Letter No.88
14 October, 1998

22 September 1998

Work and Income NZ announces sanctions for beneficiaries who do not co-operate with WINZ officials or community wage "employers". Unacceptable lateness or absence from a community wage scheme position can result in a cut to the weekly benefit of between 8% and 40% for missing over 15 minutes of work. The current policy of completely canceling a benefit for up to 13 weeks for repeated failure to co-operate is the harshest punishment and remains in place.

23 September 1998

With Russia in financial and currency crisis, 8,000 unpaid teachers in the central Russian republic of Altai will be paid in bottles of vodka in lieu of wages.

Deputy PM Wyatt Creech says that presenting social problems is not proof of poverty and that he does not know what poverty is because there is no agreed definition of it. Creech also says there is a comprehensive welfare system in place to help those in need.

Labour leader Helen Clark says that debating the definition of poverty is not an effective means of dealing with the issues of overcrowding, high unemployment and low incomes experienced by NZ'ers.

The cost of employing someone has risen 1.3% over the last year. This is slowest rise in labour costs for four years and within the Reserve Bank's inflationary guideline.

The Apparel and Textile Federation delivers to the Treasurer and the Minister of Commerce their formal arguments against a fast-tracked tariff reductions programme. The report points out there will be no economic loss if the tariff reduction programme is paused for five years while the industry restructures.

24 September 1998

Auckland solo parent Vicky Smith invites Wyatt Creech to come and talk to the people who are living in poverty. After her bills are paid, Ms Smith has $30 - $40 per week for food, clothes and other necessities for her family.

BOC Gases sheds 40 jobs as it shifts its Wellington base to Auckland.

Associate Minister of WINZ and designer of the community wage scheme Peter McCardle, meets with the 50 community broker organisations to share their first contract experiences.

The Tauranga Employment Trust, a community broker organisation contracted to convince groups to offer community wage scheme positions, has excelled their contract to find community wage scheme positions. TET chairperson Peter Wyatt says the trust was to place 130 people on the scheme in a year but has attained 182 placements with only eight months gone. TET will sign up for another contract.

Up to 175 jobs go as the Carter Holt Harvey owned Taupo sawmill closes. Sawmilling general manager Peter Coakley says that reduced Asian demand and the high expense of running the low-tech plant contributed to the decision to close the mill.

25 September 1998

The government's proposed deregulation of producer boards is not being well received by growers. Following a stormy reception earlier this month from orchardists in the Hawkes Bay, a protest march up the main street of Nelson targets PM Jenny Shipley who is in Nelson addressing a lunch time business meeting.

27 September 1998

The NZ Employment Service finishes a six week trial of a client operated inter active computer job service in Lower Hutt and Porirua. The system allows job-seekers to enrol and assess themselves using personal computers in the job centres. NZES strategic support manager, Marianne Doczi, says that 85% of the 500 people who have used the self-service project found it better than face to face meeting with NZES staff. It is not known whether the trial will be adopted by WINZ management.

The Russian government's inability to meet its wage bill brings increasing social disruption. Unpaid scientists and researchers threaten to seal off the main roads around Moscow. An army garrison says it is prepared to block the trans-Siberian express. Soup kitchens to feed the unemployed and the unpaid are abounding.

Volunteer groups feel threatened by the community wage scheme. Taranaki Disabilities Resource Centre manager Brian Eriksen is concerned that groups like themselves, which vet and place volunteers into health and community organisations, will have their funding cut because they will be seen to be offering a service in competition WINZ or the local community broker organizations.

Jan Sole, from New Plymouth Action People, an advocacy group for people with disabilities, says that some volunteer jobs have already been lost to the community wage scheme. This is because organisations NPAP had arranged positions with had now signed up with the community wage scheme and would now use long term unemployed rather than less able people.

28 September 1998

Helmet Kohl, Germany's stalwart conservative leader for 16 years loses the national election. Gerhard Schroeder's Social Democratic Party will form a coalition government with the Greens. A major election issue was Germany's four million unemployed.

Deregulation of the electricity industry may provide cheaper power but the savings will come primarily from job cuts, according to cost consultant NUS International.

29 September 1998

The government lowers the benchmark for national superannuation. Retirement pensions, which have been paid at the rate of 65% of the average wage, will be gradually moved to 60%. The difference is about $25 per week.

Criticism ignites on the changes to superannuation 85% of pensioners depend either totally or mainly on their superannuation. Age Concern, an aged people's advocacy group, points out that retired people's income is being eroded while at the same time their expenses are going up. Age Concern chief executive Claire Austin says house rental rates are rising and the cost of health service is increasing because fewer health services are now being provided by government. Austin: "The latest proposal will hurt most older people and see more and more of them slide into poverty..."

High speed tariff reduction plans are halted by government. Tariffs on textiles, clothing, carpet and footwear will be held at 15% from July 2000 until July 2004. They will be eliminated altogether by July 2006.

Over 20% of Masterton Hospital staff face redundancy. Chief executive Joel George says the hospital's drive for efficiency will see shorter patient stays, a reduced number of beds, the combining of wards and contracting out some services.

Public sector wages rose 4.5%, and private sector wages 3.1% over the previous 12 months, according to Statistics NZ's May Quarterly Employment Survey. For people who are working, the average total hourly earnings in May are reported to be $17.18.

In response to the world economic crisis, the US Federal Reserve Bank lowers its interest rate by .25% to 5.25%, the first move in four years. The expected effect on NZ will be to hold interest rates down.

30 September 1998

Asset testing of elderly long-term hospital patients, deferred by the previous coalition government, is reinstated. Single geriatric patients in hospitals or rest homes will be charged for their long-term stays until their assets are worth no more than $15,000. The threshold for couples is $30,000. If one of a couple is in care, the threshold is $45,000.

Women's Affairs minister Georgina te Heuheu urges Maori to "get off their backsides" and attain the potential their entrepreneurial ancestors did. Speaking to the Maori Women's Welfare League, te Heuheu says the way out is education and motivation, not welfare cheques.

1 October 1998

The month-long Anglican led Hikoi of Hope arrives in Wellington. 5,500 people assemble at the steps of parliament for prayers and deliver the stories collected on the way to party leaders.

The new Work and Income NZ agencies open for business. Only six, of what will be 39 WINZ one-stop shops, have opened for business in single premises. Most offices of the old Income Support and NZES are operating under the new masthead but in their same premises. WINZ chief executive Christine Rankin says that full transition and amalgamation of the Income Support and Employment Services may take up to two years.

Protests by the new unemployed union Unite! are held outside the inaugural opening of WINZ offices in Auckland, Wellington and Christchurch.

Today the community wage scheme replaces the unemployment, sickness, 55-plus, training and emergency unemployment benefits. All 200,000 people on the new community wage scheme will eventually have to sign a "job-seekers" contract that says they will attend interviews and look for work. They can be required to do training or up to 20 hours per week of community work.

Brazil uncovers plans to implement a financial transactions tax. Brazil has had a policy of attracting foreign capital by offering high short-term interest rates. But when the Russian ruble fell over, foreign investors began pulling their money out. A financial transaction tax will make investors look longer term for their investment returns.

The International Monetary Fund revises its world growth forecast to 2%, less than half the growth experienced last year. The IMF also says countries should be prepared to lower interest rates to guard against recession. The IMF expects NZ `s economy to shrink by -.5% this year.

2 October 1998

Housing NZ sold 7,302 houses for more than $650m over the past four years. About 2,000 of them were sold to tenants under the Homebuy scheme.

Act's Derek Quigley promotes lowering superannuation even further, to the rate of the dole. This would be approximately $80 per week less than a married couple is getting now.

4 October 1998

NZ businesses are told to wake up to the potential of e-commerce. Research company IDC New Zealand's Patrick Pilcher says that the amount of trading on the internet will be over $1 billion by the year 2002. Pilcher also warns that e-commerce will result in huge job losses.

Australia's national election sees the conservative Liberal/National government of John Howard re-elected but by a much reduced majority.

Fletcher's Mt Maunganui timber processing plant has increased its workforce from 69 to 114 during the past twelve months. The plant, that primarily produces finger jointed timber moldings, exports to the US, the one currently thriving economy in the world.

The G7 countries' finance ministers and reserve bank governors meet in Washington DC regarding the world economic crisis. However, they failed to offer any specifics for a co-ordinated plan other than saying Europe must create its own robust domestic demand-led growth.

5 October 1998

The Bank of New Zealand says it will give its staff six weeks paid parental leave, believing it an important way to retain valued staff.

6 October 1998

The NZ Job Ads ANZ Focus reports that the number of advertised jobs fell 1.2% during September and 19% over the last twelve months.

Research institute Business Strategies predicts as many as 350,000 jobs will soon disappear in the UK. The slide has already started as the manufacturing sector has experienced a decline of nearly -1% for both of the last two quarters. BS says the high valued pound is making UK exports expensive while, at the same time there are slowing domestic orders. These indicators point to big rises in unemployment.

7 October 1998

Housing minister Murray McCully and PM Jenny Shipley announce a package of rent relief for state housing tenants, designed to help overcome over-crowding and the effects of the reduction of superannuation announced earlier this week. Rent cuts of between $5 and $20 per week will be made for the 15,069 tenants of state owned houses. The initial response from some state housing tenants is that while any relief is welcome, those in Auckland are paying between $225 and $255 per week and the relief was not much. It is also suggested that for many, their accommodation supplement will decrease nearly as much as their rent.

Labour MP Graham Kelly releases a book "Economic Apartheid in the Nineties". The 43-page book on poverty in NZ is being freely distributed to social service organisations, economists, policy advisors, and local authorities.

Secretary-General of the UN, Kofi Annan says that G7 finance ministers are using the IMF to throw money at global liquidity problems rather than the Third World development assistance work the fund was set up for. Annan also asked for immediate debt relief to the least developed nations and the laying of social safety nets for the people of Africa and Latin America.