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    Essential Information on an Essential Issue

    Letter No.113

    6 December, 1999

    An essential summary of her book The Economic Horror

    New, sustainable, well-paid jobs for every New Zealander who wants to work. This is the mandate that Alliance leader Jim Anderton believes New Zealanders have given their newly-elected government.

    The Labour-Alliance coalition, led by Helen Clark, has taken office with a strong working majority. They have clearly signaled a halt to the market-led reforms of the last 15 years, and a softer stance on social policy.

    On election night, Jim Anderton heralded the vote as bringing "a new era of co-operation and partnership for the country". Anderton will be Deputy PM in the new government, and probably also the new Minister of Economic Development and Employment. After years in the political wilderness, he will finally get his chance to lead policy on regional and business development with his eye on the critical bottom-line: jobs.

  • Anderton's contribution will be very much as the junior partner to the Labour-led government. Labour's party vote surged from the 28% it got in 1996 to 38% this time. In comparison, the Alliance party vote fell from 10% to 8%.

    The Greens, who used to be a part of the Alliance, failed to gain a seat or pass the 5% threshold on election night ... although the final count released this week may see their fortunes change.

  • Labour and the Alliance have agreed on a 16-4 cabinet split. The programme of the new government is still being negotiated by Labour deputy leader Michael Cullen and Jim Anderton, and will be spelt out in the governor-general's speech from the throne on December 20th.

    The new government is expected however to move rapidly on those policies which Labour and the Alliance already agree on. Expect:
    — the restoration of income-related rents on state housing, a move which will substantially effect the income of the poorest NZ'ers.
    — a freeze on student loan interest rates for those students who are still studying.
    — a rise in government superannuation payments, perhaps by $10 a week, from next April.
    — a rise in the top income tax rate to 39c for all those earning over $60,000.
    — legislation banning MPs from party-hopping once they have got into parliament.
    — changes to the Employment Contracts Act to give unions more power in employment negotiations.
    — a five-year freeze on tariff reductions.
    — re-nationalising accident compensation insurance under ACC.
    — phasing out the Health Funding Authority over the next two years.

  • The Alliance is expected to be also pushing for
    — more government spending on job creation, public health and education.
    — an immediate rise in welfare benefits of $20 a week.
    — a rise in the minimum wage to $7.50 an hour.
    — the abolition of fees for tertiary students.
    — a commitment to 12 weeks paid parental leave, and four weeks annual leave for workers.
    — a 5%tariff on all imports, except for those which come from Australia.

  • Meanwhile, incoming Finance Minister Michael Cullen has asked former Council of Trade Unions economist Peter Harris to come and work for him. Dr Cullen says he wants to establish a flow of non-Treasury advice. Harris is considering the offer.

    The former CTU economist has been a strong advocate of skills improvement, a proactive role for the government in industry development and the need for productivity improvement. He also has been a critic of tariff reductions, and the cost-cutting mentality of Treasury.

    On election night, Labour leader Helen Clark made a special point of acknowledging the return of the Maori vote to her party. All Maori seats have gone back to their traditional political home, ending their ties with the NZ First party.

    The new faces in the Maori seats all have close links to Maori economic development or employment initiatives. John Tamihere (Hauraki) was the former chief executive of the West Auckland Whanau o Waipareira Trust, Mita Ririnui (Waiariki) and Mahara Okeroa (Te Tai Tonga) were former managers with Te Puni Kokiri (Ministry of Maori Development) and Parekura Horomia (Ikaroa-Rawhiti) was the former boss of the Community Employment Group.

  • Labour's Dover Samuels expects to be Minister of Maori Affairs and says that the Maori caucus within the party will be focussing on improving the Maori economy. Samuels: "We are committed to closing the gap. It is our priority. We have a young team and a committed one, but it won't be an easy task ... the hard part has just begun..."

    Alliance Maori leader Sandra Lee agrees: "The Maori politicians who will be sitting on the treasury benches on 20th December are a lot of new politicians, with a vision for our people, who know only too well what the problems facing Maori are, and are committed to the solutions..."

    "Beneficiaries haven't recovered from the 1991 benefit cuts. Beneficiaries have really been struggling under a regime of market rentals, and both the Alliance and Labour are determined to get rid of market rentals. We've got the minimum wage coming up for review, and we're determined to make sure that it is increased. This will effect a large number of Maori workers who are on the minimum wage."

  • Sandra Lee also sees jobs as a crucial test for Maori politicians in the next administration: "Jobs are number one. Everything else flows from this the crime statistics, poor health, poor housing etc we've got to create some real jobs for Maori people in this country. Our commitment in the Alliance is to create 80,000 new jobs. We're serious about that ... and this is why we've developed our Regional Development plans..."

    Lee says she will be looking closely to the Maori asset base, which is now worth about $5 billion. Lee: "The question is begging: If our assets are really worth $5 billion, how can we justify the high rates of unemployed for Maori?"

    Sources Election Day coverage in Sunday Star-Times, The Dominion, New Zealand Herald, The Daily News 29 November 1999; New Zealand Herald 2 December 1999 "Feeler out to ex-CTU economist"; TV1 Crossfire 29 November 1999 "The Maori Seats".

    Jim Anderton has actually revised his party's target of creating 80,000 jobs in the first term of office, telling The Dominion that this figure was based on the Alliance `s full policies being implemented.

    But Anderton has already indicated his enthusiasm for government assistance to create 1,300 jobs in both textile and possum fur businesses... and he is confident of Helen Clark's support. Anderton: "We want some signals to go out to the New Zealand community as to how this government and our role in it changes things. I don't think there will be any resistance in the new government to getting sustainable jobs that actually get people off the unemployment benefit and save the government hundreds of millions of dollars..."

  • Anderton drew up his "possums for jobs" plan when he visited the Nelson A&P show and came across a machine stripping fur from possum skins, which would be later blended with merino wool. The Snowy Peak company and others are turning the fibre into export textiles and garments. But they cannot get enough possum skins, and they want the government to help.

    Anderton says that the industry leaders had told him that, with government assistance, they could create 1,000 jobs within months ... as well as helping wipe out millions of pests.

  • Otago possum skin merchant Chris Taylor told The Dominion that the industry employed 10,000 trappers ten years ago, but now would be lucky to have 100. The industry exported about three million skins a year at its peak, but has been hit hard by the strong dollar and the collapse of major markets.

    Dave McKinstry, of the West Coast company Possum Pam, says that even a government bounty of $1 a skin would go a long way towards resurrecting the industry.

  • The Forest and Bird Protection Society, however, is critical of the Anderton possum proposal, saying that effective control of the possum for conservation purposes cannot be achieved by commercial trapping.

    Forest and Bird Director Kevin Smith, who was a commercial possum trapper in the late 1970s, says the idea of sending unemployed people to trap possums for an export fur industry sounded great in theory, but he believes it is a marginally viable industry. Smith says that current possum control operations already provide significant employment opportunities, and DOC has become very efficient at reducing possum numbers by 80-90% in areas targeted for control.

    Sources The Dominion 1 December 1999 "Clark cracks the whip on coalition negotiation" by Victoria Main; The Daily News 1 December 1999 "Pace quickens in party talks"; New Zealand Herald 1 December 1999 "Possum power fuels jobs dream" by Vernon Small; The Daily News 2 December 1999 "Possum plan criticised".

    The new government will be looking closely at the future of Winz and its boss, Christine Rankin. Labour leader Helen Clark has warned public sector bosses to expect a shake-up. Clark: "To those in the public sector who have forgotten how to spell the words `public service', I say get ready for change. The party is over..."

  • In the week before the polls, yet another Winz scandal hit the papers with revelations of big payouts to Winz senior executives in settling personal grievance cases. Winz national commissioner Ray Smith has revealed that, since Winz was established in October last year, nine personal grievances have been lodged and settled and the total payouts have come to $326,500.

    One of the payouts, which ended up totaling $106,000, was paid for the immediate resignation of a senior executive. Documents faxed anonymously to Labour's Steve Maharey showed that the department was nervous about the payout, which was negotiated during a period of public outrage over golden handshakes in the state sector.

    The leaked papers suggest that Winz was anxious to settle the deal before government tightened rules on secret payouts. In a letter from Winz to the sacked executive, dated June 24, the department says: "You are by now no doubt aware of the very real risks surrounding the issue of payments being made to senior public servants. To date we have not received instructions to cease negotiating such payments nor to cease agreeing to confidentiality clauses. Nevertheless, there exists a real possibility that such an instruction could be issued by the Government in the near future. Accordingly, we are anxious to conclude settlement of this matter without delay ..."

    According to The Dominion, Winz agreed to pay the executive $100,000 in return for his immediate resignation. When the department realised that such a payment was unlawful and exceeded chief executive Christine Rankin's authority, it put together a deal which meant it would not need to seek ministerial approval.

    The executive received a lump sum payment of $50,000 to stop work, and remained on the Winz payroll for six months on "study leave". At the end of that time, he would receive an extra month's pay and a performance bonus of $15,000. This takes the total payout to $106,000.

    The executive also has his study fees paid for by Winz, receives career and financial counseling worth $2,500, and gets annual leave entitlements of $4,600 including ten days accrued while he studies on full pay. A confidentiality clause was written into the agreement.

    Winz Minister Peter McCardle admitted he had approved the payment "reluctantly" last month, after seeking Crown Law advice. State Services Commissioner Michael Wintringham says he is investigating the matter.

    Labour's Steve Maharey: "This is a case of stunningly inept personnel management at the top of a major government department. Several cases like this have been reported to me verbally, but Winz has always managed to hush them up with confidentiality agreements. This is one that got away..."

    Maharey has called on Michael Wintringham to reopen inquiries into Christine Rankin's management practices.

  • Helen Clark says Christine Rankin was wrong in sanctioning the payout, and has pledged an inquiry into the department after the election. Clark says she won't comment on job prospects for departmental chief executives, but it is understood that Ms Rankin's future would hinge on the outcome of the government inquiry. Clark: "Ms Rankin and Winz continue to lead the field as examples of how not to run a government agency. In her haste to pay off a senior executive, she made an illegal payment..."
    Sources New Zealand Herald 23 November 1999 "Labour `king hit' reveals Winz payout" by Vernon Small; The Dominion 23 November 1999 "Winz $100,000 bungled handshake" by Mathew Brockett and Karen Howard; The Dominion 24 November 1999 "Labour victory could end Rankin's reign" by Mathew Brockett; New Zealand Herald 24 November 1999 "Payout scandal trumps National"; New Zealand Herald 30 November 1999 "Coalition axe poised above public sector" by Andrew Laxon

    Amidst the protest violence last week at the World Trade Organisation talks in Seattle, the UN Secretary-General Kofi Annan expressed sympathy with some of the views of protesters. Annan was unable to present his own speech to the WTO conference, because protesters had disrupted the opening ceremony and forced him to stay in his hotel suite.

    Annan says the protesters are right to be concerned about jobs, human rights, child labour, the environment and the commercialisation of scientific and medical research. However, he says "it seldom makes sense to use trade restrictions to tackle problems whose origins lie in other areas of national and international policy..."

    Annan believes that the Seattle Forum was not the place to try and negotiate labour, environmental and other social issues. Instead, the UN bodies dealing with these matters should be strengthened "to avoid giving industrial nations a pretext for more protectionism."

    Source New Zealand Herald 2 December 1999 "UN head backs protest concerns" by Reuters

    " It won't be much of a victory if all the WTO succeeds in doing is launching a trade liberalization drive that governments cannot sell to their citizens. Western leaders ought to have learned that lesson from last year's debacle over the Multilateral Agreement on Investment.

    " For three years, behind closed doors, negotiators from the world's 29 richest countries tried to hammer out of a set of rules for global investment. Finally, last fall, in the face of spreading grass-roots opposition, the talks collapsed.

    " Yet trade ministers are making most of the same mistakes again:

    " They are haggling over technicalities and ignoring the human impact of trade deals.

    " They are refusing to address legitimate public concerns about globalization: the loss of national sovereignty, the growth of an entrenched underclass and the danger to the environment.

    " They are negotiating in secrecy.

    " They are claiming that there is no time to slow down and think through the consequences of exposing their economies to global competition.

    " U.S. president Bill Clinton, the only head of government attending the talks, tried to send a conciliatory signal yesterday, promising that the concerns of labour and environmental groups would be taken into account.

    " But it will take more than the assurances of an outgoing U.S. president to convince citizens who are worried about their jobs and their future, to support a trade agenda over which they have no control"
    Toronto Star editorial 2 December 1999

    "The WTO is not just about agriculture. Nor is it benign. It fundamentally affects the capacity of New Zealand governments to determine and implement domestic economic and social policy. It is time to move beyond the free-trade rhetoric and embark on a well-informed, broad-ranging debate about the costs and benefits of the forthcoming WTO negotiations for New Zealand. The election result puts the onus on Labour to do so..."
    Professor Jane Kelsey, Auckland University

    Sources Toronto Star editorial 2 December 1999 "Danger Signals in Seattle"; New Zealand Herald Dialogue 1 December 1999 "Wheeling and dealing by WTO needs close scrutiny" by Jane Kelsey

    The Jobs Research Website has been awarded the Premier prize in the Internet category of the 1999 Media Peace Awards, organised by The Peace Foundation.

    The award was announced on 18th November at a ceremony at the Maidment Theatre, Auckland. The Peace Foundation's greenstone and silver trophy was presented to Shirley Vickery who received the award on behalf of the Jobs Research Trust.

    The Jobs Research Website was designed by vivian Hutchinson, who is also editor of The Jobs Letter.

    In announcing the Premier Award, the Peace Foundation said: "The judges considered the winning site not only succeeds as a source of information on employment and unemployment related issues, but does so in a way that effectively uses the new medium.

    "The site supports the mission and values clearly set out on the front page. It is well architected with a simple structure, making it easy to navigate, and the developers have avoided technological gimmickry..."

    The Media Peace Awards recognise those in the media whose work increases co-operation not conflict, tolerance not tension. Winning entries are those that demonstrate flair and skilful use of the media in various categories of Print, Radio, Television/Film, Internet, and Public Relations.

    peace99.jpg - 4225 Bytes

    Nga Tohu Rongomau Papaho The Media Peace Awards recognise those in the media whose work increases co-operation not conflict, tolerance not tension.

    Winning entries are those that demonstrate flair and skilful use of the media in various categories of Print, Radio, Television/Film, Internet, and Public Relations.

    The Judges look for work which challenges prejudices, advances understanding, goes beyond the sensational or trivial treatment of the issue, examines issues in their broader context, suggest ways of moving beyond conflict, and encourages moves for positive change.

    The Peace Media Awards Ceremony features prominent journalists and media commentators as keynote speakers.

    This year, the guest speaker was Pattrick Smellie, a journalist with the Sunday Star Times who has recently returned from East Timor. Past Speakers have included John Pilger, Patrick White, Judy Lessing, Kim Hill, Ed Asner and Noam Chomsky.

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