Hon Steve Maharey
Speech Notes

Biennial National Foodbank Conference, Connally Hall, Wellington

9 February 2000

Thank you for inviting me here today.

The Labour / Alliance coalition has been in Government for just over a year now.

Because we are a government with a clear sense of mission, we know that we will need at least two terms to put in place the policies required if we are to deliver on the social improvements we believe are necessary for our country.

In our first year in Government the nature of our contract with the electorate was very clear and simple. We made a number of pledges prior to the 1999 election ¡V those pledges were reflected in our programme last year and honoured.

This year will be a year of consolidation. Some may think that means standing still. That couldn¡¦t be further from the truth. The essence of this consolidation is two-fold ¡V people will know exactly where the government is heading; there are no surprises ¡V and people have a sense of ownership of and participation in the process of change.

And there will be change ¡V far reaching changes in many respects, but they will be changes underpinned by a mandate.

I want to start today with some brief comments on the economy before discussing what I believe should take place in terms of social indicators and the social investment approach of the government.

Because you and I both know a strong, vibrant, growing economy is a necessary precondition for everything else we hope to achieve.

How do things look at this early stage of 2001?

Yesterday's Household Labour Force Survey release recorded unemployment at 5.6 percent ¡V the lowest rate since 1988. Unemployment may be subject to some ups and downs over the short term, but the medium term outlook remains very positive.

The Government's fiscal position is sound ¡V the Budget Policy Statement released in December confirms that this Government will live within its proposed spending track ¡V there will be no return to tax and spend.

As an aside, it should be noted the same Policy statement recommitted us to place priority on those spending areas that we believe will best advance our key policy goals. In the wider social arena that constitutes education, health and disability services, and improving social services.

Inflation is projected to quickly come back within the Reserve Bank's target range of 0-3%.

The current account deficit is tracking down, and projected to be 3.8% of GDP by 2002.

We will always to a degree be subject to the vagaries of the international economy and in that regard we are watching closely developments in the United States.

But we are not totally subject to those vagaries. This government is about ensuring that we have the economic strength to moderate the impact of movements in the international economy.

This government's vision for the New Zealand economy and society is that we should be part of the global economy, applying knowledge and technology to the natural endowments that give us our comparative advantage.

I said that there were two reasons to make some comments on the economy ¡Vthe first because sustainable economic growth is a necessary condition for achieving the balance of the government's programme ¡V including measures to alleviate poverty.

But the second relates to those measures that we use to assess the economic and social state of our nation.

It is a reasonably straightforward task to provide targets or measures for economic growth, for inflation and for the state of the labour market.

But I have suggested recently that we also need a wider range of measures if we are going to get an accurate sense of the state of our nation, and that the key measures of our economic performance provide intermediate, not ultimate objectives.

Knowing that the economy is growing tells us something very important but it doesn't tell us about the quality of the social and economic outcomes that the growth produces.

In part the story of the 15 years before the election of the Labour/Alliance Government was a story of structural adjustment that produced only patchy bursts of economic growth.

And the economic growth that did occur was not reflected in on-going social and community development. To put it bluntly, too many people missed out.

You know that because of the subject you are discussing here today ¡V foodbanks.

The 1990's saw unprecedented growth in the foodbank community as demand soared.

Salvation Army foodbank use increased by a staggering 1500 per cent between 1990 and 1997.

In 1990 the Salvation Army gave out approximately 4,000 food parcels. In 1997, after seven years of National's destructive policies, the number soared to 65,000. A 1500 per cent increase!

But I know that foodbanks are still under pressure, particularly through the recent Christmas period.

This is an issue we are seeking to address.

Our first year in Government has seen us make a number of significant inroads into the issue of poverty.

For example, we know that accommodation costs are one of the most significant drivers of foodbank usage.

That is why we have moved quickly to institute our income related rents policy.

We originally thought that it would take three years to get up and running ¡V Mark Gosche has achieved it in one year.

Some 132,000 people living in State Houses will benefit from income related rents, with many tenants better off by between $20 and $40 a week. These are not insubstantial gains for families who have previously struggled.

Of course it will take time for the full impact of income related rents to be felt.

Families have built up a mountain of debt over the last decade as they struggled to cope with higher outgoings on rent.

And part of this debt mountain relates to the Department of Work and Income with more and more people making use of benefit advances and recoverable assistance to make ends meet. But of course the money had to be paid back.

Benefit debt recovery rates are a real and pressing issue for many families ¡V and one we have addressed in our work with beneficiary advocates.

The Department has now reviewed all debts where the recovery rate is over $40 a week ¡V this work has led to some significant reductions in repayment rates.

We have also instituted new measures to double check when large debts are established ¡V providing greater accuracy and security.

We have also removed the standard $5 deduction from Special Benefit, raised the threshold for the community services card, and reversed the previous National governments cuts to Superannuation.

Taken together this is a multi million dollar investment in some of the people hardest hit over the last decade.

Will it lead to the mass closure of foodbanks overnight?

Of course not. But it will make an enormous difference to a large number of families and superannuitants and therefore to the sort of demands you face each and every day.

Another development that I believe will have a significant impact not only on foodbanks but right across the social sector is work we are doing to improve the employment and income support services provided by the Department of Work and Income.

Our approach on the income support side focuses on fairness. We want people to be treated fairly and with the dignity they deserve, hence we have asked Work and Income to produce a service charter setting out the rights and responsibilities of both parties.

A cornerstone is that people should be informed of the support that is available and the Department should accurately assess and deliver benefit entitlements.

We want a fairer and simpler deal for everyone ¡V that¡¦s what good public services should be about.

But this does not mean we want to just passively pay benefits to people who really need jobs.

As I said earlier, yesterday's Household Labour Force Survey release recorded unemployment at the lowest level since June 1988.

Employment is up 36,000 year on year and unemployment is down 11,000 over the same period. Particularly encouraging is the fact that changes in employment are largely driven by full time jobs.

Long term unemployment is down, as is unemployment across all ethnic groups. The rate of Maori unemployment is now 13%, down from 14.5% a year ago and 19.5% in December 1998. However, the differential between the overall unemployment rate and the Maori rate demonstrates that unemployment is still concentrated within particular groups and regions. The challenge is to ensure that regional economic development and targeted employment initiatives reach into these pockets of employment deprivation.

But overall the figures are very positive, showing strong employment growth. And this of course means more families with a working breadwinner.

Part of the job of Work and income is ensuring that unemployed people on their register gain the benefits of our healthy labour market.

And we are doing just that. For example, in the period 1 July to 30 November 2000, the Department achieved 5,248 stable employment outcomes for Maori job seekers. That is a staggering 58% increase on the same period in 1999.

I don't need to tell you what a difference it makes, not only to family income, but to a persons sense of self worth to have a real job ¡V not some 'make work' scheme like the compulsory 'work for the dole' programme that typified the last governments approach to 'hassling' the unemployed.

That sums up one of the critical differences between this administration and the last.

They wanted to simply keep people busy while they languished on the dole.

We want to get people out and working in real, sustainable jobs.

That¡¦s why we have also improved the employment focus within the Department of Work and Income.

We have freed up regional commissioners to get on with the job of tailoring local services to meet local labour market conditions.

And we are freeing up front line staff to get on with the job of placing people in real work by scrapping the ineffective mandatory community work scheme along with the complex sanction regime that went with it.

Why?

Because not only did the research show that the scheme failed to help people into real work, (in fact it had a short-term negative impact), but the waste of resources involved in DWI staff policing the scheme prevented them from getting on with the important task of matching job seekers to jobs.

Helping people to find real work is our mission ¡Vwhether through economic development to stimulate growth or through education, training, wage subsidies and job placement services.

But growth alone is not enough.

As a Government, we stand for growth, but growth with equity ¡V economic growth that is sustainable, that is equitable, and that is democratic.

We need job rich growth and development because it is through that development that we reduce disadvantage in society.

This Government's vision is reflected in an economic and social development strategy that has the following features:

„h It is about generating economic growth that is measured not only in increased GDP per capita ¡V but also in increased living standards.

„h It is targeted at the reduction of poverty.

„h It is about environmental sustainability.

„h It is about a strong, competitive, stable and efficient private sector.

„h And, where appropriate, it is about developing a partnership between the private and the public sector.

„h It is about ensuring that we have efficient and effective delivery of the fundamentals of a welfare state ¡V health, education, housing and social assistance.

„h And it is about reaffirming the idea of a welfare state ¡V not as a constraining influence on the economy, but as an integral component of a growing economy ¡V up-skilling people for sustainable employment.

„h It is about seeing the provision of assistance to those in need as one of the hallmarks of a just society, and it is about seeing welfare as an investment in the good society, and the growing economy.

So how might we fully assess the economic and social state of the nation?

Apart from the key measures of economic performance ¡V growth, stable prices, and employment, I have also suggested other measures: poverty and deprivation, educational under-achievement and adult illiteracy, and social isolation.

Poverty and deprivation

Access to an adequate standard of living is a fundamental precondition for individuals to be able to participate and feel like they belong to their community and the wider society. Poverty and deprivation provide means of measuring the extent to which this occurs.

There are currently no official measures of poverty or deprivation in New Zealand. However the Ministry of Social Policy is conducting research that aims to identify an index of living standards that will provide a means by which the Government may be able to determine various income or expenditure based measures of poverty and deprivation.

An important issue is whether individuals experience poverty only briefly, or for prolonged periods of time. In many countries, individuals experiencing persistent poverty are often different from those experiencing shorter spells. The former group includes women, lone parents, the elderly, the sick, and the disabled.

In New Zealand we know that a large proportion of our people require the income protection that the social welfare system provides.

While for many the amount of time spent on the benefit was relatively brief, many experienced chronic and often repeated benefit receipt.

I am not going to suggest to you what our specific target for poverty reduction should be. The setting of a poverty target is a matter for public involvement, not just for technical discussion. There are problems in setting a target, but they are not insurmountable. This year I will be releasing a discussion document on social exclusion, which will specifically address the issues around setting poverty targets.

Educational failure and adult illiteracy

Educational failure and adult illiteracy provide an important measure of the extent of social and economic exclusion in our society.

Individuals without sufficient literacy skills may be unable to participate fully, both in the wider community and society.

Ministry of Education data records that in 1998 roughly one third of all school leavers had less than 6th form qualifications. This indicates a sizeable number of young people entering the workforce and wider society without a reasonable standard of schooling.

The International Adult Literacy Survey for New Zealand shows that almost half of adult New Zealanders (over 1 million people) are below the minimum level of literacy required to effectively meet the demands of everyday life and work.

Two hundred thousand adults function at the lowest level of literacy. At this level people could be expected to experience considerable difficulty in using many of the printed materials that may be encountered in daily life, such as reading a newspaper, or understanding a bus timetable.

This is a situation we must turn around, not only for today's school children but through second chance opportunities for adults as well.

Social isolation

Individuals who are isolated or estranged from their friends, family and community are socially excluded in a real and tangible sense. Moreover individuals who are not connected to wider society through sports clubs or voluntary groups may also face isolation.

One measurable aspect of social isolation are those individuals who face barriers to communication with other individuals ¡V for example living in a household with no access to a telephone puts people at risk of social isolation as it reduces their capacity to maintain contact with family and friends and to seek employment. The 1996 Census showed that 5% of all households had no access to a telephone.

Interestingly, lack of access to the internet is an emerging dimension of this element of social exclusion.

On all three of these issues there is much to be done.

But that should not detract from what we have already achieved ¡V as social service agencies noted, the return to income related rents was the single biggest contribution that any government could make to attacking poverty.

Trevor Mallard, Lianne Dalziel and I spent much of last year working on an adult literacy strategy.

And initiatives like Modern Apprenticeships are designed to create pathways of success, not failure for our young people.

Conclusion

The Government has a clear sense of direction and the time it might take to deliver on its goals. We know we cannot solve every problem overnight.
So we are progressively working through the changes required to turn around the effects of policies put in place in recent decades.

One of the exciting areas of work underway is about renewing our concept of welfare and social assistance which we call ¡¥making work pay¡¦.

The challenge that faces us is to ensure that long term beneficiaries gain skills for sustainable employment. For some this will have to begin at the most basic level. For others it will mean assisting them to update or consolidate current skills.

And the social security system itself has to be reshaped to support movement into employment.

We don't want to passively pay benefits to people who should be in the workforce. But we must acknowledge that for many people the step from a benefit to a wage is a hazardous and frightening journey.

Too many of the assistance provisions work against employment. From benefit abatement regimes that effectively discourage people from extending their part time work; to yawning poverty traps that greet people moving from the DPB into employment.

We need to make sure work pays. That means assisting people to get and stay in a job, even if at first the job provides little more than the benefit. Because it is only if we can sustain people in the workforce that we can start them climbing up the skill and pay ladder.

So we will be focusing on skills and will rebuild an active social assistance model that makes work pay.

It is through this type of policy, coupled with social justice measures like income related rents, that we will progressively reduce the inequalities in our society.

And by addressing inequality we will, in time, address the need for the service that foodbanks provide.

This Government shares your desire, your passion, and your drive to build a more caring and inclusive society.

I look forward to working with you towards this goal over the coming years.

ends

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