A new Government – what does it mean for your business?

With the negotiations over, and the composition of New Zealand’s new coalition government known, this is a good time to reflect on what the new government is likely to mean for businesses.

As a government led by Labour in coalition with New Zealand First and supported by the Greens through a confidence and supply agreement there is more than the usual room for uncertainty.  The recent release of both the Coalition and Confidence and Supply Agreements appear to have done little to ease the uncertainty around what the new government will mean for policy changes and for business.

In the coming weeks officials in Wellington will be finalising their Briefings to Incoming Ministers. Then, while most of us will be on holiday and enjoying the BBQ season, officials will be busy writing policy papers to implement Labour’s “first 100 days of action” and responding to questions from their new ministers regarding some of the promises made on the campaign trail.

However, this does not mean businesses should disengage. Working off the assumption that policies in Labour’s manifesto that were not ruled out by either the Coalition or the Confidence and Supply Agreements are still in play, alongside the additional commitments made in both of those Agreements, there is potential for a lot of changes that will impact on businesses over the next three years.

Changes to workplace relations laws

The first area likely to see significant changes that will affect businesses is in the area of workplace relations law. Some of the changes Labour campaigned on include:

  • Repeal the 90 day statutory trial period and replace it with a new scheme which would allow employees to use a new ‘referee service’ to challenge any dismissal. The referee would not be legally trained but would make a binding decision within three weeks. The referee would be able to grant reinstatement as well as monetary remedies and the parties would not be able to appeal the decision or have legal representation during the process.
  • Restore reinstatement as the primary remedy.
  • Increasing employee entitlements, including:
    • raising the minimum wage to $20 by 2020 (as set out in the Coalition Agreement with New Zealand First);
    • introducing 26 weeks paid parental leave;
    • abolishing youth rates;
    • investigating options for ensuring that people who work over 40 hours a week receive additional remuneration; and
    • consulting on minimum redundancy protection for workers affected by restructuring (currently there is no statutory requirement to provide redundancy compensation).
  • Extending the right for employees to elect a health and safety representative from amongst their own to all workplaces, regardless of size or industry. Currently most smaller businesses (i.e. with fewer than 20 employees) are not compelled to appoint or elect representatives.
  • Introducing “Fair Pay Agreements” that set minimum conditions, such as wages, allowances, weekend and night rates, hours of work and leave arrangements for workers across an entire industry based on the employment standards that apply in that industry (irrespective of whether or not employees were already covered by a collective agreement or were union members). This is perhaps the most significant change of all, likely to result in significant bargaining power for unions with anticipated rights for workers/unions to take industrial action which could affect an entire industry at a time.
  • Repealing the so-called ‘Hobbit law’ (which doesn’t prevent film industry workers being employees but does prevent workers who are engaged as independent contractors from changing their mind and retrospectively claiming they are an employee).
  • Extending the right to organise and bargain collectively to “contractors who primarily sell their labour” and extending employment law protections to “dependent contractors”. For businesses that frequently use contractors as part of their workforce, changes to the rights and status of contractors could have a significant impact on your business.

The first area likely to see significant changes that will affect businesses is employment law

In addition to the workplace relations changes indicated by the Labour Party, both Labour and New Zealand First campaigned on reducing immigration numbers either by cutting the overall number of visas available or making the criteria to obtain a visa more difficult. Depending on which visas are targeted for changes, businesses who rely on overseas labour, such as those involved in primary industries or tourism, may find it difficult to fill certain roles.

There are also likely to be other changes that may be of interest to businesses, including:

  • changes to the Overseas Investment Act and the rules around foreign-owned land;
  • changes to government procurement rules to try and provide more opportunities for New Zealand companies to contract;
  • tax changes including the reintroduction of R&D tax credits and the establishment of a tax working group;
  • the establishment of a $1 billion per annum Regional Development (Provincial Growth) Fund;
  • the establishment of a $100 million Green Investment Fund; and
  • the introduction of a Zero Carbon Act and the establishment of an independent Climate Commission that could see agriculture included in the Emissions Trading Scheme

All in all, the next three years will be a busy time if the new Labour-led Government is able progress its desired policy changes, with many of these having been promised to occur in the “first 100 days” (being by 3 February 2018).

While there will continue to be uncertainty until further details, costings and specific timeframes are released, business and in particular SMEs should see this as an important opportunity to engage with the policy and law makers. The insights and feedback that business can provide from their day-to-day experience are of huge value to officials. Therefore, for the short-term at least continue largely with business as usual, but stay engaged and when further policy details are announced that may impact on your business take advice and be prepared to get involved.

Find out more in our policy snapshot

Review our analysis on policy issues that you should consider for your business and personal plans over the next three years.

Read more

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