Letter No.87
23 September, 1998

26 August 1998

The redefinition of Business Development Boards is announced by Business Development Minister Max Bradford. The previous boards have been dissolved and tenders are being called to administer the new programme that focuses on training to improve the management of small to medium sized enterprises (SMEs).

27 August 1998

Mercer Stainless plans to close its Rotorua branch next month at a cost of 21 jobs. Chief Executive Bruce McNeill says the company is shedding 65 jobs nationwide because of drop in demand.

The legislation that paves the way for the disestablishment of Income Support and the Employment Service and the establishment of Work and Income New Zealand passes in parliament by a vote of 71 to 49.

The National Bank reports that business confidence is rebounding. A bank survey says that 40% of businesses expect business conditions to improve over the next twelve months. This is up from only 15% just last month. The report comes on the tail of lowering interest and exchange rates but does not consider the recent failure of the Russian rouble or the capital flight from Latin America.

28 August 1998

With the value of the rouble falling 40%, Russia's economy is in chaos. The currency has become useless as a means of determining the value of consumer items.

Finance Minister Bill Birch tells cabinet that the collapse of the Russian currency is a signal that the government's economic reform programme must continue and that further cuts in government spending are in order.

Car seat manufacturer Kenson Industries is placed in voluntary receivership, closing its Wainuiomata, Auckland and Nelson plants. The closures result in the loss of 152 jobs, and are due to the demise of the NZ car assembly industry. Hutt Valley Chamber of Commerce executive director Michael Romanos says the Wainuiomata closure will cost the area millions of dollars in lost wages, and will have serious downstream effects on other local businesses.

The Methven tap factory closes its doors in Dunedin, taking with it 80 jobs.

PM Jenny Shipley's latest cabinet reshuffle appears to be leading to a new cabinet structure. Cabinet is to have four to six "clusters" of ministries. Roger Sowry is tipped to become the team leader of the social policy cluster, including Social Welfare, Employment, Maori Affairs, Health Education and Housing.

30 August 1998

Peter McCardle, designer of the Community Wage Scheme, is dropped from cabinet and his previous position of Minister of Employment completely disappears. McCardle has been appointed Minister of Business Development, Minister of Consumer Affairs and Associate Minister of Social Services, Work and Income all while outside of cabinet.

Australian PM John Howard calls for an election eight months before his term is up. Australians will go to the polls on October 3rd.

31 August 1998

New "super minister" Roger Sowry says that his agency will advise government on social policy in the same way Treasury advises the government on economic policy.

The Far North is the most economically depressed part of the country. Using 1996 census figures, researcher Judith Reinken finds that more than half of the people in the Far North fall into the lowest 20% of a deprivation index.

1 September 1998

The Hikoi of Hope simultaneously departs from Stewart Island and Cape Reinga. Anglican leaders, including Bishop of Aotearoa Whakahuihui Vercoe and Sir Paul Reeves depart from Northland, while Bishops Penny Jamieson and George Connor begin in Southland.

The Housing Corporation sells the mortgages of 8,000 more families to commercial banks. Over the last six years, the corporation has sold $4 billion of mortgages. Now holding only $120m in mortgages, it is all but out of the business of providing lending assistance to NZ'ers.

Malaysia puts an end to currency speculator trading by announcing that non-residents would no longer be able to convert the country's currency, the ringgit, without central bank approval. The move comes as part of anti-free market economic policies instituted by PM Mahathir Mohamad this week in attempt to wrest control of the Malaysian economy back from global free-marketeers.

The criteria for people classified as eligible for the invalids benefit has been re-defined. A new medical definition says that an invalid is either totally blind or permanently and severely restricted in their capacity to work. 8,200 people will be reassessed on the new criteria over the next five months.

2 September 1998

Treasury is re-revising forecasts for the coming year. Expecting negative growth and higher unemployment, Treasury expects to take in less tax revenue, which Treasurer Bill Birch says will increase government's overseas debt. Birch tips changes to the Accident Compensation Corp and further asset sales as his remedy.

Masterton District Council, which had set aside $50,000 for the Community Wage Scheme has diverted the money because it has not had enough information about the scheme and no longer intends to participate directly in the scheme this year. Mayor Bob Francis has also asked Work and Income NZ to explain why Masterton has been put in a district whose regional commissioner is based in Palmerston North.

A state house tenant, Sue Hartley, backed by the State Housing Action Coalition, says she will not comply with an eviction notice from the Tenancy Tribunal. Hartley has not paid the increase of nearly $100 per week on her state house since 1993 when Housing NZ raised the rent to market levels. She has been paying rent of $78.50, or 25% of her income for the past five years.

3 September 1998

A debate stirs over the cause of an out-break of tuberculosis in South Auckland. The Communicable Disease Centre and Auckland Medical Officer of Health, Lester Calder blames imigration from Asia and the Pacific and suggests all immigrants be mandatorally screened for diseases. However, the Commissioner for Children Roger McClay and an increasing number of doctors in Auckland and Hamilton say the cause is poverty, overcrowded housing, poor nutrition and lack of access to health care.

4 September 1998

Staff at the Maori Arts and Craft Institute in Rotorua drape red scarves around photographs of local tupuna in a silent protest as the institute sheds 38 jobs.

There has been a steady decline in the number of people buying private health insurance as rates for private insurance soar. Worst affected are the elderly whose premiums generally treble when they reach the age of 65. In 1990, 51% of NZers had private health insurance. Today, 38% do.

6 September 1998

Carter Holt Harvey announces redundancies at its Whatakane board mill. While the company assures mayor Tony Bonne that the restructuring means the plant will stay open, 65 of the 308 workers are to go.

The Asian financial crisis has become an economic crisis with far greater effects than originally thought. NZ ambassador to China, Byrce Harland, speaking in Wellington, says the situation is more than a "trade cycle" and that NZ must look to diversify its markets. Harland also expects the East Asian countries to become more protective and resist the liberalisation of trade barriers.

7 September 1998

The Contract Broker Organisations have had difficulty finding positions for people on the Community Wage Scheme. Sixty-four CBOs were contracted to find 7,756 positions to kick the scheme off at the 1st of October. It appears that only about one quarter of that number will be found. Associate Minister of Work and Income Peter McCardle has set a target of 65,000 people using the community wage scheme during its first year.

8 September 1998

ANZ Bank job ads survey continues to illustrate a decline in the number of jobs being advertised in NZ newspapers. There were 18.7% fewer jobs advertised last month than there were this time last year. The number of situation vacant ads has been declining since 1995.

Treasury forecasts NZ will have negative growth of -0.5% by the end of March 1999. Government will spend $700m more than it takes in and unemployment will rise to 8.5%.

TVNZ cut 197 jobs last year. Company secretary Noel Vautier says the losses were a result of restructuring.

9 September 1998

The Paid Parental Leave Bill in parliament goes to select committee. The present form of the bill would give a woman or her spouse 12 weeks leave at the birth of a child at 80% pay. Payments would be made from a consolidated fund in which about $1.50 per week is paid by an employer for each of their employees. The Employers Federation says the bill would cost employers $100m per year which could stifle the economy further. The Equal Employment Opportunities Trust says the legislation would save employers money by reducing staff turnover and the need to train new workers. The bill will come back to the house within six months for a vote.

10 September 1998

International credit rating agencies are completing their assessment of the NZ economy. Standard and Poor's reports it is maintaining its main AA+ long-term foreign currency rating for the NZ dollar, but downgrades our "lookout" from stable to negative. The report cites several points for the downgrade including governance by a minority government, the potential for a change of government, our "proximity" to the Asian recession and the government's balance of payment and budget deficits. Rival agency Moody's will complete its report on the NZ economy soon.

11 September 1998

The social and economic gap between Maori and Pakeha is costing the country $3 billion per year, according to Maori Development Ministry chief executive Ngatata Love. The Closing Gaps report the ministry published last month pointed out that the lack of good health, education, employment and housing for Maori costs the taxpayer 9% of government spending. Love argues that investing that money on a one-off basis to bring about change, rather than having it as a recurring annual cost is sound policy.

13 September 1998

Staff at 13 ACC offices are being asked to consider voluntary redundancy as the agency moves to electronic processing of claims during the next 18 months. While Dr David Rankin of ACC says that the exact number of job losses was not yet known, sources suggest around 140 job losses are expected.

While the US Congress considers pleas from industry to open its immigration doors to more high tech computer engineers, the Institute of Electrical and Electronic Engineers is mounting a campaign to hold the status quo. The industry says they must be able to hire the best minds in the world in order to stay competitive. The engineers say that any move to allow in more foreign workers will deprive Americans of jobs.

14 September 1998

Proposed cuts to police in the Gisborne area anger police staff and the local authorities. With a declining population, the East Cape is proposed to lose 22 sworn police and 16 non-sworn staff. Chairman of the Gisborne branch of the Police Association Paul Stuart says he is genuinely concerned, not only because of the impact on police staff but also at the impact on the communities. Gisborne mayor John Clarke says the proposal is ludicrous and did not take into account the extra challenges faced by police in rural communities.

Mayors from 20 district councils from the Waikato, the Bay of Plenty and East Cape meet as a regional task force to seek answers to the problems in their districts and lobby government. While each area had specific problems, the mayors point to common concerns about unemployment, urban drift, crime, health, education and diminishing wealth.

15 September 1998

The split of the Electricity Corporation into three smaller companies aims to bring greater competition and lower wholesale electricity prices ... but 190 jobs will be lost in Wellington due to the change.

Labour leader Helen Clark says her party will not be making big-spending promises in the coming election due to the bleak economic outlook.

The country's next three new prisons are likely to be run by Australian or American companies. Eight overseas companies are expected to tender for the contracts. The first will be a 275-bed remand prison to be built next to Mt Eden Prison by the year 2000.

16 September 1998

The world's economies may be in greater strife than most people are aware. International financier George Soros tells the US House Banking Committee that Russia's economic crisis will worsen, Brazil is on the brink of collapse and there is growing panic in Latin American. And, while asking the committee to provide another $US18 billion to the International Monetary Fund, even a fully funded IMF could not end the turmoil. Soros: "The global capitalist system, which has been responsible for remarkable prosperity, is coming apart at the seams." World leaders and economist are agreeing the world is facing the greatest challenge since the Second World War.

Downstream effects from falling demand for timber, coal and dairy products is hitting the transport industries. Tranz Rail, in consultation with the Rail and Maritime Transport Union is considering a number of options for as many as 400 of its workers from right around the country, whose jobs may be surplus during the recession.

Defence Minister Max Bradford announces he will allow the Hikoi of Hope to stay at the army marae at Waiouru. Earlier, Bradford said the army should stand aside from political activities. Bradford: "On reflection, the hikoi goes beyond party politics and is about issues that affect all New Zealanders."

Bank of New Zealand economists, the gloomiest of the country's forecasters, believe the country's GDP shrank by -1.3% in the last quarter, substantially greater than Treasury predicted. The BNZ points to drought affected agriculture, lower production due to lack of Asian exports, rising unemployment and slowing domestic demand and a decline in construction all contributing to the decline.

17 September 1998

The Community Funding Agency will merge with the Children, Young Persons and Their Families Service by the end of the year. Social Welfare Minister Roger Sowry says the merger is the next step in the creation of the new social policy "super agency".

Taranaki police superintendent Max Morresey says that the proposed loss of 19.5 local jobs will result in having less police on the street, when the police commissioner says his goal is to get more police to the front line. Wanganui mayor and Safer Community Council chairman Chas Poynter says that the proposed reduction of police in his district would lead to a significant increase in crime.