Roger Sowry National Party Industrial Relations Spokesman

Address to National Party Lower North Island Regional Conference

National Party Leader, Don Brash, Parliamentary Colleagues, Madam Chair, Delegates

Let me start today with a couple of quotes from Auckland businesspeople on Labour's current industrial relations plans.

"Clearly, one business in the same industry cannot be compared equally with another - it may depend on their product mix, the size of the company, the financial backing, equipment, customer base etc. This will vary. Our 16 sites vary due to location, product mix etc. I also do not want to sit down at a negotiating table with my competitors."

"I am a small business owner who is currently trying to expand nationally while competing internationally. The onslaught of legislation is making this a much slower and costlier process than it should be. I can't provide the growth and new jobs wanted by the Government when I have compliance costs spilling out of my ears. It is destroying my company's competitiveness and I now see why so many other businesses relocate offshore in order to survive or to grow. Maybe we will go that way as well."

"Get rid of both the Bill and the Government that brings it in as soon as possible".

The industrial relations legislation that is being pushed through the select committee in Parliament is a huge leap backwards. It is the biggest payoff to the union movement that this Labour Government has attempted since its election in 1999. All the other union-friendly legislation that they have passed, including the original Employment Relation Act, pales into insignificance when compared to this new law.

This proposal brings back all the objectionable pieces that Labour dropped out of the Employment Relations Bill after the winter of discontent in 2000, but goes much, much further by adding effective compulsory union domination of bargaining and giving unions enormous power to increase their membership.

It is effectively a return to compulsory union membership.

Labour is doing this in two ways.

Firstly, Labour is essentially forcing workers to join a union, because under this law employers will not be able to pass on the same wage increases to non-union members if the union deems that passing on a wage increase is done with the intention of undermining the collective agreement.

Only union members can enter into a collective agreement, and union submitters to the select committee have made it crystal clear that they totally oppose passing on, and view employers passing on, the same wage increase to union and non-union employees as undermining the union's position.

The message is simple. If you are not a union member you will be prevented by law from receiving the same wage increase.

So, the carrot is for the trade unions and the stick is directed at employers. The bill requires employers to continue fronting up to the table with unions in the bargaining process until all matters are resolved. This effectively gives unions the upper hand to continue to draw out bargaining where an employer isn't giving in to particular wage and condition demands, and the employer is simply unable to walk away from the table.

How fair is that?

You don't have to be a rocket scientist to know what will happen to employers who won't buckle to union demands - they will be kept at the bargaining table.

But there is more.

The Bill introduces MECAs (Multi Employment Collective Agreements). If employees who are members of a union request that their boss becomes part of a Multi Employment Collective Agreement then the employer has to attend a meeting to discuss the issue with the union.

Once attending the meetings, the employer of course cannot leave the bargaining table without all issues being resolved.

The unions have made it clear that they deem it to be bad faith if employers walk away from the table just because they don't want to be involved in a Multi Employment Collective Agreement.

So we can expect to see a huge growth in the number of Multi Employment Collective Agreements.

Effectively, unions will be able to control sector wide groupings setting wages for the whole of an industry.

Last week, a New Plymouth engineering firm, Wells Instruments and Electrical, told us they did not register an interest in working on the major fuels upgrade contract at the New Zealand Refinery, even though they have all the expertise, because of this part of the law. They don't want to be dragged into a Multi Employment Collective Agreement.

Forget the gains we have made as a nation where individual businesses had flexibility on terms and conditions.

Forget the regional differences businesses face.

Forget the competitive nature of business -- it's back to the 1970s, one level for all, and to hell with competition and innovation.

But there is more.

Once again, Labour has taken the opportunity to hike up the level of fines that businesses face under this new proposal.

Breaches of good faith bargaining carry substantial increases in fines, with employers now facing fines of up to $10,000 under this legislation.

To breach good faith, of course, you have to know what good faith is. This legislation redefines good faith, but not clearly. It has extended the definition into unknown territory and even the Employment Court judges who appeared before the select committee said they couldn't determine what the new definition meant.

It's a recipe for employers to find themselves in court.

It's a recipe for unions to stand over employers to achieve what they want.

It's a recipe for less production and more union domination of the workforce.

But wait, there is more.

Some of the worst parts of the new legislation are the clauses covering contracting out and sale of businesses. Employers must now negotiate a clause with staff setting out the procedures for the sale or contracting out of work within their business. This, of course, will include any restructuring.

The clause has to spell out when they will notify staff and the procedure they will use. This naturally will limit business owners' flexibility.

Let me give you an example.

An electrical contractor employs six electricians and decides to sell his business. According to the new law he will have to notify his staff when he is thinking of selling the business, thereby giving staff the opportunity to leave, and establish their own business in competition before any sale can take place.

Labour is also creating new provisions for a new type of worker classified as vulnerable workers. The legislation spells these out at the moment as being cleaners, caretakers, food service and laundry service workers, and the new provision guarantees them the right of transfer to a new employer on the same terms and conditions.

New vulnerable workers can be added by the Minister at whim.

Let me give another example.

Your business uses a cleaning firm to clean the building and they do a lousy job. You re-tender the contract and award it to a new company. Under this law, the new company is required to hire all the staff who were doing your cleaning under the same terms and conditions.

So much for a new contract.

Or, - you decide to buy a motel, in doing so you must hire all the cleaning staff at the same terms and conditions, or pay them a redundancy that was negotiated by the previous owner.

The effect of all this is that the purchaser of a business that employs Labour's newly defined "vulnerable workers" will reduce the goodwill paid for the business by the amount of contingent redundancy payments.

Paper Plus, which gave their submission on this loopy law to the select committee in Auckland last week, told us that this Bill has the potential to write between 10 and 15 million dollars off the value of their chain, if shop workers were in the future added to the vulnerable workers list.

And why wouldn't they be added?

Remember that a Minister can add new workers to the list at whim!

It is a Bill that is all about increasing the membership of trade unions - increasing not only union power, but significantly leading to an increase in trade union financing and, of course, increasing the funds that flow from the union movement to the Labour Party.

Opposition to the Bill has been strong - Business NZ, manufacturers, industry groups and employers all over New Zealand have made public comments and submissions opposing the Bill.

In one of the most damning submissions I have heard, Business NZ stated: "There is no bigger threat to employment, to economic growth, to enterprise and entrepreneurship that this Bill."

Delegates, there is no bigger reason to kick out this Government than this Bill.

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