Return to Jobsletter Home

To the last Jobs Letter

To the next Jobs Letter

Download Acrobat file

To this Letters Diary

To this Letters Features

To the Index







    Essential Information on an Essential Issue

    Letter No.126

    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
  • bud-cullen.gif

    " 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 Letter No.121).

    — 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 " 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 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

    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.

    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 enterprises."

    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 subsidy ceases.

    Source Press Release 20 June 2000 "Maharey announces plans for Community Employment organisations" Steve Maharey

    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 Group (LMPG).

    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 " 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 Parekura Horomia

    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 establishing.
    — 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 control programmes.
    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.

    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

    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 " 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;

    Key Budget 2000 papers are available on the internet at

    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 household fared."

    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 Other Sources: Press Releases 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

    To the Top
    Top of Page
    This Letter's Main Page
    Stats | Subscribe | Index |
    The Jobs Letter Home Page | The Website Home Page
    The Jobs Research Trust -- a not-for-profit Charitable Trust
    constituted in 1994
    We publish The Jobs Letter