Essential Information on an Essential Issue
6 December, 1996
The VOLUNTARY SECTOR
-- GARTH NOWLAND-FOREMAN on Dissecting the Golden Goose
ROBERT BLY on Fathers and Work in the 1990s
There are now one billion people either unemployed or under-employed worldwide, according to the latest figures released last weekby the International Labour Organisation (ILO). This is up from 820m people in 1993-94, and represents crisis levels not seen since the 1930s depression. In its report World Employment 1996/97, the ILO says that the modern-day disarray in labour markets is "neither inevitable nor irreversible" and argues that "the concept of full employment, suitably updated, should remain as a principal objective of economic and social policy..."
Source -- International Labour Organisation "World Employment 1996/97 -- National policies in a global context" ILO Press kit from their internet site http://www.ilo.org/
The Treasury's latest forecast for the NZ economy paints an optimistic portrait and assumes that interest rates will fall next year. The December Economic and Fiscal Update predicts that next year's economic growth will be 2.6%, Employment growth will be at 2.8%, and unemployment will stay at 6.3%
Source -- December Economic and Fiscal Update from Bill Birch, sent to the Jobs Letter.
The Business Round Table is much more pessimistic about the current state of the economy. In a speech to the Auckland Chamber of Commerce, chairman Doug Myers says that the economy has lost competitiveness, and many export industries were under stress. He forecasts faltering economic growth, rising unemployment, and a return to government deficits. His recommendations: the government should deregulate producer boards, reduce top tax rates, privatise more state assets, and spend less on government and social services.
Source -- New Zealand Herald 29 November 1996 "Myers predicts loss of jobs, return to budget deficits" by NZPA
The moth-balling of the Waitara Valley methanol plant, one of the jewels in the Think Big Crown of the early 1980s, will see 30 staff lose their jobs. This comes on top of the already-announced 40 job losses from the Kapuni Natural Gas plant, plus about another 100 jobs to go if Fletcher Challenge Energy decides to shift its Taranaki operations to Auckland. All up, this will mean about $10m less money each year flowing into the Taranaki economy from the energy projects.
The gradual closure of these plants is dependent on new stocks of gas being found in the region by 1988. (The Methanex plants at Waitara and Motunui use almost half of NZ's total usage of gas a year). Even if enough gas is discovered before 1998, it may not be developed in time, or at a cheap enough price to enable the plants to be re-opened.
Methanex is a global corporation and plans to expand its Chilean complex. Methanex denies that it is getting free gas for their South American operations, but admits that the gas, from Argentina, is "the cheapest of the whole Methanex group".
Source -- The Daily News 2 December 1996 "Closure of methanol plants now possibility" and 4 December 1996 "Methanex confirms closure of plant at Waitara" by Neil Ritchie, and The Dominion 4 December 1996 "Methanol plant faces partial closure by 1998" by James Weir.
The ACT Party says that about 2,000 farms will 'go under' by May next year, and a further 6,000 farms will be facing the refusal of banks to lend them any more money for the following season. ACT blames the over-valued dollar and high interest rates for eroding export returns. Their prescription: Contain government spending.
ACT: " While a substantial part of the public believes that the social sector deserves more funding, to do so at the present time would be to dangerously inflame the already critical situation.
Source -- New Zealand Herald 3 December 1996 "Rural sector's future looks grim says Act" by Bernard Orsman.
Source -- New Zealand Herald 4 December 1996 "Farmers leaving land to survive" by Glenys Christian
" For the first time in living history we have legislation that is ripping the guts out of farming and no-one knows what to do about it. The Reserve Bank Act gives us the highest real interest rates in the world, and these result in a falsely high currency. The result is a boom to importers, bankers, brokers, merchant bankers, mortgage arrangers and the like and an absolute disaster for the lifeblood of the country -- anyone connected to making a dollar for NZ by exporting..."
-- Geoff Sleeman, Havelock North, writing in the New Zealand Herald 4 December 1996
Treasury and the State Services Commission earlier this year released a report by American public policy expert Professor Allen Schick, who had been commissioned to draw up an independent report on our state sector reforms. Professor Schick observed that ideas drove the reforms, which was unusual because Treasury did not derive its prescription by studying the organisations first.
Schick: "The [Treasury] brief ... has an undertone of everyone knows government is inefficient, so there is no need to prove the point ..."
Source -- New Zealand Herald 3 December 1996 "Public Service reforms: where do we go now" by Tony Simpson
The APEC nations which met in the Philippines last month plan to create the world's largest free-trade zone embracing half of humanity. Jane Kelsey reports from Manila that anti-APEC conferences were held all over the Philippines in the week before the big event. While the politics of the various meetings were different, Kelsey says that the universal message was clear: "APEC will benefit the rich at the cost of the poor, and deny the sovereign right of the people to control their own economy and their lives ..."
According to Kelsey, New Zealand's draft action plan promises that NZ will : Continue to deregulate utility and essential facility markets (such as electricity and ports); continue to consider the scope for further privatisations of State-owned businesses and assets; consider reform options for essential facilities largely owned and operated by local governments; maintain and review the existing foreign and domestic investment regime; actively promote the removal of restrictions on foreign services in the GATT agreement on services (tourism, advertising, education and so on); and consider extending the list of services which are covered in the next APEC action plan.
Kelsey: "There is a serious contradiction here. NZ voters did not re-elect those who developed the draft individual action plan. And commitments in the plan contradict key elements of New Zealand First, Alliance and Labour election policies ..."
Source -- New Zealand Herald 25 November 1996 "APEC hated by man in Manila Street" by Jane Kelsey
The International Monetary Fund (IMF) is having second thoughts about one of the cornerstones of monetarist theories -- the non-accelerating rate of unemployment (NAIRU) , which economists and policy-makers have long used to justify the continuation of mass joblessness. This change in philosophy could well influence present moves in NZ to get the Reserve Bank Act changed in order to reflect employment goals.
In its recent publication World Economic Outlook, the IMF says it no longer believes that monetary policy must be directed solely at maintaining low inflation. It says that at the same time as limiting inflation, monetary policy must also try to stabilise output and minimise cyclical unemployment.
The IMF: "The proper conduct of monetary policy does not consist only of raising short-term interest rates to forestall a potential rise in inflationary pressures ... over-ambition in reducing inflation too rapidly also has unwarranted adverse consequences for output and employment." Michael Mussa, IMF chief economist, believes that the NAIRU is a bit like an economists' unicorn: "... a mythical beast we've never met head-on and perhaps wouldn't want to.'"
Source -- The Times (UK) "IMF heresy illuminates economic blind faith" by Anatole Kaletsky reprinted in The Australian 30 September 1996 (email from Keith Rankin