Hon Dr Michael Cullen

Address to Community Trusts Conference

Novotel Hotel, Hamilton

Good morning. Thank you for inviting me to be with you again. Last year the Prime Minister spoke to your annual conference and I had the pleasure the year before.

Although as Finance Minister I most often find myself asked to speak about things economic, today I am going to take a step sideways to talk about social capital.

Social capital is shorthand for the invisible and critical threads that weave through and improve our lives. And at every level - individual, family, whanau and national, economic, moral and social. It is about the social trust, norms and networks that societies draw upon to solve common problems.

Social capital is about relationships that are underpinned by trust and reciprocity. This kind of mutual trust and goodwill lets us act collectively to make our world better.

The important role played here by Community Trusts cannot be overstated. Your contribution helps build a vibrant and active society by funding an increasingly wide range of valuable community initiatives. Indeed, the relationships fostered by Community Trusts could be described as the bedrock of social capital - whereby communities take responsibility for their own problems and issues rather than being the passive recipients of government decisions.

Community Trusts are responsible for the management of a very large amount of money - a total fund pool of over $2 billion. You are the largest spender in the area that is neither public nor private but rather what has come to be called the “third sector’.

Community Trusts are based on a unique model. Certainly one of the most significant things is your independence. Independence - not only from each other but also from government.

Your role is demanding, independent and constantly evolving. What was the norm when the Trusts were first established is not necessarily so now. The opportunities are greater and the risks are higher. The roles can be complex and extremely demanding of your knowledge and time.

As well, the function of each Trust differs significantly from each other and that adds to the mix of complexity over all.

You carry a large burden of responsibility and this is reflected in the demands on you, the trustees. The government gives no direction on investment strategies so Trustees must have a high level of financial management skills.

I would like to take this opportunity to mention a few of the outstanding results achieved by the Trusts over the past year.

Here in Hamilton, research and development is the focus of a project in conjunction with the University of Waikato and the Waikato Institute of Technology to encourage students to undertake research projects with local community groups.

The long-term goal is to build up a repository of information about the local community. Particularly in the context of social programmes and projects: to find out what works and what doesn’t, so that the wheel is not reinvented nor unsuccessful ventures repeated in the future.

More than $300 million has been pumped into over 8000 community organisations in the Auckland-Northland region over the past 13 years and this year the trusts aim to donate between $30 million and $50 million. This is money that the region has generated and now its schools, clubs, maraes and community organisations are reaping the rewards.

In Wellington, the Trust is heading off in a new strategic direction - with four main goals, one of which is to make the Capital the cultural heartland of New Zealand. In this regard they are already well ahead of the game. Over the past few years the Trust has donated millions of dollars to the Wellington Museum, the St James and Embassy theatres and $3 million toward the hugely successful Wellington Stadium.

And still with the cultural, the TSB Community Trust has made a special fund of $150,000 available to enable Taranaki people to attend productions at lower prices and to contribute to towards the long-term viability of performance venues throughout the region.

I know Clive and the Otago Trust are extremely proud and enthusiastic about their ICT project for rural schools and other users. We are all aware of the frustration of many rural New Zealanders in not having access to the same broadband technology as urban dwellers. The people of Otago, with the Community Trust as the driving force, decided they did not want to wait any longer and went directly to Telecom with a deal.

So, well before the rest of New Zealand, rural towns in Otago will have access to the latest broadband services and at exactly the same price as people in the major cities.

And still in the south, the Southland Trust is, of course, the principal funder of the Southern Institute of Technology Zero Fees Scheme. To date the Trust has granted $3.45 million over a three year period and the entire country is aware of the success of this unique project it bring students and economic growth to Invercargill.

On the East Coast, the Community Trust is right there with the local community with a number of projects; one the most important, of course, being funding for the new grandstand at Whakarua Park - the home grounds of the valiant East Coast Rugby team or Parekura’s Pride as we call it.

The Trust has also contributed $150,000 towards the restoration of the famous Tolaga Bay wharf - the longest wharf in New Zealand and one of the major tourist attractions in the area.

In the Bay of Plenty, the Trust has been a major player in ground breaking cancer research. The Trust donated $200,000 towards a Health and Research Clinic that is the latest weapon in the McLeod family’s ongoing fight against stomach cancer. Many of you will be aware of the BBC and TVNZ documentaries about the Otago University discovery that the family has a genetic link which predisposes them to the cancer.

The new clinic will provide screening and treatment as well as helping with on-going research.

And from science to sport - the Trust has now invested almost $4 million in the Sport Bay of Plenty’s Coachforce programme. The programme, which aims to get more young people involved in sport through “gaining, training and retaining’ good coaches has been the trigger for a number of similar programmes around the country.

I have just touched on a few of the varied and valuable projects community trusts have backed over the past year.

Now let’s take a look at how the government can help raise the stock of social capital in New Zealand.

There are a number of views, internationally, on the extent to which government can affect the development and flow of social capital. One view is that an overbearing central bureaucracy tends to crowd out community activity and diminish people’s sense of group identity and trust. At the other end is the view that a state too hands-off and lean leaves less fortunate families and communities to fend for them selves.

As is often the case, the common sense solution lies somewhere in the middle. The Labour Alliance Coalition is building social capital in a number of ways:

- Developing social trust (which includes rebuilding trust in the electoral, governmental and political systems)

- Reciprocity and altruism

- Local participation

- Networking and collaboration across a wide section of the community, and

- Encouraging people to get involved in government process.

Social trust is critical. It is about having a high level of integrity in all our relationships. It is about resolving disputes in a respectful and mutually satisfactory ways. It is about showing trust through building partnerships and allowing communities to make decisions for themselves.

When we became government in 1999, we heard a very strong message from the community sector that its relationship with government was under severe pressure. Over the past decade the community sector found itself taking on an ever-increasing workload without appropriate recognition, respect or funding from government.

The Community and Voluntary Sector Working Party was set up to find out exactly what was wrong and, more importantly, what could be done about it. It reported back to the government with a number of recommendations to build a strong and respectful relationship.

As a result we now have a joint community / government programme of work looking at:

- Improving participation processes around developing and making policy

- Improving funding and accountability arrangements

- Strengthening the community sector

Underpinning all is continual efforts to improve public servants’ understanding of and attitudes toward the community sector. The government expects public servants to treat all New Zealanders with dignity and respect.

As well as the work involved in cementing in government’s willingness to be an active partner with the community sector, we are also reviewing and creating good practice models, especially with regard to community funding, resourcing and accountability arrangements.

Treasury, for instance, has developed guidelines to assist government agencies pick up their game when they deal with the funding requirements of non-government organisation. An important feature of the guidelines - in line with labour laws - is a requirement to act in “good faith’.

Let me turn now to the concept of reciprocity and altruism. Here the government plays a highly critical role through the taxation system. Individuals can receive tax rebates on donations and there is assistance to organisations that work in the community through exempting them from paying income tax.

Last year the government decided to invest $2.19 million over the next three years specifically to fund volunteer centres. This investment is to provide support to the many thousands of volunteers throughout New Zealand who, individually and collectively, add so much to the sort of positive social capital we are talking about today.

Of course, how the government conducts itself is crucial to good governance. The many different views of the community can only be taken into account when the public policy process is open and transparent.

And by making sure community groups are involved the government then ensures that policy is based on common sense rather than ideology.

One of the most important changes this government has made has been in our of the partnership approach, especially between central and local government. We are putting in place programmes and interventions that are pragmatic, and customised rather than broad brush.

Steve Maharey’s Heartland initiative is a good example of how effective the partnership process can be in building social capital through bringing together central and local government agencies and communities to restore important services to rural areas.

Over the last decade government agencies grew more and more independent - to the point where communication between them was almost nonexistent.

We are encouraging networking and collaboration between the different agencies, and to streamline the work they do with community organisation.

This work is being augmented by the local and central government forum, which we put in place last year, and is developing best practice models for joint work on community development.

And of course, one of the most important aspects of social capital is the involvement of citizens in government processes.

There is much a government can do to support this participation: through encouraging people to enrol and take part in elections, developing genuine consultative processes and making sure that it is easy to access government information.

A healthy and vibrant community sector is vital to the social and economic health of our nation. But over the years, the stress and fragmentation of different government policies have taken their toll. The sector needs support and strengthening. The hundreds of projects undertaken by community trusts each year helps provide this support.

We need to look deeply at the role social capital plays in the healthy functioning of society, the economy and democracy. The term itself may change with time and fashion but the concept is rock solid. It makes sense that policy that takes account of and builds on existing social relationships and networks and which is developed through participation and partnerships is much more likely to help create the sort of country the great majority of us want.

And that is a country where prosperity, opportunity and social justice continuously improve the well being of all New Zealanders.

Thank you.

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