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    Essential Information on an Essential Issue

    Letter No.44

    14 August, 1996

    Rosemary McLeod on the NZ Poverty Measurement Project.

    Gisborne vegetable processor Cedenco has decided to move its tomato-processing operations to Victoria, Australia, at the cost of hundreds of local jobs. Cedenco, which has been restructured four times in ten years, has provided employment for up to 400 people in the growing season, and permanent work for about 90 staff in the Gisborne area. The shift to Australia will have a significant effect on an area already hit with high unemployment. It is expected to suck tens of millions of dollars from the local economy leading to further job losses with Cedenco suppliers ... last year the company spent $32m on employees and supplies, most of this in Gisborne.

    Why are they going to Australia? Cedenco managing director Dean Witters says the enticement was a more stable climate (the East Coast has been hit by poor weather in recent seasons), a longer harvest season, and greater availability of land in Victoria will reduce growing risks. Gisborne MP Janet Mackey sees other economic reasons for the shift. She says that Cedenco was forced out of NZ by government policies that "over-relied on monetary policy and let interest rates and exchange rates rise to a level which is not sustainable for our exporters..."

  • The shift to Australia was particularly helped by a grant from the Victorian State Government. Other enticements include special tax incentives and the fast-tracking of special planning approvals through the Victorian legislature. A spokesman for the Victorian Government told the Dominion that the State had a policy of providing incentives to attract investment, particularly in the food industry. These incentives were usually in the form of exemptions or cuts to payroll and/or land taxes for a set number of years.
    Source - New Zealand Herald 9 August 1996 "Tomato workers brace for the worst" by Rosaleen Macbrayne and "Cedenco reckons shareholder approval not a requirement", also The Dominion "Big job losses as aussies lure Cedenco" by Steve Evans and "Another blow for East Coast" by Philip Kitchin.

    Our Media Watch reports that the Cedenco lay-offs are just the latest in a series of significant job losses reported over the last three weeks. These include:

  • Up to 90 jobs will be lost at the Affco meat plant in Wairoa, as the company will no longer freeze and store lamb carcasses at the plant. The move comes as fewer sheep and cattle are available for slaughter this year as farmers drop stock numbers in response to low prices. The Affco plant is the largest single employer in the small Hawkes Bay town.

  • The Wellington City Council plans to slash 193 jobs in three council divisions, in measures which will save the council $9m a year. Council chief executive Angela Griffin says the job losses are due to investments in new technology and a flatter management structure.

  • The Upper Hutt Kiwi Packaging factory has announced it will close in September with the loss of 80 jobs. The company blamed the closure on the trend of its customers to move away from Wellington. Kiwi Packaging will transfer production to its Hastings plant to be closer to its markets -- meat, dairy and fruit producers. Other firms who supply Kiwi packaging with services also expect to be laying off workers as a result of the shut-down.

  • Bluebird Foods will lay off 100 staff at their Manukau factory as machines replace nearly a third of the processing staff. The snack food company's plans to modernise will cost them $10m in new equipment. In an area with already one in five people unemployed, the local economy will suffer a loss of wage packets worth about $2m a year.

  • 59 jobs have been axed at National Police headquarters in Wellington as part of a review aimed at saving up to $10m. After suffering a 6% budget cut this financial year, the Police department must now find ways of saving the extra $3m needed, and also a further $15m for the staff pay rises negotiated recently.

  • 68 staff were laid off from the New Plymouth and Stratford power stations, 60 from the Wairakei and Ohaaki geothermal stations, and 15 from the Clyde and Roxburgh hydro stations, after Contact Energy restructures its workforce in order to compete in the de-regulated electricity market. Contact is looking to prune about 150 positions from the 460 presently employed in its network of hydro, thermal and geothermal stations around the country. All sectors -- from plant operators to administration and engineering support staff -- were affected by the restructuring.

  • The Ruapehu District Council, as well as Inland Revenue and Income Support have set up a resource centre to give advice and help to business proprietors and employees effected by the eruption of Mt Ruapehu. It is estimated that 1,200 people have lost their jobs since the mountain started blowing in June. The Council estimates at least $10m in local revenue has been lost because of interruptions to the ski season from ash-fallout.

  • Job losses are expected when the Income Support Service restructures its crime detection units later this year. Income Support believes it will achieve greater efficiencies by shedding staff and centralising data-matching functions at its main centre in Lower Hutt. At present the service employs 324 data matching and fraud investigation staff nationally.

  • Hundreds of jobs will go in agricultual services company Wrightson over the next 12-18 months as the company restructures its activities in efforts to cut costs to below that of it's competitors. Details of exactly how many people will be affected have not been decided, but Wrightson will reduce its 1720 staff through retirement and attrition as well as lay-offs.
    Sources - New Zealand Herald 19 July 1996 "Bluebird lays off 100 as machines replace men"; The Daily News 22 July 1996 "Redundant power workers seek jobs"; New Zealand Herald 23 July 1996 "Ruapehu shadow deepens over skifield economy"; The Dominion 24 July 1996 "193 jobs go to save council $9m"; The Listener 27 July 1996 "Kay's Way" by Mary Holm; New Zealand Herald 30 July 1996 "Job cutting hits police at top level"; The Dominion 1 August 1996 "Income Support jobs to go".

    Economist Brian Easton has given the government a poor report card on the economic goals it set itself six years ago when it came into office. Easton told an Engineering and Printing Union conference in New Plymouth last week that National Party goals in 1990 were: INFLATION below 2%, MORTGAGE INTEREST RATES below 10%, UNEMPLOYMENT halved, and ECONOMIC GROWTH of 3%.

    The results: Although INFLATION had been below 2% since September 1991, it has gone above that mark since September 1994. MORTGAGE RATES have been above 10% since December 1994. The UNEMPLOYMENT rate, which was about 8% in 1990, had risen to 11% in March 1992. It has fallen since to about 6%. The 3% ECONOMIC GROWTH target was not achieved until mid-1994, and has fallen since.

    Source - New Zealand Herald "Govt fails to meet goals for economy"

    Meat and wool farmers are asking the government to urgently take action about the financial 'hole' they are falling into, after another jump in the NZ foreign exchange rate. A report out last month from the NZ Meat and Wool Boards' Economic Service says that about 50% of farmers are finding it hard to run a successful business and maintain a reasonable standard of living. Sheep and beef farmers profits before tax fell 15% last season ... with the major reason for the drop being a 21% fall in beef income caused by low United States prices and the high NZ dollar.

    Edward Orr of Federated Farmers says that the farmers want to be given a fair go as they battle their way through some very low international market returns for farm commodities. Orr: "We are looking for the effects of the high dollar to be shared equally, and not placed so much on the shoulders of exporting farmers..."

    Source - The Dominion 24 July 1996 "Poor prices cut sheep, beef farmers' profits" 26 July 1996 "Reports paint grim picture for farm year" by Gil Norman

  • VOICE : "If you can't afford to pay a necessary worker a decent wage -- then you have a business problem, not an employment problem..."
    -- advice to South Island farmers from Rod O'Beirne, national deputy chairman of the Agriculture Industry Training Organisation.

    Property tycoon Bob Jones has produced a new book "Prosperity Denied -- How the Reserve Bank Harms NZ" which calls for a relaxation of the Reserve Bank economic policies if NZ is to avoid being driven into recession. Jones: "The Bank's role is now utterly illegitimate. We have the highest real interest rates in the world as the direct result of policies ironically aimed at achieving low costs. The Bank stands like a scarecrow in the desert to warn off imaginary predators against a non-existent crop... "
    Source -- Prosperity Denied, published on 29 July 1996 by the Canterbury University Press $19.95

    Jobs for Social Workers. A study of Children and Young Persons' Service operations in the Auckland area has highlighted a shortage of social workers. Service general manager Griff Page says that a considerable portion of their $11m budget increase will go to Auckland, and will be spent on hiring new staff.
    Source - The Dominion 19 July 1996 "Shortage of social workers"

    The Ministry of Foreign Affairs and Trade (MFAT) says that NZ will require $75-$100m of foreign investment over the next five years to ensure sustained economic growth. In a briefing paper for the media, MFAT is promoting the concept of an 'APEC dividend' -- the economic benefits accruing from increased trade and investment among the 18 economies of the Asia-Pacific Economic Co-operation forum.

    MFAT's paper says that an estimated one third of the NZ workforce, or nearly 600,000 people, were in jobs created by foreign investment. It also quotes a KPMG survey which shows that foreign-owned companies paid higher wages to staff in NZ than wholly NZ-owned companies.

    Source - National Business Review 19 July 1996 "Foreign investment needed for growth"

    Maritime jobs. There's a "cross trading" war in progress amongst cargo carriers between Australia and NZ. At stake: the longer term security of jobs in the NZ and Australian maritime industries. Since government policies have opened up shipping to more competition, foreign-owned ships with foreign crews are calling at NZ and Australian ports with cargo from other parts of the world. As the ships head back north, they often have some spare cargo space -- and they are offering this space at cut-price rates for trans-Tasman cargo hauls.

    This practice is called "cross trading". There are about 70 ships regularly crossing the Tasman, and of these only 17 have NZ or Australian crews. The rest are cross trading ships owned by French, Dutch, German and British companies with foreign crews. While cross trading offers an attractive deal for local manufacturers and importers, the regular shipping companies (like the Union Company, Australian National Line, South Pacific Shipping and the Tasman Express Line) are hit hard by the practice.

    The NZ Seafarers Union is presently campaigning to raise awareness about the employment effects of cross trading. They say that government policies have opened up shipping more than any other country allows in its domestic waters.

    The Union: "The cut price cross traders are taking away local jobs, and destroying the shipping industry on both sides of the Tasman. They'll move elsewhere as soon as there are better opportunities. This unregulated competition is destructive because local industries will become exposed and vulnerable when regular local services have been left to run down..."

    Source - brochure from the NZ Seafarers Union, P.O.Box 1103, Wellington.

    The documentary "Someone Else's Country" has been playing to sold-out audiences at the Auckland Film Festival and is now circulating the country on videocassettes. Film-maker Alister Barry tells the story of the last decade of economic change in New Zealand tracing the progress of the "NZ revolution" as free-market policies were pursued over two government administrations and four elections.

    Barry says his primary concern is to show "how power is exercised in a democracy..." and his film suggests that the power of the Beehive was captured by the Treasury in the 1980s. Film reviewer Peter Calder says that the documentary's achievement "is to provide a coherent and comprehensive account -- which no television documentary has yet done -- of the years which will define this country for a century to come..."

    Someone Else's Country is available on video for $30 from the Community Media Trust, P.O.Box 3563, Wellington.

    Source - brochures from Community Media Trust, and New Zealand Herald 20 July 1996 "Excavations in the recent past" interview with Alister Barry by Peter Calder.

    The Maori Council is considering taking a leading role in tackling the gang problem, and chairman Sir Graham Latimer believes that money sitting idle in Maori incorporations could be used to help Maori out of gangs and into jobs. The council's gang liaison officer Peter Love has presented a proposal in which the council would offer special education and job training schemes to gang members, associates and their families. He says that it is time for Maori groups who were benefiting from treaty settlements to support initiatives aimed at helping young people.
    Source - New Zealand Herald 27 July 1996 "Maori cash could help tackle gangs"

    Finance Minister Bill Birch has come out strongly defending his targeted Independent Family Tax Credit, saying that economic critic Susan St John (see Jobs Letter No.42) "...vastly oversimplifies social equity for children" by suggesting that the tax credit should be amalgamated into family support and given to all families. Birch: "In my view, Susan St John is unfair to both beneficiaries and the taxpayer. Universal benefits, because they cover everyone, are inevitably lower than targeted benefits. They therefore penalise beneficiaries more than any other sector in the community..."

    Bill Birch describes his tax credit for working families as "commonsense", arguing that it is not practical to pay beneficiaries as much or more than working people earn for contributing 40 hrs a week to the economy. "If welfare ignores that constraint, beneficiaries can make a financial gain by avoiding work, and thousands of people in jobs are placed in an invidious position where, if they quit working and live on the dole, their family income will be improved..."

  • see also Jobs Letter No.42 and Jobs Letter No.47

  • Source - New Zealand Herald 29 July 1996 "Constraints on benefit levels are just commonsense"

    Voice : "The courts cannot close their eyes. They might wish that the community could more readily see the extraordinarily high percentage of unemployed people who were committing offences. If there is to be a genuine commitment to making the community safer, it will take more than ever-longer sentences from the courts..."
    -- High Court Judge Justice Robertson, in sentencing two 18-yr old youths to jail for four and a half years on two charges of aggravated robbery. (New Zealand Herald 27 July 96)
    Source - New Zealand Herald 27 July 1996 "Judge criticises call for longer sentences, unemployment."

    An historic roll-back of welfare provisions has recently been passed by the US Congress, sending a strong message to welfare states throughout the world who are struggling to maintain social measures in their economies. The plan to "put an end to welfare as we know it" cuts away the 61-year old guaranteed safety net for the poor in America, and will save the federal government $55 billion over six years. The remaining welfare money will be sent to the various American states, who will now run their own welfare programmes.

    The new US welfare provisions include: families will be limited to five years of welfare over the course of their lifetimes. The head of the family will have to work within two years of receiving payments. Unemployed adults with no children who are considered able to work are limited to food stamps for 3 months in any 3-year period. No money or food stamps to anyone convicted of a felony involving drugs. At least half of the single mothers in US states must be working by the year 2002, or the states will lose their federal funds. Single adult mothers must identify the fathers of their children, or risk losing 25% of their benefits. Single mothers under 18 will continue to receive benefits as long as they stay at school and live with an adult.

    Source - ABC News 31 July 1996

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