Ardern says no more than 2 fair pay agreements to be concluded this term

Tuesday 28th August 2018

Prime Minister Jacinda Ardern wants to win over business leaders with a new working group headed by Air New Zealand chief executive Christopher Luxon and sought to ease fears over sector-level collective agreements, saying no more than two will completed this term.

Ardern said flagging business confidence was "a flashing great neon sign with giant lights and fireworks going off behind it" and it would be wrong to ignore the sharp decline as simply party politics. The Labour-led government has been at pains to talk up its pro-business credentials in the face of growing pessimism in business surveys, even as firms' own activity remains robust. Ardern said that decline was probably capturing the lack of certainty firms feel.

"From a business perspective, I understand the desire for certainty in order to make decisions big and small, ranging from the risk of taking on an extra hire through to multi-million dollar investment decisions, and you need to understand that the climate you operate in today will be broadly the same tomorrow," she said. "But certainty shouldn’t be confused for stasis and complacency, which are the enemy of progress, and for that matter the enemy of innovation."

The government has faced strong criticism from business lobbies over its planned industrial law changes, such as the proposal to introduce Fair Pay Agreements for sector-wide collective bargaining. That work is currently before a 10-member group headed by former PM Jim Bolger and is expected to make recommendations to Workplace Relations Minister Iain Lees-Galloway in November.

Ardern today played down the impact such agreements will have on the wider business community, saying "they are not here to fundamentally disrupt our employment relations landscape, and they will not for instance be accompanied by the ability to take strike action" and will target areas where there is entrenched low pay and slow growth.

"That’s why I am confirming today that there will be no more than one or two fair pay agreements concluded during this term. They will be in industries and sectors that have low pay and in which the workers are vulnerable and regularly exploited," Ardern said.

"The vast bulk of you in this room will remain unaffected by these agreements, but you will have a chance to see how they work, the benefits that they bring, and I hope, that some of the speculation around them is unfounded."

Ardern also offered her ear to business leaders with a new working group headed by Air NZ's Luxon to advise on economic matters and the government's strategy and agenda.

"Members of the group will be tasked with working alongside us to assist with addressing some of the big challenges we face," she said. "I want the council to report to me on the issues and opportunities they see and identify emerging challenges like skills, training and migration and the challenge of scaling New Zealand businesses up and growing our export-led wealth."

The government has previously lauded Air NZ's workplace relations and its use of the High Performance, High Engagement process with the E Tu union as a success. Meanwhile, Luxon has strong credibility among business leaders, presiding over record profits at the national carrier and being linked as a potential candidate to head dairy giant Fonterra Cooperative Group, a rumour he later quashed.

"The council will supplement the work that business is already doing on initiatives like the tri-partite forum on the future of work, but it is fair to say that there is no formal advice stream such as this, and it’s time that changed," Ardern said.

She again ruled out greater borrowing to achieve the government's programme, saying the budget responsibility rules are an "important part of ensuring long-term fiscal sustainability".

The government also released what it called its business partnership agenda, bringing together its line-up of programmes aimed at redirecting the economy to "work within the limits of our environment, shape it to deliver on the hopes and aspirations of all our people, and for our economic purpose to be bigger than just profit".

Topping Ardern's list of priorities is growing and sharing more fairly New Zealand's prosperity, which "means the gap between the highest and lowest income and wealth deciles reduces, real per capita income increases; the value and diversity of our exports grows and home ownership increases".

She also wants "to support thriving and sustainable regions that benefit from an equitable share of sustainable economic growth" with increased regional employment and income distribution.

Ardern said she also wants a broader measure of success for the government, where ministers will "bid for funding not just on the basis of what they think they need, but on how it will provide intergenerational benefits for New Zealanders."

She reiterated the government's commitment to a "clean, green carbon neutral New Zealand", saying "we are actively talking to groups like the farming community about what we can do to reduce emissions while keeping industry profitable."

(BusinessDesk)

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