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Government shaken by leak of Cabinet paper criticising urgent repeal of law to lift wages

Thomas Coughlan,
Publish Date
Tue, 5 Dec 2023, 7:06AM
Prime Minister Christopher Luxon. Photo / Mark Mitchell
Prime Minister Christopher Luxon. Photo / Mark Mitchell

Government shaken by leak of Cabinet paper criticising urgent repeal of law to lift wages

Thomas Coughlan,
Publish Date
Tue, 5 Dec 2023, 7:06AM

The new Government was rocked on Monday evening when a highly confidential Cabinet paper made its way into the public domain. 

The paper was for Brooke van Velden, the Minister for Workplace Relations and Safety and relates to the repeal of Fair Pay Agreements (FPAs), the former Government’s signature labour market reform. The leaked paper aired on Newshub on Monday. The Herald subsequently obtained a copy of it. 

Prime Minister Christopher Luxon seemed unaware of the leak when asked about it on Monday. 

FPAs would have marked a return to sector-wide collective bargaining, allowing unions to negotiate agreements between workers and employers that would set a floor in terms of pay and conditions. These would include minimum pay, overtime and penalty rates, leave entitlements, and access to training and development opportunities. 

Six employment sectors including the likes of bus drivers and supermarket workers had successfully applied to begin negotiating an FPA, however, it is now likely that none will be concluded before the FPA legislation is repealed. 

Van Velden’s paper sought to repeal the legislation underpinning the FPA process. It will begin the process of drawing up a repeal bill to get rid of the law, which will be done, under urgency before Christmas. The paper will also block public funding to the negotiators of FPAs. 

The paper said Cabinet would consider repeal legislation at its meeting on December 11, next week. It is highly unusual for a paper relating to a decision that is yet to be taken to be leaked. 

The paper included a fairly scathing assessment of what repeal would mean for people on low incomes, particularly women, Māori, Pacific people, and young people who were “more likely than other groups to earn low wages”. 

“Disabled people experience significant disadvantage in the labour market, which includes earning less than non-disabled employees. 

“Given these populations are disproportionately represented in workforces where there are lower employment terms, they could have disproportionately benefited from any improved terms obtained by an FPA,” the paper said, noting that this would depend on whether those people actually worked in a sector covered by an FPA. 

A leak of a Cabinet paper is very rare. Photo / Mark MitchellA leak of a Cabinet paper is very rare. Photo / Mark Mitchell 

However, it added a riposte to that criticism. The paper described FPAs as a “blunt tool” that van Velden did not think would be successful in “improving employer terms for these groups”. 

CTU President Richard Wagstaff said the leaked paper showed the Government was ignoring the impact on workers in a cost-of-living crisis. 

“By pushing forward with this, Luxon is taking money directly from the pockets of hundreds of thousands of hardworking Kiwis. This comes after last week, where the NZCTU discovered that the Government was prioritising paying out $3 billion for landlords.” 

He said it demonstrated how “profoundly out of touch” the new Government was and said the leak showed Luxon was not in control of the Cabinet. 

The paper said that the CTU and Business NZ, the two sector groups which Labour consulted with during the design of FPAs had both been consulted about repeal. 

The CTU said it was not properly consulted. 

Van Velden’s office told the Herald that the minister met with both the CTU and Business NZ last week. 

Van Velden said FPAs were “a blunt tool that could be initiated by a union and a small number of employees, yet they applied to every employee and every employer within coverage”. 

“Employers would choose to hire fewer people or reduce hours of work due to higher costs associated with the terms and conditions within a Fair Pay Agreement. That means people seeking work miss out on job opportunities,” she said. 

Labour’s workplace relations spokeswoman Camilla Belich said the fact the new Cabinet was leaking is “highly concerning”. 

“Instead of helping people with the cost of living like National promised during the campaign, they’re taking away the opportunity of fair wages, pay and conditions right before Christmas.” 

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018. 

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