The Prime Minister’s flip-flop on whether he will continue to claim a $52,000 accommodation allowance for living in the Wellington apartment he owns is important.

Parliament has enacted a safety net of minimum employment entitlements for New Zealanders, such as a minimum wage and entitlements to paid leave such as annual leave, sick leave and parental leave. For good reasons, the power of setting the pay of key public office holders is given to an independent body, the Remuneration Authority, which sets an annual salary for our Prime Minister, Ministers and MPs and certain other roles.

The Prime Minister plays on his background in big business; former CEO roles, business mergers and acquisitions - and so on. He is used to negotiating his own salary and terms and conditions of employment. While there is no doubt that the role of Prime Minister is a huge and difficult job, it comes with a salary of $471,000 plus certain other allowances and benefits. Mr Luxon took a big pay cut when he opted out of the private sector and took on a career of public service.

One of the most popular moves the Ardern lead government made was to freeze the pay of politicians back in 2018. The pay freeze is due to end this year, and a new review by the Remuneration Authority for setting politicians’ pay may mean that MPs get a huge increase to make up for six years of standing still. The outcome of the review may be contentious, particularly as the cost-of-living crisis continues for many New Zealanders.

Chief Executive roles are essentially about providing leadership and strategic direction to an organisation. Leadership is often seen to have an expectation to model behaviours that an organisation strives for. High profile companies and their leaders often face scrutiny by the public and their shareholders.

Mr Luxon’s, successor at Air New Zealand, Greg Foran, offered to reduce his base pay of $1.65 million by approximately 15 per cent ($250,000) at an early stage in the Covid pandemic as he led his team through the huge changes, including voluntary and involuntary redundancies, that were necessary at the time.

Last year, Air New Zealand’s competitor Qantas, experienced shockwaves when it was accused of allegedly selling tickets to flights that had already been cancelled over a three-month period in 2022. Late last year, it’s then CEO Alan Joyce, brought forward his retirement but he is still reported to have been paid over $20 million for his final year.

Fletcher Building Chief Executive Ross Taylor recently announced he was stepping down as he delivered news that the company had made a net loss of $120 million in the first half of its current financial year and downgraded its earnings guidance for the full year. The Board chair Bruce Hassall also resigned.

In the United States, Tesla was taken to task by a shareholder in the State of Delaware where the company is incorporated. In January 2024 the Judge decided to void the pay package that the Board awarded Elon Musk and helped him make the world’s richest person by ordering Tesla to cancel stock options worth about $US50 billion awarded to him as its Chief Executive Officer.

In January 2024 Stats NZ advised that the Consumers Price Index increased 4.7 percent in the 12 months to the December 2023 quarter and that the cost of living for the average New Zealand household increased 7.0 percent in the 12 months to the December 2023 quarter. Yet the new government which sets New Zealander’s employment safety net recently announced that the minimum wage will increase by only 2 percent, from $22.70 to $23.15, from 1 April 2024.

The housing allowance available to MPs is to assist those based outside of Wellington to find accommodation in the capital. Few prime Ministers have claimed it, with Mr Luxon being the first in at least 34 years. He is one of New Zealand’s wealthiest Prime Ministers, he told journalists “It’s an entitlement and I’m well within the rules,”. “I’m entitled to the entitlements that everyone else has.”

Mr Luxon has now said that he will not claim the allowance and will repay the allowance he has already been paid. Under the law, we should all know our rights. That is different from doing what is right. Read more...

While it is early days for New Zealand’s new coalition government, the cost of living crisis is still hurting a lot of working New Zealanders.

The National Party campaigned on tackling the crisis. “Our plan is carefully targeted to ensure that those who will benefit the most are working New Zealanders. It’s about time they got some relief from Labour’s cost-of-living crisis and National will deliver that to them”, Christopher Luxon said.

The minimum wage effects a significant proportion of our workforce and helps to enable many of our most vulnerable working New Zealanders support themselves and their families. Ministry of Business, Innovation and Employment (MBIE) figures show that there were estimated to be just under 80,000 people earning between the current minimum wage of $22.70 and $23 last year.

Last month Stats NZ advised that the Consumers Price Index increased 4.7 percent in the 12 months to the December 2023 quarter and that the cost of living for the average New Zealand household increased 7.0 percent in the 12 months to the December 2023 quarter.

Yet the new government recently announced that the minimum wage will increase by only 2 percent, from $22.70 to $23.15, from 1 April 2024. Workplace Relations and Safety Minister Brooke van Velden said given economic headwinds with a softening labour market and high net migration, a cautious approach was required to raising the minimum wage.

MBIE reviewed a range of scenarios on the wage increase. It recommended an increase of 4 percent to $23.60. It said adopting this increase would be "prudent" because the cost of living crisis was likely to remain an issue and the labour market will be more sensitive to minimum wage increases compared to the past two years, as unemployment looks to be increasing.

But it is understood that in a Cabinet paper that the Workplace Relations and Safety Minister had proposed and recommended that Cabinet only adopt a 1.3 percent increase.

Of course the Labour Workplace Relations and Safety spokesperson Camilla Belich said the "tiny" increase was not enough to help low income earners in a cost of living crisis. "This pathetic increase is beyond disappointing. As the price of goods and services continue to climb, the coalition government has chosen to turn a blind eye to our most vulnerable income-earners by not increasing minimum wage to a level in line with inflation."

Last year the then Labour government increased the minimum wage to $22.70, a boost of 7 percent (in line with inflation last year). The former Prime Minister Chris Hipkins said "I do understand that a number of small businesses will have concerns about this decision, however in a cost of living crisis we can't leave those on the lowest incomes behind".

The Employment Court has said that the Minimum Wage Act “is a statute of fundamental importance in the sphere of employment law in New Zealand. It is a statute that is designed to impose a floor below which employers and employees cannot go. It is directed at preventing the exploitation of workers, and is a statutory recognition of the diminished bargaining power in low paid employment”.

The CTU has argued that “A low minimum wage keeps New Zealand’s general wage levels low and traps many workers and employers in a low-wage low-skill equilibrium. It consequently has negative consequences for productivity, equality, poverty, the gender pay gap and labour participation rates”.

The issue of course is complicated. Increasing low pay is not the same as alleviating poverty. It is not uncommon for parents to work two or more jobs to support their family. Reports of students working up to full-time to help their family are becoming more common. Even workers paid above the minimum wage may face poverty if they need to support a large family, and low-paid workers may live in so called “high-income” households.

What is clear is that our lowest paid workers will continue to go backwards as the cost of living continues to increase. Future minimum wage increases by this government are also likely to fall well short of inflation and the cost of living. There is no sign yet of that relief promised by National in their election campaign.

Where does the pay for our most vulnerable workers cross the line from a minimum level of fair pay into exploitation? Read more...

The Ports of Auckland (POAL) has often been in the news for the number of accidents that have occurred at the Port.

Late last year POAL was fined more than half a million dollars after pleading guilty to two charges over the death of a stevedore who was killed by a falling container in August 2020.

A further stevedore at POAL, aged 26, died in April 2022 after being crushed by a container. That accident, and a further one at Lyttleton Port, were separately investigated by the Transport Accident Investigation Commission (TAIC) which released its findings in a joint report in October last year.

The Chief Investigator of Accidents, Naveen Kozhuppakalam, said the report identified broad safety issues for the whole stevedoring sector. He said that neither company monitored how well its employees were using rules and guidelines to manage workplace risks. "People become desensitised to risk, they take shortcuts or drift away from following rules, some of which are thought to be impracticable. Administrative risk controls only work with ongoing active safety leadership, good supervision, and a culture of safe working behaviour."

In the past decade, New Zealand has had 18 deaths and 397 reported injuries in its ports. TAIC Chief Commissioner Jane Meares said stevedoring has the second highest rate of fatalities of any industry in New Zealand.

A recent decision of the Employment Relations Authority, and on appeal to the Employment Court, has reinstated a dismissed stevedore, Ethan O’Brien, at POAL on an interim basis.

During his 13 months of employment Mr O’Brien had been caught out on a number of health and safety incidents. He was issued with a health and safety breach notice for driving a motorcycle on the port without a helmet or licence. A further two incidents occurred where Mr O’Brien made errors which resulted in damage being caused to client vehicles. Mr O’Brien also attempted to enter the POAL site without his access identification card. Although denied entry by security staff, he again attempted to surreptitiously enter the site but was again stopped by security.

Due to the high-risk work environment there is a Drugs and Alcohol Policy which provides for random drug testing for drugs and alcohol. In July last year Mr O’Brien was selected for random testing. When Mr O’Brien gave his urine sample the technician stood behind and to the side of him. His evidence was that he was not able to see Mr O’Brien’s genitals or urine stream as the sample was being provided. The technician could only see that he took the cup and that his arms were held in front of him in the region of his genital area while the sample was being provided.

The technician’s evidence was that the test cup was just over half full, and the cup did not feel as warm as it should have when Mr O’Brien handed it to him. The technician advised Mr O’Brien that the thermal strip had not been activated, which indicated that the sample was outside the required temperature range, so he was unable to continue with the sample and would be invalidating the test. The technician did not inform Mr O’Brien that his sample had also failed to meet the minimum level of creatinine required for a valid sample.

Mr O’Brien’s evidence was that he asked the technician, and then his manager, whether he could undertake another test. The technician did not recall that request being made and his manager strongly refuted that any request was made. Mr O’Brien was then sent home and suspended from work. Following a disciplinary process Mr O’Brien was dismissed.

Mr O’Brien applied for interim reinstatement (an order providing reinstatement of employment until a full hearing of the case can be heard).

On appeal, Judge King said that there is a strongly arguable case that Mr O’Brien was unjustifiably dismissed. However, when considering the overall justice of the case, the Judge said that she was satisfied that full interim reinstatement should not be ordered. She ordered that Mr O’Brien was to remain on the payroll until the full hearing of Mr O’Brien’s substantive claim in the Employment Relations Authority. She said that the expert evidence that there is a risk of serious injury or death if Mr O’Brien is reinstated to the workplace could not be taken lightly by the Court.

While the clear indications from the Authority and the Court are that Mr O’Brien will be successful in his claim that he was unjustifiably dismissed, he may be less successful in his application for final reinstatement.

Without detracting from the serious safety issues in the stevedoring industry, the stand taken by Mr O’Brien’s employer indicates that employees, or at least some of them, have their part to play in making the workplace safe for themselves and others. Read more....

How are we once again at this point where there is another u-turn on a big infrastructure project? Surely there must be accountability on these big projects? Before these projects get approval, there are numerous feasibility reports, consultant reports, reviews within the relevant Ministries, scrutiny in Ministers offices, and sign off by the Government.

There can be no doubt that New Zealanders deserve a better and safer solution for the important connection of the ferries on our state highway network. Both ferry companies operating the Cook Straight have had a year of cancellations due to engineering and mechanical issues. Some of the Interislander ferry woes have been particularly worrying.

In January this year the complete failure of the ferry Kaitaki’s engines caused it to drift dangerously close to rocks near Wellington harbour. According to the Transport Accident Investigation Commission’s report it was caused in part by KiwiRail's failure to replace safety-critical parts, which were years past their use-by dates.

In February the ferry Aratere lost power near the Tory Channel entrance, on its way to Picton.

In March the ferry Kaitaki was taken out of service after new engineering problems, this time with its gearbox. The repair took more than a month to rectify.

In August passengers were forced to spend the night on the ferry Kaitaki anchored out in Wellington Harbour after it turned back from its sailing due to steering issues.

Sailings of the ferry were also cancelled on the ferry Kaitaki in August after a bow door was damaged by a large wave during a crossing.

At the core of New Zealand’s Health and Safety at Work Act is the requirement that all duty holders, so far as reasonably practicable, eliminate risks to health and safety. Risks that cannot be eliminated must be minimised. A business has a primary duty of care to ensure, as far as reasonably practicable, the safety and health of its workers and that others are not put at risk by the work carried out as part of the business. It must further ensure that there is, amongst other matters, safe plant (such as a ship) and that there are safe systems of work (such as replacing safety critical parts by their used-by dates).

No doubt the replacement ferries that have been on order were a big part of the Interislander’s risk minimisation plan for the future. Within businesses, serious failures in health and safety are treated as issues that could amount to serious misconduct warranting dismissal. At governance level, oversight of those responsible for health and safety would (or should) also sit heavily on their shoulders.

However, the Interislander’s plans for the future proofing of our inter-island link have been thrown into disarray with the Government announcement last week that it would not contribute new funding to KiwiRail to address rising costs involved in upgrading the ferries and terminal infrastructure. It reportedly has quadrupled in cost since 2018 to about $3 billion overall - much greater than the original $775 million business case. 

Chief Executive of KiwiRail (owner of the Interislander), Peter Reidy, has defended his team's work and processes. Mr Reidy said the engineering project was "exceptionally complex". "We're talking about a seismic area of New Zealand; we're talking about having to lift the whole Wellington infrastructure a metre because of the flood modelling codes", "Once you start to look through all the design and the real costs of constructing, that's where the envelope obviously started to increase." 

Even to a layman, there is nothing new in Mr Reidy’s explanation. Yes, we know that this is an active seismic area; yes, we know that sea levels are expected to rise. No doubt numerous feasibility reports and consultant reports dealt with these issues (or should have). How does that justify a quadrupling of the cost at this stage of the project?

Trust and confidence is an essential part of the employment relationship. It may amount to serious misconduct warranting the termination of the employment relationship; it is more than mere inadvertence, oversight or negligence. Surely there is at least a case to answer here within the senior management team and at Board level?

KiwiRail chairperson, David McLean, has said that without the further funding from the Government they couldn’t proceed with the project and that an alternative long-term solution could take years to develop. “We sought a strong outcome for New Zealand through this project for a more resilient State Highway 1 across Cook Strait for exporters, domestic freight forwarders, tourism and domestic commuters.”

The Government is the majority shareholder Air New Zealand. Does it expect lesser safety standards of its’ national marine carrier than it does of its national air carrier? How would the public feel if they heard that Air New Zealand was failing to replace safety-critical parts which were years past their use-by dates.

Unfortunately for New Zealanders, and according to our Finance Minister, the best we can now expect for the Cook Straight connection is a reliable Toyota Corolla. Until then, the problematic Interislander service will continue to operate. Read more....