ACT’s business plan: Removing January holiday, putting minimum wage on hold

ACT Party leader David Seymour outside the Canterbury Employers' Chamber of Commerce on 29 September 2023.

Photo: RNZ / Nathan McKinnon

The ACT Party says its small business policy package will abolish Fair Pay Agreements, put a hold on minimum wage increases for three years, and remove the 2 January public holiday.

The party said the reason for the removal of the public holiday would be to “absorb the cost of Matariki” public holiday, which was first celebrated as a public holiday last year.

Instead of Fair Pay Agreements, which the party’s leader David Seymour called “anti business” policy, it would be “supporting freedom to contract”.

“‘Fair pay’ agreements amount to compulsory unionism that will reduce productivity and make it harder for employers to grow their businesses. ACT will get rid of them immediately.

“It is the same as the minimum wage, a policy that seems kind but is the opposite in reality. In 2022 MBIE [Ministry of Business, Innovation and Employment] advised the government to go slower in raising the minimum wage and estimated that thousands fewer jobs would be created because of the rapid increase in the level of the minimum wage.”

However, a Cabinet paper released earlier this year by the office of the minister of workplace relations and safety said MBIE’s minimum wage review estimates of employment restraint in 2022 were “necessarily imprecise”.

“Many factors impact on the labor market, and the effect of minimum wage increases is hard to pinpoint, even retrospectively,” the paper noted.

“MBIE’s 2022 Minimum Wage Review used the most up to date data at the time it was provided to me in November 2022. While more recent figures and forecasts for wage growth, inflation and other economic factors have since become available, the estimated restraint was modeled in MBIE’s report for each option up to a 7 percent increase was relatively low.

“Low employment restraint impacts are expected for rates that do not exceed average wage growth. Average wage growth in the year to September 2022 was 7.4 percent, and wage growth is forecast to be 6.8 percent for the year to June 2023 in the Treasury’s 2022 HYEFU .

“These findings of a small employment restraint are consistent with studies of minimum wage increases both overseas and in New Zealand.

“By increasing the minimum wage in line with CPI we are ensuring that the gains of the last five years are not eroded, and that our lowest paid workers are able to keep up with increases in the cost of living.”

ACT would also abolish tariffs and exempt overseas investors from OECD countries from needing to apply to the Overseas Investment Office for approval.

In a statement, Seymour said the range of policies were about having a “thriving and productive economy” where small businesses could operate with ease.

“Starting a business is brave and involves taking huge risks. We understand the pressures that business owners are under and want to create sensible, practical policies which support them.”

Among ACT’s other small business policies are:

  • introducing an hours-based accrual system for annual leave, claiming it would remove the need for “complicated pay-as-you-go provisions”.
  • replacing the temporary work visa system with “demand-based pricing”,
  • reinstating 90-day trials for all businesses, not just those with fewer than 20 employees. (This is in line with the National Party’s commitment).

A trial period is a period of up to 90 days when an employer is allowed to dismiss the employee without the employee being able to raise a personal grievance for unjustified dismissal.

At the moment, only businesses with fewer than 20 employees can use trial periods for new employees.

ACT claimed their plan would “reduce the costs of unfounded personal grievances to employers”.

Anti-money laundering regulation

ACT also plans to reform the Credit Contracts and Consumer Finance Act, and introduce a minister and Ministry of Regulation to deal with anti-money laundering (AML).

As part of this policy package, it is also planned to:

  • Reduce compliance costs associated with the Anti-Money Laundering and Countering Financing of Terrorism Act
  • Provide clear guidelines on how to comply with the legislation (The Financial Markets Authority has guidelines on AML, which it updated at the end of last year.)
  • Simplify customer due diligence processes for low-risk customers or transactions, including relaxed rules for low-risk trusts
  • Allow reporting entities to certify the identity, source of wealth, and source of funds for clients with whom they have an established relationship
  • Allow scanned copies to be accepted
  • Extend timeframes for small businesses to submit reports to police

Seymour said current AML compliance was “prohibitively expensive, frustrating, and ineffective”.

“The laws were created with casinos and banks in mind but have since been widened to include smaller businesses who don’t have dedicated compliance teams and are put in a difficult position to comply within strict deadlines and face major fines for delays.

“ACT would implement a more risk-based approach, tailored to the size, nature, and risk level of various entities.

“ACT’s Ministry and Ministry for Regulations would get rid of unnecessary regulations and prevent more from being added.”

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