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Hon Michael Cullen's Address to Rodney Electorate

Thursday 15 April 2004

Address to Rodney Electorate Meeting : Securing New Zealand’s Future in Tomorrow’s Economy Snell’s Beach Community Centre, Hamatana Road, Auckland

Two major issues have been dominating my agenda recently. The seabed and foreshore issue has kept me awake at night. And meanwhile I have still had my day job: building a stronger economy and managing the government’s finances.

Although they may seem poles apart these issues present similar challenges and require us to watch out for similar pitfalls. As New Zealanders we pride ourselves in being fair-minded and pragmatic, flexible and respectful of others.

These qualities are essential to finding a way to accommodate the reasonable expectations of public access to the foreshore and seabed, while respecting the long-standing sense of connection and guardianship which many Maori have for portions of that foreshore and seabed.

And they are also essential qualities in creating a growing economy.

First, to the foreshore and seabed question. We need to remind ourselves how this issue arose.

Up until June of last year, New Zealanders understood it to be a settled principle that the seabed and foreshore was owned by the public, and could be freely accessed for recreational purposes and for commercial use under the appropriate safeguards of the Resource Management Act and other acts of Parliament.

Most New Zealanders were also aware of the special importance that parts of the seabed and foreshore held for particular Maori tribes as a result of a long history of continuous use and connection to that part of the coast. They respected those customs and were happy to accommodate them.

I believe the overwhelming majority of New Zealanders – Maori and non-Maori – still share these views.

What has changed is that nine months ago the Court of Appeal determined that the Maori Land Court could hear claims and investigate the ownership of the foreshore and seabed. This decision showed that the settled state of affairs was in fact on shaky legal ground.

Before we go any further we need to be very clear on what it was that the Court of Appeal actually said and what it did not say.

It did not say that Maori owned the foreshore and seabed. All it said was that the Maori Land Court did have the jurisdiction to hear claims. It left open questions as to whether the claimants would succeed in establishing any customary property and stated that the extent of any interest remained “conjectural” but was likely to pertain to “relatively discrete areas.”

This created a quandary for the government. To allow claims regarding the seabed and foreshore to be heard by the Maori Land Court would have serious repercussions. It would raise the possibility, however remote, of a claimant being granted full and exclusive ownership of a portion of the seabed and foreshore. That is because the Maori Land Court operates under the Te Ture Whenua Maori Act 1993, which only has provision for granting fee simple title. It provides for no other options.

That of course would be quite contrary to what Parliament had intended when it passed that particular Act; and completely contrary to the consensus amongst New Zealanders as to the status of the foreshore and seabed.

It would also have led to protracted and possibly fruitless legal battles, no doubt lasting for years, during which there would be an effective moratorium on any new commercial activity around the foreshore – such as tourism and aquaculture.

It needs to be said that very few Maori ever expressed a desire for fee simple title to those coastal areas with which they had ancestral connection. What Maori wanted was a means of protecting their customary rights.

We need to remind ourselves exactly what customary rights are. First and foremost, they are not an invention of Maoritanga, and they are not Treaty rights as such. They are rights which derive from the common law; that is, from the mainstream tradition of English jurisprudence which extends back to the Magna Carta. The Treaty of Waitangi enters into the picture only because through signing it Maori accepted the protection of English law, as subjects of the Queen, in return for ceding sovereignty to the Crown.

Customary rights are attested to by both New Zealand and overseas courts. Such rights are established by long practice; by a continuous relationship between a community and a specific area of foreshore and seabed. They are not easy things to establish, and if the custom falls into abeyance or the right is forfeited by some lawful agreement or by specific statute they cease to exist.

What this means is that a relatively small proportion of the foreshore and seabed is likely to be the subject of customary rights.

Although they do not involve ‘ownership’ as such, customary rights are property rights nevertheless. One can draw analogies with any number of other rights, such as rights of way and similar modifications to titles which place an obligation on the owner of land to make provision for the interests of other parties.

Like any other property right, customary rights, where they are established, should not to be taken without just compensation. And like any other property right, they must be exercised in a context of other, competing, rights belonging to other individuals and to the public. They can be regulated or moderated – to a certain extent – for broader community purposes.

As I said at the start, I believe most fair-minded New Zealanders accept the concept of Maori customary rights and would want some means to recognise and give effect to those rights alongside a general right of public access. In our view, notwithstanding the Court of Appeal’s decision, the Maori Land Court and the Te Ture Whenua Act are the wrong way of achieving that goal.

I firmly believe that we can find a middle path. That is what the government has committed itself to.

Late last year we issued a framework under which the foreshore and seabed would be placed unequivocally in public ownership; with a clear process to recognise where it exists the continuous connection between local tangata whenua and their ancestral foreshore and seabed.

The proposals were based upon four key principles to be enshrined in the legislation, and these principles have very wide acceptance. To remind you, they are:

Open access to and use of the foreshore and seabed for all New Zealanders;

Regulation of the use of the foreshore and seabed by the Crown on behalf of all future generations of New Zealanders;

Acknowledgement of the customary interests of whanau, hapu and iwi, and the protection of specific rights where these are identified; and

Certainty for those who use and administer the foreshore and seabed.

We consulted widely on these principles, not just with Maori, but also with recreational groups, environmental groups, business representatives and local authorities.

The result of that consultation was that some changes were made to the details of the proposals, and the means of carrying them out; but the principles enjoy pretty much unanimous support.

So the legislation that will be introduced into Parliament next month will make it clear that:

Ownership of the foreshore and seabed is vested in the Crown on behalf of all New Zealanders, with no new private title;

Public access to the foreshore and seabed is guaranteed; and

There is a fair process for establishing customary rights through the Maori Land Court and the High Court.

Clearly if this new regime is to work there is a need for give and take. Non-Maori and those wanting to undertake business in areas such as tourism and aquaculture will have greater certainty around access; but this for some portions of the foreshore and seabed this will go along with a more explicit role for Maori as traditional guardians, or kaitiaki, in planning decisions.

And for some Maori the measures to protect customary rights come at the cost of relinquishing the right to pursue legal claims through the courts. Where the High Court establishes that those rights could have amounted to some form of territorial rights, the government will enter into negotiations with claimants over redress for the lost rights.

I do not wish to underestimate the difficulties ahead or to deny the depth of feeling on the issue throughout the community, but I believe we have put forward a set of proposals that is fair to all and provides a workable way forward.

It is a solution that has its enemies, of course, although it would help the debate if those enemies got their facts straight.

Federated Farmers have attempted to mix up the seabed and foreshore proposals with the general question of across private land to the coastline. This is of great concern to many farmers, and it is being dealt with separately through a special report on walking access in the New Zealand outdoors.

We have made it painstakingly clear throughout the whole foreshore and seabed exercise that does not deal with the issue of access across private land; and we have gone to great lengths to ensure that the Bill is drafted to explicitly exclude that issue. It provides for a general right of public access and navigation along and over the foreshore and seabed.

How Federated Farmers could be confused about this is a mystery. I can only hope that it does not signal a return to the bad old days when Federated Farmers sang from the National Party songsheet, and tunelessly at that.

Meanwhile confusion also reigns amongst the right wing parties in parliament. Both Act and National want to create a race issue, arguing that the legislation will lead to a frustrating regime of co-management for the entire foreshore and seabed, with endless opportunities for the uncovering of taniwha and ticket-clipping along the way.

This is a gross misrepresentation of the regime that is proposed, which is in fact quite moderate and reflects in large part what already occurs. Where an ongoing ancestral connection exists it can be confirmed through the Maori Land Court and will provide for the expression of kaitiakitanga. It will bring with it a strengthened ability to participate in decision-making processes over the relevant area.

National and Act seem determined to interpret this as cynically as possible; although they part company when it comes to proposing an alternative.

The Act Party are saying that ancestral connection is a consolation prize for Maori. Because property rights are a kind of fetish for Act, they believe Maori should be permitted to pursue legal claims to the foreshore and seabed, even if that locks it up for years to come while those claims are heard.

They are taking a very purist approach. In the government’s view, it is better to create a simple process for recognising Maori interests now, and bypass years of legal wrangling that will do little to promote understanding between Maori and non-Maori and may never yield a clear result.

To their credit, Act at least recognises that there are property rights involved. National on the other hand doesn’t seem to recognise property rights if Maori have them. Their solution would be simply to legislate Maori property rights out of existence.

How this squares with National’s much vaunted principal of one rule for all is hard to see. Apart from being a dangerous precedent for all property rights and a repudiation of many centuries of English law and policy, this would be a way of guaranteeing that the seabed and foreshore issue remains with us as a source of dissension and grievance for generations to come.

So to my day job. Our economy is hitting a soft patch at the moment. Over the year to December 2003 the economy grew a total of 3.5 percent. This was considerably better than was being forecast at this time last year. However, there was a marked slowdown over the course of the year, with most of that growth occurring in the first half of the year. Even so, the annual growth result is still faster than in the United States, the UK, Europe, Japan or Australia, and that is why the international currency traders are so interested in us.

The domestic economy has remained very strong. Consumer and business spending, wages, and investment in housing in particular, have all grown strongly. Indeed New Zealanders’ total disposable income increased 4.9 percent in the December 2003 year.

And we are still in jobs in record numbers. The unemployment rate has fallen from a peak of 7.7 percent in 1998 to 4.6 percent in December 2003, in spite of rapid working-age population growth.

The major area of weakness is in the export sector, and it is primarily with export returns rather than export volumes. Indeed the volume of our exports increased over the last year. The problem was that the rising exchange rate reduced the value of those exports in New Zealand dollars.

There are mixed signals as to what will happen next. The economy is likely to slow by mid-year as the effects of declining export incomes flow onto the domestic economy. Exporters are likely to cut back their domestic spending, and a fall in the number of immigrants might also reduce economic growth.

Nevertheless there are very encouraging signs of a pick up in world commodity prices, and the US economy – which has been something of a slumbering giant in the past few years – is showing signs of recovery.

So while 2004 may be a difficult year for some, by 2005/06, thanks to a recovering global economy, and a revival in export earnings, growth is predicted to return to around 3-3½ percent per annum.

What I want to focus on today is what we need to do to position our economy for long term growth.

When I speak about growth, I want to make it clear I am not speaking about abstract statistical measures. Growth in GDP does not automatically mean better quality of life. Under some policies it could mean more congested roads, more pressure on public infrastructure and on public services such as health care and education, and nothing more than that.

The approach to growth that my government has been advocating is one that rewards innovation and entrepreneurialism at an individual level, but also aims to make New Zealand communities better places to live and New Zealand businesses better places to work. We need to start seeing growth in terms of more satisfying work that makes better use of our skill and energies, of more opportunities for young New Zealanders to establish themselves and thrive, and of being able as a society to afford better quality schools and hospitals and public transport systems. We need in other words to humanise economic growth.

I accept that it can be hard to focus on the long term requirements for growth when short term difficulties have to be negotiated. In particular we have to resist the temptation to give in to an obsession with cost cutting. That way is a blind alley, and unfortunately it is the approach being suggested by politicians on the right.

Cost cutting delivered some limited benefits in the past; but it is unlikely to do so again. The fact is we now have an economy that is very competitive in terms of the cost of doing business.

Our focus has to switch to creating value, and indeed that is where the attention of New Zealand’s most successful companies has been for quite some time.

My government’s growth strategy is about creating value in areas where government is best placed to do that. The most crucial contribution is investment in education and skills and in the infrastructure that benefits the whole of the community.

New Zealanders on average are less skilled than Australians, Canadians, Britons, Japanese, Germans and so on. Skilled individuals are like gold to a modern economy. They are masters of technology rather than servants of it. They tend to make those around them work more effectively, and they are better able to absorb ideas from other sources and introduce these into their own work.

High rates of economic growth require a mix of highly skilled technical specialists, skilled entrepreneurs and managers capable of seeing and putting in place new opportunities for productivity gains, and workers with good, medium-level skills to operate new technologies.

There are two ways of increasing the skill of our workforce: immigration (which, for many practical reasons, will always be a limited source) and education.

In addition, we know that education contributes to healthier life-styles, lower propensity to commit crime, higher levels of trust, richer social networks, and greater participation in volunteering and in democratic institutions.

Our problem when we came into office in 1999 was that our tertiary education system, after a decade of policies which rewarded institutions for placing bums on seats, to put it crudely, was delivering increased quantities of education, but was allowing problems with quality to creep in.

Recently the Ministry of Education released figures which showed that only 40 percent of domestic students starting a qualification in 1998 had completed it after five years. Fifty-one percent of those who started a qualification in 1998 had left without completing it five years later, and 9 percent were still studying towards it five years later.

Even allowing for part-time study and legitimate reasons for abandoning study – such as gaining employment – this is a worrying statistic. Education is too important to us to allow large numbers of young people to wander aimlessly around the system using up resources and putting themselves into debt, and then having no completed qualification to show for it. This is the downside of the National government’s market-led tertiary system that we are attempting now to fix.

Our tertiary education policies are aimed at improving the performance of the tertiary system in creating a skilled and productive labour force.

While we recognise the importance of a broad and liberal education for young New Zealanders, we believe that we need more explicit links between education and industry.

Arguably it is more important to ensure a higher prevailing level of skills throughout the workforce rather than to concentrate upon creating an elite of highly skilled workers.

This is the approach taken by Germany, Japan and Taiwan. They are societies which have produced few superstars, but have made enormous strides forward through a skills policy aimed at raising the abilities of the average worker.

This is not to say that we do not try to produce world class graduates and researchers. It is a matter of balance and focus. Two key conclusions we reached were that tertiary education needs better links with the business sector whose skill requirements it feeds, and that tertiary research needs a framework that rewards excellence.

For this reason we have placed a high priority on industry training, and as a result the number of workers participating in industry training jumped by nearly 20,000 last year to a new record high.

Total numbers in industry training during 2003 reached around 127,000 trainees, up 19 per cent on 2002, and up 56 percent on late 1999. The number of employers involved in the industry training programme also increased substantially, with almost 30,000 firms now on board.

We are on target for getting 150,000 New Zealanders learning on the job by the end of 2005.

At a more general level, tertiary education providers are actively working with local businesses and communities to build skilled workforces at a regional level.

We are starting to see some very innovative partnerships between tertiary institutions and business. Some are focussed on research and development, and on providing a stronger commercial edge to research programmes.

In the area of research we have introduced a Performance Based Research Fund. This is only a portion of the total funding; but it sends an important message that research that is recognised as world class will be rewarded and encouraged; and conversely that institutions need to think carefully about their areas of strength and build on them.

The other crucial area in which government is investing is improving our infrastructure. This is a term that covers a great many structures and systems that underpin our quality of life and our ability to do business.

One example of this that will affect all of you here today is the recent confirmation of a $1.62 billion investment in Auckland's transport system. For too long, confused and inefficient lines of responsibility have inhibited Auckland's transport development and the establishment of a single 'business-like' transport organisation for the Auckland region. The package delivers an unparalleled, long-term investment by central government, and a clear, fair solution.

This is part of a larger transport package addressing both Auckland’s problems and also some of the other key transport bottlenecks elsewhere in the country.

It should be the watershed event that Auckland needs. Providing regional and territorial authorities in Auckland continue to meet their responsibilities for transport funding, Aucklanders will finally see the steady development of a world class, well integrated transport system.

There are many other infrastructure issues that are actively engaging government. Achieving security of electricity supply, especially during years when lake storage is affected by drought conditions, is a major of concern and investment. So too the need to ensure that more remote parts of the country have access to broadband internet services.

There is no simple fix for many of these issues. Some of our infrastructure assets were allowed to run down during the 1990s, and only a sustained programme of investment over many years will provide us with the level of assurance we need.

Progress in areas like infrastructure and skills is inevitably slow. However, I believe the record shows that we are more robust now than we were in the 1990s. Our economy will emerge stronger and more quickly from the current downturn that it did from the downturn of 1997.

I believe that we have the conditions in this country to return to strong growth and to sustain that growth into the long term. To achieve that we need a broad concept of what growth is and we need an emphasis on creating value rather than merely cutting costs.

There is a danger, if we retreat into our corners, that we will do nothing but stagnate. This applies to businesses and to communities. And it applies to the question of how we share the foreshore and seabed, as much as it does to how we build a more skilled and productive workforce. Promoting our own interests or those of our close community is always a legitimate goal. But alongside it we would do well to revive the notion of ‘commonwealth’ (with a small ‘c’); that is, the set of valuable assets from which we all benefit and to which we must all make a contribution.

Thank you

ENDS

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