The Government’s controversial industrial relations legislation appears to be the latest flashpoint in the ongoing tussle for power between Labour and NZ First.

At the heart of the row is a clause in the new legislation which would require employers to be part of a collective industrial agreement if a union demands they be.

The clause applies to so-called Multi-Employer Collective Agreements, known as MECAs.

Under existing legislation employers are entitled to opt out.

But when the Employment Relations Amendment Bill was reported back from a Select Committee yesterday that ability to opt out had been removed.

The Auckland Employers and Manufacturers’ Association EMA issued a statement saying it was “bitterly disappointed with the lack of heed paid to concerns business has raised”  in relation to the Bill.

“None of the key elements that business wanted removed have been amended, nor changed in any significant manner,” it said.

In a minority report attached to the Select Committee report, the National Party said the Bill was ideological and promised to repeal it if it became the Government.

They now find themselves in the unusual position of being on the same side as NZ First, at least as far as some segments of the Bill are concerned.

POLITIK understands that NZ First wants the right of employers to opt out of MECAs restored.


However, it is apparently prepared to compromise and have the right limited to provincial employers.

That would fit with the party’s overall ongoing pitch to provincial New Zealand.

One political source told POLITIK that the dispute between Labour and NZ First over this could turn into a real “shit fight”.

It will come on top of the very public difference between NZ First Leader Winston Peters and Prime Minister Jacinda Ardern last week over refugee numbers.

But Labour has more at stake with this bill.

The union movement has made it plain it wants the opt-out clause removed.

In a lengthy and detailed submission to the Select Committee, the Council of Trade Unions said the ability of employers to opt out contravened International Labour Organisation conventions and was partly responsible for the decline in union coverage of workers in New Zealand.

“Collective bargaining coverage, expressed as a percentage of wage and salary jobs, has been falling since 2004,” it said.

“It fell steeply between 2009 and 2010, recovered some ground between 2010 and 2013, but has been falling since then in both the public and private sectors.

“ Multi-employer collective agreements are largely confined to the public sector, showing the difficulties the ER Act presents to forming them, made even more difficult by the amendments under the previous Government.

“Similarly union membership has continued to fall as a proportion of employees.”

The Auckland Employers and Manufacturers’ Association in their submission complained that forcing multiple employers into what would in effect be a national award ignored the different characteristics of running a business in regional New Zealand compared with Auckland.

“There are many significant geographical differences within New Zealand, “ their submission said.

“Thus rates and conditions for Auckland are profoundly different to Southland.

“If a MECA was agreed to the employer in Southland would be disadvantaged in having to pay Auckland rates and conditions.

“The cost of running a business in Southland is significantly different from the costs of running a like business in Auckland.

“ An outcome could be that the Southland employer incurs significant increases in costs making the business less viable.”

It is that potential impact on regional business which has impressed NZ First.

Yet, perhaps surprisingly, they did not seem to be concerned about it when the legislation was introduced into Parliament at the end of January.

Only one NZ First MP, Clayton Mitchell, spoke.

He said: “ We certainly are very, very pro-business.

“They are the lifeblood of this country, as too are our workers.

“That fair pay for fair work is the balance that we are going to strike and that we have got with this bill.”

There was one NZ First MP, Mark Patterson, on the Select Committee considering the Bill but he has not produced a minority report indicating he voted against the clause to insert the opt-out provision.

The problem for NZ First is that the Bill went through Cabinet before it went to the Select Committee which means that it is now Government policy which they are bound to support because of their coalition agreement.

The final Bill cannot pass without NZ First support but were they to withdraw it the Government would face a political crisis. In effect, NZ First would have broken the coalition.

That would seem an unlikely prospect.

But nevertheless, it is the big stick that NZ First carries in negotiations over matters like this.