Mainfreight: A dissenting business voice on the government

by Graham Adams / 03 July, 2018
Mainfreight's support of the government stands out among negative assessments from the business community. Illustration / Getty

Mainfreight's support of the government stands out among negative assessments from the business community. Illustration / Getty

As business lobbyists mount a campaign against the government, one very successful company is cheering it on.

You’d think that when you’re the chairman of one of New Zealand’s biggest homegrown businesses operating in 22 countries, with revenue of $2.6 billion, what you say about the government might be widely reported in the mainstream media. But apparently not if you happen to be praising the new Labour-led administration.

Bruce Plested, chairman of global freight and logistics company Mainfreight, wrote in his company’s 2018 annual report in June: As a business, we are pleased with the youthfulness and energy of New Zealand’s new government. Given the problems they face, we are impressed with the speed at which they are coming to grips, and we wish them well.

It is important that they move quickly before they become captured by lobbyists, pressure groups and the status quo.” 

Last year, Plested’s comments in his annual report made the news when he criticised the failure of successive governments to solve the problems in housing, education and the environment, and acknowledged that leaving it to the market wasn’t working.

This year, his views were barely mentioned in the media, despite the fact they provided a counterpoint to the slew of negative assessments of the government by the business community. Yet, as the founder of one of our most successful companies — which not only produces handsome profits but also likes to share them with its employees as well as shareholders — they should be every bit as newsworthy as last year’s.

Mainfreight is walking the talk that so many big firms preach but don’t practise. Unlike most companies that proclaim their employees are their greatest resource, Mainfreight puts its money where its mouth is. It paid $20.7 million in bonuses to employees over the year, it is one of a handful of big New Zealand companies to pay the living wage of $20.55 an hour and has a target of lifting every employee to earning at least $60,000 a year.

Oh, and it is committed to sustainability, last year winning a Dutch award for transport for CO2 reduction.

Nevertheless, when media minnow NBR reported Plested’s views of the government last week as part of a report on Mainfreight’s bumper year, it sparked incredulity among a clutch of commenters, including one who wrote: “Wow — what’s Plested smoking? He can’t be looking at the same CoL [Coalition of Losers] I am.”

Another commenter asked: “Latest business confidence figures anyone?”

Although Plested looks to the future with confidence and determination, “pressure groups” such as business lobbyists are currently so fretful about the government’s employment policies they are campaigning to preserve a workplace status quo that even Jim Bolger — one of the architects of the worker-unfriendly Employment Contracts Act of 1990 — believes has been tipped too far in favour of employers.

Do employers want the sort of certainty denied to employees?

Business confidence, we have been told, is in “free-fall”. Surveys show confidence hasn’t recovered from the eight-year lows reached in November 2017 after the coalition government was formed. 

Most of the concerns focus on “uncertainty” created by government policy — including worries about labour laws and unions.

This reaction may seem a bit rich given the deep uncertainty employees experienced under the last government — not least zero-hours contracts run by the likes of fast-food companies and even losing the luxury of being able to look forward confidently to a meal break.

It seems that when it concerns employees, “uncertainty” is lauded as “flexibility”. When employers get a whiff of uncertainty, they need counselling.

Employers want the certainty of knowing nothing will change. Their representatives, including the Employers and Manufacturers Association, have mounted an advertising campaign encouraging people to bombard the government with submissions against its proposed amendments to the Employment Relations Act.

The group doesn’t want trade union reps having automatic access to workplaces; businesses being obliged to settle collective agreements even if they don't agree with them, and not allowing them to opt out of multi-employer collective agreements. It also doesn’t want to lose the right to fire new employees at will under 90-day trial periods (even though that provision has been retained for firms with fewer than 20 employees).

Just a little bit of history repeating?

We have seen these tactics before, of course, after the election of Helen Clark’s government in 1999 and her proposals to amend the Employment Contracts Act that led to the Winter of Discontent of 2000. Business mounted a ferocious campaign against her relatively mild changes and looked foolish when the economy rebounded quickly without any signs of the Armageddon that had been predicted.

As it happens, Clark’s term in government saw excellent economic growth and nearly all the nation’s public debt paid down (net debt fell from 22.6 per cent of GDP in 2000 to 5.5 per cent in 2008). Her government also recorded eight consecutive years of budget surpluses.

You might think that having been exposed over its bout of crying wolf at the turn of the century, the business community would be too embarrassed to repeat it 18 years later in the early days of a new Labour-led government. But, no, they are back, giving it another whirl.

The employers association asks in its advertisement: “Employers and unions today have respectful relationships. Why return the country to an ‘us-vs-them’, anti-growth mentality from the 70s?”

Perhaps the real question should be why, after decades of one of the most deregulated and flexible labour markets in the OECD, business has still failed to deliver even a living wage to many employees. This, in turn, has created a huge divide between the well-off and the working poor.

And the divide would be even greater if it weren’t for taxpayer subsidies paid through schemes such as Working for Families and accommodation supplements, which cost the government billions a year, to ensure workers can pay for food, fuel and shelter that their low wages can’t cover.

Stronger unions would help boost wages with the real benefit of shifting a huge burden from the taxpayer given that the government would pay less in WFF and accommodation payments.

It is ironic that on July 1, New Zealand’s government ushered in a $2 billion boost to Working for Families when on the same day Australia was cutting penalty rates for employees by a slim margin. Penalty rates! How many workers in New Zealand remember those?

On July 1, these rates were cut for some retail, hospitality, and pharmacy workers. But the cuts were minor, so a retail employee in Australia working Sundays will go from getting 195 per cent of their standard wage as a penalty rate down to 180 per cent. 

Yet Australia has a much more successful economy than ours and wages are on average 30 per cent higher. Which is the major reason why more than 500,000 Kiwis call Australia home.

If business people in Australia can cope with penalty rates, how is it that their counterparts on this side of the Tasman faint when some may not be able to fire employees at will in the first three months of employment or they discover that union staff will have access to their workplace on demand?

The real challenge for our business organisations is not to agitate to hobble union power but to wean their members off their reliance on welfare subsidies that — along with mass immigration — keep wages down and skew the labour market heavily in their favour.

When a former National Prime Minister such as Jim Bolger can see the current system of industrial relations isn’t working and is chairing a government committee to look into fair pay awards, it’s time that business organisations accepted that change is not only coming - it is long overdue.


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