Ministers overrode own advisory group over law changes

By COLIN JAMES


The Government's much-trumpeted Small Business Advisory Group has started life by having its advice on two important policy areas largely ignored.

At its first meeting, on October 23, the group told the Cabinet that small businesses could not afford four weeks' holiday.

Then, according to papers given to the Business Herald, it said workers did not need special protection when businesses were sold or contracted out.

But both proposals were drafted into law, and the holiday legislation has been passed.

Meanwhile, Small Business Minister John Tamihere has praised the group as an alternative source of advice to the Government, and says that advice is being heeded.

The advisory group is made up of nine small businesspeople selected last year from more than 200 applicants round the country.

Tamihere described it in a speech on December 4 as "a great blend of experience, enthusiasm and business know-how ... selected because of their ability to reach large networks of small business people" and providing a "powerful" voice.

"Already, the group has provided input into a number of different policy areas - including tax, employment law, and work/life balance - and the group is being listened to," he said.

But not on four weeks' holiday.

A briefing given to Tamihere says the advisory group told Labour Minister Margaret Wilson at its October 23 meeting that three weeks leave was "quite sufficient" - "especially when one adds the present 11 days' public holidays, five days' sick leave and three days' bereavement leave".

But legislation providing four weeks' holiday for all was pushed through by the Government, backed by the Greens, on December 16, to come into effect on April 1, 2007.

The small business advisory group said the extra week would impose unnecessary costs on employers.

"Members cited their experiences of staff who failed each year to take their present annual leave entitlement and the subsequent requests to pay out the accumulated leave", and "believed this problem would be aggravated if an additional week's leave was granted".

The group suggested alternatives, such as allowing employees to cash up the fourth week or making the fourth week without pay or available to reward high-performing employees.

If stuck with four weeks, the group wanted it to be phased in gradually.

It also could not see the need for special protection of employees when a business was sold, merged or contracted out.

"The group was concerned that no employers of members' acquaintance had used sale/transfer or contracting out as a means to lower terms and conditions of employment for their workers," the briefing paper said.

But Margaret Wilson replied that she "knew of the existence of such employers and was therefore determined to prevent further abuses".

She offered to discuss the legislation with the group once a parliamentary select committee had heard submissions on it.

But the group may have had some effect on the final form of the transfer of undertakings protection.

Given two options - a blanket right of transfer for all employees or a requirement for all employment contracts to contain an agreed provision - the group went for the second.

This is the one the cabinet eventually chose, although it modified it by giving vulnerable workers such as cleaners, laundry workers and catering workers a right of transfer.

Ironically, the group's rejection of four weeks' annual leave came as Tamihere was finalising plans to hold a series of 24 "small business days" from mid-February to mid-May.

One reason , he said, was the need to hear different views.

The advisers

The Small Business Advisory Group was set up to advise ministers on issues affecting small business, and to suggest ways of improving the performance of small businesses and of Government agencies.

Advisory group members, announced in October, are:

* Peter Kitchen, Kaitaia, tourism business owner

* Nigel McKinlay, Dunedin, footwear manufacturer

* Alison Quesnel, Auckland, CEO health products firm, marketing, business mentor

* Lachlan McKenzie, Rotorua, farmer, small business owner

* Denise L'Estrange-Corbet, Auckland, fashion design and retail business owner

* Murray Cleverley, Timaru, Economic Development Agency chief executive, meat processing business owner

* Cameron Moore, Christchurch, businessman, immediate past president of the Canterbury Manufacturers Association

* Stuart Wilson, Wellington, IT business owner

* Robyn Reid, Nelson, aviation business owner.