Pay equity slashing a sub-plot in a much larger game

Wednesday, 7 May 2025

Minister for Workplace Relations and Safety Brooke van Velden.

ANALYSIS: Over the next 48 hours or so the Government will legislate away 33 current pay equity claims - ranging from teachers to Plunket nurses to midwives, and many others in female-dominated industries.

And while the Government is doing it for a number of reasons - including scepticism about how the current law is applied and with an eye to potentially very large unfunded liabilities - it is clearly doing so at speed in order to prop up the Budget.

An amended law will be passed under urgency with no public consultation, and all the current claims will stop - but they will all be welcome to reapply under the new regime, at some point.

The coalition government's surprise move to introduce emergency legislation to make it harder for employees and unions to raise a pay equity claim has drawn condemnation from the political left, and unions.

Stripping out the jargon, the Government’s central argument for making the change is that the current system allows for expensive pay equity claims where lower skilled workers in female-dominated industries are comparing themselves to higher value and higher skilled jobs and claiming it’s inequitable.

But no one wants to really explicitly say this. Workplace Relations Minister Brooke van Velden compared social workers to air traffic controllers but then clammed up when asked what the difference was.

According to van Velden, like isn’t being compared with like and the result is that settling historic pay equity claims has morphed into more general collective bargaining.

The proponents of the current pay equity system argue that female dominated industries have been undervalued precisely because they have many women in them and undertake tasks traditionally associated with women. It is that some skills are valued and others, historically, have not been.

There were some curious things about the proposed changes. The threshold for being an eligible industry is now rising from 60% women to 70% women for 10 years. Yet of the 33 claims currently being heard, all but one appear to be miles above that threshold.

This Budget was always going to have to make two or three, big, unpopular changes that saved some serious cash. But virtually no one expected this would be one of them, in an area of political vulnerability for National and its leader (popularity amongst women). And it will likely save billions over the forecast period.

And it encroaches not just on cost, but on something that many people regard as long overdue and hard-fought-for rights.

David Seymour was claiming a victory for the Budget, and women, and men.

Taking on the Pay Equity Act is one thing and would have been difficult enough, but linking it to Budget savings makes it a whole other thing. It becomes one of the big trade-offs that will be talked about after May 22.

ACT is hailing it as a victory, while most National MPs appear to want to hide under their green leather chairs. It is a Cabinet decision and as such, all ministers are getting in behind it - but it was ACT drawing the direct line between savings and the Budget, while Nicola Willis and Christopher Luxon were seriously (and not very credibly) playing that down.

“I actually think that Brooke van Velden has saved the taxpayer billions. She's saved the Budget for the Government, and she has made pay equity workable for New Zealand women, New Zealand men, and actually everyone who wants a fair go in this country,” Seymour said.

Politically, it reveals a tin ear from the Government which risks looking not thrifty, but just mean-spirited, potentially derailing the entire political narrative of the Budget and replacing it with another one: that the poorest paid women in New Zealand are being dudded to help plug a gap in the Budget.

While it may be problematic for the Coalition in general, ACT is making no bones about what it views as its contribution. But on Budget day where the money saved will be revealed, it will likely be Willis announcing it all and copping any criticism - not Seymour.

The Government - and National Party - were clearly acutely aware of this on Tuesday, because, out of nowhere, a private members bill to ban social media usage for kids under 16 suddenly emerged and the prime minister was talking about it with MP Catherine Wedd.

Come Budget Day it’s Nicola Willis who will cop the criticism, writes Luke Malpass.

This is not a Government bill and hasn’t even been drawn from the biscuit tin. Winston Peters supports it, ACT does not.

Then, a new chief scientist was announced, and ACT also launched the next stage of its new regulatory standards bill this morning.

When Willis came out to talk about pay equity on the way into the debating chamber yesterday, flanked by four other female ministers, it was obvious that this is a potential political problem.

The Government will be trying to flood the zone with fresh announcements, bank the savings and live to fight another day.

The question is now the degree to which Labour and the union movement can turn this issue into an effective campaign. At face value it has all the prerequisites: it is broad-based, affects a lot of women - potentially hundreds of thousands - and affects some of the poorest working women. Its original passing was a big victory for the unions under the Ardern Government. Mobilising opposition will be a big test for the Labour, the Greens and the union movement.

You never quite know what issues are going to get a life of their own and loom large in the public imagination and which the political train will simply move on from. This certainly has the potential to be a big and bad one for the Government, reinforcing latent fear among voters.

And it is also a portent of the next 18 months as the three Coalition parties circle each other - governing together, while each tries to stake out and expand their bit of turf. ACT and NZ First don’t need to appeal to swing voters to grow their share of the vote. But while they might get the spoils, National could end up paying the cost.