Pay equity amendment puzzles

The government has walked back pay equity legislation and killed 33 incomplete settlement cases, in a surprise bill debated under urgency this week. Debate over the bill included not just the bill's intent, but also why it was being passed in haste, and why it was happening now.

When the initial plan for Parliament's week was released by the government, it was to pass legislation under urgency all week. But the list of bills up for debate looked scanty. There were not enough bills, nor enough controversy, to safely sustain the 25-plus hours of debate for a full week of urgency.

The puzzle was solved on Tuesday when, late in the piece, the hitherto unknown Equal Pay Amendment Bill was added to the list. This bill was introduced under urgency and debated immediately through all stages, with no referral to a select committee (so no public feedback). It was passed by the House late on Wednesday.

A change of heart

The Equal Pay Amendment Bill was a surprise to many, and not unreasonably. The bill upends changes made by an earlier Equal Pay Amendment Bill that passed in 2020 under a Labour-NZ First-Green coalition, with National Party support.

In 2020, National had been unhappy with an amendment paper included at the committee stage, but still voted enthusiastically at the subsequent third reading. ACT neither spoke nor voted on it.

In the 2020 third reading debate Erica Stanford said, "The dreams I have for my daughter and my grandchildren ... is that they will grow up in a country where the work that they do is equally valued and compensated equally to that of their male counterparts. This bill sets out the framework that will achieve that outcome."

Nicola Willis had said, "I'm proud to stand in this House tonight and say that National will support this final reading of the Equal Pay Amendment Bill. And I'm proud that our party has contributed to crafting this legislation and bringing it to the House."

Willis also spoke in debate for the 2025 Equal Pay Amendment Bill. She repeated a statement from 2020 that, "We support the simple concept that people should be paid the same for the same work, regardless of their gender." She credited her change in support for the existing law on the amendment paper agreed during the 2020 Committee Stage.

Willis also made comments that touched on the second puzzle of the amendment bill's passing - why now?

Arguments for and against

At one point Willis suggested that those making pay equity claims were cheating."... Pay equity processes should be used for genuine issues of discrimination. They should not become a parallel route for bargaining. They should not become a backdoor route for bargaining."

The government said the new bill creates a more robust framework for pay equity claims. The Minister in Charge of the bill was ACT MP, Brooke van Velden.

"The Equal Pay Amendment Bill improves the process for raising and resolving a pay equity claim and provides a better framework for assessing whether there is sex-based undervaluation in remuneration in female-dominated occupations. I consider that the current legislative settings are too permissive and have resulted in the pay equity framework not working as intended."

One of the outcomes that van Velden listed as a positive thing was the mirror image of an opposition attack. "I consider that the settings have resulted in claims progressing through the entry threshold without strong evidence of undervaluation. The bill addresses this by increasing the threshold for raising a pay equity claim, including requiring claims to have merit."

The opposition had three broad areas of disagreement. The first was that the bill would make gaining equity much more difficult. Camilla Belich summarised that area, saying "this bill makes pay equity claims for low-paid workers much harder. It takes the threshold to 70 percent. It means that you can't bring a claim for 10 years. It gives employers the entire right to decide a comparator [role to match the wages against] and whether a claim is meritorious. It's retrospective. It gets rid of existing pay equity settlements. It is a blow to every working, low-paid woman in New Zealand that works in a female-dominated role."

Belich's accusation that the new bill gets rid of existing settlements is partly correct. It does change the agreed conditions for prior settlements, including delaying a reassessment of their impact (which could demand further pay adjustments), until ten years have passed. It also throws out all 33 claims that are lodged and in process (some of which have been progressing for years), but which have not yet been decided.

The second area of attack was that this bill was passed under urgency, without public consultation or warning. Certainly it had been pretty hush-hush and gave the appearance of being a recent addition to the schedule.

Is the bill about saving the government money?

That played into the third line of attack - that the bill was draconian and was being rushed through to help the government's balance sheet pre-budget, by removing billions of potential liabilities from the books. The budget will be announced on 22 May.

Willis also noted the cost to the government. "The last government..., I believe, set up a principle that said, 'If you, private sector employer, don't pay people properly, don't worry, if the government is funding you, we'll provide the backstop, we'll write the cheque, and we will help pay for the settlement.' They made that decision and it had significant implications."

The implications she alluded to were presumably financial. ACT leader and Associate Finance Minister David Seymour had thrown petrol on the burning question by saying "I actually think that Brooke van Velden has saved the taxpayer billions. She's saved the Budget for the Government."

National MPs have repeatedly rejected that claim, as Louise Upston did in debate. "So the first thing that I want to confirm is the fact that this piece of legislation is not about saving money."

However, during Question Time Minister of Finance, Willis said, "I can confirm that there is a reduction in projected future costs to the Crown of several billion dollars."

Willis was adamant that the use of urgency wasn't budget-oriented, saying, "actually, the decisions made by Cabinet were enough to put the financial implications into the Budget. The legislation did not need to be passed in order for that to happen." That argument might negate the need for urgency, but it appears to strengthen the likelihood of the bill being savings motivated, as claimed by David Seymour.

The sense that budget considerations were crucial to the bill and its timing was possibly strengthened in Thursday's Question Time, when Willis was asked by Barbara Edmonds "when did she first consider the pay equity changes…".

Willis's lengthy answer began with her assuming her ministerial role in December 2023.

"I was quickly made aware by Treasury of the amount of money that was built into the government's forecasts to meet future pay equity settlements. I was shocked by the size of the number, which had not been previously disclosed publicly, and which had grown very rapidly. A significant portion of the money was set aside for the government to fund what is known as 'the funded sector', which is the non-government sector settlements.

"The previous government had made a decision that meant the full costs of these settlements were being factored into the books, as well as the actual public sector settlements that the government wasn't obligated to fund. I took some time to receive advice on these issues, and I took proposals to Cabinet, in April 2024, to adjust expectations around funded sector claims. This lessened the projected cost to the Crown of these claims, but only by a relatively small amount."

Willis went on to note that the Cabinet Strategy Committee had discussed changes to pay equity law in December 2025, and decided to quickly "confront those underlying issues". They felt it had departed from its original purpose of addressing genuine sex-based discrimination.

"Changes to pay equity settings were considered through last year and into this year, and as that work progressed, since last December's Cabinet discussion, the financial implications were taken into account in Budget 2025 discussions."

It seems clear from various statements and answers given this week that the amendment bill the House has now passed, and the changes it makes to pay equity were about policy but were also about saving money.

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