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Welfare and tertiary education reform - Maharey

Hon Steve Maharey

18 April 2001 Speech Notes

Making a difference: welfare and tertiary education reform

Address to the Terrace End Rotary Club. Chalet Centennial Lagoon, Palmerston North.

Introduction - Roger Douglas and I

In 1989 Roger Douglas gave a speech in Sydney to a group called the Mt. Pelerin Society.

It is fair to say that I have tended to disagree with Roger Douglas more than agree with him.

We both came from a Labour tradition - indeed someone that I looked up to - Joe Walding - was a colleague of Roger’s for quite a time. But Roger found a new faith somewhere along the way, and his tradition is now one of the right of New Zealand politics, not the centre-left.

Where I did agree with Roger Douglas was on the need to change the New Zealand economy in the mid 1980s. It was going too far to describe the economy as a south seas variant of a Polish ship-yard (we never had that capacity) but it was an economy that was buttressed against change, that was inefficient, cosseted, and protected.

Roger Douglas was right to initiate the process of change. He was wrong to repudiate the traditions and principles of the Labour Party and the Labour Movement in doing that. He was wrong to see the market as always benign, and wrong to see the state as always oppressive.

However he was right to ask the hard questions about the nature of privilege in society - and in that he was true to his Labour roots. Unfortunately he tended to equate any opposition to his plans with privilege - and so perversely all manufacturers were seen as privileged, and all unions, and, for a time, even his own Party was seen as a bastion of privilege.

That speech he gave in 1989 was about the principles of successful structural reform. You can distill the essence of it down to one maxim - “crash through or crash’. In reality both happened; Roger crashed through, but political principle and credibility - particularly in the eyes of those who had been Labour’s traditional supporters, crashed.

But Roger also enunciated one principle that I have no hesitation at all in committing to: “When in doubt, ask, “why am I in politics?’”

Why am I in politics?

I demand of myself that I ask that question on a regular basis - because unless I keep that question in front of me there is always the risk of being diverted from the project.

One way of posing the question is to change the question to “why am I in the New Zealand Parliament?’ And the answer to that is that the electors of Palmerston North put me there in 1990 and have seen fit to do so in the three elections since.

And that is part of the answer - I am in politics to serve the needs and interests of my constituents. But am I simply there as a representative, or do the electors expect me to exercise my judgment. Clearly the latter.

I subscribe to the notion of representation as form of trusteeship, captured in Edmund Burke’s speech to the electors of Bristol in 1774:

“Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion”

One other way of putting this perhaps is to distinguish between what is popular, and what is right. Happily the electors of Palmerston North make it easy for me, because what is popular here tends most often to be what is right.

What makes the trusteeship form of representation work is two things - the fact that you elected me on the basis of a detailed manifesto, and this kind of event - me coming back to the electorate, and listening to the electors. Roger Douglas was wrong to see representation as only involving one poll every three years and the contract allowing him to do anything - even to the point of repudiating the manifesto that he was elected on.

My approach to politics is about working from a mandate, and then using the processes of government and policy formation to renew that mandate. That is an issue I want to return to towards the end of this speech.

Let me turn again to the question - “why am I in politics?’ - and let me attempt to answer it in a more personal way.

I am in politics to make a difference,. I want to be part of a Government that makes a big difference for the better.

How do I want to make a difference? - by representing the electors of Palmerston North, and by giving them the kind of assistance that only a local Member of Parliament can with a myriad of problems.

How do I want to make a difference? - by exercising my warrant as a Cabinet Minister in a Coalition Government elected on the basis of a very clear programme. In other words to implement policies and change the how and the what of public policy - to use the best of the state and the best of the market in doing so. And to make a difference to peoples lives.

Let me give you an example:

It’s about people stupid

The Department of Work and Income has been very much in the news in recent weeks. I won’t rehearse all the detail of what has transpired since we came into government, but the short version of the story is that the Department had some major short-comings, and the Government asked former State Services Commissioner Don Hunn to have a close look at it. He reported last year and we announced a programme of change shortly thereafter - changes designed to provide a great deal of regional flexibility, to move away from the “Wellington knows best’, “one size fits all’ model; changes designed to ensure that when someone walks into a DWI Office or contacts a call centre the approach to them is based on the kind of culture that asks, “how can we help you to change your life for the better? - to enter paid employment perhaps, to better understand an entitlement to social assistance.

Recently I was at a Conference in Dunedin - came question time a young women in the audience said the following:

I am a solo mother on a DPB. I used to have a great deal of difficulty going into the DWI Office. Now that has changed. I want to get off the DPB and into paid employment. When I go into the DWI Office now I am treated like a real person, and they go out of their way to assist me.

That is making a difference. That is why I am in politics.

But these changes are part of a wider project of social welfare reform, and I want to take a couple of minutes to tell you about that, and to foreshadow the release of a Ministerial statement within the next few weeks.

A new welfare state

The Ministerial Statement on Welfare Reform will offer a new approach to welfare for people of working age in New Zealand. It will be about responding to the challenges and opportunities of our emerging knowledge economy.

The Government’s objective is to give all New Zealanders the opportunity to benefit from the high skill economy that is developing in New Zealand. Rather than trapping people in welfare or forcing them into unproductive work for the dole, this Government intends to build the skills and talents of all New Zealanders, so they can find meaningful work for real wages.

The $5.4bn we spend each year on welfare benefits must become an investment in people’s potential, ensuring they can take up opportunities when they arise. At present, too many New Zealanders are held back by being on a benefit. The focus of the new system is on providing opportunities, not on simplistic and punitive notions, such as putting time limits on benefits for the unemployed, the sick or sole parents.

We have made a good start. The ill-conceived compulsory community work scheme that locked people into welfare dependency and out of real jobs has been abolished. Instead, we are working with beneficiaries to genuinely address their job-related needs.

We have also abolished the community wage, returning to a system of separate unemployment and sickness benefits. Having separate benefits reflects the reality that people in different situations have vastly different needs. A hallmark of the new approach is that it will respond to the needs of each individual.

The long-term impact of this will be to develop people’s capacity to work. This will contribute enormously to other important social and economic goals - increasing the incomes of all New Zealanders, developing the skills of our workforce, reducing disadvantage, building stronger communities, and promoting the value of education and lifelong learning.

Like all far-reaching social change, these measures will take time. Improving our welfare system is a challenge for the whole community. For its part, the Government is committed to working with New Zealanders to create a fairer, better system that provides a foundation of security as well as the opportunity for people to fully develop their potential.

Our current welfare system needs an overhaul. It was designed 65 years ago and it has failed to keep pace with the changing needs of our population.

New Zealanders are a diverse people made up of many different types of communities, families and cultures. There are more of us with disabilities, more older workers, and greatly differing education and income levels. The way we live and work has changed too, for example more women than ever before are in paid work.

The present system is not coping with the demands being placed on it. Too many people continue to be hindered by low skills when higher skills and knowledge are essential for gaining a job. At a time when there are skill shortages in some industries, we still have many long-term unemployed.

Furthermore, the current welfare system does not assist people to take on the risks of an entry-level job or take the first step towards a new career.

It is outdated, complex and ineffective in helping people achieve independence. A quick survey of the statistics bears out this depressing picture.

- Despite improved economic conditions, one in six people of working age rely mainly on a welfare benefit.

- One in 10 people of working-age has been continuously on a benefit for more than two years.

- More than half the primary recipients of all working age benefits are aged 35 or over, a higher proportion than in 1992 when unemployment was at its peak.

- One in four children under 18 years are in families whose parents are receiving an income-tested benefit.

There is a real risk of our society becoming desensitised to the social impact of long-term unemployment. Whilst the number of people out of work is declining nationally, there are still too many New Zealand families whose lives are blighted by the impact of unemployment. The problem is particularly acute in some regions where entrenched levels of Maori and youth unemployment are unacceptably high.

Through welfare reform, the Government will help people seize opportunities for real jobs and acquire the skills and attributes they will need throughout their working lives.

We will ensure that the welfare, education, and employment systems work well together so that people have income security as they make the challenging transition to work.

Right now we are working to make the system sufficiently flexible to keep people in work when they are at risk of losing their job, and to return people rapidly to work after unemployment, sickness or injury.

The Government’s new approach to welfare reform will enable people to take charge of their own lives and participate in a labour market where skills and qualifications are at a premium.

The Government’s vision is for a New Zealand where:

- There are more job opportunities.

- There are fewer families and households where no one is in paid work.

- There are more beneficiaries earning income from part-time work, and more beneficiaries increasing the amount they can earn.

- There are fewer families and households enduring material hardship.

- There is increased beneficiary involvement in communities.

It will not be easy to achieve this all at once. We will have to grapple with one of the most difficult issues in welfare reform - how to ensure beneficiaries have sufficient to meet their basic needs while simultaneously providing the springboard for them to move into paid work.

The Government’s approach focuses on six areas:

- A Simpler System. We are introducing new ways of working with people that address both their immediate requirements as well as their longer-term needs.

- Making Work Pay and Investing in People. We are ensuring that a move into work is worthwhile financially. We are also investing in disadvantaged regions to help businesses create employment.

- Supporting Families. We want a system that supports families through difficult times, especially when there is no one in paid employment.

- Reducing poverty. We have helped many people struggling on low incomes - we have reduced the rents of 46,000 State tenants, restored the levels of New Zealand Superannuation, and taken steps to ensure the hardship allowance, the Special Benefit, is available to those most in need.

- Building partnerships. We are committed to working in partnership with all interests. It is only by joint action - with the voluntary sector, with local government, and with business - that lasting change will take place.

- Mutual responsibilities. We accept Government’s responsibility to help those struggling to find paid work. However people must be prepared to take opportunities offered to them, and be aware of sanctions if they don’t.

It is in all our interests to build a better, fairer and more productive society with opportunity for all.

A welfare system that provides security, motivates people to realise their potential and assists them to make the difficult transition to work is a cornerstone of such a society.

Some parts of our programme will be challenging to implement. They will require difficult trade - offs between equally worthy goals. Other parts of the strategy are more straightforward and are already well underway.

We seek the whole-hearted support of key stakeholder groups - beneficiaries, community organisations, local government, the business sector, and employers.

The Government is determined to usher in a new social contract which will set more New Zealanders on the path to independence. It will provide a springboard of opportunity and endeavour, and provide security for people when they need it most.

I am serious about providing plenty of time for questions and discussion, but let me conclude by saying a few words about where we are up to with the reform of the tertiary education sector.

Reforming tertiary education

When I participated at the launch of the Tertiary Education Advisory Commission second report on 7 March I said that there are few more important things that we as a government can do than to ensure a better strategic alignment between tertiary education and the needs of our nation.

The last decade shows that there is no point simply hoping that the market will provide a match between the $2 billion we spend on tertiary education and the range of skills and research we are looking for.

Our predecessors in government glimpsed this, but they did so too late, after ten years without strategy. I said last month that the Government hoped that the TEACs second report could form the basis of multi-party consensus on the way forward for tertiary education. I am encouraged by the comments of Maurice Williamson and I very much hope that his views will prevail within the National Party Caucus.

The reform process is going to involve the Government coming back in as a major player in the tertiary education system again. The Government has an important responsibility as a custodian of the taxpayers' investment, a protector of students' interests, and an advocate of stakeholders' interests. In other words, we're here to serve the interests of the nation.

In order to do this effectively, though, we are going to need to look towards a partnership model. In a complex society, we cannot run the whole system out of Wellington. We all need to work together.

We need central structures that can bring those voices together and articulate those goals.

And we need those goals to drive tertiary education as a system. For ten years the driving feature of this system has been competition. That has been misplaced.

A great number of submissions have been received on the TEAC report and the work on analysing them is proceeding apace. The submissions are without exception detailed and comprehensive and I want to thank all those who have invested considerable time and effort in making submissions.

Many raise concerns about issues of detail, but on balance, my first reading of them suggests that there is overwhelming support for the direction of Government policy, and for the specific direction foreshadowed by the TEAC.

I have already acted on the submissions in one respect - the weight of submissions from Colleges of Education indicated real concern at the implications of removing legal protection for the term “College of Education’. That will not happen, and I announced that last week.

The submissions will influence Government decisions, but I am delighted that there is such a positive climate and support for change.

A renewed mandate for change

Let me give you a sense of that climate by quoting from some of the submissions received:

This from a Polytechnic:

“[We] strongly support the broad objectives and the approach to shaping the system ¡K The encouragement for collaboration and cooperation certainly suits our preferred operating style rather than competitiveness. It is also a much more appropriate approach for an enterprise such as education where knowledge should be shared for the benefit of all ¡K

We support the establishment of the Tertiary Education Commission as outlined in the report ¡K”

This from the Industry Training Federation - the body that represents Industry Training Organisations:

“We fully endorse the direction of the second report and the major recommendations. Specifically, the ITF strongly agrees with the recommendation to establish a single body with responsibility for the entire tertiary sector and consequent transfer of responsibility for the Industry Training Strategy to the proposed TEC.

This represents a major step forward and will mark out New Zealand as the only country that fully and meaningfully integrates the full range of tertiary education pathways”

This from the Vice Chancellor and Chancellor of the University of Canterbury:

“[The] University of Canterbury welcomes an end to market forces thinking and applauds strategic thinking about the future of tertiary education in New Zealand. However, a system based on incentives and partnership will be much stronger and more effective than one based on heavy-handed direction ¡K

We applaud the proposal to create an intermediary body, TEC, provided it enables genuine partnership with the university and other TEIs to achieve desired goals ¡K”

This from the Association of Polytechnics in New Zealand:

“The Association of Polytechnics in New Zealand supports (a) the government’s objectives, and (b) TEC being established and having available to it the necessary mechanisms to achieve the government’s objectives.

The success or failure of the strategy will depend entirely on how the TEC is set up and how it operates..”

"The TEC needs to be focussed on policy, strategy and encouraging/facilitating a change in culture, not on operational control."

This from the Christchurch School of Medicine:

“The general thrust of the Shaping the System report, towards a more coordinated and strategic approach to the delivery of tertiary education in New Zealand, is strongly supported. In the context of medical education, major reform is required if medical schools are to contribute optimally to an integrated and strategically focused tertiary education sector, and to the development of the New Zealand health workforce within a Research and Development framework for the health sector ..”

This from one of the largest Industry Training Organisations - the Agriculture ITO

“Welcomes the fact that the Commission has recognised the problems arising out of separate, uncoordinated government funding bodies all having different policies and operating systems contributing to post-compulsory education

Supports the setting up of a Tertiary Education Commission ¡K”

And this from Massey University’s Council:

“ ¡K we strongly support the objective of a tertiary education system involving universities being underpinned by research and teaching excellence, a focus on collaboration, stable and appropriate funding, and improved student access to, and participation in, tertiary education ..

We support, in principle the establishment of a Tertiary Education Council (sic) as an Autonomous Crown Entity with an appropriately constituted Board¡K”


This is not to suggest that all of the submissions are positive, some are not, and many raise specific concerns about issues of process, timing and detail. But a reform of the kind that is needed will only work if there is a real partnership with the sector - broadly defined, and I am absolutely convinced that there is a critical mass of support behind the changes foreshadowed by the TEAC and a real commitment to enter into partnership.

Why am I in politics? - to make a difference. I have been entrusted with portfolios that allow me the opportunity to be part of a value chain that makes a difference to peoples lives. In the difficult times that is what keeps people like me going. That and the fact that I have people like you to come back to.

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