Letter No.81
30 June, 1998

15 June 1998

Minister for International Trade Lockwood Smith tells potential business investors in Taiwan that NZ will abolish all tariffs well before the 2010 deadline set for all APEC nations. He also promises changes to the Resource Management Act, more competitive electricity prices, tax cuts, smaller government, more immigration, cheaper roading and less expensive accident compensation costs.

Korea's 6.7% unemployment is expected to double this year. Social dislocation is anticipated as 3 million families find themselves without income and no social welfare system to fall back on.

16 June 1998

Statistics NZ issues a report which suggests a number of reasons why NZ'ers aren't saving more money. Greater availability of credit cards is seen to be another factor. The report says that, compared to 1987, individual NZers are spending over double now than they were for healthcare.

Finance Minister Bill Birch unveils a simplified tax reporting system for wage earners. The plan makes it unnecessary for wage earners to prepare IR5 tax returns. Beginning this year, company records of PAYE will be all the department will require. There will be no tax refunds or tax bills. The changes will also eliminate 780 jobs at IRD by March 2000. IRD services will be more focused in call centres than in over-the-counter services. Branch offices in Greymouth and Alexandra are to close altogether while other offices will experience staff cuts.

NZ's overseas debt is revealed to be $99 billion, or $27,500 per every man woman and child in NZ.

The Nurses Organisation voices its concerns that an influx of Filipino nurses is going to drive nursing wages down. Filipino nurses are working in Auckland and Northland, primarily in rest homes, for about $11 per hour. First year nursing rates are currently between $13.74 and $15.

State houses are becoming more expensive to rent. While Labour and National argue about the details, Elaine Lolesio of the homeless welfare organisation Monte Cecilia House says that over-crowding in state houses has rocketed since the freeze on rents was lifted. Lolesio says that Income Support is telling people to move out of their state house: "Our latest figures show more than 36% of families are calling us saying they can't afford to pay the rent."

The government begins a $700,000 advertising campaign to promote the community wage scheme.

17 June 1998

Hong Kong's leader, Tung Chee Hwa, arrives in Wellington for talks with NZ's top politicians.

PM Jenny Shipley publicly acknowledges the impact the Asian economic crisis will have on NZ. In response to anticipated low or nil growth, Shipley says the $5 billion the coalition government agreed to spend may be put on hold. The spending was to be on education, health, police, CYPS and overseas aid.

Both Finance Minister Bill Birch and PM Jenny Shipley champion a policy of cutting tax rates for companies and for those in the top personal income bracket. Shipley says a reduction in the top tax rate would increase investment and jobs.

The Dress For Less chain of 23 clothing stores will close as receivers failed to find a buyer. The 800 employees will begin losing their jobs from Friday, as shops commence to close their doors across the country.

18 June 1998

PM Jenny Shipley now says she has no intention of backing down on the coalition agreement for $5 billion on additional government spending.

Labour's Steve Maharey complains to the Auditor General about the community wage TV advertising campaign. He says the advertisements are not accurate, factual or truthful. They show people performing 12 different jobs, wrongly creating an impression that unemployed people would perform these jobs as part of the new community wage scheme.

19 June 1998

The National Business Review reports that 20% of executive and managers who lose their jobs become self-employed.

The last car comes off the line at the Todd Park Mitsubishi assembly plant in Porirua.

20 June 1998

The Auckland District Council of Social Services has launched its "Opposition to Workfare" campaign. The council is warning community groups away from becoming CBOs or using the Community Wage scheme. It states that unless organisations can guarantee certain minimum conditions are met for the Community Wage workers, they shouldn't participate.

The council asks community groups not to provide placements if there will be sanctions placed on beneficiaries who decline to take up the position. It also says any worker should be entitled to: a contract and job description, at least minimum wage, standard holiday and sick pay provisions, and coverage under standard health, safety and harassment rules. These conditions are well outside the terms of the Community Wage scheme and effectively calls for community groups to boycott of the scheme.

22 June 1998

ACT's Muriel Newman says the government should consider a US model of limiting the time a person could be on a benefit. The US has a policy of limiting welfare assistance to five years.

23 June 1998

Hong Kong's leader Tung Chee Hwa, back in his own country, goes on live television to tell Hong Kong it is in recession.

The OECD reports on the expected levels of unemployment in its member nations next year. The US will be about 5%, Britain 7.2%, and the European Union over 10%.

The economy of South Africa takes a severe jolt as official interest rates reach 20.3%.

24 June 1998

PM Jenny Shipley points to progress being made in equal employment opportunities for women. Quoting from a report that will be tabled in the United Nations next months, Shipley says 57% of NZ women are currently in paid work. There has also been an increase in the amount of childcare funding programmes and for self-employment programmes for women.

NZ's foreign account deficit contracts by 0.5% rather than growing, as widely expected. The news stalls the slide of the dollar and the stock market.

Statistics NZ figures show wages increased 2% during the last twelve months. This is about the same rate as inflation.

25 June 1998

Falling exports of dairy, meat and wood products have pushed the merchandise trade balance into a deficit of $951m for the year to May, more than double the deficit in the previous year.

A Hamilton foodbank which billed Income Support for $2,700 worth of food parcels early this month is still waiting for a response and is considering using debt collectors. The invoice from the Methodist City Mission was for 54 food parcels to feed 118 people who were refused emergency grants from Income Support last month.

26 June 1998

Statistics NZ reports that the NZ economy has contracted by a startling 0.9% in the March quarter, as Asia's economic crisis and the prolonged drought combined to stymie growth. The figure is much worse than any of the commentators had been expecting.

In a sobering speech, the Reserve Bank governor Don Brash raises the possibility of "deflation" in the NZ economy. He described the Asian crisis as the most serious shock to hit the NZ economy since the oil shocks of the 1970s.

VOICES
Dr Don Brash: "Although the weather is rough and may get rougher, NZ has good wet-weather gear and a sturdy four-wheel drive vehicle"

PM Jenny Shipley: "We have been through quarters of negative growth before and have recovered very strongly"

Labour's Michael Cullen: "The government should not panic. If you want to turn a recession into a depression then slash and burn"

The Alliance's Jim Anderton: "Has the market fixed the economic crisis yet?"