2018/19 Estimates for Vote Labour Market

Transcription

1 2018/19 Estimates for Vote Labour Market Report of the Education and Workforce Committee July 2018 Contents Recommendation... 2 Introduction... 2 Accident Compensation Corporation appropriations... 2 ACC to reduce its number of medical advisers... 2 Centralisation of services... 2 Injury prevention... 3 Air ambulance services... 3 ACC s investment strategy... 3 Funding pay equity... 4 Immigration appropriations... 4 Reducing migrant numbers... 4 Moving migrants to the regions... 5 Meeting construction industry labour shortages through migration... 5 Post-study work visas... 5 Increasing the refugee quota... 6 Workplace relations and safety appropriations... 6 Increase in notices of intention to take industrial action... 7 Fair pay agreements... 7 Boosting business confidence... 7 Employment Relations Amendment Bill... 8 Lifting the minimum wage... 8 Bullying in the workplace... 8 Appendix Dr Parmjeet Parmar Chairperson

2 2 Vote Labour Market Recommendation The Education and Workforce Committee recommends that the appropriations for the year ending 30 June 2019 for Vote Labour Market, as set out in Parliamentary Paper B.5, Vol.2, be accepted. Introduction The Ministers for ACC, Economic Development, Immigration, Workplace Relations and Safety, and Employment are responsible for the appropriations in Vote Labour Market. The Ministry of Business, Innovation and Employment administers the Vote s appropriations. The appropriations sought for Vote Labour Market in 2018/19 are $2.004 billion. This is 6.8 percent more than the 2017/18 estimated actual spending of $1.877 billion. Accident Compensation Corporation appropriations The total appropriations for ACC in Vote Labour Market for 2018/19 are $1.465 billion, around $110 million higher than the 2017/18 estimated actual spending of $1.355 billion. We note that Vote Labour Market funds around 20 percent of ACC s activities, with its other revenue coming from investment income or levies. ACC to reduce its number of medical advisers ACC announced in May this year that it is proposing to reduce the number of its medical advisers from 36.4 FTE to 30 as part of the restructuring of its clinical advisory services. We observed that Lloyd Woods, Senior Industrial Officer at the Association of Salaried Medical Specialists, had said that ACC s clinical services directorate would be dismayed by the potential implications if this proposal goes ahead. The Minister said that he had been in contact with Lloyd Woods and industry bodies to discuss their concerns, and is in consultation with ACC s clinical services directorate. The aim of the restructure is to better align the directorate with ACC s case management model, creating better outcomes for customers. We heard that the restructure will increase the directorate s capacity by 6 FTE. Centralisation of services We observed that ACC was planning to close two of its call centres. Approximately 87 workers will be affected; however, ACC had committed to working with these employees to move them to other centres or into other roles in their current location. The Minister said that the closures would aim to better align resources in the centres still operating. By placing a greater level of resources in these hubs, it would support smoother case management and create better outcomes for customers.

3 3 The Minister acknowledged that change processes could be difficult for staff, but that ACC was ensuring that it was engaging with staff, and providing opportunities and choice for their futures. Injury prevention We asked how ACC and WorkSafe NZ were working together in injury prevention. Upon taking up his role, the Minister had noted that there was a lack of alignment between WorkSafe and ACC on their injury prevention goals, even though WorkSafe relies on funding from ACC for some of its injury prevention work. ACC has a legislative mandate to invest in injury prevention programmes that have a positive return on its investment, while WorkSafe focusses its resources on where it can most reduce injury and harm in the workplace. Through discussions, WorkSafe and ACC have developed a plan for ACC to release money to WorkSafe on the basis of a return of investment of $1.10 for every dollar which makes it easier for WorkSafe to demonstrate the return on investment that ACC requires. We heard that this partnership model is working well, and that agreements between the respective boards have allowed for an ongoing stream of funding from ACC to WorkSafe of $15 million per year, which is about 19 percent of ACC s total injury prevention budget. Air ambulance services Budget 2018 includes new funding of $3.7 million to improve New Zealand s air ambulance services. As well as being part of an aging fleet, many of the service s current helicopters have single engines, and under Civil Aviation Authority Rules, are not allowed to fly over urban areas. This means that air ambulance patients being taken to hospitals are often transferred to road ambulances at city limits. The new funding aims to modernise the service s fleet and equipment and ensure consistency in the level of service that people get across the country. We heard that the operations of the air ambulance service is currently out for tender. Some of us were concerned that some regions, including the Coromandel and Te Anau, were not included in the tender process. Some of us were particularly concerned that Taupō had not been included in the process, as the air ambulance service is often required to lift trampers from the Tongariro alpine crossing. We sought assurances that the air ambulance service would be maintained in those areas. The Minister said that his ambition is that people anywhere in New Zealand will get at least the level of service they are currently getting, but where these services are based is a matter to be worked through in the tender process. ACC s investment strategy We noted that ACC s investment portfolio has approximately $40 billion of funds under management. We were interested in how ACC s investment returns compare to the NZ Super Fund returns, and why ACC had invested in NZ corporate bonds and the Transmission Gully roading project. ACC told us that it has to ensure that it has income security over the lifetime of its claims, so it favours long-term investments that can deliver relatively certain income streams. The current board has decided to invest some of its funds in New Zealand s infrastructure projects, like Transmission Gully and other roading projects. Compared to the Super Fund,

4 4 the ACC investment portfolio generally has a much lower risk profile, and although at any one time it may produce lower returns, the investments are less volatile. We heard that ACC is currently sitting $1.4 billion ahead of budget in its investment returns. Funding pay equity We were interested to hear what provisions ACC had made for financing pay equity in the various services that it funds, including maintaining funding for training and development. Regarding the recent Care and Support Workers pay equity settlement, ACC told us that it had already been paying higher rates for care and support workers, so the cost gap in meeting pay equity had been more manageable. ACC estimates that the Care and Support Workers pay equity settlement will cost ACC an additional $3 - $5 million extra per year, which is well within their ability to fund. ACC noted that addressing pay equity claims would incur additional benefits as well as expense. People who worked for ACC or any of its service providers who felt secure and adequately compensated would provide efficiency benefits for ACC and a better level of service to all New Zealanders. Immigration appropriations The appropriations sought for Immigration in Vote Labour Market in 2018/19 are $ million. This is 4.8 percent more than the 2017/18 estimated actual spending of $ million. Reducing migrant numbers National members noted that the Labour Party, prior to the election, estimated that the changes it would make to immigration policy would reduce net migration by between 20 and 30 thousand each year. We asked whether the Government s proposed changes to immigration policy anticipate a similar reduction in net migration. The Minister said that it was important to distinguish between Labour s policy and the policy decided by the coalition Government. However, regardless of what reduction in migration could be expected from the coalition policy, the Minister said that the immigration priorities remain the same. These include: better matching what skills and talents New Zealand needs with the skills and talents that migrants bring; tackling the exploitation of migrant workers; reviewing New Zealand s approach to Pacific migration issues; increasing New Zealand s refugee intake; and making immigration system improvements that enhance the security of our borders. We heard that the Government has not set a target to reduce net migration by 20 to 30,000. However, the Minister told us that, even under current policy settings, net migration is expected to fall to around 60,000. We were interested to hear what effect that would have on the projected fee revenue from visas. The Minister said that analysis had been done on future visa revenue, but needed to be balanced against the costs being incurred in visa assessments. For example, testing work visas is costly for the department, which needs to

5 5 check to ensure whether New Zealanders are available to fill the work positions being applied for by migrants, while issuing group visitor visas costs the department much less. Moving migrants to the regions Some of us were concerned that changes to immigration policy would affect the electorates that relied heavily on migrant workers to fill labour shortages. The Minister said that there was a relatively low rate of migration to the regions, compared with migration to Auckland. However, Auckland s infrastructure is struggling to keep up with its population growth while other parts of the country are experiencing skill and labour shortages. The Minister said that it was vital that the immigration system become much more responsive to the needs of the various regions. Proposed changes to immigration policy mean that the system would consider regional unemployment rates, the ability of regions to welcome new migrants in terms of housing and infrastructure, what regional industries needs were, and how well the region could respond to migrants in the training and wages being offered. We heard that creating this more tailored approach to immigration would require a high degree of cooperation with local communities and regions. Meeting construction industry labour shortages through migration The Government has committed $2 billion for KiwiBuild, a programme that aims to deliver 100,000 homes for first home buyers over the next ten years. We noted that it is estimated that the construction industry is about 30,000 people short of being able to deliver this ambitious target of accelerated construction. We asked whether the Government would fill this shortage through migration. The Minister confirmed that, in the short term, the industry would need to be supplied from the migrant workforce market. However, he also believed that the steady stream of work needed to be done to boost New Zealand s infrastructure would give the construction industry more confidence and the capability to train up New Zealanders to fill those skill shortages in the long term. We observed that the number of essential skills work visas being issued this year is expected to increase by 15 percent, especially as the construction industry is facing a labour shortage in meeting the Government s Kiwibuild target. We asked whether the Minister expected that this might cause a net rise in immigration. The Minister said that policy changes around labour market testing and the Accredited Employer Programme, which are about to go out for consultation, would incentivise employers to look at other factors before they turned to the immigration system to fill shortage gaps. These factors include checking to ensure that fair wages and working conditions are being offered and training is provided. Where these factors are in place, but labour shortages are still unable to be filled from New Zealand, then the industry should seek a response from the migrant workforce market. Post-study work visas Some of us were concerned that the proposed changes to post-study work visas would further jeopardise the decreasing number of international students choosing to study in New

6 6 Zealand. The Minister told us that he is mindful of these trends, but that proposed changes to the visas, which are out for consultation, would help eliminate migrant exploitation and make sure that migrants who are granted visas are contributing to the skills that New Zealand actually needs. The Minister said that too many students were choosing to study low-level qualifications with post-study work rights, hoping to get on the path to becoming residents in New Zealand. By removing post-study work rights for courses of less than two years and limiting the length of post-study work visas for sub-degree courses to one year, the Minister aims to ensure that migrants are coming to New Zealand to gain a high-quality education that could further their career in New Zealand or anywhere in the world. International student graduates who may not be eligible for post-study work visas could still apply for other visas, such as a labour-market-tested visa. The Minister said that education providers could also benefit by offering qualifications for skills that were in demand in their regions. Increasing the refugee quota We noted that the Government had announced that it will increase its refugee quota. We asked what additional services the Government had put in place to respond to this increase. The Minister told us that it was important that the quota increase was complemented by a level of support that ensured that refugees had the opportunities to settle well in New Zealand. We heard that $1.5 million of funding had been granted in this budget round and over the next three years for building two additional accommodation blocks at the Mangere Refugee Resettlement Centre. It is expected that these blocks could receive up to 1500 people each year. In addition, the Minister told us that any increase to the number of refugees would need to be matched by an increase in funding for partner agencies, like the Red Cross, to ensure that they can continue to provide their services. An ongoing challenge for receiving refugees is to find suitable housing for them once they leave the resettlement centre. We heard that Immigration New Zealand works with its partner agencies to find suitable housing and that the Minister has been developing a programme of work with the Minister of Housing and Urban Development to increase capacity to house refugees in New Zealand. Workplace relations and safety appropriations Workplace relations and safety appropriations in Budget 2018 include: just over $94 million for the purchase of services from non-departmental providers in relation to workplace health and safety and the collection of the Health and Safety at Work Levy just under $40 million for provision of employment relations services, including support services provided to employment relations institutions just over $6 million for other expenses including salaries and allowances of the Employment Relations Authority and Remuneration Authority members, subscription to the International Labour Organization, promotion of equal employment opportunities and

7 7 better relations through the Equal Employment Opportunities Trust, and for the New Zealand Industrial Relations Foundation. Notices of intention to take industrial action National members believe there has been an increase in strikes and threats of strikes. The Minister was asked whether he agreed that the number of notices of intention to take industrial action had increased in recent months. He said that workers, particularly in the public sector, were eager to be awarded their fair share of economic growth. The Minister believes that these notices of intention were inevitable, regardless of the election results. It was noted, that during a televised debate in the lead-up to the election, the now-prime Minister had guaranteed that New Zealand would not see national strikes in an industry; however, we observed that notices of intention to take industrial action had been announced by nurses and teachers. The Minister said that the Prime Minister s comments were in light of the fair pay agreements and no industry-wide strikes had occurred, and that the Government was negotiating with these professions to find resolutions. Fair pay agreements We heard that the Government is considering the establishment of a bargaining system that would enable unions and employers to develop Fair Pay Agreements that set minimum terms and conditions for all workers in an entire industry or occupation. The Minister told us that there will be no mechanism for industrial actions, lockouts, or strikes in the fair pay agreements. This piece of work is currently being developed by the Fair Pay Agreement Working Group. The Minister was particularly hopeful that fair pay agreements would reduce the incentives that exist in some industries to engage in a race to the bottom. For example, in industries where employers have to tender for contracts, some employers lower their costs by lowering their workers wages, particularly when competition is fierce. By setting reasonable minimum standards, fair pay agreements aim to ensure that employers can compete on things they should be competing on: productivity, efficiency, the quality of their service, and the quality of their product. Boosting business confidence Some of us felt that the Government s proposed changes to the industrial relations legislative environment were having a chilling effect on employers and businesses. The Minister noted that the formation of a new Government often heralds a period of change and review that might cause some uncertainty for businesses. However, the Minister was confident that these changes would predicate a long period of sustained economic growth in which businesses could thrive. The Minister told us that he was involving BusinessNZ in all of his policy work, to ensure that the voices of New Zealand businesses were being heard and had the opportunity to influence policy direction.

8 8 Employment Relations Amendment Bill The Employment Relations Amendment Bill was introduced into Parliament in January of this year. Its provisions aim to introduce greater fairness in the workplace between employees and employers in order to promote productive employment relationships. While considering this bill, we observed that many of the employers who had submitted were opposed to many of the changes that the bill would introduce. The Minister, however, noted that workers who had submitted to the committee were overwhelmingly positive about its provisions. The Minister was confident that the bill was constructed so as to meet and balance the needs of both workers and employers, but anticipated that this would be refined as the bill was considered by this committee. Sharing of new employees information with unions The bill would provide that an employer who enters into an individual employment agreement with a new employee must share certain information about the employee with the union unless the employee opts out by means of a form provided by the employer. We noted the Privacy Commissioner s submission that requiring an individual to opt-out of having their personal information disclosed is poor privacy practice and is against an individual's right to exercise some autonomy over their personal information. The Minister said that this provision was designed to ensure that employers met their legal requirement to make an employee aware of the collective, if a collective is in place, and that the opportunity to join the collective is provided to the employee. The Minister agreed that it was vital that people be able to protect and control their private information, and said that he had a high degree of comfort that employees would be fully cognisant of their rights through provision of the form. Lifting the minimum wage We asked the Minister about the Government s plan to lift the minimum wage, including how small businesses might be supported to effect this change. The Minister said that, under current labour market conditions, wages should be increasing. Because that was not happening, the Government is accelerating minimum wage increases to ensure that workers are paid fairly. We heard that the Minister has signalled minimum wage increases well in advance, to allow time for businesses to plan to meet these requirements. The Minister also observed that, in the context of minimum wage increases, the Tax Working Group is considering a more progressive approach to company tax rates and whether there might be an opportunity to provide some tax relief for small and medium businesses. Bullying in the workplace We observed that under the Health and Safety at Work Act 2015, bullying is considered a psychosocial health risk; however, we noted that WorkSafe have investigated very few of the bullying complaints brought to them, with almost no action taken. We heard that WorkSafe receive about 10,000 notifications a year, of which 500 are investigated and 80 are prosecuted. WorkSafe said that only a very small number of

9 9 notifications are psychosocial claims. So far WorkSafe have investigated 10 psychosocial complaints, but these have not reached the standard for prosecution in the Act. However, WorkSafe observed that psychosocial harm is the most rapidly growing type of harm being reported in workplaces globally. It expects that the volume of psychosocial notifications would increase in New Zealand too, and is building a new strategy and approach to respond to these projected increases. The Minister confirmed that issues of bullying and sexual harassment or sexual violence in the workplace were two key areas that he had tasked WorkSafe to focus on.

10 10 Appendix Committee procedure We met on 27 June and 4 July 2018 to consider Vote Labour Market. We heard evidence from the Minister for ACC, Minister of Immigration, and Minister for Workplace Relations and Safety, Hon Ian Lees-Galloway, the Accident Compensation Corporation, the Ministry of Business, Innovation and Employment, and WorkSafe. We received advice from the Office of the Auditor-General. Committee members Dr Parmjeet Parmar (Chairperson) Simeon Brown Hon Nikki Kaye Denise Lee Marja Lubeck Jo Luxton Mark Patterson Jamie Strange Chlöe Swarbrick Jan Tinetti Nicola Willis Hon Tim Macindoe, Hon Scott Simpson, and Hon Michael Woodhouse participated in the consideration of this item of business. Advice and evidence received In addition to the standard Estimates documents, we considered the following documents as evidence and advice. They are available on the Parliament website, along with a transcript of our hearing. Minister for ACC, Immigration, Workplace Relations, and Safety, Response to standard Estimates questionnaire, dated 23 May Office of the Auditor-General, Briefing on Vote Labour Market: ACC appropriations and Workplace relations and safety appropriations, dated 5 June Office of the Auditor-General, Briefing on Vote Labour Market: Immigration appropriations, dated 5 June Accident Compensation Corporation responses to questions 1-122, dated 20 June Ministry of Business, Innovation and Employment responses to questions 1-122, dated 20 June Worksade, responses to questions , dated 20 June WorkSafe responses to supplementary written questions, dated 20 June 2018.