Speech to the Employers Federation Virtual Conference
1 July, 1999

by Hon Max Bradford
Minister for Enterprise and Commerce

Straight Talking About Industrial Relations

Thank you for inviting me to address you at this "virtual conference", a conference where speeches are written, but not spoken.

It is a particularly appropriate forum to discuss industrial relations, as it seems to me that some political parties are promising results which their policies will clearly not deliver.

Parties like Labour and the Alliance are saying they want to move forward and help business compete in the increasingly knowledge-based economy.

But, they are floating policies that are based on the past.

On Tuesday Labour finance spokesman Michael Cullen told your federation's conference in Christchurch that he wanted to form "a new partnership with business".

But, he quickly made it clear that it would be a partnership where a Labour government would call all the shots.

A partnership in which the Employment Contracts Act would be axed or significantly changed, despite your strong desire for it to be retained.

Labour and the Alliance say they want to grow the economy, but they want do this by making labour laws less flexible and imposing constraints on employers and entrepreneurs.

They say they want growth, but they also want to build barriers to it - barriers that National removed.

It says a lot about the thinking of both Labour and the Alliance that such retrograde steps are being proposed as we stand in the midst of a revolution - a knowledge revolution.

Modern communications and information technology have revolutionised how we do business and live our lives.

Biotechnology is pushing the boundaries of science and nature and promising huge environmental and health benefits.

Amidst all this it is hard to envisage a time when something like the Mangere Bridge could sit half-finished for years because of union wrangling or when workers one mile from an Auckland shopping centre got an isolation allowance.

Or a time when "dirt" money, "wind" money, "dust" money, "wet fish" - even "maize money" payments formed only part of a long, complex and ultimately unsustainable terms and conditions.

Back to an industrial relations past when wages were determined by awards which covered many employers and employees, even though they may have played no part in their negotiation.

This was not so long ago.

No matter how good you or your enterprise were, what you got depended on your neighbour and your neighbour's neighbour.

It was one-size-fits-all industrial relations.

There was no room for excellence or doing things differently.

The conditions of your employees were decided by craggy-faced men in smoke-filled rooms late at night, both employer and union men.

If they couldn't agree, your employees went out on strike, whether they wanted to or not.

Once or twice a year, the whole country would be held to ransom by people going on strikes that had nothing to do with them.

The country lost weeks of productivity and employees, weeks of pay, for uncertain gains.

I would like to say that the days of shady back-room deals are over, that we have a open, transparent and equitable system, but...

It seems that there are some groups that still hark back to the "you-scratch-my-back-I'll-scratch-yours" ways of the past.

In Britain last election, New Labour did a deal with the unions.

Labour would downplay industrial relations reform plans, but deliver them after the election without telling the public what its plans were beforehand.

In return the unions would not take a hard line on Labour.

An underhand understanding one might say.

Looking at the New Zealand Labour Party's industrial relations polices I am driven to wonder whether something similar has occurred in New Zealand between Labour and the unions.

Or perhaps it is just nostalgia that has drawn these two industrial dinosaurs together.

Whatever the reason, one thing is clear - unions will be the main beneficiaries of Labour's attempt to take New Zealand back to the industrial relations past.

Labour's policies will take power from employees and give it to bodies that represent at best, 20% of the workforce.

Labour would hand to unions the exclusive right to represent employees in collective bargaining - removing the opportunity for employees to have direct involvement.

Employers and employees would be still be able to negotiate directly on individual contracts.

However, when it comes to collectives, Labour obviously believes employees cannot to be trusted to act in their own interests, or choose someone else to do it.

The cosying up between Labour and unions may lead to employees being further bound by rules they want no part of.

Labour has endorsed the CTU's proposed Workplace Relations Bill as a "good start" and adopted it as an industrial relations road map.

Labour and CTU also propose to give employees a free gift - at your expense - of an entitlement to two paid union stop-work meetings a year.

This is something that can already be negotiated directly by employers and employees if it meets their needs.

But, the Labour position is that you can't be allowed to do this - they know what is best for you.

Labour will also reinstate provisions for strike action over multi-company bargaining and bring back the bad old days of strikes - creating more work for unions.

Companies that have no relationship to others will be dragged into strikes because of problems on other work sites.

Ordinary workers will be forced to walk off the job or be ostracised.

They will lose income, whether or not they support the strike action.

It will destroy the relationship built up between employees and employers over the last nine years.

A relationship that has dramatically improved.

In 1986 under the Labour Government a record 1.329 million person days were lost through strikes.

That was an average of 2 1/2 working weeks per employee spent on strike.

This is both the highest number of days lost on record and the second highest number of days lost per employee.

In 1990, when Helen Clark was Minister of Labour and Dr Cullen was her Associate Minister, work stoppages caused an estimated $48.4 million wage loss - a 158 per cent increase over the year before.

Last year, by contrast, New Zealand had its lowest level of industrial disruption since 1935.

The change toward enterprise bargaining has been the primary force in reducing the level of workplace disharmony.

The past eight years have given us incontrovertible proof that the best way to avoid and settle workplace disputes is at enterprise level.

The reduction in strikes and lockouts that we have enjoyed since the introduction of the ECA has meant less lost wages and lost business for employees and employers respectively.

This is good for everyone.

The ECA has provided a platform for far more harmonious industrial relations than ever occurred under union-dominated labour relations policies of the past.

The alarmist claims raised by its opponents have not become a reality.

During the debate on the second reading of the Employment Contracts Bill the Rt Hon Helen Clark described the Bill as a "recipe for anarchy at the workplace level".

How dramatically wrong she was.

Since the Act was passed into law the benefits of flexibility have been clearly apparent.

Since 1991 employment has risen by over 259,000. That is more jobs than there are in either the Wellington or Canterbury region.

Labour's record in office was to lose 56,000 jobs.

Recently the Australian Employment Minister Peter Reith has made comments to the effect that if Australia had New Zealand's more deregulated industrial relations framework, they would have half a million more people in jobs.

Research shows very high levels of confidence in the Employment Contracts Act.

A recent survey by the firm AC Nielson found that about three quarters of employees were happy with their current employer, and with their conditions of employment.

This is just another sign of an Act that is working well, an Act that is helping to build a productive and competitive New Zealand society.

Even the Labour Party acknowledges that employers in general would rather keep the Employment Contracts Act.

There's a simple reason for this, one that employers understand well, even if the Labour Party doesn't.

The ECA recognises the diversity of needs and interests of employers and employees, and allows them to set their own course. They know what is in their best interests: co-operation toward common goals, not their imposition by Government or some other third party.

Why has Labour been silent on the Alliance's plan for a fourth week of statutory annual leave which would cost employers up to $480 million a year?

Has it struck a deal with the Alliance along the lines of "you say it, we'll do it'?

It should not be forgotten that Labour industrial relations spokesman Pete Hodgson told last year's Labour conference it was a question "not of if, but when" there would a fourth week of statutory annual leave.

Since the last election our industrial relations legislation has undergone a comprehensive and transparent set of reviews.

These found no persuasive argument for any substantial overhaul.

However, some fine-tuning was proposed.

In particular, we acknowledge that there are some problems in the personal grievance area.

National remains committed to universal access to grievance procedures for all employees, something which was introduced when the ECA was passed. However, it may be appropriate to provide greater clarity to new employees and their employers.

New Zealand needs employment legislation that does not create a disincentive to employers to hire new staff.

As part of the proposed industrial relations package announced last year the Government announced a number of measures which sought to increase certainty in the employment relationship.

The Government proposed to amend the ECA to establish a fairer balance between the substance of an employee's conduct and the fairness of the process used by the employer.

It is common sense that if an employee steals, for example, it is his or her conduct that is the key element, not whether the employer followed the dismissal rules to the letter.

Changes were also proposed to provide more guidance to employers on the standard of conduct required in dismissing staff.

This recognises that all employees have the right to be treated in a fair manner and that the way an employer does this will be influenced by individual circumstances. Small employers do not have the large HR departments that large employers do.

The package also clarified the position of employers and employees in the circumstances surrounding probationary periods.

Unfortunately there was simply not enough support in Parliament for these changes following the demise of the coalition last year.

However, if we have the numbers in Parliament, the next National-led government will address this issue.

We want rules that are certain and fair, that take us forward and provide the flexibility needed for the knowledge economy, not take us back to industrial relations dark ages as Labour and the Alliance are promising.

Multi-employer bargaining, union domination and one-size-fits all wage rates will not be part of National's future industrial relations framework.

They have no place in today's economy, let alone tomorrow's.

Labour and the Alliance talk the politics of division, the rhetoric of bosses versus workers.

They do not acknowledge that New Zealand has changed, that 85 per cent of New Zealand businesses employ five or less people. These businesses need flexible conditions to grow and pay their staff higher wages.

The Labour-Alliance bloc would take us back to the centralised and divisive policies of yesteryear.

This will not provide the flexibility to attract and retain the best people.

This will not suit the information technology companies, the biotechnology firms, the tourist industries that will be the drivers of our future growth.

The knowledge age requires us to look critically at our current practices and where necessary to do things a little differently.

To help us forge ahead the Government has been working on this for the best part of two years.

Over the last couple of months 24 forums have been held throughout the country to get feedback from the business, education and research and development sectors on the Five Steps Ahead framework.

The framework focuses on getting real growth out of education, research and business sector inter-action.

The outcome of this consultation, which will be a comprehensive and integrated partnership policy package, will be announced at a major conference in mid- August.

The package will focus on:

· Lifting New Zealanders' skills and knowledge.

· Using both publicly and privately funded research to generate more valuable ideas for New Zealanders to use.

· Improving New Zealanders' chances of getting the risk finance they need to turn good ideas into reality.

· Ensuring regulations and laws support, not frustrate, innovation.

· Promoting success and supporting New Zealanders with creative ideas.

You and your staff will be one of the principal means of turning smart ideas into smart products.

The Government will do what it can to create the right framework, through fine-tuning the ECA and other measures.

But, ultimately, it is you who have the power to make the most of the opportunities in the increasingly knowledge-based global economy.

Perhaps the time has come for the Employers Federation to view its role differently?

To become leaders, rather than lobbyists.

Perhaps it is time to become a catalyst for partnership between business, the tertiary and research sectors, by building the cluster concept amongst your members and by becoming a champion for the knowledge economy?

We all have to take the next critical steps to make the concepts like Five Steps Ahead work in practice.

We won't do that by revisiting the policies of the past and especially not by ripping the heart out of one of the most successful pieces of legislation passed in the last 50 years - the ECA.

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