MPs hearing submissions on the fair pay agreements (FPA) bill have been told the government was given faulty advice on the bill’s consistency with the Bill of Rights Act (BORA).

Business NZ chief executive Kirk Hope has tabled an opinion written by public law expert Andrew Butler, who was cited in advice written by the Ministry of Justice for the attorney general.

Appearing before Parliament’s education and workforce committee on Wednesday, Kirk said ministry officials had incorrectly concluded that section 17 of BORA, which provides for freedom of association, did not apply to the process of collective bargaining for an FPA.

The advice from the Ministry of Justice was written for the attorney general, who is responsible for vetting bills for their consistency with BORA.

Officials wrote that they did not consider the universal coverage of the FPA “… engages section 17, because while two people who enter into a contract might be described as ‘associating’, they could not be considered to have an ‘association’ within the meaning of section 17”, citing a leading legal text on the BORA co-authored by Butler.

Failure to analyse

Business NZ commissioned an opinion from Butler, who said because the Ministry of Justice had incorrectly formed the view that collective bargaining does not fall within the protections of section 17, it, therefore, failed to fully analyse this important aspect of FPAs for consistency with BORA.

Butler said that there were several features of the bill which are not consistent with, or are unlikely to be consistent with, section 17.

“Chief among these are its universal coverage; its departure from the principle of voluntariness; its interference in multiple ways with party autonomy; and the complete prohibition on employers initiating bargaining for an initial FPA.”

However, Butler also said there were some features that he considered would be likely to be consistent, particularly where it focused on enhancing the bargaining power of those in low-paid, insecure or unsafe jobs.

“If the FPA bill had confined itself to workers in those sorts of jobs alone, the limits the FPA bill imposes on freedom of association would have been more likely to be reasonable and justified in a free and democratic society.”

Hope said if there are issues with the New Zealand Bill of Rights Act, then there are going to be issues with convention 98 of the International Labour Organisation (ILO) “which is why we keep referring to it”.

In June, the ILO heard a complaint from Business NZ that the bill was in breach of convention 98 on collective bargaining, but did not appear to provide the condemnation sought by the business lobby.

Australian approach

Hope suggested MPs should consider the solution advised by the Ministry of Business, Innovation and Employment (MBIE), which he said focused on mechanisms to help identify a small number of sectors where there are identified vulnerabilities and provided a set of sector-specific standards to address them.

In the bill’s regulatory impact statement, MBIE said that FPAs were not well-targeted, which meant the government’s proposed system might create significant labour market inflexibility and costs when it is used in sectors without a demonstrable labour market issue.

MBIE’s alternative solution included empowering a government agency to introduce a limited set of sector-based minimum standards where it had confirmed there was a labour market problem.

MBIE said this would be like a targeted version of Australia’s system of modern awards, with sector-based standards that create a new ‘floor’ that sits above legislated minimum employment standards.

However, in its written submission Business NZ said it wanted such standards to only be binding on employers that sign up to them: “effectively a variation of current multi-employer collective agreements”. 

'Hyperbolic'

In a statement to BusinessDesk, workplace relations minister Michael Wood accused Business NZ of hyperbole and misinformation.

He said the Ministry of Justice’s BORA report considered many elements of the bill and found no unjustified limitations on people’s rights.

“As has been well canvassed, Business NZ’s hyperbolic claim that the bill breaches International Labour Organisation conventions has also failed.”

Wood said the proposed system followed the recommendations of the FPA working group, chaired by former prime minister Jim Bolger, and would improve outcomes for vulnerable employees.

He said this was especially true for Māori, Pacific peoples, young people, and people with disabilities, who are over-represented in occupations that could benefit from an FPA.

“What we have here is an organisation representing some of the wealthiest corporates in New Zealand, running a desperate misinformation campaign to stop some of the lowest-paid workers in our country from having a bit more of a say and a fair go.”