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Cullen: Community Trust Speech

17 February 2005 Speech Notes

Thursday 17 February 2005

Address to Combined Community Trusts Annual Conference

Carlton Hotel, Mayoral Drive, Auckland

It is a great pleasure for me to be able to address your annual conference, and to convey both the best wishes and the apologies of Hon Dr Michael Cullen.

In her recent speech at the resumption of Parliament for the year, the Prime Minister, Rt Hon Helen Clark, set out a number of priorities for this year and the years following. These focused to a large degree on how we can sustain into the future the kind of economic performance we have achieved in the past five years, and on how we can ensure that economic growth gets translated into stronger, more confident families and communities.

As a nation we have exceeded all expectations in the creation of wealth in the last five years. GDP growth for the year to September came in at 4.6 per cent, equal to that of the United States and second only to Korea in the OECD. Indeed, our GDP growth per capita has been running ahead of the OECD average over the past five years.

Creating wealth is only one part of the equation, however. When you come from our part of the political spectrum, how that wealth is spread through the community matters also. Rising GDP needs to flow on into rising living standards for families, and a rising quality of life for the whole community.

Our conviction is that a confident and secure nation can only built upon families and communities that are confident and secure too. It is not enough for a small elite to drive prosperity. Rather, it is crucially important for all New Zealanders to have a stake in the future.

New Zealanders at large will not embrace the notion of growth unless they see how it makes their lives better, both in terms of individual well-being and community well-being.

That’s why we have focussed on distributing wealth through the community. However, I am not talking primarily about distribution through the social welfare system. First and foremost it has been happening through job growth. As a Labour-led government we have been committed to work (and increasingly skilled work) as the primary means of giving families a stake in the economy.

In the past five years, more than a quarter of a million jobs have been added to this economy. Household incomes have been increasing, with the result that consumer spending has been a major driver of the domestic economy.

Along with that extraordinary growth, unemployment has plummeted - down 44 per cent from the September quarter in 1999 to the September quarter last year. Particularly welcome has been the fact that the Mäori unemployment rate has been falling on an annual basis every quarter since the June 1999 quarter.

Accordingly, benefit numbers have tumbled over that period. In the past five years the numbers of working age adults supported by benefits has dropped by over 100,000 – a drop of 23 per cent.

Of course, we do recognise that benefits and pensions are the appropriate way to support those in the community who cannot participate in the labour market. We have kept our promises to those people by maintaining and in some instances increasing the value of benefits and pensions.

We have also recognised the importance of income security for families with children, especially those on low to middle incomes. The Working for Families package, which will be phased in over the next few years, will improve the living standards of almost all families earning under $45,000 a year, and a significant number of families earning $45,000-$70,000 a year.

This is not the occasion to go into the detail of the Working for Families programme. However, it is important to understand its impact. Using a poverty threshold of 50 per cent of 1998 household median income adjusted for inflation, Working for Families is forecast to lead to about a 70 per cent reduction in child poverty in the next three years. If we use a higher threshold of 60 per cent of median income, Working for Families is forecast to lead to about a 30 per cent reduction in child poverty by 2007.

Economic growth also allows us to make collective investments in things that affect our quality of life. We have increased expenditure on social services such as health care, housing and education which benefit all sectors of the community.

And we have made significant commitments to our long-term infrastructure needs in areas such as transport, roading, and electricity.

Not surprisingly, the effect of greater and more broadly distributed prosperity is being seen in social indicators. The latest Social Report analyses 43 indicators spread across ten categories: health; knowledge and skills; paid work; economic standard of living; civil and political rights; cultural identity; leisure and recreation; physical environment; safety; and social connectedness.

The picture that is emerging from this and the two previous reports is that compared to the mid 1990s, New Zealanders are on average living longer, they are more highly educated, less likely to be unemployed and enjoy higher real average hourly earnings. The crime rate is now at its lowest level for 21 years, and we are making significant progress with other indicators such as:

reducing suicide (which is a good indicator of general mental health status);

reducing overcrowding in housing;

reducing smoking; and

increasing local content on television.

This is far from suggesting that all is rosy. We will not overcome a social deficit built up over decades in a few years. However, these are the kind of measures that will make a difference for many New Zealand families, especially those who are under considerable strain and finding it hard to achieve a balance between life and work.

Nevertheless, there are a number of indicators where we are struggling to hold our ground. These include: criminal victimisation; income inequality; housing affordability; and voter turnout. We still have work to do in areas such as child death by maltreatment, suicide, obesity and adult literacy.

What the Social Report does is give us a much clearer picture to work from, so that both government and the community and voluntary sector can be more strategic in deciding where to make investments.

It goes without saying that the community and voluntary sector plays a unique and important role in promoting community well-being. There will always be limits to the ability of government agencies to grapple with local problems and to respond to emerging issues. Although they are not as hide bound as they used to be, government agencies are constrained in their ability to be innovative. They may be elephants who have learned to dance, but they are still lumbering beasts.

With investment portfolios in the region of $2.3 billion and around $90 million in grant distributions last year Community Trusts provide a service to local and regional communities that cannot be replicated elsewhere. A broad mandate for enhancing regional development and strengthening communities has enabled Trusts to respond quickly and imaginatively to regional needs.

In recent years Community Trusts have made important and timely interventions in areas as diverse as flood relief, investment in rural broadband services, small business development and support to the voluntary sector. It would be hard to find another group of organisations that can make as diverse a contribution.

So your work is invaluable, and your service to the public as trustees is an essential ingredient in the glue that holds communities together.

There are three important issues I want to touch upon briefly. These are:

The establishment of the Charities Commission;

The recent review of Community Trust Fee Regulations; and

Government initiatives to strengthen the community and voluntary sector and improve its relationship with the sector

I will not say much about the establishment of the Charities Commission, since Hon Judith Tizard will be covering this. Suffice it to say that the intention of the Commission is to foster stronger, better managed charities.

From a finance minister’s point of view, governance issues are key. The highest standards need to be maintained, not just because charities are making use of resources that have been provided to them on trust, but also because any serious breach of good governance can cast a shadow over the whole sector and reduce public confidence in charitable organisations.

The creation of the Commission should preserve as fundamental the independence of the decision-making of funders from government, while acknowledging a general leadership role for government.

With respect to Community Trusts, there is clearly a shared interest between the Minister who makes the appointments and you as Trustees in ensuring that sound governance practice is not just followed but that it is seen to be followed.

We need to take up all opportunities to add value to the effectiveness of community funding through better collaboration and information sharing. With a simple set of rules for working together we should be able to deal with risks such as multiple dipping by applicants, crossed purposes between funders, and “reinvention of the wheel” as various funders each deal separately with similar issues.

Turning to the review of the fees charged by the Department of Internal Affairs for administering Community Trusts, the aim, as you will be aware, was to:

Update regulations made in 2000 specifying the level and nature of fees charged to Trusts; Identify what services should be charged for; Review the method by which Trusts paid the Department; and Consider the circumstances when waivers are to be granted.

On this last issue, the government is considering options for how to ensure that Crown funding of services provided by the Department adequately reflects the significant public good element in the services provided by the Community Trusts. In my view there is a very strong logic to the recommendations of the review for full Crown funding of the services provided to Trusts by the Department. Inevitably these options need to be assessed against other budget priorities; so the most I can say at present is that final decisions and announcements on the outcome of the review are expected soon. Regarding the government’s broader relationship with the Community and Voluntary Sector. 2005 should see a number of important steps forward in this regard:

An action framework is being developed as a joint initiative between DIA and the Ministry of Social Development to guide Government’s strategic investment in communities;

Policy with a community focus is increasingly being co-ordinated across government agencies. For example, the Department is working with the Office for the Community and Voluntary Sector on initiatives to support volunteering. The Department’s focus is on practical support for volunteers while the Office focuses on strategic issues;

Enhancing relationships between local government, government agencies and community organisations is a current focus. The Department is running a pilot action research project investigating how central and local government can effectively work with communities to develop community development plans. This will contribute to developing central and local government relationships and inclusive local planning processes;

2005 will also see an increase in the size of the Community Development Scheme administered by the Department. Additional funding means that the Department will employ 20 people this year. The Scheme provides funding to community organisations to employ key people who can be agents for positive change in their communities;

Finally, a strategy for further developing the community website Communitynet Aotearoa will be implemented. In the last 12 months, more than 130,000 people visited the site. The Department has sought feedback from the community groups that use it, and the strategy will ensure the site continues to be a valuable resource for communities.

What I hope these particular initiatives demonstrate is that as a government we remain committed to improving our relationship with the community and voluntary sector and enhancing the capacity of the sector. There is an important symbiotic relationship here that needs to be preserved through open dialogue and through keeping the focus on both the ends and the means without over-balancing in one direction or the other.

I am sure that this year’s conference will be another step towards these goals.

ENDS

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