Matariki holiday could cost up to $448m as minister rules out subbing out another day off

Matariki falls mid-year and the first public holiday will be held on June 24 next year. Photo / Stephen Chadwick

Making Matariki a public holiday could cost New Zealand businesses up to $448 million - double previous forecasts, according to officials.

It's the first time the Government has revealed the potential cost of adding a 12th public holiday to the calendar despite receiving the advice last term.

Last year the Ministry of Business, Innovation and Employment calculated the impact on 534,930 businesses giving their staff an extra day off to be between $377m and $448m - or between 0.35 and 0.42 per cent of 2019's wage bill of $107 billion.

That figure is double the $200m the Employers and Manufacturers Association (EMA) forecast when Labour made its Matariki election promise in September.

The estimates were included in a response from Workplace Relations Minister Michael Wood to a Parliamentary written question from the Act Party.

Wood said the MBIE advice hadn't been published before now because the Government was preparing a full cost-to-benefit analysis for when legislation is tabled in the next few months.

That analysis would reflect the current climate and also factor in potential benefits like increased retail and tourism spending, productivity gains arising from an extra rest day and the cultural impact of recognising the indigenous culture of Te Ao Māori.

The legislation will go through a full select committee process before being implemented ahead of the first day off on June 24 next year.

Wood ruled out swapping out another public holiday and said he would not be seeking advice on doing so.

"We're following through on the commitment we made at the election which was to add an additional public holiday.

Workplace Relations Minister Michael Wood says there'll soon be a full cost-to-benefit for making Matariki a public holiday. Photo / Mark Mitchell

"In reality if we followed through on Act's world view we probably wouldn't have any public holidays. Work is important but there's more to life than just work and we actually need a decent number of public holidays to enable people to have a good sense of wellbeing."

Act leader David Seymour said the $440m estimate showed Labour was being reckless with "the country's ability to pay its way".

Instead he wanted the Government should swap-out Matariki for a different public holiday.

"It's a shame, but as a nation we simply can't afford to add more holidays.

"One of Jacinda Ardern's arguments for the extra holiday – that New Zealand has fewer public holidays many members of the OECD – doesn't wash," said Seymour.

Act leader David Seymour says the Government is being "reckless" by piling costs on to businesses. Photo / Mark Mitchell

"We might have slightly fewer holidays than the average, but we rank behind most OECD countries for productivity. Another holiday won't improve that.

"Anyway, at the rate this Government is piling fresh costs on to business, New Zealand won't deserve to be in the OECD."

Economist Brad Olsen said the Government should have requested advice on substituting Matariki for another public holiday given the other added costs of increased sick leave and minimum wage hikes.

"There should have at least been an option on the table."

He expected most businesses would be able to shoulder the extra public holiday but as the cumulative effect of the regulatory changes ate into profit margins, New Zealanders could start to see the costs passed onto them.

But there was international evidence giving workers an extra day of rest actually bolstered productivity - especially during the middle the year which is starved of holidays, Olsen said.

"From a business point of view they will be wanting to ask some pretty tough questions over the Government's decision-making given that there are at the moment a lot of cost-pressures being put on to businesses."

The Prime Minister announced at Waitangi this year that the first day off for Matariki would be on June 24 next year.

Matariki – sometimes referred to as Māori New Year – marks the rising of the cluster of stars known as the Pleiades. It usually rises in late May or early June. In Māori tradition it is seen as a time of renewal.