Letter No.89
28 October, 1998

8 October 1998

PM Jenny Shipley and Minister of Housing Murray McCully announce a plan to address the rural housing crisis. The scheme is designed specifically for low income earners in Northland, East Cape, the eastern Bay of Plenty and Wairoa. People who qualify could get a Housing NZ loan with a 3% deposit and have their interest fixed at 7.95% for seven years. Ngapuhi in Whangarei hopes the scheme will help up to 1,000 tribal members buy their own homes.

Wairoa mayor Derek Fox is critical of the new housing proposals. He says that nearly half the people in his district have incomes of less than $10,000. Because of this they have no savings even for the reduced deposit or for the repayments. Fox suggests that policies to create meaningful employment would have a far greater impact on solving his region's housing needs.

The NZ Education Institute says the community wage scheme is replacing real jobs. Jackie Hawthorne, NZEI's Auckland representative, says that schools whose operations budgets are inadequate are discarding their current support staff, including teachers aids, for less expensive and less trained community wage workers.

JP Morgan and Co, the fourth largest US bank predicts a recession in the US next year.

9 October 1998

The final review of staffing of the police service is announced at the Police Association's annual conference. Chief executive Chris Pentecost ends speculation on the number of police to be cut by saying 380 jobs will go.

Indonesia's unemployment figures continue to rise. Two million more Indonesians are expected to lose their jobs between now and the end of the year, according to Manpower Minister Fahmi Idris. This would bring the number of unemployed to 20m people or 22% of the Indonesian workforce.

10 October 1998

NZ Local body elections are held.

11 October 1998

Prime Minister Jenny Shipley says a review of the student loan scheme will probably result in the loans being paid incrementally rather than as lump sums.

12 October 1998

Russian finance minister Mikhail Zadornov admits that he has no overall plan for the beleaguered Russian economy. Zadornov says the crisis is so complex and changing so rapidly that his government is reacting on an ad hoc basis. There is growing concern there will not be enough food for Russians for the upcoming winter.

Germany's new government, although not yet sworn in, announces tax relief as a means to get the economy moving. The new income tax package will see an additional NZ$3,250 per year in the pocket of the average working family. The expected result will be greater domestic spending creating growth in the German economy.

More timber industry job losses hit Taupo. Fletcher Challenge Forests spokesperson Jacqui Millar says that about 100 of the 280 people at the Fletcher mill in Taupo may be facing redundancy. The news comes on the tail of Carter Holt Harvey's announced mothballing of its Taupo mill earlier this month.

13 October 1998

Ericsson Communications announces 50 jobs will go as the company decides to end its manufacturing activities in Napier. All manufacturing by Ericsson will now be contracted out.

The decommissioning the fishing trawler Pakura by joint owner Sealord sees 75 jobs lost in the Nelson area.

The Japanese Lower House of Parliament approves the cabinet's plan to spend nearly NZ$1,000 billion to rescue its besieged banking industry. Approximately NZ$395 billion will be used to recapitalise solvent banks, NZ$284 billion to nationalize failed banks by buying up their shares and bad debts, and NZ$268 billion to pay back the depositors of bankrupt lenders. Economists say that while this massive spending addresses the banking industry, the Japanese government should now cut taxes to get people spending and the economy moving again.

14 October 1998

Work capacity assessment trials for people on invalid benefits, due to start this month, are delayed for two months.

The NZ floating house mortgage rate drops to 6.95%. This is the lowest home lending rate since 1970. Seven months ago the floating rate was 11.25%.

15 October 1998

The employment dispute between the nation's firefighters and the Fire Service Commission receives a ruling from the Employment Court primarily in favour of the firefighters. The chief judge Tom Goddard says the Fire Service Commission can not sack its 1,525 workers and ask them to reapply for 1,250 positions. Chief judge Goddard: "The commission is not entitled to disestablish the positions of all its firefighters and community service team members and replace them with firefighters and CST members called by a different name merely by adopting the expedient of subtly altering the job content." The court says the Fire Service Commission had not acted as a good employer and that it would have to negotiate changes with the firefighters union.

16 October 1998

Finance Minister Bill Birch says he was told by top US officials on his trip there that the world economic problems had recently become much more frightening. He was told that 40% of the world is now estimated to be in recession. This does not bode well for NZ's export led recovery. Birch: "Month by month throughout 1998, estimates for world growth have continually fallen. Large and developing markets for New Zealand goods have, meantime, been decimated."

A further 0.25% cut in interest rates by the US Federal Reserve is seen to be an attempt to create growth there, avoiding a recession there that is now almost being considered inevitable.

18 October 1998

Another Employment Court ruling is heralded by unionists as a step in favour of the rights of workers. The judgment concerns workers at Tuckers Wool Processors saying that the employment contracts signed by nine workers was harsh and oppressive. The issues concerned the lack of payment for overtime, the right of workers to use a union to negotiate on their behalf, the requirement of sick workers to submit to a medical examination by a company appointed doctor and random drug and alcohol testing.

US Treasury Secretary Robert Rubin says that the world economic crisis was years in the making and no one should expect any quick fix answers. He points to the new government of Korea as a good example of pulling together unions and companies to build support for reforms.

The Korean Financial Services Commission announces Korean banks are holding some NZ$210 billion in bad loans. This is certain to topple many banks. The Korean government is yet to implement a programme to deal with the banking crisis.

20 October 1998

Napier's Daily Telegraph and Hasting's Hawke's Bay Herald Tribune, both owned by Wilson and Horton, will close and be replaced by a single Hawke's daily newspaper in April, 1999. Sixty jobs are expected to be lost in the changeover.

ACC intends to put as many as 5,000 of its claimants back into work - or at least off ACC - during the next year. Chief executive Garry Wilson says that for the first time in ten years the number of long term claimants has been reduced. Getting 5,000 people off its books would see ACC saving of $1.75 billion per year.

The Corrections Department annual report says the department has about 4,000 employees servicing about 5,300 people in NZ's prisons. The number of prison inmates is projected to increase by 22% over the next eleven years. The government intends to have five new prisons by then. Indications are that the new prisons will be privately run.

The Labour party finance spokesperson, Michael Cullen says that his party will support a rise in the top tax rate. The Labour policy is that those earning over $75,000 will be taxed at 39%, up from the current 33%.

21 October 1998

The salaries of heads of government departments increase by an average of over 12% this last financial year. The average NZ wage increased less than 2% over the same period.

22 October 1998

A Harvard University survey says that one in four NZers are going without medical care because they can not afford it. The survey also studied attitudes of people to their healthcare systems in the US, Canada, Britain, Australia and NZ. It showed that NZers have higher anxiety levels than the other countries about their healthcare system. Specifically, NZers are worried they will be unable to afford medical care, not be able to get advanced medical care, be incapable of paying for long term care of a relative and that they will have to wait too long for non-emergency care.

Banks come under fire for keeping interest rates on credit cards at about 20% when borrowing and lending rates have dropped to below 7%.

26 October 1998

Labour Day. This NZ public holiday originally celebrated the introduction of the 40 hour week. In 1997, half of working NZers said they regularly worked more than 40 hours.

Housing NZ posts an $122m profit.