Essential Information on an Essential Issue
23 June, 2000
The Jobs Budget
- Commentary from the Editors of The Jobs Letter
- The Jobs Machine Initiatives
- Closing the Gaps
- Anderton and Bunkle on Sustainable Development
- Community Employment Organisations
- Conservation and Bio-Diversity Strategies
- Topoclimate Funding
- Community Employment Group to Move
- Treasury Incomes Study
- Budget on the Internet
- Voices on The Jobs Budget
" I am confident that an active industry policy, harnessed to a streamlined and much
improved training system, and a vibrant research and development programme, will generate quality jobs.
A job though, at any price, is not the standard that a participatory democracy sets itself. We
spend too much time at work, are too much defined by work, and express ourselves socially too
much through work, for work to be set aside from social policy... "
Dr Michael Cullen, Treasurer and Minister of Finance, from his Budget 2000 speech
" For too long governments have neglected regional and industry development, allowed
skill levels to fall behind those of other developed countries and neglected the knowledge
economy. This Government will work in partnership with the regions, business and local government
to turn that around ..."
Jim Anderton, Deputy Prime Minister and Minister of Economic Development
" The Government's employment policy is summed up in one word jobs. Budget 2000
begins the process of turning around the mistakes of the past by spending existing funds in smarter
ways and by introducing new programmes which have an unashamed job creation role ..."
Steve Maharey, Minister of Social Services and Employment
BUDGET ANNOUNCEMENTS on 15 June have seen funding allocated for Jim
Anderton's "jobs machine" initiatives, as well as previously-announced programmes like Modern
Apprenticeships. There is also $90m of new funding in employment and economic development areas, with
a substantial amount allocated to rebuilding the "capacity" of social services, and "closing the
gaps" between Maori and other New Zealanders.
This funding includes three new employment programmes, along with other initiatives
which target migrants and mature workers, and will commission research into more effective
employment programmes and future work trends.
- Highlights of the Budget 2000 package include :
$331.8 million (over four years) for industry and regional development through the Ministry
of Economic Development (MED) Jim Anderton's "jobs machine" initiatives (see
The Jobs Letter No.120)
An extra $30 million for research, science and technology ... including a record $20.8
million allocation to encourage R&D in the private sector.
$42.2 million (over four years) for the Modern Apprenticeships programme
(announced earlier this year, see The Jobs
New funding of $42 million (over four years) for Maori and Pacific community
organisations to "improve their capacity to promote economic and employment activity".
$8.5 million (over three years) to establish Community Employment Organisations
(CEOs). This new programme aims to assist the development of community-based organisations which
are "creating employment for disadvantaged individuals".
an Artworks programme, worth $585,000 (over three years) to "create employment in
the creative industries".
an Activity in the Community programme which will replace the Community Work
scheme. This new programme expects to work with up to 13,000 participants in its first year. The
government will be reallocating $33.6 million of existing funding together with investing a further
$24.9 million "...to refocus the scheme and better tailor it to the needs of individual job seekers".
$330,000 (over the next year) to trial specific programmes aimed at meeting the needs of
the recent migrants to New Zealand and the growing number of unemployed mature job seekers.
An increase of $23 million (over four years) in the Industry Training Fund, taking this fund
to $281.8 million, over four years).
$32 million extra (over four years) for the Training Incentive Allowance.
A variety of measures "to help lower the cost of tertiary education".
$3 million extra (over four years) to Student Job Search.
$8 million (over four years) to adult education and community learning services to help
improve basic literacy skills.
an extra $6.2 million (over four years) to enable the Careers Service to expand the
careers education it provides to schools and parents, including the development of information on
the KiwiCareers website.
a commitment to permanently fund the CareerPoint 0800 information line which provides
free and impartial advice on career and training options, and is aimed at all age groups.
$4 million to pilot a new Gateway programme designed to improve the transition from
secondary school into the workforce.
$1.7 million (over three years) to "undertake action research into new employment initiatives".
$2 million (over four years) for the Department of Labour to produce advice on "future work trends".
- THE "JOBS MACHINE" INITIATIVES
The Budget has revealed some more details on how the Ministry of Economic
Development will be administering its "jobs machine" initiatives the range of advisory and practical
assistance programmes for new and growing businesses. These new programmes will be
unveiled progressively between July and September, with three of them being available from the
beginning of next month.
- Regional Development Programme. This is aimed at strengthening regional
economies and will take a bottom-up approach, "...working with local communities to assist them to
make best of the assets and advantages of their regions."
How do you qualify? A proposal must involve a number of community groups; have
emerged from an inclusive regional development consultative process; have local funding of at least 25%
of the total cost; and, "be sustainable and consistent with the Government's policies".
How much is available? Up to $100,000 for any single strategic planning or audit initiative in
any single region. Up to $2 million for major regional or community initiatives.
- Early Stage Financing. These are grants which will assist the development of
innovative projects in the early stage ... " ensuring that entrepreneurs with innovative ideas are not
prohibited from realising the potential of those ideas by a lack of early stage finance." The grants will
enable entrepreneurs to develop existing research for commercial applications, establish a firm, or
expand a firm that is very small or has a limited track record.
How do you qualify? A proposal must come from New Zealand resident individuals and
businesses with well-developed early stage project proposals that are committed to growth.
Grant applications need to show a minimum contribution of 50% from non-government sources.
How much is available? The grants will be limited to $10,000 in any one year.
- Incubator Development Programme. This will provide individuals and small
businesses with "skill-based assistance to develop their ideas to the point where others can invest in them".
The government plans to fund a national programme of workshops and seminars which
will provide information and training to small businesses about obtaining investment capital. It
also will support a national network of "ideas brokers" who will act as a focal point for
innovative entrepreneurs and companies and help them obtain investment funding.
Source Backgrounder 15 June 2000 "Industry and Regional Development" Jim Anderton
- SUSTAINABLE DEVELOPMENT
Economic Development Minister Jim Anderton, and his Associate Minister Phillida
Bunkle, have released a cabinet paper on "sustainable development" which they say underlines their
overall strategies for economic and regional development. Bunkle: "Development which ignores
the essential needs of the poorest people or erodes the quality of our environment is not
sustainable development. This new approach will integrate social environmental and economic issues.
Anderton defines sustainable development as "meeting the needs of the present generation
without compromising the ability of future generations to meet their own
needs". He says that the Budget announcements represent the first time that the government has taken environmental
and social factors into account alongside purely economic ones.
Anderton: "Sustainable development means a major shift in government policy. Previous
governments have only worried about short-term economic gain which has often been at the expense
of the environment or jobs. This new approach realises that the benefits of growth do not
always trickle down, and sustainable development must address human needs directly..."
- Bunkle and Anderton list several key factors in guiding sustainable development decisions:
Thinking broadly about costs and benefits, not merely separating issues into
economic, environmental and social compartments
Considering long term effects as well as short term ones
Assessing indirect as well as direct effects
Taking extra care when developments might be irreversible.
Source Press Release 14 June 2000 "Sustainable Development, key to new industries"
Jim Anderton and Phillida Bunkle.
- COMMUNITY EMPLOYMENT ORGANISATIONS
Establishing a network of Community Employment Organisations (CEOs) was one of
the key pledges in Labour's election employment manifesto. The $8.5 million will be directed
to "creating additional employment opportunities for disadvantaged job seekers in community
Steve Maharey defines these community enterprises as providing services of benefit to
the economy or the environment ... but they should not be in direct competition with the
private sector. His examples: foreshore beautification programmes, or providing clerical and
financial services to community organisations. His goal: that Winz will start referring job seekers to
CEOs later this year.
How will CEOs be funded? The final policies are still being worked out. The preliminary
information available suggests that the CEOs will be eligible for partial wage subsidies to employ
disadvantaged job seekers, with the CEO topping up the subsidy to at least the minimum wage.
There is also the expectation that CEOs should be trying to become independent of wage subsidies
over time and looking to take on some of their workers on an unsubsidised basis once the
Source Press Release 20 June 2000 "Maharey announces plans for Community Employment organisations"
- FUTURE WORK TRENDS
While the government is not setting up a specific "FutureWork Unit" (as promised in
Labour's election employment manifesto), the $2 million special "future work trends" funding
will enable the Department of Labour to commission specific research on changing labour
market trends. Most likely, this work will be done by the department's own Labour Market Policy
Steve Maharey says that an immediate priority for this funding will be a project to determine
how we can close the "digital divide" between those with and without skills and access to
information technology "...so that all New Zealanders can better take advantage of the world-wide growth
in the knowledge industries."
Source Budget 2000 Press Release 15 June 2000 "Creating New Jobs Opportunities" Steve Maharey and
- BIODIVERSITY AND GREEN FUNDING
The government has announced significant funding in conservation and bio-diversity
strategies ... several of which contain significant employment benefits. An extra $57 million will
be spent on controlling animal pests and weeds on public conservation lands over the next five
years work which represents a 150% increase in invasive weed control and enhanced control
of browsing pests such as goats, deer and possums.
Specifically, this new work will involve:
Increasing the area of high conservation-value habitat under possum control.
Goat control to improve natural habitats and prevent expansion of goat populations
into currently goat-free areas.
Managing deer farm escapes and illegal releases to prevent new deer populations
Investigating the impacts and distribution of noxious fish, including Gambusia and Koi
carp, and putting in place measures to contain their spread.
Actively searching for new weed invasions while they are still manageable.
- Conservation Minister Sandra Lee is keen to see this increased funding creating
more opportunities for local communities and tangata whenua to become aware of the threats
facing New Zealand's biodiversity ... and also to become more involved in the pest and weed
Source Press Release 8 June 2000 "Biodiversity Funding - Animal Pests And Weeds" Sandra Lee
- This year's Budget also included a special "Green Budget" package a series of
measures totaling $15 million, reflecting a partnership on specific issues between government ministers
and the Green Party. These Green initiatives include funding towards: a stop-smoking programmes
for low-income New Zealanders; implementation of the Greens' energy efficiency legislation;
stepping up biosecurity measures (increased inspection of containers and used cars); running
conservation awareness programmes; resourcing environmental legal aid; pilot work on
alternative national accounts and business environmental reporting; developing a domestic organic
certification scheme; grants to assist community environment centres; working on a pesticide
reduction programme; establishing a Ministerial Advisory Committee on complementary and
alternative health therapies; and contributing to the industry/government working group on organics.
- GREEN ACCOUNTING
For all this funding at the front-line of environmental concerns ... the Greens hope that
it will be the $730,000 for "alternative national accounts and business environmental reporting"
that will see them having a longer-term influence on government economic thinking and
business policies. The money will pay for the development of a social and environmental audit
programme, undertaken in partnership with business and community groups, as well as supporting work
with Statistics New Zealand to develop a system of alternative national accounts.
This funding is part of Green leader Jeanette Fitzsimons' long-held view that until
we change the way the government and business accounts its environmental costs the green
"bottom line" then the environment will continue to bear the brunt of economic development.
Fitzsimons: "Accounting can seem a bit dry at times, but the profit and loss figures at the
bottom affect every decision that businesses and government make. GDP currently includes many
negative costs such as pollution and biosecurity invasions in its measure of economic activity,
and excludes constructive voluntary activities such as parenting and skill-learning. Modified
national accounts would measure progress in a more sensible way, by including positive activities such
as voluntary work and unpaid childcare, and deducting negatives such as pollution and
biosecurity clean-ups. This programme is a crucial first step towards measuring genuine progress and
ensuring that economic activity is sustainable rather than destructive..."
Source Press Release 14 June 2000 "Green Package far reaching" Green Party; and "Green Accounting counts
the environment" Jeanette Fitzsimons
- TOPOCLIMATE FUNDING
A key example of Jim Anderton's new regional development support is seen in the
$1.8 million funding for the Topoclimate South mapping project. The funding will ensure that
this project is completed ... and it will probably serve to be a model for other regions wanting
to develop alternative land-use options.
The Topoclimate South project involves the intensive surveying of 805,000 hectares of
Southland and Otago to map their soils and microclimates, taking the guess-work out of developing
more intensive land-use opportunities in the region. The trust is working closely with another
economic development trust, Crops for Southland, which has been set up by commercial interests,
farmers, growers, and scientists in conjunction with the regional and local authorities. Crops for
Southland has been researching the alternative crops that can be grown in the region (such as
Meadowfoam, Boronia, Cranberry, Gentians, Paeony, Valerian and Wasabi) and developing the markets for
these crops which will make new enterprises viable. The job opportunities inherent in this strategy
will be considerable.
In April, the Southland Times reported that there were just five flower and bulb growers
in Southland five years ago, but now this number has increased to more than 90. Topoclimate
South quotes research by the Dutch government which says that one extra job is created for
every hectare converted to intensive horticulture and, in addition to this, an extra eight positions
are created downstream.
- Jim Anderton is keen to capitalise on this initiative as part of his "jobs machine"
programmes. Anderton: "The stereotypical image of a region fit only for growing swedes and
other low-value crops is a grossly unfair one. The growth of the tulip industry in Southland, and
the emergence of other exotic crops such as wasabi, show the potential to capitalise on
non-traditional areas of activity. The Topoclimate Survey is an essential aid to this process of transition,
as well as boosting production, efficiency and income for existing land uses..."
- Topoclimate South is being held up as an excellent model of what community, local
government and central government partnerships could achieve. Southland District Mayor Frana
Cardno says that the funding grant "...is more solid evidence that this government is true to its word
and its promise of partnerships with the regions". Cardno: "This project is not only significant in
terms of our region, but could also prove to be vitally important to this country as we diversify
the economy and invigorate our rural communities..."
- The Topoclimate funding comes hard on the heels of government support for another
major Southland economic development initiative the completion of the Hump Track near
Tuatapere, which Southlanders hope will attract more tourists and backpackers into the region.
Source vivian Hutchinson; and Press Releases from Topoclimate South 15 June 2000 "Government allocates $1.8m
to Topoclimate south mapping project" Murray Ballantyne; "government allocates $1.8m for Topoclimate mapping
for Southland" Helen Clark and Jim Anderton;
- BUDGET ON THE INTERNET
Key Budget 2000 papers are available on the internet at
- INCOME GAP WIDENS FURTHER
A week before the Budget, a Treasury-commissioned study was released which shows
that New Zealand now has one of the highest levels of income inequality in the OECD ... and
this income gap has been growing faster than in other developed countries.
The report, by economist and statistician Des O'Dea, shows that the incomes of the richest
10% of households rose significantly between 1982 and 1996 (allowing for inflation) while incomes
of households in the lower- and middle-income bands fell.
When similar statistics were produced last year by Statistics NZ (based on their household
economic survey) the results were criticised, in some quarters, because the survey was based on
a relatively small sample of the population. But O'Dea points out that further research work
has been done since then, based on tax and census data ... and it tells the same story of a
widening income gap. O'Dea: "This conclusion is reached regardless of how income is measured:
individual or household incomes, before and after tax, from different data sources and after adjusting
for changes in household size and composition..."
- Between 1986 and 1996 the average household income after tax rose 0.4% a year, or
0.7% if adjusted for the fall in average household size over that period. But much of this increase
was concentrated in the top 10% of households. Over the same decade, the median household
income fell 0.7% a year ... which O'Dea describes as "a better indicator of how the typical
O'Dea reports that some (10%-25%) of the increase in income inequality can be put
down to changes in the make-up of households, especially in the higher proportion of sole-parent
homes and of pensioners. About another 25% can be explained by changes in the age mix,
employment status and educational qualifications of the population.
But at least half of the increase in inequality cannot be explained by any of these factors, and
more research will be needed to pinpoint the fuller reasons for the widening gaps. O'Dea: "There
have been winners and losers, but the overall picture, combined with only modest increases in
average incomes over the period, should be a source of concern for policy-makers..."
- Treasury secretary Alan Bollard stresses that the report does not represent the views
of Treasury or the government. He told The
Dominion that Treasury "does not have a view" on
the desirability of a less even income distribution structure.
Source New Zealand Herald 10 June 2000 "Widening income gap opens further" by Brian Fallow; The Dominion 10
June 2000 "Gap between rich and others now wider study" by Craig Howie
National Business Review 9 June 2000 "No More Dr Nice Guy" Cullen interview with David Cohen;
14 June 2000
"Link between tertiary institutions and business promised" Steve Maharey;
"Maharey must reveal welfare plan in Budget" Dr Muriel Newman;
15 June 2000
"Another Budget that puts the cart before the horse" Manufacturers Federation;
"Budget dislocated from econiomic growth" Employers Federation;
"Budget responsible, unimaginative" Employers and Manufacturers Association;
"Comment on Budget" Aotearoa Polytechnic Students Association;
"Better economics but socially racial aparthied" Winston Peters;
"Maori must take control of their own positive development" Donna Awatere Huata;
"Budget Speech" Richard Prebble;
"Government creates more gaps in social areas" Wyatt Creech;
"Budget targets carers, school leavers with disabilities" Ruth Dyson;
"Supporting at-risk children and families" Steve Maharey;
"Budget focus on Maori Education" Parekura Horomia;
"Budget speech notes" Jim Anderton;
"Work for the Dole will be compulsory" Dr Muriel Newman;
"Rebels reject Red Budget" Prebble's Rebels;
"What a lot to spend on a boring Budget" Bill English;
"Maharey big loser in the Budget" Dr Muriel Newman;
16 June 2000
Budget feature coverage and editorials in National Business Review, The Daily News, New Zealand Herald, and The Dominion.
17 June 2000
New Zealand Herald "Cullen playing to overseas gallery in Budget speech" by Brian Gaynor; "Why the Alliance is Green
with Envy" by Vernon Small;
18 June 2000
Budget feature coverage and editorials in Sunday Star Times
"The changes in NZ's Income Distribution" by Des O'Dea, Treasury Working Paper 0/13
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