The new Government faced a significant challenge on Monday evening when a highly confidential Cabinet paper found its way into the public sphere. The document, intended for Brooke van Velden, the Minister for Workplace Relations and Safety, pertained to the repeal of Fair Pay Agreements (FPAs), a key labour market reform of the previous Government. The leaked paper first appeared on Newshub on Monday, and The Herald subsequently acquired a copy.

Prime Minister Christopher Luxon appeared to be unaware of the leak when questioned about it on Monday. FPAs were designed to reintroduce sector-wide collective bargaining, enabling unions to negotiate agreements between workers and employers that would establish a baseline for pay and conditions. These would encompass minimum pay, overtime and penalty rates, leave entitlements, and access to training and development opportunities.

Six employment sectors, including bus drivers and supermarket workers, had successfully applied to commence negotiating an FPA. However, it is now probable that none will be finalised before the FPA legislation is repealed. Van Velden’s paper proposed to repeal the legislation underpinning the FPA process. The process of drafting a repeal bill to abolish the law will commence urgently before Christmas. The paper will also halt public funding to the negotiators of FPAs.

The paper indicated that the Cabinet would consider the repeal legislation at its meeting on December 11, next week. It is highly unusual for a paper relating to a decision that is yet to be made to be leaked.

The paper included a rather harsh assessment of what the repeal would mean for people on low incomes, particularly women, Māori, Pacific people, and young people who were “more likely than other groups to earn low wages”. “Disabled people experience significant disadvantage in the labour market, which includes earning less than non-disabled employees.

“Given these populations are disproportionately represented in workforces where there are lower employment terms, they could have disproportionately benefited from any improved terms obtained by an FPA,” the paper said, noting that this would depend on whether those people actually worked in a sector covered by an FPA. However, it added a counterargument to that criticism. The paper described FPAs as a “blunt tool” that van Velden did not think would be successful in “improving employer terms for these groups”.

CTU President Richard Wagstaff said the leaked paper showed the Government was ignoring the impact on workers in a cost-of-living crisis.

“By pushing forward with this, Luxon is taking money directly from the pockets of hundreds of thousands of hardworking Kiwis. This comes after last week, where the NZCTU discovered that the Government was prioritising paying out $3 billion for landlords.”

He said it demonstrated how “profoundly out of touch” the new Government was and said the leak showed Luxon was not in control of the Cabinet.

The paper said that the CTU and Business NZ, the two sector groups which Labour consulted with during the design of FPAs had both been consulted about repeal.

The CTU said it was not properly consulted.

Van Velden’s office told the Herald that the minister met with both the CTU and Business NZ last week.

Van Velden said FPAs were “a blunt tool that could be initiated by a union and a small number of employees, yet they applied to every employee and every employer within coverage”.

“Employers would choose to hire fewer people or reduce hours of work due to higher costs associated with the terms and conditions within a Fair Pay Agreement. That means people seeking work miss out on job opportunities,” she said.

Labour’s workplace relations spokeswoman Camilla Belich said the fact the new Cabinet was leaking is “highly concerning”.

“Instead of helping people with the cost of living like National promised during the campaign, they’re taking away the opportunity of fair wages, pay and conditions right before Christmas.