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    Essential Information on an Essential Issue

    Letter No.103

    17 July, 1999

    Interview with the Alliance leader Jim Anderton on how he would make a difference on jobs

    With the strong possibility of a change of government at the end of this year, attention is turning to what a potential Labour/Alliance coalition will do about jobs. If a coalition is achieved, Alliance Leader Jim Anderton will be a key contributor to economic policies. And action on jobs will be the top priority for the Alliance members of the coalition.

    In the next few weeks, the Alliance will be announcing details of its economic development policies which will include proposals for an Economic Development Fund to fund new job-rich developments in both the private and public sector. Jim Anderton is keen to see the establishment of a new Ministry of Economic Development and Employment ... and wouldn't be surprised if he finds himself as its Minister in a future coalition government. This Ministry would run the economic development fund through Regional Development Agencies similar to Scottish and Irish development models. In this issue of The Jobs Letter, we include excerpts of an interview with Jim Anderton on his proposals.

    Source - The Alliance press release 29 June 1999 "Alliance wants jobs fund"

    Trade and Jobs have been in the spotlight this month, with the Auckland APEC meetings focusing local debate on tariffs and their effect on income and employment.

    PM Jenny Shipley told the Auckland's Northern Club that the APEC conference was showing us "how jobs and wealth are genuinely created" here in New Zealand.

  • Last month the PM released a study by New Zealand Institute of Economic Research which showed that trade liberalisation has put more money in people's pockets. The study, prepared for the Ministry of Foreign Affairs and Trade, showed that the process of tariff removal begun in 1987 has delivered what Shipley calls "...the equivalent of a significant wage increase to New Zealand consumers". The report focused on four consumer goods that were subject to high tariffs - cars, household appliances, clothes and shoes. These items together account for about one-quarter of all household spending.

  • The figures: tariff removals have led car prices to drop by 16% since 1987; household appliance prices have fallen by around 9%; clothing prices have fallen by 15%; and shoe prices by 5%.

    Jenny Shipley says that when we add all this together, typical New Zealand householders have another $7.30 a week in their pockets, thanks to tariff removal in these four items alone. For a three-person household, that's a gain of $22 a week, or $1,140 a year.

    When the PM's economic advisers look forward to the year 2010, the gain for the average consumer is expected to rise to $14.10 a week. This translates to an extra $42 a week, or $2,180 a year.

  • Shipley: "In case you listen to the arguments that tariff reductions have meant job losses, let me tell you that during the same period, more than quarter of a million new jobs have been added to the economy. That's in the last decade. Yes there have been job shifts, and sector changes. But overall we've created more than a quarter of a million new jobs for New Zealanders..."

    "The evidence is clear. In terms of both jobs and prices, New Zealand is winning from trade liberalisation. This government has every intention of continuing down this path.

    "I challenge other parties to get off the fence and say whether they support or oppose our APEC goals. While Mike Moore's position is clear, Helen Clark is still sitting on the fence, and Jim Anderton is trying to turn back the tide ... I challenge them to come clean."

    Source - "Shipley On Trade And Jobs " PM Jenny Shipley speech to Northern Club Luncheon in Auckland 2 July 1999

  • The Alliance has been quick to take up this challenge. Jim Anderton's view on tariff reductions is that the benefits to consumers in terms of price reductions have come with "an horrendous human price tag" for people who once had a job.

    The Alliance has released figures that show at least 25,000 New Zealanders lost their jobs as a direct result of tariff reductions since 1987. In 1987, 58,700 people were employed in making cars, clothes, footwear and associated industries in New Zealand. Now there are only 33,000 people in those industries. Anderton: "Most are likely to lose their jobs as more tariffs are abolished in the next few years ..."

    The Alliance also reports that there has been no gain in jobs for our exporters by removing tariffs on manufactured goods. Jobs in Agriculture have only increased by 1,900 since 1987, whereas jobs in Manufacturing have decreased by 26,500.

  • Anderton says New Zealand has sacrificed its own industries through tariff cuts - cuts which are far in excess of our major trading partners. And New Zealand still faces unfair tariff competition from our major trading partners. His figures:
    -- tariffs on beef range from 10% in the USA to 50% in Japan and 70% in China.
    -- tariffs on apples range from 18% in Japan, 48% in Korea and between 40 to 100% in China.
    -- tariffs on butter and cheese range from 10% to 20% in the USA, 35% in Japan, and 40-95% in Korea.
    Source - "25,000 Jobs Lost Though Tariff Reduction, Axe To Fall On 33,000 More" Press Release from The Alliance 25 June 1999

    The Business Roundtable Executive Director Roger Kerr is concerned that if there is a change of government at the end of the year, then the Employment Contracts legislation will be repealed. Kerr criticises Labour and the Alliance for "wanting to turn the clock back", and says that the opposition parties seem unwilling to see that their criticisms of the Employment Contracts Act have not been borne out.

    According to Kerr, statistics are showing that the number of work days lost through strikes has fallen since the legislation was introduced, and the average weekly earnings has risen from $564 in May 1991 to $682 in February 1999. New jobs have been created and unemployment has fallen from 11% to 6% by 1998. Kerr: "It could have been down to 4% by now had NZ maintained the momentum for change..."

    "In the labour market we can ill afford to go back down a path of re-regulation and union involvement. It is paradoxical that those who claim to care most about the unemployed and people on low incomes continue to promote policies that keep people out of work and widen income inequalities. NZ has been moving in the right direction and should go further. Unemployment and labour market performance generally, is a matter of choice."

  • Roger Kerr told a Wellington Chamber of Commerce meeting that the belief that full employment is a thing of the past and unlikely to be achieved again "... is nonsense, as the US is showing us today."

    Kerr: "There is no reason why we should not be looking back in a few years time on the high unemployment rates of the 1980s and 1990s as an aberration, just as the high inflation years of the 1970s and the 1980s are rightly seen as an aberration today. To boost productivity and employment prospects, the key step is to establish full freedom of contract in the labour market..."

    Kerr sees the key factor in unemployment as one of employers being reluctant to employ during an economic recovery because of the inclusion of personal grievance provisions in contracts. He wants these to be made a matter of voluntary negotiation: "Open labour markets allowing workers to quit unsatisfactory jobs and employers to fire unsatisfactory workers are the greatest protection for both parties against individual injustice. Other protections can be negotiated by contract, if both parties wish ..."

    Source - NZPA 3 July 1999 "Kerr links jobs to Free Market"

    Mayors from around the country have joined to support Labour's disapproval at Work and Income New Zealand's plans to restructure the operations of the Community Employment Group. Labour spokesperson on employment Steve Maharey wrote to mayors last month to draw their attention to the WINZ review of CEG. He has received responses from over a dozen mayors - and reports that the majority have written in support of CEG and its work.

    Maharey: "It is clear that WINZ is proposing changes which will see the end of CEG as a stand alone organisation focused on community economic development. It appears CEG will be merged into WINZ and focused on helping individuals find community wage work. Such a change would be very short-sighted as community development has a significant impact on long-term development within regions. It is time for WINZ to listen to the communities it is there to support. Its track record of managing change has been disastrous, so why risk a programme that is accepted as having positive benefits?"

    Source - Press release from Steve Maharey 29 June 1999 "Mayors express concern about fate of Community Employment Group"

    "Community Banking" is the theme for this year's COMMACT annual conference to be held in Wellington on 3 August. Special guest at the seminar will be Russell Jenkins from the Bendigo Bank in Australia. For more information, contact COMMACT at P.O.Box 423, Auckland phone 09 302 2496 fax 09 377 4804.
    Source - conference flyer

    There are two APEC "peoples" conferences being held in Auckland just before the Leaders Summit on September 12-13.

    "Reclaiming APEC" is a conference being held at the Auckland University from Tuesday 7th to Thursday 9th September. The conference is supported by Proutist Universal, the Sustainable Futures Trust, the Pacific Institute of Resource Management, the Aotearoa New Zealand Environment Trust, and Native Forest Action. Guest speakers will include Walden Bello, Hazel Henderson, Sir Paul Reeves, Pita Sharples, Sukhi Turner, Marilyn Waring, Jeanette Fitzsimons, Sohail Inayatullah, and Marion Wood.

    The conference flyer describes the gathering as a chance to critique APEC's "misguided direction" and to develop positive models for people and earth-centred development. For more information contact or the conference website at

  • The "Alternatives To The APEC Agenda" Conference will be held in Auckland on Friday 10th to Sunday 12th September. It is organised by the Aotearoa/New Zealand APEC Monitoring Group and sponsored by GATT Watchdog, CAFCA and the NZ Trade Union Federation. Speakers here include: Antonio Tujan, Executive Director of the IBON Databank in the Philippines; Moses Havini, of the Bougainville Freedom Movement; Sunera Thobani, of the Simon Fraser University in Canada; Crispin Beltran, the Chairman of Kilusang Mayo Uno (KMU) in the Philippines; and New Zealanders Dr Jane Kelsey, Moana Jackson, Annette Sykes, Robert Reid, Radha D'Souza, and Aziz Choudry.

    To receive registration pack for the forum contact or fax 09 846 3297 website

    Source - internet flyers from conference organisers at, and gatt watchdog at

    This electorate contains 21,837 households, of which 44% have household incomes below $30,000 per year before tax. That 44% is equal the rate for the country as a whole. There are 33,675 adults aged 20-59 in the Taupo electorate, of whom 58% are in paid, full-time work. Another 12% are in part-time work. Unemployment in the electorate is 4% above the national average.

    Localities in the Taupo electorate which have high levels of deprivation are: Rangipo, Taupo East, Mangakino, Tokoroa: Central, Stanley Park, Parkdale, Matarawa, Strathmore. Turangi, Wairakei-Aratiatia, Raetihi and National Park. (- Electorate statistics compiled by Judy Reinken, and based on 1996 Census).

    Source - Judy Reinken, statistics based on 1996 Census of Population and Dwellings

    US President Bill Clinton last week embarked on a week-long tour of impoverished areas of the US, including the first visit of a US president to an American Indian reservation this century. His visits were to highlight the plight of the nation's estimated 36m poor people, and to promote to business leaders that depressed areas do offer commercial opportunities.

    Clinton highlighted a Department of Housing and Urban development study that found that inner city neighborhoods have $US 330 billion in purchasing power. Much of this however was not spent in the inner cities because so few businesses are willing to locate there.

    Clinton used the poverty tour to promote his "new markets" initiative involving tax credits and loan guarantees for businesses that invest in distressed areas. The new tax credit would be given for up to 25% of the money a firm invests in poor areas. According to the Reuters news service, this is expected to generate $6 billion in new equity capital into the areas, while costing the federal government only about $980 million over five years.

    At every stage of the tour the president was accompanied by company executives and bankers. He told the coal-mining town of Hazard, Kentucky: "I came here in the hope that we can say to every corporate leader: Take a look at investing in rural and inner-city America ... It's good for business, good for America's growth and it's the right thing to do..."

    Source - New Zealand Herald 7 July 1999 "Offer of Hope to USA's 36m in poverty" by Reuters; The Guardian 8 July 1999 "Clinton on poverty drive, at last" by Martin Kettle

    " In a recent speech, Clinton compared himself to Franklin Roosevelt. Both of them, he said, were "people who were progressive, people who try to change things, people who keep pushing the envelope.

    "The difference is that Roosevelt was acting at the start of his presidency in a time of economic crisis, and was almost entirely willing to try any means that worked to achieve his ends. Clinton, by contrast, is acting at the end of his presidency in a period almost bereft of economic crisis, and will only try those means that pass muster with the stock markets..."
    -- Martin Kettle, Washington Diary, The Guardian

    "It's positive, and long overdue, that Clinton is addressing these issues, but to be saying that you want to deal with poverty while you're calling welfare `reform' a success is rather disingenuous. While the US welfare rolls have dropped sharply, studies indicate that many have simply joined the ranks of the working poor. They now have jobs that are paying below poverty wages, without benefits or affordable child care; moreover, states have been `forgetting' to tell them that they are still eligible for Medicaid and food stamps ..."
    -- Mimi Abramovitz, Professor at the School of Social Work at Hunter College and author of "Regulating the Lives of Women"

    "It is good that Clinton is going out and calling attention to these issues, but some of the suggestions are flawed. If you build a base of incomes and social and physical infrastructure, then business activity develops, but if you throw business activity in a region where that does not exist, then you have a sweatshop phenomenon. What is needed is housing assistance, public services, money to improve schools and the environment, and income support such as through the earned income tax credit and a higher minimum wage."
    -- James K. Galbraith, professor at the LBJ School of Public Affairs,

    "If it wasn't for NAFTA, hundreds of thousands of jobs would not have left the U.S., creating more poverty. If there were minimal protections for migrant workers, then we wouldn't have the depth of poverty that we have. If North Carolina, where I live, wasn't a `right to work' state, people could do collective bargaining and have the guarantee of organized workplaces. As it is, they can be fired at will. What you have now are people who are afraid of losing jobs, so they don't push for better conditions and safety at their workplaces..."
    -- George Friday, a member of the Grassroots Policy Project and a low-income activist.

    "What the president's tour highlights is that there are really important pockets of poverty in the country. Full employment is the single most important thing in lifting people out of poverty, and the president seems to understand that. But a rising tide lifts boats unequally. While poverty is falling, income inequality remains at post-war highs ... Using tax incentives just moves investment around..."
    -- Robert J. S. Ross, author of the forthcoming "Hearts Starve: The New Sweatshops in Global Context"

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