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Employment law: a key to prosperity

Posted on 21 Jul 2005

Address to Quigg Partners – Employment Seminar Election Special; The Bayleys Building, 28 Brandon St, Wellington; Wednesday, 20 July 2005, 5pm.

Employment laws are a key to investment, growth, jobs and prosperity.
 
Lower taxes, the rule of law and a business friendly environment are all-important to creating prosperity, laws that encourage employment are vital.
 
There are still 75,000 able-bodied adults on the unemployment benefit. There are another 112,000 able-bodied adults on other benefits.  A further 100,000 adults are doing sub-degree marginal value courses, to quote the Minister of Education. 
 
We still have a third of a million people out of work. There are two reasons.  First, massive welfare abuse costing over a billion dollars a year - but that’s another speech.  Second, employment laws that increase the cost and risk of employing our fellow citizens. The cost of employing the remaining 300,000 adults is high even before the employment laws.  There are single mothers who need time off for their children, adults with poor or non-existent work records and former drug addicts and alcoholics.
 
It is easy to prove that employing such people is not worth the risk.  Since 1974 the numbers on the DPB has grown from 16,000 to 108,000 and the sickness and invalids benefit numbers have risen from 17,000 in 1974 to 135,000 today.  Most of the beneficiaries are not sick; they are on the benefit because they are not worth the cost of employing.
 
The Employment Contract Act did promote employment, jobs and growth. The Labour Department’s figures show that real wages also grow faster than inflation. The Treasury reports that growth hit 5% a year 10 years ago.  Since Labour was elected growth has stalled.  It is partly due to extra taxes, but employment laws are a factor.
 
But ACT has always been a critic of the Employment Contracts Act because it did not go far enough and the law invited employment grievance cases.  In the most recent amendment to the Employment Relations Act, to outrageously benefit unions, I noticed how many lawyers appeared in front of the committee, how many lawyers came from firms claiming to specialise in employment law.  I asked the Law Society how many lawyers they thought now earn most of their income from employment cases and how many lawyers were employed before the Employment Contracts Act.  The answer was that before the Employment Contracts Act there might have been half a dozen lawyers who specialised in industrial law in private practice and today the Law Society believes that there are approximately 1,000 lawyers who say that most or a significant part of their income comes from employment law.
 
While I don’t expect this observations to win me any votes from our hosts I predicted at the time that this would happen and urged Bill Birch to abolish all the specialist employment courts and tribunals.  Employment is just another contract and any breech should be taken to the general courts.  I don’t doubt that there are genuine employment cases but also have no doubt that most of the 1,000 lawyers will have to find something more productive to do.
 
Just to show I am not picking on you, ACT has a little list of people who could be more productive.  Since Labour was elected in 1999 there has been a 25% increase in the people working in the public sector, at a cost of over $1 billion.
 
Labour says the dire predictions regarding the Employment Relations Act have not come true.  What they fail to mention is the law that was passed was not the bill drafted by Margaret Wilson with the CTU.  Provisions like the one declaring all the self-employed who have only one customer to be employees were dropped as a result of the opposition from parties like ACT.  The measure was aimed at the owner-driver who unionists hate.  It would have bankrupted thousands and also would have made over 100,000 self-employed, like real estate agents, employees with disastrous tax consequences for them.  Labour did not ask the self employed whether they wanted to be employees.  It is still on their agenda.
 
Here is what ACT would do:  
 
ACT would pass a Freedom to Contract Act, freeing employers and employees to contract between themselves.  Laws and regulations, which are anti-employment, would be scrapped or modified.  Employment laws will aid rather than hamper economic growth and higher standards of living.
 
ACT’s goals:
  • Restore freedom of association in the private sector. The public sector should be forbidden to discriminate, except on merit.
  • Restore freedom of contract in both public and private sectors.
  • Lower taxes and reform welfare to help people to shift from welfare to work.
  • Help employers create more jobs by reducing tax and regulatory barriers.
ACT’s policies:
  • Foster prosperity generally by reducing taxes, crippling regulations and welfare dependency.
  • Repeal the Employment Relations Act 2001.
  • Abolish all specialist employment authorities, tribunals and courts.
  • Restore the common law freedom of contract between employers and employees.
  • Restore common law freedoms of association and of speech in hiring labour and in communicating with staff.
  • Review other regulations affecting employment with a view to replacing regulation by common law remedies.
ACT’s policy outcomes:
 
  • Higher rates of employment, growth in labour productivity and resultant wage growth.
  • Higher economic growth and standards of living.
In employment law, ACT is offering a clear alternative to all the other parties.
 
ENDS
 
Hon Richard Prebble CBE                    
richard.prebble@parliament.govt.nz
Phone:            04 470 6638  /  021 753 128
Fax:                 04 473 3532
Scott Dennison, Press Secretary
scott.dennison@parliament.govt.nz
Phone:            04 470 6622  /  027 450 1407