Tom Pullar-Strecker: Acid test coming for Labour's relationship with business

Tuesday, 7 February 2023

Prime Minister Chris Hipkins discusses his approach to being Prime Minister with Stuff Political Editor Luke Malpass.

Tom Pullar-Strecker is a senior business journalist at Stuff.

ANALYSIS: Few claim to know whether Labour’s policy reset under Chris Hipkins will see it overhaul its approach to businesses and workplace reforms, or merely adjust its public image in the run-up to the election.

It would be pejorative to suggest the Government might be considering adopting a more “business friendly” agenda.

That would imply its recent policies weren’t business friendly, which ministers would presumably contest.

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Prime Minister Chris Hipkins addressed the Auckland Business Chamber last month.

And it’s true that not all business owners want the exact same thing from the Government.

A minority are supportive of Fair Pay Agreements, even though they are probably the single most contentious workplace reform Labour has attempted during its current term, for example.

So instead of asking whether the Government is going to become more business friendly, it might be fairer to ask whether it is going to adopt a more conservative business agenda.

The Auckland Business Chamber last month polled its members and reported the majority wanted Hipkins to ditch the merger of TVNZ and RNZ, the proposed compulsory unemployment insurance scheme and its Three Waters reforms.

But the fate of those policies won’t necessarily say much about whether the Government is going to water down its ideologies, as none appear to be “left/right” issues at heart.

The proposed Income Insurance Scheme would provide an ACC-like safety net for workers who found themselves unemployed due to redundancy or illness.

Such social insurance schemes have commonly been proposed by centrist politicians overseas and opposed both by conservatives and left-wingers, in the former case for being unnecessarily interventionist and in the latter for being a slippery slope towards a two-tier welfare system.

So if sticking with, or abandoning, those particular policies won’t shed much light, how might we know if Labour is shedding some of its actual spots?

One way may be to follow its ongoing review of where the legal boundary should be allowed to lie between employees and contractors.

At stake is the employment status up to about 150,000 self-employed contractors, potentially including courier drivers, gig-economy workers, some tradespeople, cleaners and telecommunications technicians.

Businesses have become increasingly keen in recent decades to outsource work to contractors who don’t then have the right to sick leave, holiday pay or the ability to bring personal grievance cases.

Uber's court loss in October was part of a wider dispute between some businesses and unions (video first published in October).

That is anathema to unions, which believe both workers rights and their own membership bases are being eroded.

A working group established by the Government and which included union and employer representatives has considered the issue.

In a win for unions, it recommended in 2021 that the “critical question” should be whether a worker was“genuinely in business on his or her own account”.

If they were, an employer should be legitimately able to engage them as a contractor, but if they weren’t, then maybe not.

It is perhaps no coincidence that was the same test that the Employment Court chose to apply in October when it issued a landmark judgment that four Uber drivers were actually employees of Uber, and not self-employed as Uber had claimed.

The court was in effect converging on the legal position that the government working party appeared to be recommending in giving more rights to those workers.

CTU president Richard Wagstaff says he has raised the fate of the proposed contractor reforms directly with Chris Hipkins since the change of Prime Minister. (File photo)

The question now is whether Hipkins will commit during his current term in power to see through those proposed reforms.

Public consultations had been expected to start last year.

First Union special projects co-ordinator Anita Rosentreter said in October that it had been expecting Workplace Relations Minister Michael Wood to announce a decision on the next step in the contractor law reform then.

Richard Wagstaff, president of the Council of Trade Unions, says he told Hipkins after he was appointed Prime Minister that the CTU was keen to see the work advance.

“A lot of working people in New Zealand are misclassified as contractors” and even genuine contractors would benefit from more support and protections, Wagstaff says.

As with Fair Pay, businesses will have been impacted differently by the contracting trend and may have different views and interests in reform.

But the Ministry of Business, Innovation and Employment reported in the wake of public consultations on the topic in 2020 that employers and employer-aligned organisations feared the Government could “overreach” and affect a “wide variety of legitimate contracting relationships that currently exist”.

If Hipkins bows to such concerns, then the “status quo” could carry on for some of the country’s most disadvantaged workers, who may continue to be denied many of the rights that other workers take for granted.

Uber may also have more chance of overturning the Employment Court’s judgment on appeal, and unions will be mightily displeased.

The cop-out for the Government would be to play for time and delay a decision on contracting reform until after the election, but that risks reinforcing any impression that Hipkins is just treading water till then.

It’s a litmus test.