The prime minister's goal for New Zealand is to return average incomes to the top half of the OECD range and get the unemployment rate down to 3 percent. As 2004 begins, these goals are not in sight.

The government's own figures show that the growth rate of the economy is likely to fall away relative to the better performance of the last 10 years. In the five years from 1991, the unemployment rate fell from 11 percent to 6 percent. In the subsequent seven years it drifted down to 4.4 percent and is not predicted to fall further, and the Maori unemployment rate remains a totally unacceptable 10 percent.

In December, finance minister Michael Cullen was asked to write an article explaining how the Labour government would make 2004 a great year for business. His message in part was that: “The Government is not the main determinant of business success or failure and has duties which extend beyond simply driving down the costs of business.”

That is correct, but the role of government should not be underestimated. Politicians and policy makers set the framework in which businesses operate. Whether firms are operating in an environment like that of, say, South Korea rather than North Korea , makes a world of difference. Several moves planned by the government for 2004 will make the environment less attractive to New Zealand entrepreneurs, employers and investors.

The first on the horizon is the Employment Law Reform Bill, a ratcheting-up of the Employment Relations Act. The new bill would not make the sky fall in – but it would amount to death by a thousand cuts. It would reduce the freedom of employers and employees to make arrangements that suit them. It would push workers into collective agreements instead of individual agreements. There is also an attempt to force business owners into multi-employer agreements, and to redefine ‘unjustified dismissal' in a broader way. The bill is complex, poorly drafted, and legalistic; only lawyers and unions stand to benefit from it.

The legislation would make meeting the prime minister's goal even harder to reach – and that would have real consequences. Wages would be continue to be lower than in the countries that attract a generation of young New Zealanders. Investors would be deterred, meaning less money would be spent employing New Zealanders.

Although trade union leaders publicly maintain they have ‘moved on' and don't want to go back to the bad old days, in fact their agenda is little changed. In submissions to Margaret Wilson, the Council of Trade Unions declared its “interest in more fundamental measures such as a return of the [national] award system” and in compulsory arbitration. The bill already contains many devices to push workers into unions – shades of compulsory unionism.

National Distribution Union president Bill Andersen has delivered a clear warning: “For those employers now party to collective agreements … the proposed amendments will not cause the substantive changes that the business leaders and the business commentators are forecasting (e.g. loss of jobs).” In other words even Mr Andersen acknowledges that for other firms, which employ 80% of the workforce on individual contracts, the proposed amendments will indeed have harmful consequences.

After failing to consult employers before sending the legislation to parliament, Margaret Wilson now wants to “engage” with business. Given the strength of business disquiet, engagement is likely to occupy a lot of time this year.

The Bill comes on top of a raft of legislation that has increased the costs of doing business and tied up employers in ever greater amounts of red tape, including changes to OSH , the Holidays Act and the introduction of an extra week's annual leave. Next in the pipeline are so-called ‘pay equity' and initiatives to improve ‘work-life balance' – the latest fad taking up the time of Wellington policy makers.

The Department of Labour has dedicated an entire website ( www.worklife.govt.nz ) to what it calls “WLB”.

“What is WLB?” the website asks itself. It is “about effectively managing the juggling act between paid work and the other activities that are important to people”. WLB “is a very personal thing and will change for each person at different times of their lives”. It would be indelicate to suggest WLB could also stand for “What a Load of Bull”.

Getting the balance right between work and non-work commitments is important – that is simply common sense. But the idea that the government has a role instructing individuals in this matter is difficult to stomach.

If it were truly committed to the goal of returning average incomes to the top half of the OECD range and achieving an unemployment rate of 3 percent, the government would set up a flexible and open framework and then follow the advice given by France's business people over two centuries ago: laissez-faire – leave us alone. Instead, taking the Chinese Year to heart, the government appears committed to further monkeying around with the business environment in 2004.

For more information, contact:

Roger Kerr
Executive Director
Ph: 04 499 0790
Email: rkerr@nzbr.org.nz

David Young
Communications Manager
Ph: 04 499 0790
Email: dyoung@nzbr.org.nz

Web: www.nzbr.org.nz