Dr Jamie Whyte, ACT Leader
Monday 9 June
ACT Launches its Employment Policy
ACT has today released its employment relations policy, which focuses on growing businesses, increasing jobs and increasing incomes.
“New Zealand businesses and employees are poorly served by the Employment Relations Act. It is a burden that stifles growth, productivity and wages”, said Dr Jamie Whyte..
“Businesses are tied down by a law that limits who they can employ and increases the opportunities employees have to make unjustified dismissal claims.
“ACT has four policy proposals to address this imbalance. ACT will extend employment trial periods, from 90 days to 12 months. In Australia, employees have to wait between 6 months and 12 months before they can make an unjustified dismissal claim. In the UK, employees must wait two years.
Employing staff is one of the most important investments a business owner will make. Short trial periods don’t give employers a fair opportunity to assess their new employees’ capabilities.
“ACT’s 12 month trial period will also increase the chance for unemployed to get work. This has been the experience in other countries and will emerge here too.
ACT will also remove the employee’s right to reinstatement and provide an opt-out provision for higher earners.
“The ERA tries to patch up ‘marriages’ between businesses and employees that can’t be rescued. Limiting remedies to monetary damages allows everyone to move on, rather than perpetuating a failed relationship. Higher earners – who are often crucial to the success of an organisation – will be able to opt out of personal grievance provisions of the law and pre-negotiate an exit package.
ACT will repeal Part 6A of the ERA. Under Part 6A, if a tenderer wins a contract that utilises certain classes of employees, the successful tenderer must employ the staff of the existing contractor or negotiate redundancies with those workers. This defeats the purpose of tendering in the first place.
These are ACT’s first steps towards unwinding the current legislation and replacing it with contract law and modest codification of the common law. The goal is to reduce regulation, while at the same time protecting people from clearly abusive behaviour. Employment law must give freedom to employers and employees to come to arrangements that suit them both. And these four policy steps are a start along that path.
Today National unveiled its ‘Starting Out Wage’ policy – a watered down re-establishment of the youth minimum wage.
For their first six months in a new job, youth aged 16 and 17 will have a minimum wage of $10.80 – which is 80 per cent of the $13.50 adult wage. After six months on the job they return to the adult rate but the six months begins afresh with each new employer.
While the policy is not as bold as ACT would have liked, this announcement is step in the right direction and represents another win for ACT as National adopts another of our core policies.
When Labour abolished the youth minimum wage in 2008, youth unemployment soared. A study by the former Department of Labour found that abolishing the youth wage resulted in a loss of up to 9000 jobs. Removing the youth minimum wage priced young people out of the market.
The reason for this is obvious - hiring a young person is more of a risk.
Most youth have little or no experience and do not have the life skills or maturity of older workers. Employers cannot look to their work history to ascertain whether they are reliable and suitable for the job, or how productive they will be. If employers must choose between a young person or an older person at the same rate of pay, employers will usually choose the older, more experience worker.
Different wages for adults and young people gives employers an incentive to employ a young person with no experience. It gives young people the chance to get their foot on the job ladder where they can gain valuable skills and experience, eventually moving into better, higher paid jobs.
Some people will say that youth workers are just stealing jobs off older people and that we are left no better off. However a young person who gets a job produces goods and services on the one hand and spends their money on the other. By working they produce more for people to buy, leading to more production and the creation of new jobs.
Making it easier to work actually increases employment.
On the other hand keeping people at home on the dole produces nothing new for anybody to buy, and actually penalises those who are working by making them pay taxes for welfare payments.
ACT has campaigned for the re-establishment of a youth minimum wage since Labour and the Greens abolished it.
In 2010, we introduced the Minimum Wage (Mitigating Youth Unemployment) Amendment Bill which would have reintroduced the capacity to establish differential minimum wages for those aged 16-17.
Not one party in Parliament, aside from ACT, voted for this bill.
Those parties instead voted to keep our youth at home on the couch, doing nothing, learning nothing and earning nothing - rather than in a job paying $10 an hour.
Labour and the Greens went so far as to argue that demand and supply is not affected by price. They argued – and still do - that minimum wages have no impact on employment and therefore it could not be the reason for our high rate of youth unemployment.
Yet, here we are, in 2012, and both these parties are campaigning to raise the price of cigarettes and alcohol as they say a higher price will lower demand. That’s rich - but we digress.
Two years, and many unemployed young people, later, National’s announcement – a back-down on their previous position – is a welcome step to getting our young people into employment and moving forward in their careers.
We just wish it hadn’t taken National so long.
ACT New Zealand’s Labour spokesman Chris Simmons today said he isn’t surprised that Labour Leader Phil Goff was light on policy detail during his recent photo opportunity.
Mr Simmons was responding to the article in today’s ‘Dominion Post’ on Mr Goff’s visit to engineering firm A. E. Tilley yesterday.
“In light of Labour’s policies on raising the minimum wage to $15 an hour – and even higher for some industries – Phil Goff visiting small businesses is akin to Daniel entering the Lion’s Den,” Mr Simmons said.
“The factory owner, 78-year old Don Tilley, stated he didn’t know what Labour’s policies were. I suspect if Phil Goff had informed him, he would have been aghast.
“Mr Tilley specifically stated that he doesn’t like laying staff off. He still pays double-time when his guys work overtime, and his workers are supporting him currently by taking unpaid leave during the current hard times. For 89 years the Tilley family has run this business – it is hard to think he needs the government telling him how to do anything. Yet, here is Labour promoting Labour policies that would leave him no other choice – and would likely mean that we will not see 100 years of A.E. Tilley.
“The business environment is hostile enough already. Statistics show that more small businesses closed in 2010 than in any other year over the last decade. When one considers that small businesses employ most of our workforce, and drive our economy, this is very bad news indeed.
“Last year, almost 98 percent of new businesses started with between zero and five employees. Such businesses are the most vulnerable to failure. Under National that has proven particularly so – and Labour’s plans will drive many more entrepreneurs out of business.
“The only Party that recognises the potential of business entrepreneurs is ACT. ACT knows that business entrepreneurs drive our economy. For everyone’s sake we need an economic environment in which they can survive, then thrive.
“With 18 years of running my own management consulting business, working with entrepreneurs around the world, and networking with leaders in the field of entrepreneurship, I know how important it is to have a regulatory environment that supports business owners.
“ACT is the only Party with a vision to create an entrepreneurial economy that supports and attracts entrepreneurs to build businesses from a New Zealand base,” Mr Simmons said.
ACT New Zealand’s Labour spokesman Chris Simmons today slammed the Labour Party’s new ‘Work and Wages’ policy, labelling it an unprecedented attack on New Zealand’s small business sector.
“Labour’s plans for raising the minimum wage to $15 an hour, a return to the archaic award system, and the abolishment of the 90-day trial period will do nothing but increase costs for employers and put more workers out of jobs,” Mr Simmons said.
“We can already see so many empty shops in our towns and cities around New Zealand. At a time small businesses are hurting, Labour wants to well and truly put small business owners out of their misery.
“Unemployment will go up not because businesses have one or two spare staff to lay-off. It will go up because businesses will fail outright. Most small businesses have lean profit margins; squeeze them too hard, as Labour plans to do, and they will have to shut up shop.
“The costs grow larger still: in many medium-sized businesses the minimum-wage worker is being supervised by a staff member who is most likely currently earning around $15 an hour. When the minimum wage goes up, the shift co-ordinator’s wage must also go up.”
Mr Simmons also dismissed Labour’s proposal to Mondayise public holidays as yet another costly bribe.
“We have never recovered from the productivity hit of giving every person four weeks leave. To Mondayise public holidays will further reduce the country’s overall productivity and directly hit the bottom-line of every small business in the country.”
Self-employed for 18 years, Mr Simmons strongly suspects that Labour’s policy was devised by “people who have never employed a person in their careers; have never been responsible for covering a payroll; have never had their family home on the line.”
“Small business owners are already looking at the return they get for being an entrepreneur and asking themselves ‘why bother?’ It is easier just to let someone else take the risk and move their families and their skills to Australia and start again.
“This sort of craziness is exactly why government should never try dictating how people run their business. ACT policies will let New Zealanders get on with their lives and cut the bureaucracy that holds back employers and employees alike,” Mr Simmons said.
Labour’s Work and Wages Policy announced today will cost us jobs and will hurt the very people Labour claim they are trying to help – those on low incomes, ACT Leader Don Brash said today.
“Labour just doesn’t seem to get it - the more something costs, the less people buy. Employers are no different to their customers in this regard. Higher minimum wages will cost us jobs – particularly among those with low skills,” Dr Brash said.
“It is a disgrace that Labour pretend to champion the rights of workers, but at every chance push policies that harm those on low-wages rather than help them.
“Creating more restrictions to employment laws and raising the minimum wage will see employers hire fewer staff. It is the people on the margins - the lowest paid and unskilled - that will be the first to suffer.
"We only have to look at what has happened with the abolition of the youth minimum wage to see this effect. This legislation was passed with the best of intentions but has had pernicious effects.
“The Department of Labour found that up to 9000 young people are now out of work as a direct result of the abolition of the youth minimum wage. Raising the minimum wage to $15 an hour without an increase in productivity will be equally disastrous.
“Labour cannot disregard the laws of economics. We need to focus on policies that create growth, delivering liveable wages to all New Zealanders.
“Like Labour, ACT wants to see wages in New Zealand rise. But, unlike Labour, ACT knows the best way to achieve that is to reduce taxes and regulations so business can grow, invest and create more jobs. Labour’s Work and Wages policy will see more people at home on the dole than ever before,” Dr Brash said.
Joint Release: ACT Finance Spokesman Sir Roger Douglas, Youth Affairs Spokesman Stephen Whittington
Labour’s policy to raise the minimum wage to $15 will throw more people on the scrap heap and shows how out of touch with reality Labour really is, ACT Finance Spokesman Sir Roger Douglas said today.
“Labour claims to be the Party that cares about those on low-incomes but raising the minimum wage is not the answer - it will only push up prices and cost us jobs,” Sir Roger said.
“Labour would have us believe that the majority of employers are big nameless corporations out to maximise profits while screwing their employees. Yet, small to medium sized business makes up 97 per cent of all enterprises in New Zealand and employ one third of the work force.
“Last year more than 50,000 small businesses shut up shop, the highest number in a decade. Of that figure, 3877 employed between 1 – 19 people. Small businesses are struggling and increasing the minimum wage to $15 would simply see more businesses close their doors.
“Even Mark Peck, former Labour MP turned small café owner, agrees Labour’s policy is out of touch:
“… in an industry with low margins, wage costs are very significant. I don’t think people understand the effect a $15 minimum wage would have on businesses like this. Prices go up…if prices go up, customers, already feeling the economic squeeze, change their spending habits… The result: less profit for owners; less money to employ staff.”
“Increasing the minimum wage to $15 will hurt the people that Labour says they are trying to help. By pushing up prices, people will have to spend more money to buy necessities and will have less to spend elsewhere. This will be made even worse by the fact that there will be even fewer jobs available in the first place,” Sir Roger said.
ACT Youth Affairs Spokesman Stephen Whittington says this increase would be particularly pernicious for young people.
“The Department of Labour have already estimated that scrapping youth wages reduced the number of jobs for those aged 16 and 17 by 4,500-9,000.
“This proposed increase will further marginalise young people, who are most susceptible to unemployment as a result of high minimum wages,” Mr Whittington said.
“Former Labour MP Mark Peck has woken up to reality. It’s time for the Labour Party to do the same,” Sir Roger said.
The Green Party's newly-announced 'For a Richer New Zealand' advertising campaign is really a push for a poorer New Zealand, according to ACT New Zealand leader Don Brash.
"On the face of it, it's full of feel-good bromides that could be uttered by anyone," says Dr Brash.
"Who would want to disagree with rivers being clean enough to swim in, children having enough to eat and jobs that are good for the environment?
"But make no mistake—when the Greens speak about 'green jobs' they mean subsidised jobs in enterprises that make no commercial sense. They mean jobs created by crony capitalism, where firms favoured by the government are showered with taxpayer largesse. They mean jobs in firms like solar panel-maker Solyndra in the United States. Solyndra has just gone bankrupt notwithstanding a $538 million federal government loan.
"America affords us a salutary lesson in what not to do," Dr Brash adds. "Billions of taxpayer dollars have been spent on creating hundreds of these 'green' jobs: $4.7 million per job according to one estimate I have seen! The net effect has been simply to add to the country's indebtedness—hardly conducive to jobs for all, well-fed children and clean rivers. Yet this is what the Greens are proposing for New Zealand.
"ACT's policies would deliver genuine prosperity. Foremost among them, an investor-friendly—indeed, investor-irresistible—tax and regulatory regime, the opposite of the Greens' high-tax, heavy-regulation plans. Getting government off the job-creators' backs is far more effective in creating jobs than Soviet-style central planning.
"A prosperous economy can easily afford to keep its rivers clean. A destitute economy might clean its rivers even when it couldn't afford to (though the rivers of the old Eastern bloc would suggest otherwise)—but that would be cold comfort to the hungry children who lacked the energy to swim in them.
"By 'rich,' the Greens mean something different from the rest of us. They mean the 'richness' they think comes from destitution. In that sense, I wish their campaign for a 'richer' New Zealand every failure," Dr Brash concludes.
ACT MP Sir Roger Douglas today heralded Department of Labour research that demonstrates the effect of ending youth wages: a significant increase in the number of youth who cannot find jobs.
"When I first introduced the Bill to re-establish youth minimum wages, those in Labour and the Greens cited research undertaken by Dean Hyslop and Steven Stillman, which indicated earlier increases in the minimum wage for youth had not led to unemployment," Sir Roger said.
"We argued vociferously that the rates were so high that they were locking youth out of jobs, and that the earlier figures were not relevant. Today, a further study undertaken by Hyslop and Stillman proves that we were right.
"The study concluded that 'this minimum wage increase accounted for approximately 20–40 percent of the fall in the proportion of 16 and 17 year olds in employment by 2010. Overall, this implies that the introduction of the NE minimum led to a loss of 4,500-9,000 jobs for 16 and 17 year olds (employment of 16 and 17 year olds fell from 61,400 to 39,500 between 2007 and 2010).'
"If Labour and the Greens want any credibility on this issue, they must now reverse their position. The study and methodology they relied on to argue their case has now demonstrated that they were wrong, ACT was right, and youth are suffering.
"However all the reports in the world will not put a single young person back into work. Reinstating the youth minimum wage will. Sadly ACT has been the only Party with the courage to propose this. If National really cares about the thousands of young people struggling to find work it must pledge to do the same," Sir Roger said.
A new report showing just over half of the 200,000 New Zealand children living below the poverty line are Maori and Pacific Islanders is a further vindication of ACT policies and pointer to how urgently they are needed, says ACT New Zealand leader Dr Don Brash.
The report, commissioned by a coalition of child advocacy organisations called Every Child Counts, has found that ''a combination of high dependency on welfare benefits, high rates of single parenthood, and a concentration of workers in the manufacturing industries keep Maori and Pasifika families trapped in poverty."
"ACT has been saying since its inception that welfare dependency, particularly dependency on the sole parent benefit, creates a poverty trap that has ensnared Maori and Pacific Islanders in disproportionately high numbers," says Dr Brash.
"The solution, however, is not more of the same policies that created the problem.
It is not, as the Greens have already demanded in their knee-jerk response to the report, higher benefits and a higher minimum wage.
"Nor is it, as report co-author Hone Kaa has demanded, a shift away from what he calls 'a Pakeha approach'—whatever that might be—to the problem of a 'brown underclass.'
"Poverty is no respecter of race. Nor are its cures. There are approaches that work and approaches that don't.
"Another one that won't work is a government task force, such as Dr Kaa is also seeking, likely to be stacked with politically correct lobbyists with a separatist agenda.
"The government must press ahead with its overhaul of our welfare system, not just to get more beneficiaries into work or training, but with a view to uprooting the very culture of dependency whose disastrous results for children this report so tragically highlights.
"It ought also to reinstate youth rates and thus pave the way into work for thousands of youngsters currently condemned to the dole because employers can't afford to take them on.
"I don't want to see an underclass of any colour. I don't want to see any children of any race living below the poverty line. With that in mind I'll be delivering a major speech on the entire subject of welfare reform in the near future," Dr Brash concludes.
Labour’s policy to spend $251 million subsidising young people into work is an expensive band-aid on the problem of youth unemployment that Labour created by abolishing the youth minimum wage, said ACT New Zealand Leader Dr Don Brash.
“Labour is absolutely right to focus on combatting New Zealand’s record level of youth unemployment – they created it,” Dr Brash said.
“Since Labour abolished the youth minimum wage young people have been priced out of the labour market and youth unemployment has increased from 15 percent to over 27 percent. Labour’s decision is estimated to have cast up to an additional 13,100 young people on the unemployment scrapheap.
“With a net cost of $171 million, Labour’s youth employment package can only be paid for by creating yet another tax. Reinstating the youth wage would impose almost no burden on taxpayers and would result in more young people being put into work.
“If Labour was really interested in fixing their mistake and reversing the growth in youth unemployment they would pledge to reinstate the youth wage if re-elected. Instead we have the usual Phil Goff prescription of spending more money that New Zealand does not have,” Dr Brash said.