High country ‘tenure review’ to be scrapped

Land Information Minister Eugenie Sage:  Government to end tenure review

The Government will end tenure review in the South Island high country, Land Information Minister Eugenie Sage announced today.

Tenure review is a voluntary process where Crown pastoral land can be sold to a leaseholder and areas with high ecological and recreational value can be returned to full Crown ownership as conservation land.

“Tenure review has resulted in parcels of land being added to the conservation estate, but it has also resulted in more intensive farming and subdivision on the 353,000 ha of land which has been freeholded. This contributed to major landscape change and loss of habitat for native plants and animals,” said Eugenie Sage.

“Tenure review has produced a mixed bag and has been criticised for a long time. It’s not clear that the taxpayer has always got value for money.

“We want to ensure that we are good stewards of the remaining 1.2 million hectares of pastoral lease land; that farmers can farm while safeguarding the high country’s landscape, biodiversity, social, economic and cultural values for present and future generations.”

With tenure review ending, the remaining Crown pastoral lease properties, currently 171 covering 1.2 million ha of Crown pastoral land, will continue to be managed under the regulatory system for Crown pastoral lands.

An announcement about the future of Crown pastoral land management will be made on Sunday.

Ending tenure review will involve law changes to the Crown Pastoral Land Act 1998.

That act was passed during a term of the Bolger/Shipley Government, and survived both the Clark term and the Key/English term.

Charlie Mitchell (Stuff):  The slow, sorry end of tenure review

For all of its flaws, there was something comforting about the way tenure review united groups that are often in conflict.

Before it was officially canned on Thursday, it was a rare piece of public policy that had few champions on any part of the political spectrum, despite the fact it had stuck to successive governments like a sloth clinging to a falling tree branch. There was little evidence of enthusiastic support, or even a vague notion of what was meant to be accomplished.

That was certainly the conclusion of an internal review by Land Information New Zealand (LINZ), released last week, which appears to have sharpened the blade for tenure review’s execution.

It was a fall from grace for a policy that had started with promise in the 1990s, when there was multi-partisan consensus between farmers, conservationists, and public access groups that it just might work. You could give farmers more control over managing the land, add to the conservation estate, and improve access to the most scenic parts of the country in one fell swoop.

That vision, in practice, strayed so far from its origins that by the time it was formally dropped, it would be hard to find a less popular policy, particularly one that had been continued by four successive governments.

Many farmers and conservationists had come to resent tenure review, albeit for different reasons; the minister responsible for LINZ, Eugenie Sage, had once called tenure review “the greatest wave of privatisation since Rogernomics” and repeatedly pointed out it had been “heavily criticised” when she announced its cancellation this week.

But the clearest sign that tenure review was done came in that internal review. There were many criticisms, but the most telling was this: The Crown “does not appear to have a clear strategic objective, other than exiting the arrangements.”

 

Reserve Bank predictions about KiwiBuild – very slow, and crowding out private development

Reserve Bank Governor Adrian Orr has said that the Reserve Bank predicts a very slow start to the KiwiBuild programme – that’s hardly a prediction, it appears to be current reality – and also that due to lack of capacity much of the numbers eventually built may simply replace what private builders would have constructed.

RNZ: Reserve Bank predicts KiwiBuild will crowd out private building, progress slowly

The Reserve Bank has sounded a warning that the government’s KiwiBuild programme is likely to crowd out other private house building, because the construction industry simply doesn’t have enough capacity.

Reserve Bank Governor Adrian Orr told MPs on Parliament’s Finance and Expenditure committee this morning KiwiBuild would need time to fully pick up momentum.

“It will be a very slow start, which it has proved to be, we haven’t had to change our forecasts much over the last six months,” Mr Orr said.

The Reserve Bank report said the sector was struggling to find enough skilled and non-skilled labour to meet demand.

“Capacity constraints are restricting firms’ ability to meet that demand.

“The ability of the construction sector to build additional houses therefore depends on whether these constraints can be eased.”

That meant resources were limited, which could impact on private investment, Mr Orr.

“It would crowd out resources if you’re chasing for land building activity etc then you have compete to build KiwiBuild versus something else”.

According to the bank’s estimates that would mean for every 100 KiwiBuild homes built, 50 to 70 houses would not be built elsewhere, Mr Orr said.

This isn’t a new idea either.

Housing Minister Phil Twyford said the Reserve Bank’s estimates were just “one more projection” and that he was not “fussed all at” about them.

He agreed with the concerns about capacity constraints.

“We’ve inherited some real difficulties in the construction industry, it’s both a lack of workforce, firms that have trouble scaling up, low productivity, lack of access to land.”

Twyford and Labour should have known that before they made bold promises.

NZ Herald – KiwiBuild warning: Reserve Bank governor Adrian Orr warns scheme ‘crowding out’ private sector

But Finance Minister Grant Robertson appeared to be at odds the central bank’s estimates and said Orr’s forecast was “certainly challengeable”.

Robertson did not seem to agree with Orr’s data when questioned this morning.

“Whether or not I accept that that is the level of crowding out is certainly challengeable, as we have had other advice.”

Robertson would not say what level of crowding out the Government was expecting; only that the Government’s goal was to add “significantly to the housing stock”.

The aim of KiwiBuild was to promote the building of affordable housing, the Finance Minister said.

I don’t think there is any sign so far that Kiwibuild is making housing more affordable.

The project has been trying to get promised numbers of houses built (dismally) but this focus doesn’t seem to have done much if anything to address the costs of building and the lack of available land (that also contributes to the cost of land).

“If we are starting to shift where some of the development is to more affordable, more affordable homes for first home buyers, that’s good.”

Note that he says ‘if’, not that that is what is actually happening.

The Government has a lot of work to do to prevent this from being both a big embarrassment and a costly failure.

‘Let’s do this’ Ardern promise for light rail now ‘let’s do this later, if NZ First let us’

Minister of Transport Phil Twyford has admitted that a Labour promise for a light rail line in Auckland to be completed by 2021 will not be kept, but he says that the Jacinda Ardern promise was made before she was Prime Minister.

Newshub: Jacinda Ardern breaks the first promise she made as Labour leader

The first promise Jacinda Ardern made as Labour leader looks to have gone up in smoke.

During her first big public outing as leader during the election, she promised rail for all – including a line from the Auckland waterfront to Dominion Rd to Mount Roskill, all to be completed by 2021.

The promise was part of a $15 billion package and came with a plea from Ms Ardern – she needed cash to fund it.

“You can call a regional fuel tax ‘crowd-sourcing’ if you like,” she told the public.

That part of the promise did come true: Aucklanders are paying the 10 cents a litre more at the pump.

But Labour hasn’t done the rail part.

On Wednesday, Transport Minister Phil Twyford admitted the Government would fail to build light rail down Dominion Rd by 2021. Instead, he only expects work to start on it next year.

Mr Twyford’s defence is that promises made by Jacinda Ardern as Labour leader are completely different from promises made by Jacinda Ardern as Prime Minister.

NZ Herald (6 August 2017): Jacinda Ardern outlines Labour’s light rail plan for Auckland

Labour is promising to build a 20km light rail line from the city to the airport as a priority – partly funded by higher petrol prices – leader Jacinda Ardern announced today.

She says Labour will build light rail from Wynyard Quarter to Mt Roskill within four years, followed by light rail from Mt Roskill to the airport and light rail to West Auckland within 10 years.

I wonder if this is another scrapping of an interim target but retaining the 10 year target (as the Government has done with KiwiBuild targets).

“I believe Labour’s plan is a game-changer. It will reduce the $2b a year that congestion costs Auckland. It will realise Auckland’s potential to be a truly world class city,” said Ardern.

She said Labour will give Auckland Council the power to introduce a regional petrol tax – understood to be 10 cents a litre – to help pay for light rail. Infrastructure bonds and targeted rates will also be used to fund transport in Auckland.

A world class city needs a rail connection from the CBD to its international airport – that’s why Labour will build light rail to Auckland Airport as a priority, said Ardern.

The fuel tax to fund it was a priority – it is already being paid in Auckland.

But the actual building seems to be less of a priority – or it was a promise made without a proper assessment of how long it might take to do.

Twyford was still talking up light rail in Auckland as a game changer yesterday in parliament, but the game was going into extra time.

Question No. 8—Transport

8. Hon PAUL GOLDSMITH (National) to the Minister of Transport: Is he committed to building light rail from the city to the airport in Auckland and if so, when will work begin?

Hon PHIL TWYFORD (Minister of Transport): Yes. Light rail will be a game-changer for Auckland. It will be a magnet for private investment in urban renewal, and each line will be able to carry 11,000 commuters per hour, the equivalent of four lanes of motorway. The light rail project will extend Auckland’s rapid transit network, a core part of our plan to build a modern transport system for the city. There is a procurement process under way now, so work has already started.

Hon Paul Goldsmith: Is the Government on track to have built light rail from Wynyard Quarter to Mount Roskill within four years of becoming Government, as promised by Jacinda Ardern in August 2017?

Hon PHIL TWYFORD: At that point, Jacinda Ardern was not the Prime Minister.

Hon Paul Goldsmith: I raise a point of order, Mr Speaker. That’s not answering—

SPEAKER: Well, it answered as much as the Minister has any responsibility for it.

Hon Paul Goldsmith: Well, the core part of the question was—

SPEAKER: Well, the member can ask it again. Ask another question if he wants to.

Hon Paul Goldsmith: Is the Government on track to have built light rail from Wynyard Quarter to Mount Roskill within four years of becoming Government?

Hon PHIL TWYFORD: I’ve expressed the view that we hope to have shovels in the ground in 2020. There’s a procurement process under way; that’s what we’re working towards.

Hon Paul Goldsmith: So is that another target he no longer intends to keep?

Hon PHIL TWYFORD: I reject the premise of the question.

Hon Paul Goldsmith: Does the Minister agree with infrastructure Minister Shane Jones’ message to Phil Goff about the light rail project: “I would say before Phil Goff gets too enthusiastic about the Dominion Road idea he needs to sort out how he’s going to fund the CRL project. It hasn’t been completed yet and now he’s got to find $500 million to $1 billion for that.”?

Hon PHIL TWYFORD: Well, I would point out that the light rail project is being pursued through the Auckland Transport Alignment Project and is expected to be funded and financed as part of that 30-year transport plan, and funded partly through the National Land Transport Programme. The member will know that the City Rail Link project that was entered into under the former National Government is funded through Crown contributions—completely separate from the National Land Transport Programme.

Twyford fobbed off the promise as “At that point, Jacinda Ardern was not the Prime Minister.” Does that mean that any promises made by Ardern during the election campaign are not worth the PR they were written by?

An implication raised here is that NZ First are not playing ball in Labour’s ambitious game changer.

Can any election ‘promise’ be taken seriously when governing agreements negate them?

Single party claims like “Labour will build light rail to Auckland Airport as a priority” are meaningless if Labour is not going to run a majority Government alone.

Major changes for Polytechnics proposed by Government

Polytechnics around the country have been struggling financially for some time. In response the Government is proposing all sixteen Polytechnics be merged into one ‘entity’ called the New Zealand Institute of Skills & Technology (even the acronym NZIST or NZIOSAT will not be particularly catchy).

Public consultation on the proposed will run to 27th March, so this looks like a rush job, particularly compared to a lot of long drawn out inquiries and working groups.

I can’t see the changes signalled in Labour’s 2017 election manifesto, and it is not mentioned in either governing agreement with NZ First or the Greens.

Beehive: A new future for work skills training in NZ

Education Minister Chris Hipkins today released wide-ranging proposals for strengthening vocational education so that school leavers get high quality training opportunities, employers get the skills they need and New Zealanders are better equipped for the changing nature of work.

“Instead of our institutes of technology retrenching, cutting programmes, and closing campuses, we need them to expand their course delivery in more locations around the country.

“It’s time to reset the whole system and fundamentally rethink the way we view vocational education and training, and how it’s delivered.

“The Coalition Government proposes to establish a unified, coordinated, national system of vocational education and training. The proposals are:

  • Redefined roles for education providers and industry bodies (Industry Training Organisations (ITOs)) to extend the leadership role of industry and employers;
  • Bringing together the 16 existing ITPs as a one entity with the working title of the New Zealand Institute of Skills & Technology with a robust regional network of provision; and
  • A unified vocational education funding system.

“We would also ensure there’s strong regional influence in the New Zealand Institute of Skills & Technology through the proposed formation of Regional Leadership Groups which would identify the needs of the local economy and become a key link between local government, employers, iwi and communities.

“The development of courses and programmes would be consolidated, improving consistency and freeing up resources to expand front-line delivery. There will be more sharing of expertise and best-practice, and more use of online, distance, and blended learning.

“The Government envisages that the New Zealand Institute of Skills & Technology, and perhaps also wānanga, host Centres of Vocational Excellence (CoVEs). These power houses of expertise could cover key sectors and industries, which could be broad (eg, agriculture) or specific (eg, viticulture).

“What we are proposing is ambitious, but it needs to be. We cannot continue to tweak the system knowing that the model is fundamentally broken, and isn’t delivering our workforce the skills that they need to thrive.

“The proposals released today may go ahead in this or another form, but the Government won’t make any decisions until we have heard and carefully considered feedback from this consultation process,” Chris Hipkins said.

Public consultation is open until 27 March.

Six weeks seems a short timeframe for consultation on such major changes. .

It has been reported that the intention is to have these changes up and running by the end of the year.

Hipkins seems to be one of the better ministers for providing information available.

The decision making documents are dated from 28 March 2018, showing that changes have been considered for at least a year, probably initiated just after Hipkins took over as Minister of Education.

There was no mention of reform of Polytechnics in either the Labour-NZ First coalition agreement or the Labour-Green confidence and supply agreement.

There is no mention of it in Labour’s Vision for Education, their 2017 campaign policy document.

From Labour’s Education Manifesto:

Strong Institutes of Technology and Polytechnics

Institutes of Technology and Polytechnics (ITPs) are a crucial element of New Zealand’s tertiary education system. They play a key role in ensuring that the workforce has the skills and training to drive innovation and to ensure labour market needs are met. They are important for regional development, and serve as economic ‘anchors’ for the communities they serve.

  • Labour will ensure that there is a strong network of regional public institutions dedicated to meeting the labour market and skill needs of our regions.
  • Labour will establish Centres of Vocational Excellence (CoVEs) to be based at Institutes of Technology and Polytechnics to provide a focus for driving excellence in training, research and innovation in a particular industry
  • Labour will improve the way that ITPs and ITOs work together including through joint curriculum development, clearer qualifications and more flexible learning pathways.

I can’t see any reference in the rest of the manifesto for centralising administration of the Polytechnics.

They emphasise “Labour will ensure that there is a strong network of regional public institutions”.

It will be interesting to see how they achieve this by merging 16 regional providers into one centralised body – I presume centralised in Wellington or Auckland.

Pressure on Ardern and Government over relationship with China

Jacinda Ardern’s first day in Parliament for the year was difficult, with questions being asked about New Zealand’s apparently deteriorating relationship with China.

Juggling different international interests is one of the biggest challenges for a Government. This cannot be done via PR and friendly media.

While Ardern has had positive coverage at the United Nations (last year) and Davos (last month), she doesn’t seem to have established good working relationships with two of the biggest economic powers, USA and China.

She has played a sort of anti-Trump card to the applause of some (but not Trump), and Foreign Minister Winston peters has been campaigning around the Pacific against Chinese influence.

Sam Sachdeva (Newsroom): NZ-China ‘scheduling issues’ cause for concern

The tourism relationship between New Zealand and China is a “special and enduring one”, Tourism Minister Kelvin Davis said last October.

That was why the official 2019 China-New Zealand Year of Tourism would be marked with a special event at Te Papa on February 20.

Just one problem: the event was quietly postponed – to an as yet unknown date – due to what Davis described as a “scheduling issue” on the Chinese side.

Coming on the heels of similarly nebulous scheduling issues which put paid to Jacinda Ardern’s plans to visit China before the end of 2018, it is difficult to shake the feeling that a point, however subtle, is being made.

Last year was particularly difficult for Ardern’s Government when it came to China.

He details well covered issues, then concludes:

Where things go from here is unclear: while Ardern says officials are still working on dates for a Beijing visit, there is a sense from some foreign affairs watchers that the delay at China’s end is directly related to other strains on the relationship.

The nature of China’s interventions means people will be on edge for any perceived slight, real or otherwise: some have questioned the fate of a trip to Beijing by Davis and Local Government Minister Nanaia Mahuta which had supposedly been pencilled in for early March (both ministers’ offices say a firm date has never been set down, with discussions still underway).

The relationship may not be as dire as National is claiming – but there are certainly some issues which need to be resolved.

NZ Herald: Prime Minister Jacinda Ardern says there are challenges in NZ’s relationship with China

Prime Minister Jacinda Ardern is playing down any suggestions New Zealand’s diplomatic relationship with China is on the rocks but admits the two nations were facing some “challenges”.

Ardern was this morning grilled on a number of issues relating to New Zealand’s relationship with China.

She said New Zealand still puts a lot of effort into its relationship with China, but is “at the same time facing some challenges”.

Ardern added: “But in a way I think that preserves New Zealand’s independent foreign policy.”

Having an independent foreign policy is fine, but when it has an affect on relationships with important trade countries it can get quite tricky, as Ardern appears to acknowledge (the ‘challenges’).

Ardern’s predecessor John Key used to go to China every year during his time as Prime Minister.

But Ardern said she did not want to set that expectation.

She said the Government sent a number of ministers to China last year – Foreign Minister Winston Peters visited China midway through the year.

“Those exchanges are happening with our Government, it’s just that I don’t want to set an expectation that I go somewhere every single year.”

She stressed that the diplomatic relationship with China was important, but acknowledged there were some challenges.

When asked what those challenges are, Ardern said there were some questions over the Huawei decision.

Stuff:  Until Jacinda Ardern visits China, questions about the relationship will only deepen

There is no doubt that the relationship is in a difficult state, and many in media and foreign affairs circles are on the lookout for any sign that China is punishing New Zealand.

News that the Government’s security bureau may block Chinese giant Huawei from participating in the next generation 5G telecommunications network, seemingly under pressure from our Five Eyes partners, has left the political class on edge.

Everyone expects some form of punishment from the world’s largest command economy, creating a high risk of confirmation bias, where we interpret facts based on what we believe is coming.

Prime Minister Jacinda Ardern was questioned repeatedly, forced to defend the state of relations with New Zealand’s largest trading partner.

Back in October, Tourism Minister Kelvin Davis was so excited by the coming China-New Zealand year of tourism that he posted an official statement on the Beehive website.

An opening ceremony event was to be held at Te Papa on February 20, coinciding with the hosting of 2300-year-old Chinese artefacts, the Terracotta Warriors: Guardians of Immortality exhibition.

However, a fortnight ago, the Chinese (who were the hosts of the event) unexpectedly cancelled.

“Officials are working with the Chinese Embassy to get a new date confirmed for this event,” a spokesman for Davis said.

These things will take more than a feature in the Womens’ Weekly or a friendly article in the Guardian to resolve.

Whether the current low level tension escalates is impossible to know.

On the one hand, China faces bigger problems, in its ongoing trade war with the United States, meaning it cannot afford to get into unnecessary fights elsewhere.

On the other, if China wanted to demonstrate its power to cause considerable pain to a country resisting its expansion, while causing relatively little pain to its own economy, New Zealand could be an attractive target.

There are certainly challenges for Ardern here, especially with Winston Peters in charge of Foreign Affairs.

Saudi sheep deal finally over

The Saudi agrihub sheep deal initiated in 2013 by the Government became very controversial and embarrassing for National, and in particular Murray McCully. It has finally put out to pasture.

NZ Herald: Government axes Saudi sheep deal

The controversial Saudi sheep deal been shut down, which the Government says will save about $1 million.

The deal was made to set up an agribusiness hub in the Saudi desert for Saudi businessman Hmood Al Ali Al Khalaf, which would be used to showcase innovative New Zealand farming operations.

Taxpayer spending on the agrihub was approved by the previous National Government in February 2013, and the following year 900 sheep were flown over on Singapore Airlines.

But Trade Minister David Parker said the deal has now been axed.

The then-National Government had paid about $10m, including a $4m payment to Al Khalaf, for the deal.

Opposition parties at the time called it a bribe to set up a free trade agreement.

It wasn’t only opposition parties.

The deal was made partly as an effort to secure a free-trade deal with the Gulf States.

Al Khalaf had lost millions of dollars after New Zealand banned live sheep exports for slaughter over animal welfare concerns in 2003, and ill-feeling over his treatment was identified as an obstacle to an FTA progressing.

Former Foreign Minister Murray McCully also said there was a risk Al Khalaf could take legal action. As a result, the deal saw a $4m facilitation payment made to the Al Khalaf Group, and a further $6.5m allocated to create a farm on his land.

The Auditor-General criticised the deal, but found no evidence of corruption or bribery.

No evidence of corruption or bribery perhaps, but plenty of indication of a shonky deal by McCully, approved by the National Cabinet, and swept under the political carpet when exposed.

Smoking to be banned in cars with children in them

The Government has announced that they will introduce legislation that will ban smoking in cars that have children under 18 in them.

NZ Herald:  Smoking to be banned in cars when children under 18 are present, Govt announces

Smoking will be banned in cars when children under 18 are present minister, Associate Health Minister Jenny Salesa has announced.

Vaping will also be included in the prohibition and it will apply to all vehicles both parked and on the move.

“Public education and social marketing campaigns over many years have had some impact, but the rate of reduction in children exposed to smoking in vehicles is slowing. It is now time to do more by legislating,” Salesa said.

She expected the Smoke-free Environments Act 1990 to be changed by the end of this year.

Once changed, police will be able to require people to stop smoking in their cars if children (under 18) are present.

They will also be able to use their discretion to give warnings, refer people to stop-smoking support services, or issue an infringement fee of $50.

It’s sad that a law for this is seen as necessary.

Will it be an effective deterrent? It’s still common to see people using cellphones while driving since that was made illegal.

“Government is stuck in a fiscal holding pattern”

Bernard Hickey thinks that the Government is “stuck in a fiscal holding pattern” this term due to their commitment to Budget Responsibility Rules, which committed them to get net debt down to 20 percent of GDP and keep the budget in surplus across the economic cycle.

This fiscal straightjacket has been criticised by those who want the Government to launch into significant (and expensive) tax, benefit and social reforms.

Hickey (Newsroom):  ‘Let’s do this’ in a holding pattern

Jacinda Ardern’s first big economic speech of the year warned of global economic headwinds, but it lacked action in response, or a major plan to improve wellbeing. Instead, it exposed how her Government is stuck in a fiscal holding pattern before the 2020 election, when it hopes it can throw off its debt target and capital gains tax shackles.

The breakfast speech to a polite audience of Auckland’s business elite at the Hilton Hotel on the waterfront showed the Prime Minister at the top of her game. She is a smooth operator with a knack for a self-deprecating quip or an aside that can win over even the most sceptical audience.

“Our starting point for the Wellbeing Budget is that while economic growth is important, it alone does not guarantee improvements to New Zealanders’ living standards,” she said, going on to make a strong case to address our obvious wellbeing problems.

“An everyday New Zealander – hearing of the “rock star economy” while their housing costs are skyrocketing, or they can’t afford to send their kids to school with a proper lunch or their mental health is strained – tends to have their faith in the system and in institutions undermined.”

She went on to detail the plans and the priorities for the first Wellbeing Budget in May, and suggested it would help New Zealand cope with economic headwinds from overseas.

“It will ensure that those closest to the margins are protected and that no one is left behind,” she said.

Really?

How can that be true when Kiwibuild is behind schedule and there are massive infrastructure deficits in housing, health, education and transport, which can only be addressed with tens of billions of extra public investment. New Zealand’s population is growing five times faster than the OECD average and Ardern acknowledged in her speech that governments had encouraged population growth without investing in infrastructure to deal with it.

That’s what National had been criticised for (with some justification).

I asked Ardern afterwards if the Government was planning to respond to the slowing economy and higher unemployment by loosening fiscal policy with extra operational or investment spending.

She stuck to the usual line that the Government would keep operating within its Budget Responsibility Rules.

Ardern and right-hand-man and now-Finance Minister Grant Robertson agreed with Green Leader James Shaw shortly after her election as Labour leader to essentially sign up to the same fiscal settings as National had up until earlier that year.

They imposed those rules on themselves to stick with a campaign promise, made to promote Labour as fiscally responsible to combat attempts by National to portray them as loose with money.

Ardern and Robertson are playing a longer game here, but that is frustrating those who want rapid and meaningful reforms.

The only exception to this rule is the need to spend up large to cope with either natural or man-made financial disasters such as the Global Financial Crisis and the Christchurch earthquakes.

The irony is they need a new global financial crisis to give them the excuse to do what they need to do to make a real improvement in wellbeing.

So should the Government use its strong balance sheet to fix New Zealand’s massive infrastructure deficits? Yes should be the answer, but the timing should be now, not in two years time.

Unwilling to break its promise, it is now in a holding pattern and hopes voters keep the faith for long enough to give it a chance to throw off the shackles.

The Government has already committed to some extra spending – they boosted the Families Package, rushed in a tertiary education fees policy, and gave NZ First a $3 billion Provincial Growth Fund kitty. They will also end up with significant increases in teacher and nurse wage bills.

There are pressures to address what Labour had claimed was underfunding in health, but there seems to be no urgency there. They are now seem to be kicking the ‘mental health crisis’ down nine separate working group roads (see Mental health crisis -> 1 working group -> 9 working groups), and have stretched out their promised rebuild of the Dunedin Hospital (now due for completion in ten years).

Ardern has promised big in this year’s ‘wellbeing’ focussed budget, but has also promised small in debt targets, so Grant Robertson will have quite a balancing act to do.

Hickey sees this as a virtual holding pattern for the next two budgets, unless the world economy turns to custard and gives them an out clause.

 

Ardern’s ‘state of the nation’ speech to Business New Zealand

Jacinda Ardern gave a speech to Business New Zealand yesterday. This is described by some as her ‘State of the Nation’ speech. Here is the Beehive transcript:


PM speech to Business New Zealand breakfast

Good morning everyone.

I want to start by thanking Kirk and his Business New Zealand team for the invitation.

It’s good to have this opportunity to join you as another year starts.

While this is my first economic speech of 2019 here at home, there has been plenty happening internationally since the year kicked off. I want to reflect on some of that this morning, but before I do, I’d like to take stock of our economic and business landscape, set out some of the challenges we face here and in an international context, and then outline our Government’s plan to address those over the coming year.

First though, I want to take a moment to reflect on the events in Tasman. Twelve months after facing a cyclone, the rain in Tasman has been replaced with a fire that when I visited yesterday, was 22km in parameter, and covered 1900 hectares. It has led to the evacuation of hundreds of homes, and roughly 400 people.

I have been in regular contact with our civil defence team, and evacuations are still happening as they try to predict where the wind movement may take the fire, all the while creating a parameter around it and using fire retardant to try and contain it from spreading across an area that is bone dry, and surrounded by forestry.

I spoke to a few people who had been evacuated yesterday. They told me what it was like to evacuate with only a few hours warning. But they didn’t dwell on that.

Mostly they reflected back to me the amazing work being done by emergency services, MPI, council, civil defence and others. So many who I met yesterday were volunteers. One of the coordinators of the many helicopters hauling water over the fire for eleven hours at a time was from Feilding and had travelled through the night to get there. He also happened to be colleagues with my first cousin – it was a true New Zealand moment.

Situations like this always reinforce to me something that you will intuitively know, we are a nation of extraordinary people. And I don’t separate out situations like this as being a one off example of who we are. The traits we have as a nation are there 24/7, and in many fields of work.

You see it in our social sector, our business community, and in our young and older citizens. The trick is to remember that, and for us as Government to bring together the many groups who want to tackle the big challenges we face regardless of which sector of our society that they may work within. We are not a nation of discrete compartments, so we should be facing our challenges together.

And when it comes to the economy, and the business environment, there are challenges.

There are also good reasons for us to be optimistic though.

Last year I talked about the elephant in the room. Pleasingly, the elephant has gotten a little bit smaller in the past 12 months. Perhaps it got to know its company and decided it wasn’t quite as scary as it first thought…

Either way, it’s pleasing progress and it is based on some strong fundamentals.

  • Yesterday’s employment data showed wages are growing and unemployment is at 4.3%, the second lowest in a decade. The lowest was of course last quarter, and we are confident that we’ll reach our 4% target by the end of our term.
  • Growth is relatively strong at around 3% and is forecast to stay close to that level in coming years. That looks particularly strong when compared to the IMF’s recently released forecasts for advanced economies that predicts average growth of about 2% a year.
  • Inflation is tracking at 1.9%, and food price inflation remains low.
  • And it is encouraging that one of the Big Three rating agencies recently gave our economic and financial management the thumbs up. Standards & Poor’s have revised its outlook on New Zealand’s AA foreign and AA+ local currency credit ratings from ‘stable’ to ‘positive’ – its strongest verdict on New Zealand since September 2011.
  • The latest Crown financial statements, released just yesterday, show that core Crown revenue and expenses are in decent shape and delivering a better than budgeted surplus. Running surpluses of course gives us the room to make important capital investments while keeping debt under control and importantly provides a buffer against external shocks and international headwinds.  

As you can see, on key economic measures the Government is delivering. There is good cause for the elephant shrinking.

But there is a shift in mood globally. While global economic growth remains strong, it is beginning to slow.

The IMF is projecting worldwide growth to ease from 3.7% in 2018 to 3.5% in 2019 due to rising trade tensions, political uncertainty and less stimulatory monetary and fiscal policy.

As I mentioned earlier, advanced economies are forecast to grow at only 2% a year.

The finger of blame for the slowdown in global trade growth is generally pointed at countries pursuing increasingly protectionist policies, which are naturally affecting confidence and investment plans.

Trade tensions in the wake of tariffs imposed by the US on Chinese imports dented the strong growth seen in 2017. And the worry for us is that further reductions in Chinese exports could cause a material slowdown in its economy, with adverse effects for New Zealand exporters.

And then there is Brexit.

As all of you will have no doubt seen, the final form of Britain’s exit from the European Union is yet to be decided.

Clearly, the risk of a no-deal scenario remains high. There is a lot of uncertainty around what such a scenario would mean, and while we are doing our best to create a buffer through, for instance, our recently signed mutual recognition agreement, a no deal Brexit could still do harm to EU economies or disrupt financial markets.

Political tensions are beginning to present serious risks to international institutions and the rules-based order that we rely on for security and prosperity. The World Trade Organisation, for example, and other multilateral organisations, are facing challenges to their legitimacy that undermine their effectiveness.

At Davos, a significant conversation revolved around how we could ensure the reform of these institutions, whilst not seeing them blamed for the current political environment which, ultimately, they didn’t cause.

But where does all of that leave a country like New Zealand? We have strong fundamentals and are well prepared, but we need to be realistic that if the global economy slows, it will affect our economic growth.

Now is then the time to take the foundations we have and to build on them. Now is the time to ensure we not only build greater resilience into our economy, but that we modernise it too.

This is a message that we have been sharing for some time, but that I recently heard reinforced by the IMF executive director Christine Lagarde.

We were at APEC in Papua New Guinea when I first heard her reiterate the message that policymakers need to make greater efforts to prepare for the slowdown, and that is a message we are heeding.

That’s why our economic plan includes the following key planks:

  • Doubling down on trade and broadening our trading base to protect our exporters and economy
  • Reform of skills and trade training to address long-term labour shortages and productivity gaps in the New Zealand economy, and to make sure we are prepared for ongoing automation and the future of work
  • Changes to tax to make the system fairer
  • Addressing our long-term infrastructure challenges
  • Transitioning to a sustainable carbon-neutral economy
  • And of course investment in wellbeing, because this is inextricably linked to our economic success too.

Trade

On trade, our experiences in the 1970s and early 1980s taught us there are no winners in trade protectionism.

By taking an active role in WTO reform efforts and by committing ourselves to diversifying our export markets through new and upgraded free trade agreements, we are strengthening our safety net.

At all the international forums I have spoken at in the last year I have made the case for the retention of an international rules-based trading system. I believe it’s incredibly important that we continue to be a leading voice on this, in order to retain a system that allows New Zealand exporters fair access to international markets.

With the CPTPP coming into force, 65% of our exports are now covered by FTA preferences which buttress and build on the WTO disciplines.

The Pacific Alliance and RCEP are making steady progress.

The upgrade of our agreement with China is ongoing and we are about to commence the same negotiations with ASEAN.

But a top trade priority this year is a positive conclusion to the EU free trade negotiations and the launch of free trade talks with the UK in the event of Brexit occurring.

On my recent trip to Europe I received assurances from the EU leadership of their desire to conclude an agreement by the end of this year. It’s an ambitious plan, and one we will pursue whilst also being mindful of getting a quality deal.

In the UK, Prime Minister Theresa May expressed her desire for New Zealand to be amongst the first nations they negotiate with, and for our part we made the case that given New Zealand’s expertise in this space we would make a logical partner to establish a benchmark for a high quality model agreement for the UK.

As importantly as the political assurances I received we also got positive backing from leading British business leaders for a high quality free trade deal as soon as practical after Brexit.

And at home, we are working to rebuild the social licence for trade. The Trade for All Advisory Board will continue meeting this year to look at how our trade policy works with other economic policy to deliver the benefits of trade to all New Zealanders.

Through this combination of trade and foreign policy initiatives we will strengthen our resilience to the risks we face from the uncertain global economy.

Of course it is not just in the international scene that our economy faces challenges.

Domestically we are seeing both short and longer-term issues that could constrain economic growth if left unaddressed.

Education and training

One such issue that the Government has big plans for in 2019 is around skills training.

Whenever I talk to business I hear a recurring theme around skills training and the gap between what business needs and what our training organisations provide.

Businesses are facing a constant struggle finding the people with the right skills at the right time to do the jobs that need to be done. Many of you here today have spoken to me about this issue.

In the past our economy has been too reliant on buying skills through immigration. Immigration is vital, but we need to get the balance right. I want us to focus on how we can be better at growing the skills our economy needs.

Without change, the challenge for businesses and Government is only going to increase.

We know the future of work will look very different than it does today.

A future when, by some estimates, a full one third of jobs in New Zealand are likely to be significantly affected by automation. That’s a million jobs.

For us as a government and you as a business community we cannot afford to let the skills gap continue to drift.

We need to act now.

The Coalition Government has already taken steps to make post-school education and training more accessible, with our fees free programme, which provides 2 years of free industry training and apprenticeships, or one year of free tertiary education.

We also announced changes to allow greater use of micro-credentials to ensure our system is more accessible and responsive to business needs.

My Business Advisory Council has also set skills as one of its key priorities. One of the ideas it has put forward which we are working through is how business themselves can take the lead in committing to reskilling their workforces.

The Government has also done some deep thinking on reforms that are urgently needed to the vocational education system.

The Minister of Education will next week announce proposals for consultation. They are far reaching. But we firmly believe they must be.

We currently have a vocational education system that is in many cases, struggling.

Take the building sector for example. We know we need more tradies and they are just not coming through fast enough.

That’s absolutely no reflection of the people who are involved in the sector – far from it. What it is, is a damning statement that the system has been left to drift, to muddle through.

How is it, for example, that at a time when we’re facing critical skill shortages, our polytechnics and institutes of technology are in many cases going broke?

Over the last two years this Government has been forced to spend $100 million to bail out four polytechnics, and that is a pattern that started before we took office.

That is not the sign of a healthy and sustainable sector.

We need to move away from the cycle that sees course delivery at institutes boom when the economic cycle turns down and then dive when the economy improves, while on-the-job training providers face the opposite cycle.

Instead of our regional polytechnics and institutes of technology retrenching, cutting programmes, and closing campuses, we need them to expand their course delivery throughout the country.

We want a sector that meets the needs of our economy. But the current system faces three major structural issues we need to fix.

It is not well coordinated or integrated. It is not easy for business to engage with and it delivers variable results across the country.

We have a duplication of courses and lack of consistency across the sector.

Many of the institutes face an issue of scale and insufficient capital to grow and respond. All of this is unsustainable.

Here is our vision – I want the vocational training system to be the backbone of our productive economy, and of our regions. I want students and parents to proudly choose a career in the trades and I want businesses to have confidence that the system is flexible and preparing a workforce for the future of work.

We need a model where businesses, iwi and local government in every region play an active role in driving skills development. We need a system of training and skills development that is more flexible and more nimble so we can get people with the rights skills into the right jobs much faster.

As I mentioned, we will be putting out some significant ideas in this area in coming weeks. Alongside our education sector, you have a crucial role to play in this matter and I do look forward to hearing your response to what will be some big new ideas.

But we haven’t just looked to the education sector to upskill our workforce, we have also looked for ideas to support you directly.

We are providing assistance in this regard through the Mana in Mahi training initiative, which provides a wage subsidy to businesses who employ as apprentices young New Zealanders who have been on a benefit for six months or more.

This policy is constructive for both businesses and workers, linking employers who need labour with young people in need of a career path.

I’ve met some of the young people in programmes like Mana in Mahi and He Poutama Rangatahi. They are our best salespeople for these types of initiatives.

Recently in Kaikohe a young woman told me all her friends want to join the course she was on. She is learning and earning and it was, in her own words, better than the street. Especially since she had become a supervisor.

Building a sustainable economy

In addition to skills the Government will use 2019 to contend with bigger, longer-term trends that will have a transformational affect on our economy. 

As I have said before, climate change is the defining issue of my generation.

We know that we all have to adapt now to avoid catastrophe for the generations to come.

We have a plan for a just transition to a low-emissions economy based on a more sustainable growth model. We want to ensure that this transition is phased and signalled early to give businesses and workers certainty and flexibility.

The Government will soon announce plans for legislation to establish an enduring institutional framework for managing the long-term transition to a low-emissions economy.

This legislation will contain legally binding emissions’ reduction targets and it will see the establishment of an independent Climate Change Commission, which will recommend emissions reduction budgets and provide advice on policy development and initiatives in transport, energy and primary industries.

The Government’s Just Transition work programme will assist New Zealand to successfully transition to a low-emissions economy.

The work programme includes looking at energy, regional economic development and workforce planning. It has a strong connection to education and skills development to create new jobs.

A Just Transition Summit in May this year will kick-start a national conversation about what the Just Transition means for New Zealand.

But it won’t just be a local conversation. We will be testing ideas that the world is interested in too. The conversations I had in bilateral meetings and conferences increasingly demonstrated to me that the world is not only looking for ideas, it is hunting for them. And New Zealand is on its list.

We recently announced a $100 million capital injection to New Zealand Green Investment Finance Ltd to stimulate new private sector investment in low-emissions industries. More and more investment dollars globally are looking for clean, sustainable ventures to invest in.

New Zealand Green Investment Finance Ltd positions New Zealand to attract its share of that investment capital, and will provide businesses with a pathway to being part of efforts to confront the greatest challenge facing the planet.

Another issue currently confronting the Government is inequality, and our commitment to bring fairness into our tax system.

We have long foreshadowed that we will deliver this year a response to the Tax Working Group.

There has been a lot of speculation on this topic of late, some of it feverish and not always accurate.

But my message to you this morning is succinct.

Yes, we have received the report of the Tax Working Group and, as we have shared publicly, it will be released on Thursday 21 February.

That report is now being pored over by officials, and discussed with Coalition and Confidence and Supply partners. Our plan is for the Finance and Revenue ministers to release the Coalition Government’s full response to the report in April.

Importantly though, the Working Group’s report will be shared with the public. There will be time for everyone to see that work, to debate what they have said and to share views. Anything we subsequently decide will also go through a consultation process before legislation and ultimately will be put to voters at the next election before it comes into force.

As we enter into a period of discussion and debate, I hope it’s guided by the overriding goal of fairness, and building an economy and system that works in the best interest of New Zealand and its people.

The Wellbeing budget

Finally though, a few words on what has become a significant topic of debate and discussion internationally. In fact I saw just yesterday the issue of wellbeing economics being discussed in a Swedish newspaper. I can’t tell you what it said but I am sure it was eminently sensible.

Our starting point for the Wellbeing Budget is that while economic growth is important, it alone does not guarantee improvements to New Zealanders’ living standards.

We want to take a much broader approach that uses the full range of factors that affect the quality of people’s lives.

So there will be measures that track the progress of our country based on what enables people to live fulfilling lives – things like material wealth; our capability as individuals, families and communities; and the health of our environment, such as the cleanliness of rivers.

We can all agree that New Zealand has seen solid rates of GDP growth over the past few years, and of course no one is suggesting we get rid of this indicator. But we also need to ask questions about the quality of that growth. An everyday New Zealander – hearing of the “rock star economy” while their housing costs are skyrocketing, or they can’t afford to send their kids to school with a proper lunch or their mental health is strained – tends to have their faith in the system and in institutions undermined.

So embedding wellbeing will require us to shift to a wider definition of success for our country, one that incorporates not just the health of our finances but also our natural resources, people, and communities.

It will represent a shift away from government departments thinking of their Budget bids in terms of their own appropriations, towards a focus on the outcomes they can achieve in collaboration with others.

All Ministers and departments have been asked to consider what they can contribute to the delivery of each of the Budget priorities.

This in itself is different and was the source of great interest when I was at Davos.

While deep reform will take time, the Government has already made significant strides. Treasury has created the Living Standards Framework, we are reforming the way the state sector works to give effect to a more collaborative way of working, and we will amend the Public Finance Act so that priorities around wellbeing are set each Budget. We are giving effect to the new approach in this year’s Budget.

The five Budget priorities this year are:

  1. To create opportunities for transitioning to a sustainable low emissions economy;
  2. Lifting Maori and Pacific incomes and opportunities;
  3. Supporting a thriving nation in the digital age through innovation;
  4. Reducing child poverty, improving child and youth wellbeing, including addressing family violence; and
  5. Supporting mental wellbeing for all New Zealanders, particularly those under 24.

In Davos the OECD Secretary General advised the Finance Minister and me that they would be reviewing the Government’s wellbeing approach and Budget in their country review this year, an indication of how closely the rest of the world is looking at this new model and what it can offer other countries.

The Wellbeing Budget is not only about improving the livelihoods of New Zealanders, it is key to ensuring we are protected from the international headwinds the economy may face. It will ensure that those closest to the margins are protected and that no one is left behind.

I want to conclude today by affirming the Government’s strong desire to continue partnering with business wherever we can. We will be using forums such as the Small Business Council, the Future of Work Tripartite Forum and my own Business Advisory Council to develop and test initiatives that can help improve business productivity and workers’ wellbeing. But more than that, to continue to work together.

As a country we face challenges on a number of fronts, but in these challenges the Government sees opportunities to build a more resilient economy and I know we are not alone in that.

By diversifying our trade opportunities, upskilling workers, leading the transition to a low carbon economy, ensuring fairness in the tax system and delivering our Wellbeing Budget we have a clear plan that will protect and improve the wellbeing of our people, our businesses, our communities and our environment.

I look forward to working with all of you in delivering on this in 2019. And perhaps along the way that elephant might keep getting a little bit smaller.

Calls for more than handouts for Māori

Prime Minister Jacinda Ardern and Regional Development minister Shane Jones have preceded Waitangi Day celebrations with announcements of hundreds of millions of dollars in development grants, but this approach has been questioned and in some cases slammed – see National leader Simon Bridges urges RMA reform over $100m for Māori land ownership

NZ Herald editorial: Handouts are no substitute for a Ngapuhi Treaty settlement

The Prime Minister is doling out a great deal of money on her extended visit to Northland for Waitangi Day.

At a Kaipara marae on Sunday she announced $100 million of the Government’s $1 billion provincial growth fund will be set aside as capital for Māori developments.

Yesterday at Mangatoa Station near Kaikohe she announced $82m from the fund will be used to set up regional training and employment “hubs”, and a further $20m from the fund will go to establishing regional digital “hubs” to help small towns and marae get internet connections.

In two days, with Regional Development Minister Shane Jones at her elbow, they have committed about a fifth of the original fund which is already depleted by some grants of dubious value he made last year.

While the projects announced at the weekend will be spread around a number of regions Northland is one of the most needy, which is why successive governments have been working so hard to try to help Ngapuhi get organised for a Treaty settlement.

After a year of trying, Justice Minister Andrew Little seems to be no closer than previous ministers came to finding a bargaining partner all Ngapuhi hapu will accept.

Now the Government seems to be giving handouts instead.

The Government may be right that Māori land is the underdeveloped asset that can provide those parts with more wealth. But providing seed capital is the easy part. It has to do much more to ensure the seedlings are not mulched.

Sam Sachdeva (Newsroom):  Ardern’s Waitangi sequel a test of relationship

Heading to what has traditionally been a tempestuous occasion for prime ministers, Jacinda Ardern’s Waitangi debut in 2018 went about as well as she could have hoped.

While Waitangi Day organising committee chairman Pita Paraone believes Ardern will receive a similar reception this year, he suggests there may be “a bit of murmuring” from Māori over some areas of discontent.

There has always been murmurings of discontent at Waitangi.

Matthew Tukaki, chairman of the National Māori Authority, agrees there will be plenty of expectation from Māori for the Government to deliver on its many promises.

“We’ve had a year of inquiries, we’ve had a year of investigations … 2019 for this Government must be the year of action.”

Many of the issues prioritised by Māori are the same as for the wider population: Paraone mentions mental health and housing, while Tukaki talks about high suicide and unemployment rates.

Tukaki says there is value in “universal principles that guide your waka”, but argues that is not enough: it must be supported by targeted reform and policies to succeed.

Solutions will not come in the form of short-term fixes, he says, but a longer-term vision that can be sustained over years or decades.

The handouts look to be more short term political fixes, or attempted fixes, but fundamental problems remain.

“For too long, government agencies and offices and ministries have been working on solutions and then saying to Māori, ‘Here’s a solution to whatever problem’,” (Labour MP and deputy Prime Minister) Kelvin Davis says.

Like “here’s some money”.

“Really what we need to say is, here’s a problem, how do we work on a solution together so it actually meets the needs of the people who we’re working for?”

There is a lot of work to do there, more than meeting a next year holding to account deadline that Ardern seems to be trying to address.

Māori will be looking to the future too, and whether Ardern’s government can deliver on its promises: perhaps with an added degree of wariness, but also hope.

They will be hoping for more from Ardern and her Government.