NZ Announces Surprise Halt to Gender Equity Pay to ‘Save the Budget’

All existing pay equity claims have been ended and new ones will be much harder to lodge after legislation was passed under urgency with no consultation.

ACT's Brooke van Velden looks on during a press conference at Parliament in Wellington, New Zealand, on Aug. 12, 2020. Hagen Hopkins/Getty Images

The New Zealand government has brought an abrupt end to all live pay equity claims and passed laws that will make future claims significantly harder to launch.

Associate Finance Minister and ACT Party leader David Seymour said the move would “save the budget”—due to be delivered on May 22—by reducing government expenditure by “billions.”

However, senior National MP, Finance Minister Nicola Willis, quickly denied that the rushed legislation was about making the budget numbers add up.

“It’s got nothing to do with the budget, this is about making sure we have a piece of legislation that is incredibly workable and not as complex as it has been,” she said.

Parliament and the public had no warning of the law change, which was announced by ACT deputy leader and Workplace Relations Minister Brooke van Velden at 11:00 a.m. and passed under urgency the same day. The current government has never mentioned the topic before.

Van Veldan said payment claims had been made even in cases where it was unclear whether pay discrepancies between men and women had been due to sex-based discrimination or other factors.

“Costs to the Crown have become significant, with the costs of all settlements to date totalling $1.78 billion per year,” she said.

Before the changes passed Parliament, Van Velden said genuine gender-based discrimination was being muddied under the parameters.

“We want to ensure that the settings are right. Is it reasonable that we have people who are librarians comparing themselves to transport engineers ... there are social workers comparing themselves to air traffic controllers,” she said.

In one example, the District Health Board had included over 90 occupations, from dental assistants to cultural advisors, in a single claim.

“We’ve looked to limit some of the scope of their claims so that unions, who are bringing claims, need to show that the claimants are doing similar or substantially similar work in order to bring a claim,” van Velden said.

Hundreds of protestors gathered at the Parliament’s forecourt in response to the unexpected law change.

Nurses, care workers, and others affected gave interviews expressing shock and anger at the move.

One of the biggest claims was from the Post Primary Teachers Association, with 75,000 teachers claiming they were being underpaid because women made up the majority of their workforce.

Aside from immediately ending the 33 pay equity claims currently underway, the new law also raises the thresholds necessary for a new claim to be lodged.

From now on, a job will need to be “predominantly performed” by 70 percent female employees, up from from 60 percent; the profession will need to have been that way for at least the preceding decade; and there will be stricter criteria for how claimants could compare whether their skills were undervalued against those of other sectors.

There will also be a greater focus on whether employers could afford a higher wage bill, with a provision for increased remuneration to be phased in over time rather than being required immediately, as used to be the case.

Seymour praised his deputy’s work.

“I actually think that Brooke van Velden has saved the taxpayer billions. She’s saved the budget for the government,” he said.

The government would save money because it employed many of the professions that had lodged pay equity claims.

Securing Funding Sources

Last week, Willis revealed the expected operating allowance for budget 2025 had been cut by $1.1 billion, leaving just $1.3 billion, which is less than Treasury said had already been allocated for spending.

However, the government has also made big-budget spending commitments, such as $10 billion in new money for defence, with no new taxes to fund them.

The shortfall had to come from somewhere, with the government choosing to end equity pay rather than another scheme like the winter energy payment.

Prime Minister Chris Luxon said that, “It’s got nothing to do with the budget, this is about making sure we have a piece of legislation that is incredibly workable and not as complex as it has been.”

Willis said the Cabinet was comfortable with the evidence van Velden put forward, adding, “We believe the minister provided a very principled case.”

The change had Opposition leader Chris Hipkins on the same page as Seymour, saying the new law was drafted to save Willis’ budget billions of dollars.

“I think David Seymour and Brooke van Velden let the cat out of the bag. They got caught telling the truth,” he said.