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    Essential Information on an Essential Issue

    Letter No.87

    23 September, 1998

    WINZ names its 13 regional commissioners

    The global economy is free-falling into its worst crisis since the Second World War. What started as an "Asian" economic crisis has quickly in the last few weeks swept across the globe to include Russia and Latin America.

    The Russian rouble has collapsed as Russia defaults on its debts (which could reach as much as $US190 billion). The NZ Reserve Bank warns that there will be significant "knock-on" effects to the NZ economy from the Russian economic turmoil.

    The Wall St sharemarket experienced its second-biggest one-day fall earlier this month, sending fears of a global crash into markets everywhere. Kiwi stocks were spared some of the onslaught because they are already at a five-year low.

    The "Asian crisis" itself is deepening as Hong Kong _ the island of free market enterprise _ has been "heretically" defending its currency by spending $12.5 billion on sharemarket operations. All eyes are on how the mainland Chinese currency itself will hold up. The former NZ ambassador to China, Bryce Harlan, says that the Asian crisis is now expected to last for five years.

    The Malaysian government has effectively withdrawn from the consensus of the global marketplace ... imposing a fixed exchange-rate regime in order to control foreign exchange. Also, foreign investors buying shares in Malaysia will have to hold onto them for a year before being allowed to sell.

    Brazil is facing sharemarket panic (falling 15% last week), currency depreciation and capital flight ($1 billion a day). It has raised its interest rates to 50% in an effort to protect its currency. If Brazil goes the same way as Russia, and Asia, this will have ramifications for Argentina and Mexico and deepen the potential for a major slump in the US and European Union.

    The IMF is gravely cash-strapped, after spending $US37 billion in the last year bailing out countries like South Korea and Indonesia. There is now widespread criticism of its strategies and aid programmes, which won't help it when it goes cap-in-hand to borrow directly from its richer shareholders when dealing with future financial emergencies.

    Despite President Clinton conceding that this is "the biggest financial challenge facing the world in half a century...", our Media Watch reports that NZ newspapers and TV news are strangely complacent about the crisis they seem to prefer to saturate coverage of global affairs with details of the Clinton sex scandal with a White House intern.

    The G7 nations have held emergency meetings in London, Basle and Washington in order to develop a "fightback" strategy. There is speculation that these meetings indicate an extraordinary change in policy objectives from fighting inflation to actively stimulating growth. If this is true, then we may see a move towards policies which will boost demand creating more jobs rather than worrying about rising prices.

    In NZ, Treasury is expected to confirm this week that we are officially in a recession two successive quarters of negative economic growth with little prospect for a recovery this year. BNZ Economists are predicting the economic contraction to be -1.3%.

    Treasurer Bill Birch has admitted that government plans for further tax cuts are now off the agenda. He also warns that government spending may be cut even further because of a weakening of the NZ and international economy. The Treasurer describes the events of recent weeks as "the biggest external shock since the oil crises of the 1970s." Birch: "With several of our key markets experiencing severe economic downturns, it is hardly surprising that this will affect exports, tourism and growth ..."

    Sources -_ Sunday Star Times 20 September 1998 "Little hope of economic recovery this year" by Garry Sheeran; National Business Review 18 September 1998 "Recession-busting solutions elude world leaders" by Neville Bennett; The Dominion 3 September 1998 "Birch tips rising debt and more jobless" by Cathie Bell

    Latest Treasury predictions expect unemployment to rise from the present 7.75% to 8.5% by early next year. It then expects the rate to slip back to 8% in 1999-2000. This means another 10,000 people will lose their jobs.

    The Council of Trade Unions (CTU) and the Trade Union Federation (TUF) are much more pessimistic. Michael Gilchrist of TUF believes that the government is facing negative economic growth for the next three years. He says that job losses in the car, manufacturing, textile clothing and footwear sectors will see 30,000 jobs disappearing in the next year.

    CTU general secretary Angela Foulkes says there is nothing in government policy to indicate why we should believe growing unemployment ill stop at any stage. She says the government has not done enough to protect jobs, and its policies will create "an unlimited opportunity to lose jobs..."

    Source _ New Zealand Herald 9 September 1998 "unions fear up to 30,000 may lose jobs" by Jason Colie

    The international economic crisis is already leading to the loss of hundreds of jobs in our transport sector. Tranz Rail and the road transport industry say that falling demand for timber, coal and dairy products is fueling concern among rail freight workers and truckers.

    Tranz Rail says it is already identifying jobs for "decommissioning" under an ongoing review of customer needs. The Rail and Maritime Transport Union estimate that as many as 400 jobs could be at threat.

    Tranz Rail has already slowed down its construction of new coal wagons, after a decline in international coal sales. And the impact of Russia's economic crisis on the NZ dairy industry will also effect freight volumes.

    Tony Friedlander of the Road Transport Forum says that many trucks are being "parked up" now as business contracted 2% this year, following several years of 4-5% growth.

    Tranz Rail says it is also looking at "imaginative solutions" to maintain its skill base in a situation where workers not required now, might be needed in the future. The company is holding talks with the union which include consideration of giving workers a lump sum and up to a year's leave without pay as an alternative to redundancy.

    Source _ New Zealand Herald 17 September 1998 "Hundreds of jobs on line in transport" by Roger Wakefield, and "Lump sum year off one option".

    The Building Trades Union says that the construction business is in its worst recession for 20 years, and it predicts more problems downstream affecting the timber and carpentry industries. The New Zealand Herald reports that a drop in demand for new houses is forcing builders to lay off staff and cut profit margins to survive.

    Latest figures show the value of work and the value of building consents in April to June this year were down substantially on last year's levels. Trevor Allesbrook of the Master Builders Federation says that commercial and residential work has dried up in the past six months and that company collapses are inevitable.

    Source _ New Zealand Herald 7 September 1998 "Housing slump forces layoffs" by Mary-Jane Boland

    The Richmond beef-processing plant in Hastings has closed with the loss of 120 jobs. Hastings' other meat-works, Pacific, is expected to accommodate 40 new staff when it takes the extra workload from the closing plant, but the closure is indicative of hard times continuing to hit the meat industry.

    The problem is a mismatch between stock and killing capacity. Last year, the North Island's largest meat company AFFCO did not open its Taumaranui and Waitara plants because of falling stock numbers. Low prices have led farmers to convert land to dairying or selling it for forestry or subdividing it into lifestyle blocks. This year, the East Coast drought has caused a major drop in cattle numbers, intensifying the moves being made away from sheep and dairy farming.

    Brian Lynch of the Meat Industry Association says that the main players in the North Island are doing their sums on stock capacity and "another closure of a plant cannot be ruled out". He estimates that there is still 10-15% overcapacity of beef processing space in the North Island.

    Meatwork closures have hammered the Hastings job market over the past 12 years. The city was host to the country's largest meat processing plants until Whakatu closed in 1984 and Tomoana in 1994 with the collective loss of 4,500 jobs.

    Sources _ New Zealand Herald 9 September 1998 "Hard season feared for meat industry" by Glenys Christian; The Dominion 9 September 1998 "Another beef plant will close, says meat industry" by Philip Kitchin

    Land Information NZ is upgrading its massive database of land titles into a digital format that will be available electronically via a national network. The project will cost the government $39m, and will create 242 redundancies in the department.
    Source _ New Zealand Herald 24 September 1998 "Electronic titles to hit 242 jobs" by Malcolm McDonald

    PM Jenny Shipley announced her new-look cabinet late last month. Roger Sowry has taken over as the Minister of Social Services, Work and Income, leaving the newly independent MP Peter McCardle to be his deputy on matters concerning the department of Work and Income.

    The new line-up does not include a specific Minister of Employment ... a significant change for people involved in the employment agenda, particularly those community groups which remember campaigning for the establishment of an Employment Minister when Labour came into power in 1984.

    Jenny Shipley's vision is to create a new breed of "super"-ministers, who are leading a cluster of responsibilities. Roger Sowry is one of these, overseeing the Social Welfare Department, as well as the Work and Income department and the Housing Ministry. Other "super" ministers include Max Bradford (enterprise and commerce, and tipped for replacing Bill Birch when he retires), and John Luxton (Food and Fibre, Biosecurity and Border Control).

    Speculation is rife in Wellington that the creation of the "super-ministers" will lead to a similar creation of "super ministries" ... in line with the absorbing of NZES into Income Support. Jenny Shipley has already made her view on this well known: the number of government departments could well be cut from 40 to 15 with further mergers.

    Roger Sowry is first out of the blocks in announcing that the Community Funding Agency and the Children, Young Persons and Their Families Service will merge by the end of this year. He sees it as the next step towards a social policy "super agency".

    Sowry "does not expect" the merger to result in any redundancies, but there will be some "rationalisation" in the organisations' national offices, with normal staff attrition expected to avoid job losses.

    Sowry's vision of the "super agency" is that it will advise the government on social policy in the same way that the Treasury advises on economic policies. Sowry: "If you are designing income policy, it makes sense to me that you also have within the same agency expertise about housing policy, or expertise about family policy or employment policy. It is much better to have it all in the one place ... the closer co-ordination between portfolios will also improve the delivery of social services to communities."

    Labour's employment spokesperson Steve Maharey says that just such a combination of employment and welfare portfolios is a blow to job seekers and will bring about a further "welfarisation" of employment. Maharey: " The move turns employment into a welfare issue, whereas it has traditionally been treated as an economic issue. It also takes the focus off real work and real wages ..."

    Source _ The Dominion 31 August 1998 "Shipley plays it safe" by Nick Venter; The Dominion 5 September 1998 "Upton explains move to `super' ministries" by Nick Venter; The Daily News 31 August 1998 "PM shies away from sackings in shakeup"; The Dominion 18 September 1998 "CYPFS, fund merger to make super agency" by Helen Bain; The Dominion 1 September 1998 "Super agency to advise on social policy"

    WINZlog.jpg - 5684 Bytes

    WINZ General Manager Christine Rankin wants the first day of the new department on October 1st to be remembered. The staff will be having a breakfast launch at which Rankin will be speaking to everyone throughout the country via video-tape. The doors will be opened to customers on the first day at 8:30am. Over the rest of October, Rankin will be on the road with her head office team to launch "a vision of Work and Income NZ" and a business plan for the new agency.
    Source _ The Head Line Issue 7 9 September 1998

    hiklogo.gif - 8151 Bytes

    October 1st will also be a memorable in Wellington, because it marks the day when the Anglican Hikoi of Hope arrives at parliament grounds (just across the road from the Work and Income department head office).

    Adding to this, a coalition of groups campaigning against the work-for-the-dole programme, led by the Auckland Unemployed Workers Rights Centre, are planning to protest the establishment of the new Work and Income department, with rallies and pickets in Auckland, Wellington, Christchurch and Dunedin on the same day.

    Source _ Socialist Action15 September 1998

    Government changes to single parents' benefits are deliberately designed to `hassle' recipients into getting a job, according to a report compiled by the Dept of Social Welfare, and obtained by the Alliance under the Official Information Act. A review of the domestic purposes benefit written last June says that agency policy on active assistance is a combination of "helping and hassling".

    The report: "Helping and voluntary elements are aimed at facilitating movement into employment. Hassling and mandatory elements aim to reinforce the reciprocal obligation to take steps to move towards employment associated with receipt of benefits..."

    Under changes due to take effect next year, single parents with children under six will be required to take part in mandatory interviews for jobs or training. Those with children aged 6 to 13 will be tested for part-time work.

    Alliance social welfare spokesman Grant Gillon says that the review is "clear written evidence that the government intends to pester and torment beneficiaries into jobs that do not exist..." Gillon: "The policy is despicable, because many of those on the benefit are not in a position to deal with government bureaucrats with specific instructions to hassle..."

    Source _ New Zealand Herald 18 September 1998 "hassling beneficiaries part of official policy says report" by Annemaria McEneaney

    One major group which is terrified of work-testing and benefit cuts is the mentally ill. Newspaper reports over the last month have been highlighting cases where benefit checks from Income Support have been badly upsetting mentally ill people. The paranoia many of these people have experienced has led to suicide, self-mutilation and violence.

    Carers for the mentally ill say that these people are not capable of being pushed into employment ... and even if they can work, they are at the wrong end of rising unemployment queues.

    Carers are particularly concerned that front-line staff at Income Support are not trained or capable of dealing sensitively with the mentally ill. Dr Wayne Miles of the College of Psychiatrists says: " It is important that the doctor making the assessment is someone the client can trust and has clear knowledge of that person'' illness and wellness --partiularly what triggers the illness. This is not gained in a couple of minute's assessment..."

    Roger Sowry, Minister of Social Services, has written to Auckland Healthcare's mental health services saying that purpose of the changes to invalids and sickness benefits is "to ensure that all people are supported to realise their full potential ..." Sowry: "the changes reinforce the government's belief that paid work is the key to achieving personal, economic and social independence ... Those people who are assessed as unable to work due to their incapacity will not be required to do so."

    An Auckland social worker Alastair Russell is calling for mentally ill people to be exempt from the work-testing and workfare schemes, saying that the very prospect of assessments is enough to trigger many of his client's illnesses. Russell: "The government, whether it likes it or not, has created an element of fear. If the minister really wants people to realise their full potential then he should adequately fund mental health services ..."

    Source _ New Zealand Herald 19 September 1998 "Welfare police create state of terror for mentally sick" by Carroll du Chateau

    Internet Bookmark : The Maori Employment and Training Commission is now on the net at

    The Commission has been set up by the Ministry of Maori Affairs, and was a part of the now-defunct coalition agreement. It aims to recommend policies and processes to reduce Maori unemployment, and the site seeks to help set the agenda for reinforcing, catalysing and creating opportunities for Maori to achieve gains in employment.

    Commission chairman Rongo Wetere: "The Commission is comprised of a proven and committed group of Maori and their extensive networks. It strives to improve government processes in collaboration with Maori ... only through action oriented and integrated development, can real opportunities for our peoples employment be realised..."

    The Commission has set itself ambitious goals in creating an employment plan which will be accepted by all political parties for the creation of 200,000 new jobs in New Zealand in a 5-year period. It also wants: separate identifiable funding for Maori controlled by Maori; the adoption of a successful and sustainable self-determination model for Maori; and the reintroduction of work based training on a national level.

    In recent months, the main focus of the Commission has been on gaining a greater Maori perspective in the new WINZ organisation, The Commission has also engaged a series of consultants on research projects which will be collated over the next month, and presented to Ministers early next year.

    Briefing papers for these research projects are available on the Maori-Employment Commission website.

    Source _ Maori Employment Commission site at

    The Economist reports on a new British study that says that £1 given to charity produces £1.40-worth of good work.

    The new study, published in "Dimensions of the Voluntary Sector" by the Charities Aid Foundation (CAF) and said by its authors to be the first of its kind, concludes that Britain's charities do £22 billion-worth of good each year, whereas their costs are put at £16 billion. Thus they produce an "added value" of almost 40% of their costs. Communities serving the homeless, which the researchers studied in particular detail, added value at a rate of 200%.

    The research was commissioned by the CAF which provides advice and other services to charities. It wanted some hard figures for the benefits that charities provideespecially now, when the government is conducting a review of their tax breaks and governance systems.

    The CAF turned to a group of economists led by David Pearce of University College London, whose previous work involved putting a price on another hard-to-value quantity: pollution. The economists conducted surveys in which people were asked how much extra tax they would pay in order to save charities from closure, and then calculated estimates of the benefits to recipients of the charity work.

    The study provides some further helpful evidence: it found that the value that the public puts on charitable works is at least £2.2 billion more than it actually donates to charities each year. So, the study says, some people are enjoying a "free ride", receiving a share of the benefits of charitable work while not paying their full share of its cost. Thus, it could be argued, people could be made to pay a fairer share by taxing them and giving the proceeds to charities.

    Source _ The Economist; May 30 - June 5 "Charities _ valuing virtue"

    Australian Elections. The growing dole queues across the Tasman has forced "jobs" to be the front-running issue of the upcoming October 3rd elections. A new poll by The Australian shows that job security has outstripped all other concerns in the nation ... ranking above health and taxation. Labour is now seen by voters as the party best able to create jobs.

    According to the Australian Bureau of Statistics, more than 7% of Australia's employees were made redundant in the three years to June last year, with the sackings concentrated among the young and the middle-aged breadwinners. Media reports from Australia say that the main parties are engaged in a fight for economic credibility and voter acceptance of policies which will enable companies to hire more workers.

    Source _ New Zealand Herald 10 September 1998 "Jobs shape up as key point of contention" by Greg Ansley

    hiklogo.gif - 8151 Bytes

    "What we have heard this morning is that we live in a country where there is enough for everybody, and what we have to do is to sort out our needs from our greeds. And we also need a system of political and economic order which is based upon sharing and distribution.

    "So this hikoi, amongst other things, is about values the values that light up the decisions that we make, and we want our elected representatives to make.

    "Since the mid-1980s, we have been encouraged to think of our private needs. And so we went into economic restructuring, and we were told that the pain was worth it because in the end we would all share in the benefits.

    "Whether you think that has come about or not is for you to decide but I think we need to concentrate and emphasise the public good, the collective responsibility we have the fact that my life and my death are with my neighbour

    "Now I am only too well aware that if you are poor, if you are homeless, if you are unemployed, if you are sick we live in a system which puts these people out of sight. An earlier speaker referred to the silence of good people who now will stand up and demonstrate. We wish to support them and be part of that.

    "We are expressing our hopes for the nation of which we are a part, which is the cradle which has made us what we are, and which is the home and the cradle for the future generations for whom we are responsible. So if we are marching, we are marching towards a better future, not simply for us, but for all who come into the heritage of this country of ours ..."
    --Sir Paul Reeves, former Governor-General and Anglican Arch-Bishop of NZ, speaking at Aotea Square, Auckland, on the arrival of the Hikoi of Hope to Central Auckland, 12 September 1998

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