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Prime Minister's Statement to Parliament

Rt Hon Helen Clark
Prime Minister

Prime Minister's Statement

Parliament Buildings

13 February 2001

Almost fourteen months ago the direction and programme of the new Labour-Alliance Government was set out in the Speech from the Throne.

That speech set out the new government¡¦s intention to improve the social and economic wellbeing of New Zealand; to restore public confidence in the political process; to provide stable and effective long term government for New Zealand without compromising the distinctive political identity of either party; and to act in good faith between the coalition partners.

Looking back now on those past fourteen months, the government takes considerable pride in what has been achieved. Just as Rome was not built in a day, nor will deep-seated economic and social problems be solved overnight. But we have made a good start. The Coalition takes this opportunity to acknowledge the very important role which the Greens' parliamentary support has provided and the support given from time to time on specific measures by other parties.

Our first year in office saw us reset the nation¡¦s compass to deliver the change of direction in economic and social policy which people had voted for. We were able to implement in full many of the core policies of Labour and the Alliance. For example:

„h We reversed the cuts the previous government had made to New Zealand Superannuation. On 1 April last year superannuation for married couples increased by $21.42 cents a week and for single superannuitants by more than twelve dollars. On 1 April this year, New Zealand Superannuation will increase again. That contrasts very favourably with the cut to New Zealand Superannuation which would have occurred had the National Party stayed in power. This government believes superannuitants have a right to live in dignity.

„h Important changes are also being made in health.

More funding allocated for surgery is enabling around 27,000 extra treatments a year in our hospitals.

The extra surgery available is good news for people of all ages needing treatment, and it is especially helpful to our older citizens who as a group are more likely to be calling on our public health system.

Elected representatives will return to the health system in October this year when the elections to the new district health boards are held. These new boards will be more responsive and accountable to their communities than the inappropriately commercially-oriented boards of the previous government were.

Our government looks forward to working with the new boards to implement the new New Zealand Health Strategy, the new primary health care strategy, and new strategies to improve Maori and Pacific peoples¡¦ health.

„h Tertiary education was a defining issue in the 1999 election campaign. The cost of student debt was high and student fees had risen steeply in the 1990s.

We moved quickly to deal with these issues. We said that full-time students and part-time students on low incomes would not accrue interest on their loans while they were studying. We honoured that pledge in our first year in government.

For this year, 2001, we have moved against fee increases. Fees in our tertiary institutions this year are set at last year¡¦s levels.

Both these moves ¡V no interest on loans while studying and fee stabilisation - have been taken because our government wants to make tertiary education more affordable and because we believe that access to education should not be determined by whether students and their families can afford it. Our country needs more educated and skilled people and we will do everything in our power to see that we have them.

„h The housing policy of the previous government carried a huge responsibility for the fall of many thousands of New Zealand households below the poverty line. Our government pledged to restore income-related rents for state tenants, and we delivered on that pledge in full on 1 December. More than 50,000 households in state tenancies applied to go onto income-related rents. The average rent decrease granted is over $33 a week. These families now have a chance to feed and clothe their children and heat their homes in winter without falling into debt.

„h In the area of fighting crime the government set itself the particular target of cracking down on burglary. We did that for two reasons. In the first place burglary is a widespread crime which all too commonly upsets and disturbs the lives of New Zealanders ¡V and it causes great distress whenever and wherever it occurs. In the second place, burglary is the stepping stone to more serious crime. Cracking down on burglary will have the effect of stopping the development of criminal careers.

The early signs of our focus on burglary are very encouraging and I congratulate the New Zealand Police on the results. Burglary offences have hit an eighteen year low, response times are much quicker, and the crime resolution rates for burglary are at their best for twelve years. That¡¦s good progress, and it encourages us to continue to target burglary as a top priority in fighting crime.

„h Another top priority for the Labour-Alliance Government was creating more job opportunities for New Zealanders. The latest employment figures show that we are making headway.

Unemployment now stands at 5.6 per cent, the lowest since June 1988. The number of jobs for the December quarter is up 36,000 on the same quarter a year ago, and the labour force participation rate is rising too.

The good news is that all ethnic groups across our community have seen their unemployment rates decline. For the European/Pakeha community, the rate now stands at four per cent. The rate for Maori, while falling, stands rather higher at 13 per cent, and for Pacific peoples at 11.4 per cent. This disparity is unacceptable. It is the aspiration of our government to see people in all our communities achieve equal opportunity, and we will continue our work to that end.

The progress our government has made in these core areas of policy ¡V superannuation, health, education, housing, employment, and fighting crime ¡V is significant. The year 2000, the beginning of a new millennium and a new beginning for New Zealand, was indeed a year of action. But there is much more to do.

Our dream, our vision, our aspiration, and our goal is to see our country develop as a kinder, fairer, more prosperous, innovative, tolerant, progressive and advanced nation.

Economic Transformation

Critical to our future is the modernisation and transformation of our economy. For too long New Zealand has been trying to sustain first world living standards on the back of third world exports. That doesn¡¦t add up, but it does explain why over the last half century, as others have taken their economies up market, ours has drifted steadily towards the bottom rungs of the OECD ladder.

Reversing our fortunes as a nation requires us to develop a shared vision about what could be and the road map to get us there.

Last year the government appointed the new Science and Innovation Advisory Council to help develop that vision and the road map. The Council has been a breath of fresh air in its enthusiasm about what can be achieved and its pragmatism about how we get there.

The vision statement which the Council has developed is simple: It sees New Zealanders as innovators to the world ¡V turning great ideas into great ventures.

And why not? New Zealanders have the brains, the talent, the education and research institutions to develop great ideas, and we do.

But, it is commercialising enough of the output in New Zealand which has eluded us for so long, and that is now imperative.

So is ensuring that we have a more highly educated and skilled population and the technology to realise our innovation vision.

And so is embracing innovation and technology in everything we do. That way we bring the old economy of commodity-based production into the new economy too.

Vision is important. We can look ahead ten years and see where we could be.

If we embrace innovation wholeheartedly, we can be in the top half of the OECD, not falling to the bottom.

Our falling unemployment rate places us among the top half of OECD performers on that indicator.

Why should we not aim to be in the top half on other key indicators too?

We can lift our economic performance hugely by improving our connectivity with the rest of the world through the best possible use of information and communication technology.

Through that we can develop our clusters, our global villages, our centres of excellence.

We can tap into our New Zealand expatriate communities for more investment in and promotion of our potential.

We can see more of our companies developing as global traders in leading edge sectors.

We can have a much more dynamic small business sector as the seed-bed for business growth.

We must have an education and training culture and aim to be enterprising in everything we do.

If we buy into the innovation vision, we can look forward to substantially higher incomes, to sustainably low unemployment, and to a more secure society.

This government has a passion for economic transformation.

We know that business and nations worldwide are facing tremendous economic challenges.

We are in a global market for investment and skills.

We have to establish a firm niche in that market.

And we have to do so at a time when the pace of change has never been faster.

There is a race to the future going on ¡V and we New Zealanders have to be committed to being among the winners. Love it or loathe it, globalisation is here to stay and we have to succeed within its framework.

This government is committed to being smart and active to get the best economic results for New Zealand. In the coming year we look forward to working with the education and research sectors, with business, with local government, and with communities to get those results.

This year the government has many big projects on its agenda which relate directly or indirectly to economic transformation and modernisation.

Tertiary Education and Training

Shortly the Tertiary Education Advisory Commission is to present its report on a proposed structure for tertiary education in the future. In recent years competition in the system has been destructive and costly in terms of the quality of education. Nor has it been clear to the tertiary sector what the government¡¦s expectations of it actually are.

This government will be clear about its expectations of the tertiary sector and funding will move in line with that strategy.

The government will want to see the development of centres of excellence in the tertiary sector. Presently resources, especially at post-graduate level, are spread too thinly at a cost to the quality of the education New Zealand provides.

In industry training, we have already substantially increased funding. We have also set up a modern apprenticeship programme to raise the profile of work-based training and the numbers of skilled New Zealanders. A review of industry training is also under way.

Information and Communication Technology

Success in the 21st century economy is going to depend on New Zealanders being confident in their use of information and communication technology. That¡¦s why a major digital opportunity partnership between the government and leading information and communications technology companies was launched last week.

With a government contribution of $10.15 million over four years and with company contributions of skills, expertise and products at reduced rates, we are launching ICT projects in low decile schools in six regions. The projects are aimed at getting students and communities to embrace ICT by providing access to hardware, software, and improved bandwidth, and to the skills training necessary to use the new technologies.

The projects will have direct educational benefits; they will contribute towards building the skilled workforce of the future; and they demonstrate a commitment to equity of access to new technologies across our communities.

Immigration and Recruitment in a Global Labour Market

In building the educated and skilled workforce of the future, our top priority is to enable New Zealanders to reach their full potential in education and training. Not only does that take time, however, but also there are world wide shortages in key skill areas. We live in a global labour market where opportunities abound for skilled and talented people. If we are to get our share of that global labour market, we have to do more than educate and train our own people. We also have to vigorously recruit educated and skilled people from other countries.

For that reason the government is setting a specific target number for skilled and business migrants coming to New Zealand each year.

We aim to increase the numbers of those migrants from the 1999/2000 figure of 17,000 to 27,000, an increase of almost 60 per cent.

We need these people to help drive our economic development.

We have also announced other changes to help business attract skilled workers.

„h From April this year we will grant open work permits to spouses and partners of work permit holders, to enable them to contribute to household income and help them integrate in New Zealand during their stay. The barriers to partners and spouses working has been an impediment to employers attracting skilled staff to New Zealand on work permits.

„h The government is also identifying occupation shortages so that the work permit application process can be speeded up. This will also help employers get the staff they need to New Zealand more quickly.

„h As promised prior to the last election, we have also eased the English language testing requirement to make New Zealand a more attractive destination for migrants. The last government¡¦s imposition of a stringent English language test had an adverse impact on migration flows.

Work will continue this year on improving immigration policy¡¦s responsiveness to labour market and business needs, to help us overcome the skills shortages which impede our economic growth.

Science, Research, and Technology

Critical to the building of an upmarket economy which guarantees high living standards is a quantum leap in our level of scientific, research, and development activity.

Last year the first steps were taken in that direction. The government increased science, research and technology spending by over ten per cent in its first budget. More than half of the extra $43 million is going directly to the private sector to support R & D activity.

We also

„h increased the range of science scholarships to include 41 new science, mathematics and technology fellowships for primary and secondary teachers.

„h funded 33 new post-doctoral positions through the Marsden Fund


„h funded 24 new post-doctoral fellowships with 12 targeted to new economic areas.

There is, however, much more to be done to build a strong innovation system in New Zealand.

Submissions have now closed on the discussion document on how the tax system should treat research and development expenditure. Business is actively and constructively engaged in discussion with government about this.

The Minister of Research, Science and Technology is working on:

„h new policy for incubator support for small start-up companies

„h fresh seed capital and venture capital initiatives for the commercialisation of new technologies in New Zealand

„h how the Crown Research Institutes can be more actively involved in innovation and the commercialisation of research output.

The planned new focus on centres of excellence in our tertiary education sector will also contribute to New Zealand's developing innovation system.

There has been much comment on the recent Australian Government innovation package and how it compares with New Zealand initiatives. The Australian package does have good ideas and it has been well marketed. It should not be assumed, however, that Australia has stolen a march on New Zealand.

The New Zealand Treasury estimates that when the Australian package is adjusted for relative GDP, it represents an increase of around $NZ93 million a year. To put that in perspective, they say, last year¡¦s New Zealand Budget included an increase per annum of around $130 million on science, research and development, tertiary education and industry and regional development. The R & D component of the new Australian initiative when adjusted for New Zealand¡¦s relative GDP is about $NZ5 million per annum.

New Zealand under the Labour-Alliance Government is making significant advances in building a national innovation system and plans more. What will be important, as the Australian initiative has shown, is to market and brand what is happening so that the sense of excitement about what is happening and what our country¡¦s potential is can be shared more widely.

Industry and Business Initiatives

The Labour-Alliance Government is also active in leading and facilitating industry strategies, encouraging inward investment in key sectors, backing innovative small businesses, and partnering regional strategies.

In the past year

„h the Tourism Board has come together with the private sector, local government, and Maori and community interests to work on a New Zealand Tourism strategy. There is also strong private sector representation on the new Tourism Research Council

„h Hon Jim Anderton and the Ministry of Economic Development are working with the forestry industry and international investors to facilitate more investment in processing infrastructure in New Zealand and the production of an adequate supply of skilled workers

„h Jim Anderton and his Ministry have also worked hard to secure the investment of Sovereign Yachts at Hobsonville and the prospects of hundreds more jobs and hundreds of millions of dollars of export earnings for New Zealand. More such initiatives are in the pipeline

„h the Industry New Zealand Enterprise Awards Scheme is up and running, and has already approved 111 grants for feasibility studies, intellectual property protection, business planning and mentoring. These awards are giving small innovative companies a chance to grow and to make a big contribution to jobs and our nation¡¦s wealth

„h the Regional Partnership Programme has been established with $33.8 million over three years. To date 137 expressions of interest have been received, suggesting considerable enthusiasm for local and regional development initiatives.

Economic Outlook

The government¡¦s determination and initiatives to lift New Zealand¡¦s economic performance come against a background of improvements in a range of economic indicators.

„h The switch from consumption led to export led growth is having a positive effect on the balance of payments as New Zealand starts to earn its way in the world again.

„h Exporters and the tourism industry are continuing to do well.

„h Levels of business and consumer confidence are also encouraging.

As a small export-oriented economy we are vulnerable to external factors beyond our control. Notwithstanding that, the outlook for this year continues to be positive.

As a government, we will continue to do all in our power to build an economy less dependent on commodity price fluctuations, good weather and a low dollar and rather more driven by innovation and high value, high quality production of goods and services.

Trade Policy and Promotion

Labour believes it is in the national interest for New Zealand governments to be very active in the promotion of international trade and in the opening up of markets for New Zealand exports. This government certainly has been.

Last year we brought negotiations on the free trade agreement with Singapore to a successful conclusion. The higher profile New Zealand has been enjoying in Singapore has already contributed to a significant increase in New Zealand exports to Singapore.

I take this opportunity to thank Hon Lockwood Smith for his early work on the agreement and to thank the National Party for their broad support for it last year. This was an issue where the ¡¥agree to disagree¡¦ provision of the Coalition Agreement was invoked, but also where Labour was prepared to move ahead on the basis that the Singapore agreement did have broad parliamentary support.

Since then, early discussions have been held with Hong Kong to discuss a similar agreement.

We are keen to follow up with the new United States Administration on the possibility of a free trade arrangement. Our preference is still for the strategic advantages which a five way United States, Chile, New Zealand, Australia, Singapore agreement would offer.

Considerable effort will be invested this year in promoting the launch of a new World Trade Organisation round, in strengthening APEC relationships, and in bilateral trade promotion. Hon Jim Sutton will be travelling widely this year to promote New Zealand¡¦s trade interests.

This year the government is also launching a new export credit guarantee scheme aimed at facilitating the entry of small and medium-sized exporters into overseas markets.

A huge contributor to New Zealand exporting is the dairy industry. It has come to government to request support for major change in the industry.

The government will work with the dairy industry on its proposal to ensure that it offers the best possible way forward for the industry. Our major objective is to secure the best footing we can for New Zealand dairy exports for the future. Before change is made the support of dairy farmers will need to be assured and the government will need assurance that any new statutory framework is fair and in the long term interests of the industry and the nation.

Modernising the legal and regulatory framework of the economy

The government has a big agenda this year to modernise the legal and regulatory framework within which the economy operates to enhance competition and to improve consumer and investor protection.

„h Last year saw major independent reviews commissioned by government on the functioning of the electricity and telecommunications industries. Legislation is now before Parliament governing the future operation of the electricity industry and the telecommunications legislation is due shortly.

„h Amendments to the Commerce Act will be passed to deter anti-competitive conduct.

„h A Takeovers Code will take effect from 1 July to ensure that all investors are treated fairly. The last week¡¦s events surrounding Montana prove beyond all doubt the need for this move to restore confidence in the New Zealand sharemarket at home and abroad.

„h For the same reason, legislation is being prepared this year to toughen the rules against insider trading. This Labour-Alliance Government is not prepared to tolerate the wild west aspects of the New Zealand sharemarket. We want international and domestic investors treated fairly.

„h Last year Hon Paul Swain launched the government¡¦s e-commerce strategy with the vision statement that ¡§New Zealand will be world-class in embracing e-commerce for competitive advantage¡¨. A major summit on e-commerce generated a lot of excitement about its potential for New Zealand.

The rapid development of technology, however, has exposed shortcomings in the legal framework which we are moving to correct.

„h The Electronic Transactions Bill will be passed this year to support an equivalent legal environment for both electronic transactions and paper-based transactions.

„h Work is to be done on the development of the Evidence Code to define how electronic communications can be used in evidence in legal proceedings.

„h The Crimes Amendment Bill No 6, better known as the anti-hacking legislation, will be passed to deal with cyber crime.

„h Changes will also be needed to the Privacy Act to ensure that our privacy laws are regarded as adequate in terms of the European Directive on Data Protection.

„h There will be reviews of our intellectual property legislation to see that there are no significant impediments to the application of e-commerce.

In recent months the government and the business community have taken steps to work more closely together in the interests of New Zealand.

In the agenda I have outlined today, the government can be seen to be outlining a clear vision for the future of the New Zealand economy and accepting the leadership role in taking the country towards that vision.

The business community has a huge role to play as an economic partner in the country¡¦s development. For that reason the government has made tackling compliance costs a high priority through the Simplicity 2002 programme. The establishment of the Business Compliance Cost Panel was brought forward to January this year and will report to ministers by the end of June on how to reduce compliance costs.

Test panels are being formed to assess the likely compliance costs and workability of regulation. In the first instance panels are being established in the areas of energy performance and labelling standards; gas appliance safety regulations; and regulations relating to wine production and marketing.

Other developments of particular interest to the business community this year will be the outcomes of the Monetary Policy Review, due on 28 February, and the Tax Review, due by 30 September.

Climate Change

The government will also continue to engage the business and scientific communities and environmental NGOs in discussion about the development of climate change policy.

It is our objective to see New Zealand ratify the Kyoto Protocol by mid-2002, around the tenth anniversary of the Rio Conference on Environment and Development. Reaching this objective is not made easier by the failure to date to get international agreement on implementation of the Protocol.

Our ministers will continue to be fully involved in international efforts to reach such agreements this year.

Scientific evidence is painting an increasingly bleak picture about the effects of climate change on our planet. It is important that New Zealand plays its part in an international plan of action to reduce the impact of greenhouse gases.

Social Policy

This year will again see major social policy legislation. Perhaps the most challenging bill before Parliament this year is the New Zealand Superannuation Bill introduced last year by Hon Dr Michael Cullen. It seeks to secure New Zealand Superannuation on its present terms and conditions by saving now to help meet payments in future.

All political parties and most New Zealanders appreciate the importance of having long term and secure arrangements for superannuation. This Bill deserves serious scrutiny and all parties in the House have indicated their goodwill to giving it that.

Legislation will be introduced to improve the accident compensation scheme. It will include lump sum payments for impairment and provision for more emphasis on both accident prevention and post-accident rehabilitation.

The government¡¦s plans to improve the quality of education, and to support equality of opportunity through the education system were set out in last year¡¦s Budget. This year legislation will be passed setting up an Education Council charged with implementing higher standards for teacher registration. The outcome of the review of the Education Review Office is likely to lead to ERO taking a more active role in helping schools to reach high standards of teaching.

Significant changes in health legislation are planned in amendments to the Smoke Free Environments Act. The government is also spending a great deal extra on initiatives to help people stop smoking. Tobacco smoking is the most preventable cause of death in New Zealand and causes at least 15 per cent of all deaths each year. The death toll is especially high for Maori communities. The dangers of tobacco single it out for special attention by government.

Family violence prevention is a major priority for the government. Our nation has been shocked by horrific cases of child abuse. We want effective services which address the problem in ways appropriate to our different communities.

For that reason Te Hauora O Te Tai Tokerau charitable trust has been granted $3.2 million over the next three years to provide a comprehensive family violence service aimed at reducing violence in its community.

The government is determined to fund programmes which meet the needs of specific communities. Maori and Pacific Island communities have not always responded well to initiatives in the mainstream. Governments in this country have long acknowledged the need for different programmes to meet different needs.

One size does not fit all.

We will target disadvantage in all communities, and we will support the building of capacity in Maoridom and in Pacific Island communities so that they and their organisations can play a major role in their economic and social development.

I am personally saddened by the determination of some opposition parties to play the race card on these initiatives. But I do believe that there is a broad appreciation among New Zealanders that not only is the rich-poor opportunity and security gap overall a concern, but so is the concentration of significantly larger proportions of Maori and Pacific peoples at the bottom of the socio-economic ladder.

If we are to pull New Zealand back into the top half of the OECD, then we need to ensure that all our people can reach their potential. As a nation we cannot afford to have significant parts of our population feeling excluded and unable to develop their skills and talents.

It goes without saying that the government will continue to work in good faith to reach settlement on historical Treaty claims. Progress on the Muriwhenua and Taranaki claims is very much hoped for this year, along with legislation to finalise the Te Uri O Hau settlement.

Priorities in the criminal justice area this year will include the passage of the Victims Rights Bill to strengthen and extend the rights of victims, a sentencing and parole reform bill, and new legislation covering second-hand dealers and pawnbrokers designed to thwart burglary by making it more difficult to sell stolen goods.

Improved funding paths for arts and culture and for environmental and conservation initiatives were established last year. Tremendous energy has been unleashed across the cultural sector which has both economic benefits and intrinsic benefits.

The new charter for Television New Zealand will be settled this year. Work is also being done on whether there should be a separation out of TVNZ¡¦s transmission arm, BCL, from its responsibilities as a broadcaster of programmes.

The government also expects to make decisions about Maori television in the coming months.

This year work begins in earnest around policy for the oceans surrounding New Zealand. The creation of a national energy efficiency and conservation strategy and a waste minimisation strategy are high priorities.

The Royal Commission of Inquiry into Genetic Modification is due to report this year. Following that, the government will move to make decisions about the future of that technology in New Zealand.

Last year new, and more co-operative relationships were formed between central and local government. Two forums were held between ministers and Local Government New Zealand, and more are planned this year. There is close consultation between us on new local government legislation, the future of land transport, and environmental legislation and strategies. The Labour-Alliance Government has made the relationship with local government a top priority. Our roles are complementary, we serve the same population, and it is in the public interest for us to work together.

International Relations and Defence

Last year regional issues came to the fore with the instability in the Solomon Islands and Fiji and our continuing commitments in East Timor. Pressures and strains in Indonesia itself, including in West Papua/Irian Jaya, are also of considerable interest to New Zealand.

Our government is internationalist in outlook and committed to being a good regional neighbour to Australia, the South Pacific, and to Asia. We are also developing stronger relationships with Latin America, as well as maintaining our traditional ties with North America, Europe and the Commonwealth.

The Prime Minister of Australia, Mr Howard, visits New Zealand later this month for annual bilateral talks. Announcements are expected then on a new social security agreement. Existing arrangements have been a growing irritant in the relationship between our two countries for some years.

We continue to work to extend the closer economic relationship with Australia on harmonising business law, food standards and labelling, and on taxation.

This year the Commonwealth Heads of Government Meeting will be held in Brisbane in October and will be followed by a visit to New Zealand by Her Majesty the Queen. This visit will mark the impending fiftieth jubilee of the Queen¡¦s accession to the throne.

On 24 April I will visit Australia for the unveiling of the New Zealand memorial on ANZAC Parade in Canberra. This is New Zealand¡¦s gift to Australia in this centenary year of federation. It symbolises our close defence co-operation with Australia.

The government is in the process of reshaping the defence force in line with last year¡¦s defence policy framework. Substantial investments are being made in essential equipment, beginning with the modernisation of the army. We are working on a ten year plan for investment in safe, effective, and sustainable capabilities.


The year 2001 is one of considerable activity for the government and for Parliament. Our plans build on from and consolidate many initiatives taken last year.

The government does take pride in keeping its word on the core pledges it made and in restoring a sense of balance to the community. We are a government which seeks to ensure opportunity and security for all New Zealanders. We are a government which is prepared to lead economic and social transformation, and to seek partnerships inside this Parliament and throughout the community to build a stronger economy and society.

The early results are promising.

Most New Zealanders yearn for a nation which is confident, progressive, more prosperous, tolerant, and which cares for its people. That¡¦s what this government aims to deliver.


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