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    Essential Information on an Essential Issue

    Letter No.47

    27 September, 1996

    New Zealanders speak out on the International Year for the Eradication of Poverty.

    Election '96. The latest New Zealand Herald - Waikato University election poll shows that worries about 'the economy' have dropped to 8.7% as the issue "most important to you personally when making your decision". And 'unemployment -- for years the greatest single concern found in every opinion poll -- was mentioned by fewer than 5% of the survey.

    Amongst the small group who chose 'unemployment' as their greatest concern in the poll, 36% said that the National Party was the most preferred in its policies on employment. The Alliance and NZ First both polled a 20% preference on their jobs policies, while just 16% preferred Labour.

    Source - New Zealand Herald 16 September 1996 "Health main concern for voters" by John Roughan

    Bill Birch's pre-election 'opening of the books' gives us a clear view of Treasury predictions for unemployment until the end of this century. The result: little change. The economy is expected to continue to grow, but unemployment is expected to stay at about 6% between now and the year 2000.

    Treasury says in its pre-election report that it expects unemployment to rise from its present 6.1% to 6.3% by March next year. Thereafter, the unemployment rate is expected to fall to 6%.

    Increased participation in the workforce and job growth are not expected to be enough to absorb additions to the labour force. Treasury says that since 1993, the labour force has grown on average by 48,000 people a year, with half the increase coming from increased participation. It predicts additions to the labour force to average 30,000 a year until the year 2000.

    Sources - New Zealand Herald 15 September 1996 "Birch calm on jobs, deficit" by Cathie Bell and Rt Hon Bill Birch, Minister of Finance "Pre-election Economic and Fiscal Update"

    Treasury's Pre-Election "Labour Market" Predictions
    % change
    (years ending March)
    Labour Force2.9%2.9%1.8%1.5%1.5%
    (full time equivalent)
    Participation rate 65.5%66.2%66.8%66.5%67.5%
    Unemployment rate 6.2%6.3%6.1%6%6%
    Source -- Treasury

    Banking jobs. Jim Anderton is predicting that the Bank of New Zealand will lay off as many as 1,000 staff in restructuring announcements to be made following the elections. He says he was told this by 'a very reliable source' close to the BNZ, and the moves are part of the general trend in the industry towards more electronic banking and cost-cutting. Pushing his party's economic policies, Mr Anderton says that if technological changes were going to cost thousands of jobs, then opportunities should be created in other sectors.

    Westpac last week announced the first stages of its own job-cuts due to its takeover of Trust Bank. 105 management jobs will be shed in the next 18 months as the bank puts a new area and regional structure in place, and hundreds more front-line bank jobs will go next year when the 424 branch offices are integrated into the newly merged operations.

    Source - The Dominion 16 September 1996 "Anderton predicts big bank job cuts" and The Daily News 13 September 1996 "Bank managers' jobs to go in Westpac merger"

    The big North Island dairy merger between Taranaki's Kiwi and Manawatu's Tui dairy companies looks as though it may lose considerably less jobs than when the merger was first proposed. When first announced several months ago, the Pahiatua and Longburn workers were told that up to 800 jobs were in jeopardy. But latest plans given to Tui shareholders reveal the job losses to be about 350 jobs. (Tui shareholders vote on the merger this week).

    The new plans reveal that Pahiatua's milk powder plant will be retained, and its butter plant moved to Kiwi's processing site near Hawera. Longburn will expand its milk and foods plant, while its cheese and casein plants will also probably move to Hawera. New Plymouth and Hastings milk plants would close. At present Tui employs 1050 full- and part-time staff and Kiwi 800 at the peak of the season. The predictions for the merged company will be about 1500 total staff.

    Source - The Dominion 13 September 1996 Dairy merger would cost up to 350 jobs" by Jon Morgan

    Has there been a 1990s small business boom? The Employers Federation thinks so, and as part of their pre-election "don't go back" campaign they describe the growth of small businesses as the engine room of the present 'buoyant' economy. Their figures: Between 1987 and 1990, there was a net increase of 8,211 small businesses, a figure which takes into account the businesses which fail. In the years 1991 to 1994, the net increase was 28,826 small businesses.

    Statistics NZ confirms that there has been significant small business growth. They define a small business as one that employs five or less people, and say that there has been a growth of nearly 30,000 more small businesses in the past five years. Their figures: In 1991, there were 149,000 small businesses employing a total of 292,000 people (no breakdown available of full or part-time work). In 1995 178,000 small businesses provided a total 261,000 full-time jobs and 121,000 part-time jobs.

    Source - The Daily News 23 September 1996 "Small business boom in NZ treated with caution" by Tracey Watkins

    Roger Douglas has hit the campaign trail with the publication of his latest book Completing the Circle which suggests that NZ is heading for a social crisis "...worse than the 1984 economic crisis." Douglas warns that problems caused by 'dysfunctional families'-- criminal behaviour, sex abuse, violence and alcoholism -- represent a time bomb for the country. He says that such families were responsible for 80% of the crime in NZ, and that children from such families were 100 times more likely to follow the same path of dysfunction, than children born into a 'normal caring relationship'.

    Roger Douglas's prescription: dysfunctional families should be discouraged from having children they cannot cope with; the domestic purposes benefit should be restricted and adoption made easier; the present welfare system should be dismantled in favour of insurance-based social services.

    Source - Sunday Star-Times 15 September 1996 "Douglas brings welfare to book" by Jane Clifton and The Dominion 14 September 1996 "Douglas wants DPB restricted".

    Combined with the privatisation of the Commonwealth Employment Service (CES), (see the
    last Jobs Letter) the Australian government is pressing ahead with reforms affecting its welfare and labour market programmes ... reforms which, in many cases, go much further than what has been tried here in New Zealand.

    The Australian government has announced the creation of a whole new statutory authority that will take over most of the service delivery functions currently provided by the DEETYA (Department of Employment, Education, Training and Youth Affairs) and DSS (the Department of Social Security). The new agency will come under the Social Security portfolio and will have 23,000 staff and a budget of $40 billion ... which amounts to 30% of total Commonwealth budget expenditure.

  • As with recent NZ reforms, the DEETYA and DSS departments will be pruned back to much smaller organisations, with their main future responsibilities being policy development and administering contracts for service delivery. The new agency will absorb what's left of the service delivery staff. It has been described as a one-stop-shop for all the payments and services now provided by DSS, as well student assistance, the registration of job seekers, their assessment for benefits and possible referral to Employment Placement Enterprises (EPEs) for labour exchange services and Intensive Employment Assistance.

    The new Australian agency will operate under contract to deliver services on behalf of other Commonwealth (policy) departments. Under a 'business' model, It will make its own decisions regarding the best way to deliver services, with its chief executive officer responsible for ensuring that service agreements with client (government) departments are met. Once established, the operations of such an agency could well be privatised, office by office, by allowing potential private sector providers to bid for contracts to perform these functions, in the same way the government is privatising the CES functions.

  • Fuller report from the Green Left Weekly is available on the Internet at
    Source -- (Green Left Weekly 11 September 1996 "7000 jobs to go in privatised CES" by Daniel Kelly and "Why Howard is Bashing the Unemployed" by Lisa Macdonald.

    Low-income families are failing to take up the government's new Independent Family Tax Credit, adding to the National Party's anxieties that its tax cuts package is not hitting home with voters. Bill Birch estimates that only 19% of the 150,000 families estimated to be eligible for the tax credit have applied for it. He has asked the IRD to step up its publicity campaign about the IFTC.

    The credit is $7.50 a week for a child this year and $15 for a child from July 1st next year for working families earning less than $20,000 a year. It phases out gradually for earners above $20,000. People who do not apply for the credit now, will still be able to get it through a tax rebate when they fill in their tax returns at the end of the year.

  • see also Jobs Letter No.44 and Jobs Letter No.42

  • Source - The Dominion 12 September 1996 "Tax credit flop raises National's anxieties" by Ruth Laugesen

    The Women's Information Network (WIN) Poverty Campaign is an informal network of national community organisations that focus on the needs of women, and their campaign will focus on specific changes which would make a difference now in the lives of those on low incomes. It has set itself 14 goals over seven areas -- income, housing, health, employment, education, childcare and retirement.

    WIN wants housing costs to be set at no more than 25% of a family income; elimination of consultation charges including ACC and prescription charges for all those eligible for Community Services Cards and all children; an increased training incentive allowance to give greater access to training and upskilling; and an extension of the categories of non-recoverable special-needs grants for emergency needs.

    Source - The Dominion 20 September 1996 "Cartwright calls on all politicians to fight poverty" by Bernadette Courtney.

    Who will feed people if the foodbanks shut their doors next week as part of their national week of action on poverty campaign? Wellington's Downtown Community Ministry Foodbank director Kevin Hackwell says it will tell people to go to the Department of Social Welfare and ask for a special benefit for food. Mr Hackwell says that under the Social Welfare's guidelines, closing the foodbanks would create an "exceptional circumstance" where it would have to give beneficiaries a food grant. Hackwell says that beneficiaries would be entitled to the grant, even if they had exceeded their annual limit on food grants.
    Source - The Daily News 10 September 1996 "Closed-door protest by foodbanks"

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