Thursday 8 November 2001 Media Statement

Keynote speech to Te Waka Awhina conference 2001

Te Herenga Waka Marae, Victoria University of Wellington

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(Mihi)

Thank you for inviting me here today.

With a year now to run till the end of the current term of the Labour-Alliance coalition, it is appropriate to look at where we are, and to review what we inherited and what we have set in train for the future.

There is no doubt now that the September 11 terror attacks in the United States have had a major impact on the world.

The start of what appears to be an international economic downturn may have originated before the attacks but it seems to have become much more pronounced since then.

Last week the International Labour Organisation noted after a Global Employment Forum that nearly half a million jobs were lost in the United States alone during the past month, and that hundreds of thousands of jobs have been lost around the world in industries such as tourism and aviation. As a result, the US Federal Reserve¡Xtheir equivalent of our Reserve Bank¡Xyesterday dropped its base interest rate to 2%.

The ILO fears that a job-loss tidal wave is on the move and that it will wash up on everyone's shores. Their concern is that the world economy could be plunged into such a stunning reversal that up to 24 million jobs could be lost by the end of next year.

Already, there are signs of "softness" in some export markets, which is economic jargon for "not looking as good now as before".

As you would expect, New Zealand is taking note of these dire predictions but Treasury is also undertaking its own careful assessment to ensure that our response will be appropriate to our particular circumstances.

Within New Zealand, our economic indicators gave cause for cautious optimism immediately after the attacks. At that stage, we had unemployment that was at its lowest level since 1988, a shrinking current account deficit, improving balance of payments, low inflation and low government debt.

This was bolstered by a special lowering of the official cash rate by the Reserve Bank that effectively cut mortgage and other charge-out rates by half a percent, a move designed to boost our domestic economy.

More recently, the indicators have started to "soften".

The Quarterly Employment Survey figures that came out on Monday showed that wage growth for the three months to the end of September was moderate. In effect, the economy has been "humming along" without any obvious sign of inflation.

This is likely to reassure the Reserve Bank that a further reduction of the official cash rate (next week) in its November 14 Monetary Policy Statement can provide another shot in the arm for our economy without fuelling inflation. Commentators are again picking a half a percent reduction, but obviously only the Reserve Bank knows.

The employment outlook, from Monday's Quarterly Employment Survey figures, is not so cheery. These figures suggest a flat job market, and this is likely to have been confirmed by the Household Labour Force Survey figures for the September quarter that were due to come out late this morning.

The latest business opinion surveys have taken a turn for the worse, although I am interested to see that most respondents do not report a decline in their own business yet.

So the government and indeed the country are looking forward to the release of Treasury's prognosis for our economy, the December Economic and Fiscal Update otherwise known as the "DEFU".

The Finance Minister told Parliament on Tuesday that the "DEFU" is due out on December 18.

Dr Cullen indicated then that the government intends to "look through" shocks to our economic activity that may only be temporary.

He was adamant that this government would not repeat the mistakes of the last administration. It cut spending in response to the expected slow-down associated with the 1997 Asian economic crisis, but this only worsened the negative impact on New Zealand of what was happening overseas.

Despite our uncertain outlook, this government is determined that the core values that underpin the Labour-Alliance coalition will remain firmly in place.

- We are determined to keep alive the promise of a better tomorrow for all New Zealanders.

- We are committed to ensuring that the government is a positive force for good.

- We believe governments can deliver gains for New Zealanders that markets can't.

- We continue to reject the free market vision that demands that the community should pull out of everything, sell everything, and let the market rule. We've already seen the folly of that path with our railways, and our national airline.

Up till the November 1999 election, the many years of so-called economic reforms had wrought havoc on the lives of New Zealanders and on Maori in particular.

The imposition of the market model in health and education had resulted in ever-lengthening waiting lists for necessary treatment and young people losing access to education, and tertiary education in particular.

Market rentals and the sale of the state housing stock saw low income families increasingly forced into substandard accommodation.

The fundamental principles that underpinned our Accident Compensation system were being systematically stripped away.

Predictably, unemployment continued to climb, with massive ramifications in particular for low-income earners, low skilled people and Maori in the workforce.

Our regions were dying, bereft of investment while our strategic assets were being sold off, usually offshore, and not necessarily to the highest bidder.

Our national sovereignty was also up for grabs while the National-New Zealand First government promoted the Multilateral Agreement on Investment, the "MAI".

Our country once had a proud social security history and had been described as an enlightened social democratic nation. But it underwent a massive ideological lurch to the right, and led the charge for callous free-market Chicago School of Economics theories.

Our country has¡Xin fact¡Xbeen the victim of a failed political economic experiment. That failure is most clearly seen in the recent Air New Zealand debacle. It will certainly take more than the two years we have been in government to apply sufficient first aid to revive the patient!

The ultimate victim was democracy itself, as even mainstream New Zealanders gave up on the hope of the old electoral system ever enabling them to bring about a change in direction.

Let it be remembered that MMP came about¡Xdespite a massive campaign against it funded by a few rich conservatives¡Xas a direct result of the frustration felt by masses of voters that they could not seem to influence government politicians or their policies.

Whether we like it or not, it will take as long to restore a viable social democracy¡Xwith free health care and education, a true public service, decent housing and all the other things that have been lost¡Xas it took to rip it all away.

Maori, who have suffered greatly from the so-called economic reforms, are still the most likely to say: "we've heard all this before, what's changed?" There is an undercurrent of distrust that stems from long years of broken promises to Maori by successive governments.

While people in this country, including some Maori, may doubt that even this government really wants to turn the tide, others who are hardly cheerleaders for the Labour-Alliance coalition are taking careful note of what's been happening.

The Guardian Weekly, a British newspaper, has featured an article written by Jonathan Freelander who commented:

"A new kind of Labour government rules New Zealand now, in coalition with a left-wing Alliance Party. In a little over a year they have not only increased the top rate of income tax for higher earners, jacked up pensions, reduced student debts and boosted trade union rights, they have dared halt the global trend towards privatisation¡Xand even reverse it."

Freelander goes on to say:

"As if that was not enough, New Zealand is ready to go further than merely undoing failed privatisations. Any day now it will announce a new venture¡Xowned and run entirely by the public sector.

"Designed to remedy a sell-off fever which left every one of New Zealand's high street banks¡Xincluding the Bank of New Zealand itself¡Xin foreign hands, the Alliance has proposed the setting up of a new bank, offering cheap services and low cost loans, owned and operated by the government, using the network of Post Offices" (the one service past administrations never sold off).

The Guardian Weekly goes on to say:

"It is a remarkable transformation where once New Zealand seemed bent on shrinking the public sector to anorexic proportions it is now pumping it full of blood."

I quote this British publication because it can never be accused of being in the pocket of the New Zealand Labour Party or the Alliance.

I am proud of the work undertaken by all of my colleagues in the Labour-Alliance coalition. I only have time here to highlight a few achievements by some of my own Alliance colleagues.

This week has seen the unveiling of the official name of the People's Bank which is now to be called Kiwibank.

Last February, the government gave the parent company New Zealand Post the go-ahead for the bank, agreeing to make a $72.2 million capital injection and to forgo $6 million in dividends from NZ Post in 2000/01.

New Zealand Post has also gained government approval to provide an additional $4.8 million to finance Kiwibank's start-up costs.

An Auckland University survey released on Monday noted that in the past year, since the People's Bank idea was floated, all the other banks have made strenuous efforts to increase their customer satisfaction ratings.

So everyone's banking service has improved as a result of this Alliance initiative, and Deputy Prime Minister Jim Anderton can be justifiably pleased at the outcome of his hard work over the past two years.

The government's careful response to the recommendations of the Royal Commission on Genetic Modification was a triumph for the years of work put into the GE issue by my colleague Phillida Bunkle.

She promoted three Member's Bills between 1997 and 1999 calling for GM food labelling, a moratorium and the Royal Commission of Inquiry. Her initiatives have helped to put this issue firmly on the political agenda.

The government also yesterday announced the details of the new Paid Parental Leave scheme, which my cabinet colleague Laila Harre has been vigorously advocating on behalf of the Alliance.

From July 1, 2002, some 20 thousand working women will qualify for 12 weeks paid parental leave following the birth or adoption of a child.

Provided they have been in paid employment with a single employer for 10 or more hours a week for a full year before the birth or adoption date of a child, they will receive $325 gross per week or 100 percent of their previous weekly earnings, whichever is lower.

A new stand-lone agency to handle New Zealand's Official Development Assistance is being set up within MFAT, a move that development NGOs have been seeking for years and which my colleague Matt Robson has initiated this year.

I'm not sure I want to lay myself open to blowing my own trumpet.

But I was chuffed when the Labour-Alliance coalition set aside a record $187 million of new funding to implement the New Zealand Biodiversity Strategy.

This is a comprehensive strategy aimed at turning the tide on the loss of our distinctive animal and plant species that give our country its unique identity in the world.

Maori have a legacy of judging by deeds rather than words, and rightfully so.

For the record:

- This government within weeks of being elected increased the minimum wage. Who is on it? Many of the low paid are Maori.

- This government overturned the privatisation of Accident Compensation. Who works in the high-accident-risk industries? Maori and Pacific Islanders.

- This government abolished market rents for state houses, and who live in them? The majority of tenants are Maori or Pacific Islanders.

- This government promised to give pensioners their $20 a week back, and did.

- This government has re-invested in the public health system, but in two years we haven't put in anything like what is needed, and it will take years to address the demise of what once was the best public health model on earth.

- This government is also re-investing in public education. But the user-pays model for tertiary studies will take years to remedy. I have no doubt that there will be on-going problems for young Maori to achieve an education based on ability as they had trouble attaining access even before the user-pays student loan model was introduced.

When I stand in Parliament and look across to Bill English and Richard Prebble on the opposition benches, I see only leaders who played an instrumental role in creating our country's "new poor".

Their policies devastated Maori communities up and down the country.

They continue to embrace the philosophies of free trade and globalisation.

The very nature of global economics is constructed on the proposition of a willingness to engage in the relinquishing of land, the sale of public assets, the surrendering of natural resources and management of them for the sake and in the name of the competitive model.

New Zealand's capacity¡Xin the face of these imperatives¡Xto remain viable in its own right is inhibited by its size, capacity to produce and historical alienation of strategic assets.

But Maori will continue the struggle to resist the loss of our political and economic sovereignty by virtue of the fact that our sole stake and place on earth resides in these islands in the South Pacific called Aotearoa.

Governments have come and gone since the signing of the Treaty of Waitangi, while Maori have continued to advocate its significance in every generation since 1840.

It is ironic that in the absence of other contemporary constitutional arrangements, it has been the Treaty itself that¡Xin the context of globalisation¡Xhas protected the sovereignty of our nation on behalf of all New Zealanders.

One of the major challenges facing this and future governments of the 21st century will be to advance the constitutional undertakings that are enshrined in this simple document, in the interests of all of us.

What will be required is grace, an appreciation of the otherness, a willingness to engage, courage, and of course the political will to do the right thing by Maori.

I believe we can achieve constitutional remedies that protect Maori interests.

But these will never be reached by policies and programmes that play off those in work against those who are unemployed, or those who are well against the sick, or the young against the old, or Pakeha against Maori.

May I close today with the words of my mentor, the late Hon. Matiu Rata, who once said: "New Zealand has never had a colour problem; just colourless people in power, with colourless ideas and colourless ideals."

Now that I am one of those "people in power", I am challenged every day to live up to his expectations of making a full-on commitment to serve our people, in the best interests of all New Zealanders.

ENDS

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