He wants to include them now—that is where the confusion is. I think the confusion is on that side of the Chamber; it is clearly not on this side of the Chamber. If Mr Scott wants to put that up as an amendment to the SOP, he would have my vote. I will put that on the record right now. I am very happy to support that. But I would want to see that the National Party members would be prepared to support it as well, because if they genuinely do have a concern for what is happening in this area—if they genuinely do want to address making sure that the minimum wage is an entitlement for people when they offer their labour, no matter in which form they offer their labour—then they should be supporting this bill.

There is another amendment to schedule 2 that I want to speak to briefly, and that is that where originally schedule 2 had also included "public entertainment services as an actor, musician, or singer", David Parker has brought forward Supplementary Order Paper 203 that would make sure that it applied to people who were doing that in a professional capacity. I admire him for doing that. I think it is important to bring that forward, because I can tell you, no one wants to pay me the minimum wage for my karaoke. I was bit worried that my car karaoke might be captured under this schedule, but it is very good that that has now been clarified. [Interruption] Well, my colleagues know a little too much about my car karaoke; they want to pay me to not continue to indulge in that. So it would be professional entertainment services that would be captured by this, and I think that is right and I think that is proper.

The manufacture of clothing, footwear, or textiles would also be captured by this.

Telemarketing services is the next one on the list, and that is a pretty interesting field too. It is a growing field.

Dr PARMJEET PARMAR (National): Thank you for the opportunity to speak to the Minimum Wage (Contractor Remuneration) Amendment Bill in the Committee of the whole House. The issue is that this bill is not going to deliver what it intends to—it is the way it is proposed. The way this bill is proposed is confusing, not at just one level that can be sorted, but it is confusing at all levels. This bill confuses employee and contractor status and expects businesses out there to treat both employees and contractors the same way, because this bill proposes to apply the minimum wage to contractors in the same way it applies to employees.

This bill misses that employees get holiday pay on top of their hourly wage, and for the ACC argument that we heard from the member who spoke before, the ACC earners levy is deducted from their gross earning through PAYE. For contractors, they will not be receiving any holiday pay, which employees get on top of their minimum hourly rate, and they will also be required to pay the ACC earners levy and work levy. So there is a big difference in employee and contractor status, and contractors earning just the minimum wage is not going to help them earn more.

We have heard a lot from various people, even after the select committee process. People are urging that this bill should not proceed, especially the business sector—those people who represent businesses—because they see that this bill is based on some wrong assumptions. Because this bill is based on some wrong assumptions, it is confusing and it is also unworkable. During the select committee process, the member in charge of this bill was unable to provide us with any concrete evidence. We heard some anecdotal stories, but there was no concrete evidence about how widespread this problem is. We do acknowledge that there is a problem, but we need to know how big that problem is. Because we do not know how big that problem is, I do not see that it is necessary to amend the current legislation.

We have heard from businesses saying that it is going to harm contractors. This bill is going to harm contractors, and not just that, it will create a lot of uncertainty in the business sector. The example that the member used from day one—I would like to use that same example of delivering flyers. If a person is delivering flyers for more than one client, who will be responsible for the enforcement of this legislation? Who will decide who should be the client who will be responsible for paying the minimum wage to the contractor? This bill assumes that a contractor works for only one client at a time, which is not true—that is what I mean by wrong assumptions. There are a lot of wrong assumptions in this.

To the member—in his contribution, he used the example of Masala restaurant. I believe that those people were employees, not contractors, so that is, again, a very, very confusing example given by the member. We do acknowledge that the problem is there, but this bill is not going to address the problem. We need to know how widespread this problem is, and we also need to look at the practical aspect of how we deliver this bill on the ground. That is really important. This bill is confusing, it is not workable, and I would like to ask the member in charge of this bill, David Parker, to take the next call and tell us why he assumes that contractors should be working for just one client at one time.

I also want to know from the member how this confusing legislation is going to help contractors. What happens to the holiday pay, and what happens to the ACC earners levy and work levy? I want to know that, and I also want to know from the member whether he has done any evaluation on the value of—

The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair for the dinner break. This debate is interrupted and I shall resume the Chair at 7.30.

Sitting suspended from 6 p.m. to 7.30 p.m.

Dr PARMJEET PARMAR: Just to summarise, before the dinner break I was saying that this bill is very confusing. It is because of the way it is proposed, because it mixes the employee and contractor statuses. And I was also saying that this bill is not workable and is based on some wrong assumptions. Before the dinner break, I was asking some questions of the member in charge of this bill.

I was asking why the member assumed that a contractor should be working only for one client at a time. In a situation where a contractor is working for multiple clients, who will decide the client that will be responsible for the minimum wage for that contractor? It is unfair to put that responsibility on clients and the contractor, and I would like to ask the member in charge of this bill to answer this question. I would also like to ask the member how this confusing legislation is going to help contractors, especially regarding their holiday pay and ACC levies, because with holiday pay and ACC levies, it is not going to deliver what the member actually intends to deliver through this legislation. Thirdly, I would also like to ask whether the member had an opportunity to do an evaluation on the work that contractors do in various industry sectors. We know that contractors work in various industry sectors like manufacturing, forestry, construction, cleaning, and so many other industries. I would like to know from the member whether he had the opportunity to do an evaluation on the value of work that contractors do and their earnings.

The reality is that the current legislation is enough to address the issue that this bill intends to address. This bill will actually intervene in a way that will take away the choice that is available to people in the market place. It will take away the flexibility that is available in the market place. It will also reduce the earning power of contractors because contractors want to work efficiently to be able to earn more. They want to have the flexibility available to them to be able to work in their own time. I know several families where, just to balance their family and work life, a member works as an employee but the other member takes up some contracting jobs because it gives them the flexibility to balance their family and work life. That is the kind of flexibility that people really like when they become contractors. We need to see that we are moving forward with the workforce, not going backward. We are not restricting our workforce but we are making it modern and we are making it flexible and practical too.

If this legislation goes through, the focus will be on time. The focus will be on the number of hours and on contracts. The whole focus will come on just one factor, and that is the time factor. There will be no focus on productivity. There will be no focus on flexibility. There will be no focus on choice, which is available to people currently. This legislation also does not take into consideration any cost overruns, because it is possible that people are unable to estimate the number of hours they will take to finish a contract, so they will underestimate the number of hours they will take to finish that project and there will be issues of cost overruns. There will be a possibility of a number of people coming and claiming those kinds of costs, complicating the whole situation.

As I said before, this legislation will actually harm contractors and will create uncertainty in the sector, and we do not want to see that. This legislation will also require self-employed people to pay themselves the minimum hourly rate. Examples that Sue Moroney gave before the dinner break, of those self-employed people—truck drivers, courier drivers. They will be required to pay the minimum hourly wage to themselves under this legislation. That will limit their ability to earn more, because that means we are adding more compliance costs on to them. There will more administration costs for some of these people because I know these people like to work on their business in a way that they are quite involved in the way that they deliver their contracts. They will have to employ another person to deliver those kinds of administrative jobs. That means they will have to pay another person to do that kind of record-keeping and then their overall earning will be definitely affected.

As this bill has progressed through the House, we have seen that a number of businesses and a number of people have realised that there are a number of flaws in the way this bill is proposed and that it is not going to deliver what the intention is. We all know that we should not underestimate what the business sector is saying and what contractors are saying. They are quite capable. They know what they are doing out there, so it is not a good idea to mix the employee and contractor statuses. We want to see that we have fair employment legislation, but, on the other hand, we also want to have flexibility in our workforce while enforcing that fair employment legislation. We are doing that.

Hon DAVID PARKER (Labour): I was challenged by the last speaker, Dr Parmjeet Parmar, to immediately take to my feet and respond to the question of what we do with a contractor who has got more than one principal. The member was on the Transport and Industrial Relations Committee and was there when the Parliamentary Counsel Office drafted an amendment at the request of the select committee. That very point, which was a fair point, had been raised by submitters, and raised by rural delivery people saying: "Look, every individual contract that we have here would be insufficient but you take them altogether and we get much more than minimum wage. Please do not include us." So there was a clause drafted, which is in Supplementary Order Paper 203, because that amendment was blocked by Dr Parmjeet Parmar and others at the select committee. It says in clause 10 on Supplementary Order Paper 203, adding clause 6A(2) to the Minimum Wage Act, that this requirement to pay the minimum wage "does not apply to a specified contractor"—which is the terminology—"who is providing a service to more than 1 principal at the same time …". I think that is pretty clear.

I am not going to refer to anything else that that speaker raised, because all of those points have already been addressed quite well by either me or other members speaking in favour of the bill. I will refer to the premature release that we had from Business New Zealand. It has not really covered itself with glory on this bill. I read the opinion piece in the newspaper. In fairness to those at Business New Zealand, they obviously had not read the amendments that had been proposed but been blocked by the National Party members in the way that we referred to earlier. I know that because, having seen their misinformed piece in the paper, which did not refer to all of the protections that address most of their concerns, I met with them and gave them the form of the bill that had those amendments in them, and they plainly had not seen them previously.

Further, I said: "Look, if there are any other provisions here that you would like to have incorporated that would make this more practical, I am open for business, because I am really just trying to cure this social ill without overregulating things." They came up with three proposed suggestions, all of which are in the Supplementary Order Paper. There is a transitional provision that says that this will never apply to contracts that are already in existence even after the Act comes into effect. So it will not affect those arrangements that are already in place. There is a provision making it clear that where there is an agreement as to what a reasonable time is, that agreement is at the time the contract is formed not half-way through it. I thought that was pretty clear anyway, but I was willing to clarify that. Then, lastly, there is a provision to have an equity and good conscience discretion so that for the labour inspector, having taken all those things into account, it still would not be fair to ping the person who was not paying the minimum wage—well, they did not have to ping them. So that is in there too.

Notwithstanding that, this premature release from Business New Zealand shows that, if it is right, Peter Dunne is going to cast a vote against this at the Committee stage, which is a shame. I am taking it that someone would have raised a point of order if the press release was right in saying that this bill has already been voted down at Committee stage, because I have been here for the last couple of hours, and, hopefully, I was not asleep so long that I did not notice that.

The one other thing that I have not responded to was the question from Kevin Hague and the Greens who asked why we had gone for a list in schedule 2. The original form of this bill, when it went under Darien Fenton's name at a previous iteration, actually did not have a list; it applied to all contractual relationships. We actually put in a list to reduce compliance costs because we did not want to catch brain surgeons, who are, plainly, paid more than the minimum wage, so we went for a list approach.

Really, having gone through all of this, if I was going to do it again—I think this bill is good—the better approach for a future Parliament is to actually have the approach that is taken in Canada, which is dependent contractor legislation. This is because that then does go further and addresses the things that Dr Parmjeet Parmar says, at least, that she is worried about—because you could also clean up at the same time things like holiday pay, unfair terms and conditions, and contracts that prevent people who are in these dependent contract relationships even joining together and telling their boss that the terms are not good enough. I will wait until I hear any other new questions.

CHRIS HIPKINS (Labour—Rimutaka): I rise to support the Minimum Wage (Contractor Remuneration) Amendment Bill full-throatedly, because I believe that this bill reflects many of the pressures people are facing in the modern workforce and in the modern economy. We have to accept the fact that in the Western economy effort and contribution have been decoupled from reward. That is the simple reality of the modern workforce. People are going to work every day, working hard and creating the conditions for prosperity, and yet they are not sharing in that prosperity. While people on higher incomes are enjoying prosperity, those who help them to create the wealth are not. That is a reality of the modern economy. They keep being promised jam tomorrow while they watch people higher up the economic ladder tucking into a three-course buffet dinner, and it is not good enough.

I will tell you that the members on the opposite side turn a blind eye to that, and they are irresponsible if they ignore the growing groundswell of support amongst people in low-income jobs who are increasingly frustrated and angry with the fact that they are not getting their fair share of the economic reward and of the rewards for success in this economy. The people out there delivering leaflets for our local supermarkets in a howling Wellington southerly help to create the massive profits that Progressive Enterprises and Foodstuffs—i.e., Countdown and Pak 'N Save—are enjoying, and yet they are not enjoying a share of that themselves. They are not even getting paid the minimum wage.

So when this Government talks about choice, who are they talking about the choice for? It is not for the people who are offered the opportunity to take a contract that is worth less than the minimum wage on a take-it-or-leave-it basis—they do not get a choice. The only choice they get is to not work. I think it is wrong that we say to people that they should not have the opportunity to work unless they are willing to work for below the minimum wage. The question that I have got for the members opposite is: if they think that that is right, why do they purport to support the minimum wage in the first place? The minimum wage is meaningless if there are so many loopholes that firms can simply get out of paying it by using contractor arrangements.

Let me look at another example that I came across recently of people who are barely earning the minimum wage despite doing work that I would have assumed was relatively lucrative. It is some of the contractors, whom I met, who are working on the roll-out of fibre for ultra-fast broadband. They explained to me the chain of the contracting that people go through before any money reaches them. The Government have Crown Fibre Holdings, who let a contract to Chorus, who let a contract to Downer Group, who let a contract to a principal contractor, who then lets a contract to a subcontractor, who then hires labour on a casual basis.

That is the layer of contracting, and every step of the way someone is clipping the ticket so that by the time you get to the person who is in the street putting the cables into the ground, they are earning barely minimum wage, if that. They are often contractors who have then got all of the overheads that go with being a contractor as well, and yet they are doing a job that traditionally would have been regarded as the role of an employee—and they are barely earning the minimum wage. That is wrong. It is morally wrong that we have created that environment where people who are out there working hard and creating the conditions for economic prosperity for everybody are not getting their fair share of that.

The members opposite can go on and on and try to discredit this bill by making claims about it that simply are not true, but it is time they confronted the reality that a growing number of New Zealanders are feeling frustrated and let down and left behind and forgotten. If we do not want to have a situation like they have had in the UK where they ended up with Brexit, or in the US where they are ending up with the rise of Donald Trump, we would be wise to consider that. We would be wise to consider the fact that every New Zealander has the right, if they are willing to go out and work for it, to enjoy a share of the economic prosperity that others enjoy. They are willing to go out and work for it, and they are not getting that reward.

The members opposite can continue to turn a blind eye to that, but as the groundswell and the growing numbers of people who feel disenfranchised and forgotten continues to expand, they will inevitably feel the consequences of that. I think we are a better country than that. New Zealand workers deserve a better deal than that. This bill is only a small step, but a significant one and an important one, and it has my full support.

MARAMA DAVIDSON (Green): The Greens will be, absolutely, supporting the Minimum Wage (Contractor Remuneration) Amendment Bill. I will pick up from where my colleague Chris Hipkins just left off at the end of his debate.

This is actually about bringing our society up to one that is fairer and that is more cohesive. The thing is the low-wage society, which is what this Government supports and believes in, has just done us in badly. We are seeing the ugly rearing head of it right now. This is why just today the low-wage economy—which is why this Government is opposing this bill. It is making up all sorts of excuses and reasons. The Government members even tried to say to us that they support the principle of the bill but that it is a messy bill—that is an absolute excuse.

Again, I have to say, I have been sitting here feeling—I am just trying to keep my language parliamentary—vomitous about us sitting here on the salaries that we are all on, and more, and having the absolute cheek to even fight against a minimum wage of—what is it—$15.25. We are going to deny New Zealanders $15.25. We are going to deny contractors a bit of legislation to bring them up to $15.25—us here in this House, us here sitting on these salaries. I have felt vomitous about that; I am going to use that word. It is a feeling of being really disconnected, and it is quite abhorrent, actually—quite abhorrent, actually—that we can even have the cheek to stand in this Chamber and argue against new section 6A, which is about bringing the "Minimum rate of remuneration not to be less than the minimum rate" of $15.25. Wow, go us! Go us in here! Go us in here! OK, I will get back to the bill. Thank you, Mr Assistant Speaker.

The Government's cries of opposing this bill have been that it is impractical and that it is not going to do what it is intended to do. It is doing that under the guise of being sympathetic with the intent. Thankfully, none of us is going to fall for it. None of us and New Zealanders is going to fall for it. Do you know what happened today? Research released today from Otago University showed that more than half—half—of all homeless New Zealanders are working or studying. I am going to ask that we research how many of those workers are on any sort of contract. According to schedule 2, that means that I am going to ask that we research how many of our building and construction services, cleaning services, courier services, or food catering services contractors—all of those are listed in schedule 2—are struggling or are in any sort of insecure housing situation, which the report is showing that half are.

I will move on from there. We are also supporting this bill, as I said, because it is one step towards fixing what this Government has neglected in terms of inequality increasing. So we will be supporting this bill. We will be trying to support workers and reduce the inequality that has been worsening under this Government. Do you know what it actually is? This is the thing: this bill is to help us steal less from workers—from contractors. This bill is to stop us from stealing the money that we steal off contractors by paying them a little bit more towards what they are worth—towards what they are worth. That is what this type of legislation is actually about. It is not about giving people who contract more; it is about stealing less. They deserve that. They need that, and then some, to live a good life. So that is also what this bill is about. My colleague Catherine Delahunty is going to go into more detail around carers.

Dr JIAN YANG (National): Let me start my speech with an example to demonstrate the spirit, the nature, of a contract. I am currently doing up my garden. I have a contractor. He employs a few people, and he gave me a quote and I accepted the quote. He did not specify how much time it would take. He said about 4 weeks, but now 4 weeks have gone and the work is half done, due to various reasons. There was bad weather, a couple of his workers left, and the plants that he had ordered did not arrive on time. So for all sorts of reasons the job did not finish within the time frame he had informally talked about. However, I am not particularly worried, because I know that I am not going to pay more, and he is not particularly worried because he knows that he has a job to finish and I am not going to get somebody else to finish the job. So this is the beauty of contracts—flexibility. Flexibility is particularly important.

I do have sympathy for the intention of this particular bill. However, I would say that this bill is trying to resolve a problem that does not really exist, because there is no empirical evidence to support this, and also we do not know how widespread the issue is. Having a contract is a commercial activity—for that reason we need to listen to the voice of business, right? For example, the Employers and Manufacturers Association (EMA) has a membership of 4,500. It is a large organisation. The chief executive, Kim Campbell, said that although the bill has good intentions, it would create more problems than it tries to resolve, and a contractor may well have more than one job at a certain time. So this person may not get much from one particular job, but could get many more jobs, and if you add up all the jobs, this person—he or she—might be doing quite well. So this bill may well reduce types of contracts that we are currently using and therefore reduce flexibility.

Also, the bill may not necessarily help the contractors themselves, because some people may not be able to finish within a time frame and therefore may not be able to enter a contract. Also, as my colleague Dr Parmjeet Parmar said, the bill itself might entrench contract workers, because, in the end, the contract workers might have to set the pay, which, in the end, may not work out in their favour because they have other things to factor in, like sick leave, holiday pay, or ACC levies—these things. I also quote Mr Kim Campbell from the EMA, and he said: "I think probably common sense will prevail and I'm reasonably confident there are enough people who've got some common sense in Wellington who will see this is not going to work".

So I do think that we should let common sense prevail, and common sense should prevail as the risks outweigh the benefits and the bill would not achieve its goal. The bill is more of an attempt to address wage level concerns for a selected group of occupations rather than to address concerns over the nature and value of contracting for services generally. There are many other problems with the bill. Also, as my colleagues have mentioned, the administrative compliance cost is a factor we need to consider. Just imagine that contractors have to record what they have done today, and when. So this can mean lots and lots of work to be done. There is also confusion regarding the provisions. What kinds of jobs should the bill apply to and what kinds of jobs should it not apply to? For example, construction and building services are covered by the bill, but technical maintenance is not. The bill, therefore—

Su'a WILLIAM SIO (Labour—Māngere): It is alarming when I hear two members in a row from the Government come down to this Committee and read out lines—political lines, obviously—in opposition to this bill. They are lines that I do not think they believe in—lines that, I think, if they do believe in, then they have not seriously considered what they mean for their reputation. It is alarming also that the Hon David Parker has revealed to this Committee that one of those members, who is a member of that particular committee, opposed the amendments of the committee that would have improved this bill, but then comes down to this Chamber and says that she does not understand what is going on. That is alarming.

Anyway, I want to acknowledge, firstly, the Hon David Parker, for the professional and caring way in which you have, I think, ushered this bill through, because the manner in which you have ushered this bill through has enabled the passage of this bill in its first and second reading. I hope that those political parties that have supported this bill thus far will continue to support it in its third reading. I want to thank you because if this bill is passed tonight and it gets implemented immediately, it will have an immediate impact—a good impact—on those people who are self-employed at this point in time who are paid less than the minimum wage. I know many in my community who will be applauding this Parliament if this bill is passed.

Once upon a time we used to consider in our community that for somebody who was self-employed—"that's where the money's going to be". We used to encourage so many of our young people to get into self-employment opportunities. We used to brag about having a contract to build houses, having a contract to paint for Housing New Zealand, and having a contract from the telephone companies, because we believed that if you worked hard enough and you were honest about your day's work, you would receive a fair wage. We are talking here about making sure that we protect those people who are now self-employed, so that they are at least paid the minimum wage.

We are a signatory to International Labour Organization Convention 131 about the minimum wage. If members of the Government would read that convention they would know what that minimum wage is about. It is about ensuring that the worker and their family are able to support themselves. It is about ensuring that a worker and their family are able to afford the cost of living of their particular country. At the moment, if I look at what is happening and how we now as a country are looking at using self-employed opportunities or contracting work out, employers—not all, I can say, but some employers—are using them to get away from their responsibility to the workforce. They are using them to undercut their costs.

That is not just me saying it. If you look at the report that was prepared by the Transport and Industrial Relations Committee, there were a number of submitters who made submissions, including Caritas—the social services of the Catholic Church—the trade union movement, the New Zealand Public Service Association, FIRST Union, and the New Zealand Association of Citizens Advice Bureaux. These are people who are close to the ground to where it is happening and they note in this report that there is a trend towards firms offering work to contractors, rather than employees, in order to reduce costs and avoid duties and obligations. That was the submission made by this group of people to the select committee. FIRST Union said that it had seen work that was predominantly performed by employees now being contracted out and weighted significantly in favour of the principal's interest.

I do not know whether members on the other side of the Chamber recognise the error of their ways. Instead of us being proud of a New Zealand where our workers are earning good money and they are spending that money—and if you know anything about economics 101, and most of us do, that money is circulating and helps generate more wealth—that lot seems intent on driving down salaries.

PEENI HENARE (Labour—Tāmaki Makaurau): Tēnā koe, Mr Chair. As I rose to my feet, I had to check the bill that we are debating, because it sounds like the Government is actually talking about the housing crisis, because this problem does not exist either. There are not any problems with this particular bill.

I hear calls from the other side saying: "Give us some examples." So I want to start my contribution with an example. New schedule 2, inserted by clause 14, talks about services as an actor, musician, singer, or support crew for the production of advertising or content for television.

Some people might know that I used to work at Māori Television. I was fortunate enough to be there when Māori Television led the way with Anzac Day coverage—full-day coverage—and Te Matatini National Kapa Haka Festival coverage, with a worldwide audience of over a million people. What else was there? It was a part of Christmas in the Park, the Rugby World Cup—

Meka Whaitiri: Te Ata's tangi.

PEENI HENARE: —Te Arikinui Dr Dame Te Atairangikaahu's hui mate, her tangi. While we all sit there and we watch and we "Wow" and we are amazed by the images on our television screen, what people who are viewing at home do not know is that the key grips, the riggers for the equipment, the lighting people, and the cameramen are all contractors. Just recently Ngā Aho Whakaari, the union representing the workers in this particular industry, threatened to strike. Why? Because those workers were not being paid what they were owed. They were being paid, in some instances, below the minimum wage—below the minimum wage.

Meka Whaitiri: There's an example.

PEENI HENARE: There is a classic example. So while we all sit there and we watch television and we think: "By crikey, Māori Television's doing a fantastic job.", I think about a man by the name of Don Selwyn. Don Selwyn through the 1960s and 1970s knew that technology was going to change the world. So what he did was he focused on the young people. He trained a generation of television producers, of film directors, of movie makers, of camera operators, of key grips, and of riggers for television sets and productions. It is sad to see that despite his hard work through the 1960s, 1970s, and 1980s, the birth of Māori Television saw some of those contractors get paid below the minimum wage. There is a classic example of what is exactly wrong with the current legislation.

I want to congratulate Mr Parker, because he has done a great job at cajoling those on the Transport and Industrial Relations Committee, those across this House, to make sure that we can get this bill across the line. We have bent to the right, bent to the left, bent over backwards, changed a few words, and shaken hands. We all smiled when we agreed on these amendments. Now, all of a sudden, we have already heard about the press release that has just been prematurely let out.

Hon Ruth Dyson: Oops.

PEENI HENARE: Oops—amateur move. Now we are still fighting for the rights of workers in New Zealand.

I think it is absolutely despicable that the narrow-mindedness of this Government is actually going to force many of the constituents in Tāmaki-makau-rau and many of the hard-working whānau right across Aotearoa into more poverty. Our colleague Marama Davidson has already talked about the working poor, and what this does is this actually guarantees that they will remain the working poor. Let us be honest here, the minimum wage is still very low. Let us be honest here. Let us be honest. Let us work hard, get the minimum wage, and still struggle! So we are not asking for the Government to open up Treasury and let everyone reap the benefits of the money that pours out from the doors. No. We are actually asking them to come up to only the bare minimum level—the bare minimum.

It blows me away, as I said—the narrow-mindedness of this Government to turn its back on the hard-working people of Aotearoa New Zealand, in favour of what—market forces? Let the market sort it out? Will market influence make sure that those who work hard, regardless of how many contracts they might have, actually get a livable wage and be able to go home and provide for their families?

So, Mr Parker, I applaud you. You have done a fantastic job, Mr Parker, to bring this bill here, and it does upset me that a key stakeholder in our community—

JONATHAN YOUNG (National—New Plymouth): I would like just to clarify a couple of things, because we are being, I think, unreasonably lambasted by members of the Opposition. They are attempting to make a political feast when we are talking about principles here. The issue around this proposed legislation is not intent, but it is the mechanism.

A case in point has been the confusion that seems to be happening around some schedule 2 inclusions or exclusions. We have had the sponsor of the bill, the Hon David Parker, talk about pamphlet delivery people needing to be on the minimum wage, and why would we not agree with that, and we have had Chris Hipkins come into the Committee and do a grandstanding rhetorical speech saying the same thing, yet we find in schedule 2 that they have been deleted.

The reason that they have been deleted through the discussion in the Transport and Industrial Relations Committee—and I believe Clayton Mitchell has proposed this deletion and the member has agreed to it—is that there are many retired people who do pamphlet delivery who do not walk as fast as a 20-year-old but do it for a lifestyle choice, or perhaps they do it for supplementary income, and possibly they will never do it fast enough to really get that minimum wage. But if the "principal", as defined in clause 6, says: "I can actually get these delivered by a younger, fitter person, because this is what we estimate this job needs in order to be done, in terms of length of time.", then it creates exclusion for them. This is part of the complexity—can I say complexity—around this bill and how it will affect lots of people in our communities. So the member has agreed to take that group of people out of schedule 2. That is just evidence of the great complexity around this space.

I heard what the member was saying before—how he believed that, perhaps, if it does not succeed in this format, then some work can be done around contractual law and looking at some of those other areas. I would think that what I am hearing and, perhaps, members are hearing is that right through the contracting community people are saying that this is creating confusion. Let me give another example of that, because in new section 7A—inserted by the amendment to clause 11 on Supplementary Order Paper 203—which is entitled "Remuneration and time record to be kept", it states in new section 7A(2)(d) that "the number of hours spent providing the service by the specified contractor and the remuneration for those hours:" needs to be recorded. When we come to what the Inland Revenue Department states an employee person is, they are a person who can be told at any time what to do on the job and when and how to do it. So they have their hours of work controlled by their employer.

Essentially, this is what we are saying in new section 7A, that we are needing now—and I am not saying that we are excluding piece-rate or excluding the ability for a person to put in a contract price for a deliberate outcome—to pass all of that through a filter of a time-recording process. There may be some exclusions, which, perhaps, the member could talk about later on through that as you go on to new section 7A(6), which I would probably like the member to explain, especially new section 7A(6)(d). This is the confusion. It is blending contract, which is clearly under contract law, with law around employers and employees. I just think that the example of schedule 2 and the exclusion of newspaper and pamphlet delivery services to letterboxes is an example of the complexity and the confusion that is being created.

Hon DAVID PARKER (Labour): Can I respond to Jonathan Young's point, when he was just referring to new section 7A, inserted by clause 11 on Supplementary Order Paper 203, about records being required to be kept about the number of hours spent providing the service by the contractor and the remuneration for those hours. Of course, if you read down to new section 7A(6) it says: "This section does not apply if— … (c) the agreed rate of remuneration is calculated otherwise than by reference to the number of hours worked … and (d) the principal reasonably believes that the agreed rate of remuneration … is sufficient to remunerate … at a rate that is higher than the prescribed minimum rate …". I do not think I need to say more than that.

IAIN LEES-GALLOWAY (Labour—Palmerston North): There is a group of people who earn more than $50 an hour and have not earned a cent of it tonight, and they are the National caucus members who have stood up and spoken on this bill without reading a word of it, I think, and especially without reading any of the amendments proposed on the Supplementary Order Papers put up by my colleague David Parker. If they took time to read them, they would realise that every single one of the arguments they have put up against this legislation is dealt with in the Supplementary Order Papers proposed by David Parker.

Let us go through their arguments. First of all, we had Parmjeet Parmar saying: "Well, what if someone is working for multiple contractors, multiple principals? Which one of them is responsible for paying the minimum wage? Oh, gosh! It is so damn difficult. We can't do it." It is simple. New section 6A(2), in clause 10, says "Subsection (1) does not apply to a specified contractor who is providing a service to more than 1 principal at the same time …". End of story—that problem is dealt with right there in that proposal in David Parker's Supplementary Order Paper 203.

Then we had this other argument about: "Oh, well, you know, it could take the person longer than they thought it was going to take them to do the job, so you're going to have to pay them more because they're going to do more hours, or the person might be old and they might not get around as quickly as a young person and so, you know, it would be terrible to have to pay them more." Well, let us have a look at new section 11AC, in clause 13, entitled "Specified contractor may not recover minimum remuneration for time that exceeds agreed reasonable time to provide service".

So it is pretty simple. When you enter into the contract you agree how long it should take to do the job, you agree on a rate that would make that job pay the minimum wage, and if the person takes longer than the agreed reasonable time, that is fine—new section 11AC says they cannot recover any more money because they went over the agreed time. The only requirement is that the agreed time is reasonable and the rate of pay is reasonable.

Let us face the facts. National's opposition to this legislation is purely ideological. It is not based on any practical concerns at all, because every single one of the things that its members have raised in this debate tonight is dealt with. They have not raised one single legitimate concern—or at least if they have raised a legitimate concern, David Parker has dealt with it. It is all here in the legislation, and it is all here in the Supplementary Order Papers. The fact is that National does not want workers to earn a reasonable wage. It wants some employers to be able to circumvent our employment law and pay people less than the minimum wage. That is why National is opposing this legislation. It does not want working people to get a fair share of the improvements in productivity. It wants only its supporters—the owners of capital—to get all of that share, and it wants people to work harder and harder and harder for less and less pay.

That is why people cannot afford to live in houses under the National Government—because they do not earn enough to pay the prices that the National Government allows our housing market to get to. That is what is going on in this country, and that is why Chris Hipkins was absolutely right when he said that if you ignore these problems for too long, if you push people down, then you get Brexit, you get Trump, you get all of those things that we are seeing around the world, and that is exactly where National is leading us.

National members cannot argue this one on the facts. They cannot argue this one on the detail of the bill. They have come down here and demonstrated that they have not been paying attention and they have not been earning their money, reading the bill, and properly considering the amendments proposed by David Parker. They are opposing this purely on ideological grounds, because they want working people to earn the barest minimum, if not less, so that the people they stand for—the few at the top; the speculators—can do well out of a growing economy and everybody else can get stuffed. That is why National is opposing this bill.

DAVID CLENDON (Green): I am pleased to take a short call to speak in support of this excellent bill. Before I deal with some of the detail of the provisions of the bill, I would just like to make two observations about the Government's objection to it. It seems to me the first point its members are insisting on is that this bill is unnecessary—that the provisions within the bill are already covered off by existing legislation. That presupposes the drafter of the bill, Mr Parker, is given to flights of fancy and has an overactive imagination. None of these characteristics are evident in my experience of Mr Parker. I think it cannot be denied by anyone who is actually observing the New Zealand workplace that so-called contractors are often at a distinct disadvantage.

The second concern we have heard from our friends in National on the Government benches is about the intense complexity of this bill. It runs to some 14 clauses—scarcely six pages of text. I recall when Simon Power was Minister of Commerce. He was putting through a lot of legislation to reregulate the finance industry. They were complex bills, and I say this having sat on the Commerce Committee at the time. They were extraordinarily complex. It, in a sense, bothers me and concerns me that the combined intellectual horsepower of these fine folk we see this evening considers this to be a complex bill. It is quite extraordinary. The bill is extraordinarily straightforward, in fact.

I can say I speak with a level of experience. I have been an employer and an employee, and, indeed, I have also worked as a contractor—on a very fair rate, I might add. But the problem is that often people working as contractors are working at a distinct disadvantage. There is a significant power imbalance between those seeking to earn their way in the world and those who are in a position to employ them as contractors to contract to them. This very straightforward, easily understood bill I think seeks to even out that field, to even up the situation a little, and to make it a fairer situation.

New section 4B, inserted by clause 7 of the bill, is fairly straightforward, I would have thought. Matters must be taken into account in establishing a rate: how long the job will take and how long is a reasonable amount of time for a person to take to provide the service. New section 8B, inserted by clause 11, requires that information about remuneration must be kept. It requires a person paying someone for services to keep good records, and it goes on to say that those records must be available to a labour inspector. So far I am not intellectually challenged by any of this, I must say.

Hon Members: Ha, ha!

DAVID CLENDON: I make no immodest claims to superior intellect, but I am finding this quite straightforward to comprehend. It goes on to say that in the event that it is found by an inspector or someone else that a person has not been rewarded sufficiently and reasonably and fairly, the person paying the amount may be taken to task and obliged to pay compensation, in effect—to top up the payment that person has received to meet a reasonable minimum standard. None of that challenges me. None of it do I find unreasonable, unfair, or difficult to incorporate into existing law. It may well be, and Mr Parker has very modestly conceded, that this bill may be far from perfect. This is the purpose of select committees: to make bills better and bring them back into the House in a form that we can then integrate into the existing statutes. Nothing in this do I find difficult; nothing in this I find would disrupt the existing employment situation in New Zealand in any negative way.

I must refer to some of the majority view of the Transport and Industrial Relations Committee, which identified the printing and distribution sector as potentially almost a victim of this bill. It highlights the fact that the digital age has made things slightly difficult for the print industry. That is a given. Disruptive technologies come along and do create challenges for older forms of technology, and this form, the digital form, has made print a difficult thing. It goes on to say that—I am running out of time, so very briefly, it implies that if we pay these people too much, the entire print industry could collapse. If we give a few more dollars to people stuffing letterboxes with leaflets, with local papers and the like, the entire print industry could be brought to its knees. Somehow I doubt that. I do not see that as being a credible proposition.

SUE MORONEY (Labour): We have had some very interesting contributions on this, some of which have put some light on this very simple bill, which is, in fact, so simple I think it lasts for about three pages—too much for the National members to get their brains around. They find that too complicated. About three pages' worth of regulation that simply aims to ensure that people who would consider themselves as being self-employed or contractors are, at the very least, able to earn the minimum wage of $15.25—too complicated for the National members to get their tiny little brains around.

Well, I want to ensure that people listening to this debate know that the party opposite is very deliberate in why it is voting against this very good bill. It is deliberate, and I think Parmjeet Parmar, when she gave her contribution, gave it away, actually. She said—

Carmel Sepuloni: What contribution?

SUE MORONEY: Well, the contribution was varied, but the part that I want to concentrate on is when she said that the Masala restaurant case, which a previous member had referred to, would not even be covered by this bill, anyway, because those people were employees. So let us just think about that for a minute. In fact, what she is telling the Committee is that this bill would actually mean that it would stop that employer from using another mechanism to not even get into court, because the only reason that case even got before the court was that the workers were not being engaged as contractors. Had they been engaged as contractors, the labour inspectors could never have even prosecuted, and that is the point about this bill. It will give labour inspectors the right to actually investigate and prosecute those dodgy employers whom Parmjeet Parmar is instructing to use the contracting provision to get around the minimum wage provisions—it would actually prevent that case from even getting to court.

So the party opposite is arguing that it wants to vote this bill down so that it can ensure that employers like the Masala restaurant can get away with what they are doing and not be brought before the court, because all they simply have to do is require those vulnerable people whom they were employing to not take up an employment relationship but just engage them as contractors, and it will all be sweet. They will be able to continue to exploit those people, and I think that it is a disgrace that National thinks that that is OK.

We have already heard that there has been premature speculation, I think I will call it, from Business New Zealand about the fact that this bill—it has announced to the nation that it has been voted down. Well, we have yet to take a vote, actually, and I hope that whoever put that press statement out—I know that they will be earning more than the minimum wage. They probably do not deserve to, quite frankly, if they are going to make pronouncements about matters that have not even taken place yet. But I genuinely hope that Business New Zealand, through its incompetency, has not only prematurely speculated but has got this, in fact, quite wrong, because I hope that all the parties that have supported this to date actually keep their nerve—hold their nerve—in the face of those who want to exploit people who work hard in this country. I hope that every party holds its nerve against those employers who actually do other good employers a disservice.

The thing I want to say to Business New Zealand is this: the majority of the members whom it represents will not be using this provision and this loophole. They are the employers who actually play by the rules, do the right thing, and pay people a decent wage for the work that they perform for them. They do not want to have to compete against the dodgy employers who use this loophole to exploit their staff, because that is the race to the bottom and most employers in New Zealand do not want to engage in that. They do not support what the National Government is doing. They do not support the idea that their competitors, because they have no ethics and no morals, are able to use this loophole to actually pay people less.

ALASTAIR SCOTT (National—Wairarapa): I would just like to reflect on the contribution from the last speaker, Sue Moroney, regarding Masala restaurant and its $2 an hour issue. That was an employer-employee relationship, and that was an abusive employer, and that employer should be punished. There is no one disagreeing with that. There is no one disagreeing with that. If that same employer had these guys on a contract, that would make no difference. The employer would still have an employer-employee relationship with those people, and they would still be breaking the law. So we all agree that these—to quote Mr Parker—"toe-rags" are the guys who we want to make sure do not operate. We all agree on that, but this is not the solution to that problem. The solution is to give labour inspectors more resource, which is what the Minister for Workplace Relations and Safety has given in the last Budget, to make sure that those employer-employee relationships that are out there that are covered, or disguised, if you like, by a contract, are not a contract at all. So let us be clear: there are employer-employee relationships that are disguised as contracts, and that is unacceptable. This is not the way to solve that problem; in fact, this does confuse things.

So let us look at Supplementary Order Papers 203 and 204. I was looking at the original list, and then we found that the pamphlet guys, the guys who are the most vulnerable—these are the guys who sort of kicked this whole thing off, the guys who took a long time to deliver pamphlets because they wanted a social outing. At the end of the day, if you added up the hours that they took delivering those pamphlets, they were certainly getting paid less than the minimum wage. They were certainly getting less than the minimum wage, but they were happy with it because they used it as a social occasion, and they were slow—they were slow. A young fella on a bike would earn more than the minimum wage delivering the same pamphlets. The guy who wanted pamphlets delivered, he did not give a toss who delivered those pamphlets—he did not care who delivered those pamphlets. He was concerned only about those pamphlets being delivered on time and at the right price.

It just seems bizarre to me that those people who kicked this bill off are excluded—are excluded—from the protection that this bill is designed to give. The most vulnerable, according to some, are excluded—they are not protected—all because of Mr Tabuteau's contribution earlier. That was New Zealand First's condition of support for this bill. Disgraceful—disgraceful—allowing the most vulnerable to be paid less than the minimum wage for your political gain. You have got Mr Parker, who has all the right intentions, confused. Unfortunately for Mr Parker, that group of people is not protected in the bill proposed by Mr Parker. That is a disgrace.

The other thing that was interesting was Mr Lees-Galloway quite rightly pointing out that if a time was agreed to and an hourly rate was agreed to then that was, essentially, a contract. That is what I would call that: a contract. He would call it some sort of quasi-contract employment, based on the time. If the person went over time, there was no recourse for that person to claim extra. So I do not see any improvement in the bill, because this is just what a contract is. It is a fixed price for a job to be done.

Iain Lees-Galloway: You've got to agree a rate that meets the minimum wage.

ALASTAIR SCOTT: It does not matter what rate you agree. It could be $50 an hour, but if you limit the time, then the total amount, "x" times "y" equals "z"—it does not matter whether "y" and "z" are around the other way, it still equals "z", does it not? You are just playing with numbers. Whether it is a high hourly rate and a short time or a low hourly rate and a high period of time, the total is the same. That is of all concern. I am pleased to see that Mr Lees-Galloway appreciates the certainty that a contract gives a builder, or a customer, if you like.

The other exclusion, the other group of people that is excluded now under these Supplementary Order Papers, is those who are employed from multiple sources, and the courier driver was used as an example. So here we are—that is the third line down, "courier services".

JULIE ANNE GENTER (Green): I would like to congratulate the Hon David Parker on bringing this bill to the House and seeing it through the select committee process, because, fundamentally, this bill is about fairness. It is about creating a fairer New Zealand, and that is what we are here for. I know that most New Zealanders want to live in a country where if someone goes out and does a full day's work, they have enough to live in a warm, safe, and secure home and to put food on the table so that their kids do not have to go to school hungry. That is fair.

There are two problems here, and this bill solves one of them. The problem in New Zealand, firstly, is that the minimum wage is not even high enough now for all New Zealanders who are working a full day's work to be able to afford those things that we consider essentials, which everyone in our society should have access to. With the minimum wage at $15.25 an hour, people are taking home just over $514 a week after tax. Is that enough when you have got a couple of kids—maybe a single parent—with the way that house prices are going in Auckland? No, it is not enough. Too many people are struggling, working hard to make ends meet, and they cannot. That is not the New Zealand that I think most of us want to live in. Even those members opposite—I know they do not want that either. I just think that they are a little out of touch with what is happening under the ideological approach taken by this Government.

So this bill solves one problem, which is that contracts are being used to get around our minimum wage rules and to pay people less. This bill just makes it hard for people to do that—impossible for people to do that—and that is a good thing. That is a good thing. It is one step closer to a fairer society where people earn enough from their work, and that is what we want.

I know how difficult it must be for the members opposite to confront the fact that their ideology is not supporting the outcomes of a fairer New Zealand, because they probably really believe it. Coming from the United States, I can tell you that that ideology of always more competition, always cutting wages, not having a higher minimum wage—it does not work. It just leads to a grossly unequal society where there are some people who are incredibly wealthy and are benefiting from this approach, but many people—many, far too many—are struggling, are working 60- to 80-hour weeks, are working multiple jobs, and do not have enough to pay for the basics. They do not have enough for healthcare, and what is happening in that society is that it is coming apart. We can see that with the rise in the popularity of Donald Trump.

That is the natural outcome of policies that are justified on the basis that they are good for employers and therefore good for jobs and therefore good for growth and therefore good for society. But the reality is—all the evidence shows—that that is not how it works, and so we have to protect workers. We have to make sure that they are getting paid enough. There is not any real evidence that higher minimum wages lead to higher unemployment. There is no evidence.

Chris Bishop: There is. There's a bucket load of it.

JULIE ANNE GENTER: There is no evidence of that. I know it is really hard for those people brought up in the religion of the National Party to confront that reality, but go look at the evidence. Go look at the evidence, because the countries that are doing the best right now are the ones that have high protection for workers, they have higher wages, they have good social services—

Hon Member: Scandinavia, for a kick-off.

JULIE ANNE GENTER: Yes, Scandinavia—take a look at Scandinavia. But New Zealand is a small country, and it is a country that prides itself on fairness, looking after our natural environment, working hard, and sharing the benefits of that hard work. I know that that is the New Zealand that we can create together, but in order to do that, we are obviously going to have to change the Government, because this lot does not understand how it is that we will create a New Zealand where everyone has the same opportunities.

The Government is fundamentally committed to its constituency, which is a group of very privileged people who are out of touch with the reality of families who are struggling. So I am very proud to be voting in favour of this bill tonight, and, with my party, I know that we are all strongly supportive of the efforts of the Hon David Parker and the work that went into this bill in the select committee.

DENISE ROCHE (Green): I am pleased to take a call for the Greens on this bill, and I want to thank the Hon David Parker, like others have done, for bringing it to the Committee. A piece of legislation like this is about resolving a problem, and the problem has been identified really, really clearly and really well throughout the bill. It has been discussed on this side of the House, but completely ignored on that side of the House.

The problem is that some employers use contracting arrangements to force wages down to ensure that they get services provided to them at cheaper and cheaper prices with no consideration at all for the people who are providing those services. According to 2013 statistics, self-employed workers with no employees received an average of $26,700 per year from their labour as contractors. Compare that with waged workers, who received in the same year $36,700—so about a third more.

What this Government is saying by its opposition to this bill is that it believes that people who work should not receive a fair day's remuneration in whatever way they provide that work, and it also believes that some people should pay the cost of their labour—so they should pay for their equipment, they should pay for their tax, they should pay the ACC, and they may even have to pay for their own health and safety. If it is a true contractor, that is not a problem, but what we have seen more and more in more and more areas, like home care, is that fact that people are being taken on as contractors as a way for some employers—and they are employers—to avoid the employer-employee relationship.

We have a hugely deregulated industrial relations system as it stands. This piece—this small piece that Mr Parker is offering with this legislation—is an attempt to try to fix a problem, and it is a grave problem. There have been examples already from across this side of the House about the grave exploitation that occurs in our communities, and I do not know whether members from that side of the House actually are in touch with any of their constituents who have had problems. I am a list MP and I get people talking to me about how they are being ripped off.

We hear about the labour hire workers—vulnerable workers who are coming on working visas—who are actually migrants who are desperate to be employed. They are taken on as contractors by labour hire companies and exploited to the hilt, and they have very little protection. They do not have the protection of a trade union and they have very little protection in legislation, and this is one way of trying to address that. I agree with my Green Party colleague Julie Anne Genter that, yes, we were a country that used to say that everybody should have a fair go. We used to believe in a fair day's pay for a fair day's work, and we could be that country again. But in order to do that, we need to stem the tide of exploitation that this Government has allowed to happen with its deregulated environment for industrial relations, and we have seen cut after cut after cut to the right of workers to be able to negotiate decent wages and conditions.

This is not about real contractors screwing the system. That is not what it is about. This is about offering some minimum protection through paying the minimum wage to some specified people, when they have a principal contract. This is not about cowboy contractors screwing their clients. That is not what this is about. We would not be supporting it if it was. This is actually about fixing a problem. That problem—thank you.

ANDREW BAYLY (National—Hunua): It is a pleasure to be talking on this bill. It has been fascinating listening to the debate. I have got to say at the outset that I think Mr Parker has been very genuine in bringing this bill to the House, and I think no one in this House would disagree with the general intent that any worker in New Zealand should be entitled to fair remuneration and pay. That cuts across everything, and everyone in this House—including National members, who stood behind it—believes in that same principle. However, how this bill has been framed I think has some issues, and I think one of the things—and it has been a very confusing debate, partly because we have had a number of members talk tonight who have not been party to the ongoing discussions around the nature of this bill. I have heard some very confusing arguments, particularly in relation to what it means to employees. Actually, what those members mean, in terms of contractors and, vice versa, what it means for contractors when, in fact, they are employees, and that is a very important part of this debate, and I think—that lack of clarity around what we are dealing with.

So, broadly, we have three categories: we have employees; we have contractors, who are basically in full-time employment contracts; and we have the temporary or semi-permanent contractors working on a part-time basis. To sit here and hear that National is not worried about all of this and that we are uncaring and all that sort of stuff is simply codswallop. It is codswallop, because from this Parliament and this Government we have passed a number of changes to the employment and contracting relationships, but the most recent one, of course, is that we have passed the bill around stopping zero-hour contracts. We do want to strengthen the relationship, and to make sure that we do have a fairer system between employers and employees and contractors, and, also, some of the things we have done around the employment rights are very important.

I absolutely dispute—dispute—the allegation that we do not worry about the minimum wage, because since this Government has been in power, since 2008, I hasten to add that without exception every year we have pushed up the minimum wage by 50c, up to $15.25. [Interruption] And now I hear a member over there saying: "Whoop-de-doo!". Well, that is the issue, because, one, it is about making sure that employees and contractors get fair reward but, also, it is about making sure that employers are still prepared to offer the jobs, and that balance is the critical part of what we are talking about tonight.

So where to settle on the issue about vulnerable employees? I think there is a point about it, and that is what we have been talking about tonight. But what I find staggering is that since the time we started discussing this in our Transport and Industrial Relations Committee, a lot of the discussions were around people delivering mail and newspapers and all that sort of stuff. Well, of course, I found out tonight that that has been deleted. And then we have got new provisions in the existing ones that I just ask you to reflect on. Why are we worrying about truck drivers and services delivering goods, and why are we worrying about market research and telemarketing? That is one of those 12 that are in schedule 2. I just put it to you that we have come up with a list, and I am not sure about the logic around some of that list. But I cannot understand why—we have actually dealt with probably the most potentially vulnerable workers, who are the ones out delivering the pamphlets. The question is this—and this is what we talked about in the select committee. Those people—and they did come to our select committee, the newspaper people. The people who often deliver those are the younger people—and I now know that the bill excludes under-16-year-olds, but it also does not deal with the issue about older people, and I heard my colleague talk earlier about the older person who cannot walk as fast as the younger person. And we also heard about the people with disabilities—again, we have not mentioned that tonight—and part of this is about creating opportunities for jobs for them.

What this bill does—it has two things that really cut across the gybe, and one is how the State is basically interceding between two parties, namely contractors and employers. I heard about the argument about—

KRIS FAAFOI (Labour—Mana): I move, That the question be now put.

The CHAIRPERSON (Hon Trevor Mallard): I am not quite ready to do it yet.

Hon Member: Well, we are.

The CHAIRPERSON (Hon Trevor Mallard): Order!

JAN LOGIE (Green): I was not necessarily going to speak in this stage of this bill, but after hearing Andrew Bayly, the last speaker, I feel compelled to respond, because what I heard that speaker say was that older New Zealanders and people with disabilities do not deserve the minimum wage. I have got to say that that is the absolute reason for this legislation. It is that there are people in our society who think like that and that we actually need to protect people from them. There are people who will take advantage, who hold discriminatory views that belong in the 1950s, and who take advantage of people, and we need to protect those people from them. This piece of legislation—I thank the Hon David Parker for bringing it to the House. It is about lifting this base standard in our society to be a little bit fairer.

I have listened to a lot of the debate tonight, and I would like to frame the rest of my contribution just to speak a little bit more specifically about how this affects women. Casualisation of work and insecurity of work, which is a significant part of the contracting environment for many, disproportionately affects women. The research that was done by the Council of Trade Unions in 2013 showed that temporary workers are more likely to be female than permanent workers are, and women make up 58 percent of temporary—

The CHAIRPERSON (Hon Trevor Mallard): Order! I am reluctantly interrupting the member, but as I ruled on an earlier bill this afternoon, we are in the Committee stage. All we are debating now is whether the details in the clauses in the bill reflect the agreement of the House to proceed at the second reading. The member is giving a very interesting second reading debate, but it is not relevant.

JAN LOGIE: Thank you for that guidance. I was linking to this bill in terms of the employment contract environment that contractors sit within and how that impacts on women, and the benefit of this bill for women who are in contracting environments in this country. We recognise that through the process, to try to get the bill passed, there have been limitations made that have excluded some workers, which women would have benefited from. This is part of the process of trying to make a difference when we have this Government in power. That is a shame, but it is still worth doing, and women would still benefit from us passing this legislation.

This Government has talked specifically—and I know that for contractors this is particularly relevant—about work being the answer to poverty in this country, particularly when we talk about child poverty; work is the answer. Contracting is a significant part of our work environment these days. If we want our children to be able to achieve at school, to be healthy, to be safe, actually we need to ensure that their parents who are in sole-parent - headed households—mostly women—actually get a fair deal. This legislation is one small step towards helping us do that. It is entirely inconsistent for this Government to say that work is the answer, and then not to put the protections in place to ensure that people get the benefit of that work, and to allow employers, who hold the attitude expressed by the previous speaker, to rip off those workers of what they deserve. This Committee should not give that Government any more space in expressing those views. I hope the Government will reflect on its values and come to support this bill.

The CHAIRPERSON (Hon Trevor Mallard): I call Jonathan Young—slightly reluctantly, given his earlier comments.

JONATHAN YOUNG (National—New Plymouth): Thank you for your kindness. I would just like to address the comments that the previous speaker, Jan Logie, made. I believe there may have been a misunderstanding—

The CHAIRPERSON (Hon Trevor Mallard): Order! I am going to interrupt the member before he starts. I am going to repeat the warning that I gave to the previous speaker slightly into her speech. I let her run almost certainly out of order because she was replying to some things that were earlier out of order. That has now stopped. The member will come back to the bill.

JONATHAN YOUNG: I am, Mr Chair. I was going to refer to schedule 2—

The CHAIRPERSON (Hon Trevor Mallard): Good, good—that is good.

JONATHAN YOUNG: —and I did refer to it in my last contribution. The issue that I believe has occurred in terms of the exclusion from schedule 2 of newspaper and pamphlet delivery services to letterboxes, which Andrew Bayly, the member speaking prior to the previous speaker, spoke about, came through an agreement, I understand, between Opposition parties. The reason for that is when it comes to pamphlet delivery services, there is a broad range of people involved. Some of them are retired people who do this either to provide supplementary income or for a lifestyle choice because they enjoy getting out and getting the exercise. There is a multitude of reasons, which they presented to our committee.

The reason why the exclusion occurred is simply that when a principal makes a decision around getting a quantity of pamphlets or newspapers delivered, they work on the quantum of quantity, time, and expense, and there are some people who can do that far more quickly and far more efficiently. They tend to be younger and more mobile. That creates—I would not say discrimination, but it creates an exclusion, and—

Sue Moroney: They set a rate. They just have a discussion about it.

JONATHAN YOUNG: Yes, except that the previous speaker felt that there was ageism being expressed from this side, but that is not the case at all, so I am just defending that point.

Coming back to the amendment to clause 11 on Supplementary Order Paper 203, which inserts proposed new section 7A, I would invite the sponsoring member to bring some clarity particularly to section 7A(6), which says that the section requiring 6 years of record-keeping "does not apply if—", and there are a number of conditions there. But subsection (6)(d) states: "the principal reasonably believes that the agreed rate of remuneration payable to the specified contractor is sufficient to remunerate the specified contractor at a rate that is higher than the prescribed minimum rate of remuneration under section 4C." What I would like the sponsor of the bill to perhaps expand is the rationale behind this, because what I see in this particular point is that a principal is somebody who is obviously looking for the contractor to do the work. They are offering the work, and if they simply believe that what they are paying is going to be more than the minimum wage, then they have an exclusion from keeping a time record.

My concern about that is that it is not the honest principals out there but the unscrupulous ones, who could look at this passage and say: "There's an out for me." I would appreciate it if the sponsor of the bill could perhaps expand on that point, to bring some more clarity.

KRIS FAAFOI (Labour—Mana): I move, That the question be now put.

The CHAIRPERSON (Hon Trevor Mallard): Looking at the number of calls we have had—the member in the chair has had six, and Mr Young has had four—I think there has been ample opportunity for people to express their views.

A party vote was called for on the question, That the question be now put.

Ayes 58

New Zealand Labour 32; Green Party 14; New Zealand First 12.

Noes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.

Motion not agreed to.

ALASTAIR SCOTT (National—Wairarapa): I would like to go through the list in schedule 2, which has been commented on earlier. Perhaps Mr Parker could address how that list was derived, and why some other vulnerable groups are not on the list. In fact, he has already explained why the newspaper and pamphlet delivery group, which was on the list, has now been excluded, but I would also like to point out, and ask about, the situation regarding multiple sources of income.

Where you have multiple sources of income from doing one of these jobs, you are excluded from this bill. So we could have a situation where we have got a sparky, for example, who has multiple sources of income—like a courier driver—and that would exclude them from the bill. We could have a cleaning services contractor with multiple sources of income who is excluded from the protection that this bill aims to provide. Courier services are mentioned. Food-catering services—one could imagine a cleaner going from one restaurant to another and being treated by both restaurants as a contractor, and maybe even being abused by those unscrupulous employers, which is what they are, after all. Those "dishos" would not be protected because they have got multiple sources of income.

Chris Bishop: What's a "disho"?

ALASTAIR SCOTT: Well, a "disho" is a guy who does the dishes, of course.

Chris Bishop: Oh, righty-o. I thought you said "Bisho".

ALASTAIR SCOTT: No, not "Bisho"—"disho". Mr Bayly asked the question earlier about telemarketing services and market research services. Why are they on the list and why do they need such protection?

I do not understand about these multiple sources. We could have a person doing the same job from one source and we could have a second person doing the same job but from multiple sources, and the multiple-source person would be excluded from the protection that this bill is designed to give. So I would like Mr Parker to explain that.

We get to a situation where we have excluded so many people who are apparently vulnerable that this bill becomes redundant and those multiple-employed contractors are left to the protection of employment law, which is what we should be looking to to ensure that poor employers—they are not contractors; they are employers disguised as contractors—are targeted. This bill does not do what it is designed to do. That is what I would say, and I think there is a better way of doing it.

I think that the labour inspectors had more resource given to them in the last Budget. That is, in my view, the appropriate place to give the resource, and it is for those guys to enforce the law that already exists around employer-employee relationships and to dig into situations where employer-employee relationships are disguised inappropriately as contracts. They should be—

The CHAIRPERSON (Hon Trevor Mallard): Order! The member will resume his seat. There are two points that I want to make to the member. The first is that about the first 3 minutes of his speech—I think he even admitted it by saying that Mr Bayly had said it all before—was repetition, so if I could warn the member for that. The second thing is that the member cannot focus with anything other than a passing reference on other approaches to the problem. This bill has been accepted at second reading, and we are talking about the detail that is in here now, not alternative approaches.

ALASTAIR SCOTT: Thank you, Mr Chair. The detail of this bill is so—"confused" has been used before. It is ambiguous and confusing—I am going to use the word "confusing". It confuses the relationship between employer and employee with that of contractor and contractee, and that is why we cannot support this bill.

Hon DAVID PARKER (Labour): I will quickly respond to the last two points made, which is, I am afraid, repeating what I have said earlier, because these points have already—

The CHAIRPERSON (Hon Trevor Mallard): I am actually going to sit the member down. I am not going to allow him to respond to irrelevancies.

CLAYTON MITCHELL (NZ First): I move, That the question be now put.

Motion agreed to.

A party vote was called for on the question, That clause 1 be agreed to.

Ayes 60

New Zealand Labour 32; Green Party 14; New Zealand First 12; Māori Party 2.

Noes 61

New Zealand National 59; ACT New Zealand 1; United Future 1.

Clause 1 not agreed to.

The CHAIRPERSON (Hon Trevor Mallard): I will report this bill to the House, informing it that the Committee, in rejecting clause 1, has rejected the bill.

House resumed.

The Chairperson reported that the Committee had rejected all the provisions of the bill.

Report adopted.

Mr DEPUTY SPEAKER: The House, having adopted the Committee's report that it has rejected the bill, does not set down the bill for third reading, despite Standing Order 310.