Speech at Business New Zealand's Election 2002: Growth, Politics and Business conference. Hotel Inter-Continental, Wellington.

INTRODUCTION

Thank you for the invitation to join with you at this Conference, and let me, at the outset, unequivocally endorse the focus on economic growth. I agree with Simon Carlaw when he says that, "health, education and superannuation are all important issues, but they can only be secured through economic growth". That reflects my own view that the challenge we face is the policy quinella - economic growth and social development - which each being a necessary prerequisite for the other.

This session is about the productive workplace - how my party will facilitate productive workplaces - including employment law, health and safety, and training and education.

EMPLOYMENT: A PRODUCTIVE RELATIONSHIP

Let me start with Employment Relations.

The government's approach to the workplace is based on a recognition that employment creates a relationship. This relationship is the primary foundation for achieving greater well-being.

Employment is the key means by which New Zealanders and their families gain income to support themselves. A productive relationship generates benefits for all parties.

What does this involve?

• recognising the relationship between work and the greater well-being of society (e.g. through the provision of Paid Parental Leave);
• providing employees a more equal footing in the employment relationship (e.g. through improving access to collective bargaining, increased involvement in workplace health and safety)
• focussing the employment relationship on the productive pursuit of long terms gains through the promotion of mutual respect and trust in the way people and organisation treat each other
• establishing clear principles for behaviour that apply to both parties in the employment relationship (e.g. good faith)
• providing support to minimise the cost of disagreement when it arises in the employment relationship.

It is my very firm view that the Government's changes have facilitated productive workplaces.

THE EMPLOYMENT RELATIONS ACT

Changes to employment law that have been made by the Government are designed to provide a more productive and workable employment relations framework. The Employment Relations Act has changed the focus of the employment relationship from one based on contractual principles to one that recognises the totality of the relationship that arises in employment.

The services that are offered to help in maintaining a working and productive relationship through dealing with employment relationship problems have gained considerable support. The Employer and Manufacturers Association (Northern), in a first year report on the Employment Relations Act, said that the Act had made a promising start and that it is working well in some key areas. These sentiments have recently been repeated by the Association; again the performance of the Act and its institutions - mediation and the Employment Relations Authority in particular - were reported as working well.

The overarching objective of the Employment Relations Act is to facilitate productive workplaces and employment relations through the promotion of mutual trust and confidence in all aspects of the employment environment.

The Act encourages employers, managers, unions and employees to deal with each other in good faith. This requirement promotes sensible unionism and protects employers from unfair and destructive negotiating tactics, as well as requiring all employers to respond in good faith. While employees and employers may have a range of different interests, they have a common interest in the viability and success of the business.

The Employment Relations Act strikes a balance between, on the one hand, the need to redress the imbalance of power inherent in many employment relationships and, on the other, the need for flexibility that enables firms to be competitive and efficient in our open economy. Collective bargaining is the recognised means of redressing this imbalance of power in a systematic way.

At the same time the Act acknowledges that the parties to collective bargaining should have the responsibility to work out whether multi-employer or industry bargaining is appropriate, or whether enterprise bargaining is preferable. As the parties may have different perceptions on the form of employment agreement that is preferable for them, the Act requires that the parties in good faith follow some processes to facilitate discussions over the scope of employment agreements.

If sensible people deal with one another in good faith, then most differences should be able to be resolved amicably. This environment will displace a culture of adversarial relationships that used to prevail.

And clearly good faith is a two way street.

Good faith is not just a duty imposed unilaterally on employers. Employees and unions must also act in good faith toward employers. Nor is it restricted to the bargaining table, employers, employees and their unions have to act toward each other in good faith, and this includes when unions consult their members, seek to visit a workplace or hold a secret ballot.

In collective bargaining employers and unions must meet, seriously consider each others' proposals and where possible quality information should be provided to back up claims. Good faith doesn't mean that the parties have to agree, but they must be able to openly and honestly discuss their positions during bargaining.

Good faith also requires all parties to keep other parties reasonably informed of issues that affect other parties. Keeping lines of communication open between parties encourages them to learn from each other, to educate themselves as to their rights and duties under the Act, and thereby to build a productive employment relationship.

SUPPORTING THE EMPLOYMENT RELATIONS ACT

The Government has moved to provide support for parties involved in collective bargaining.

The Government recognises that some employers will not have been involved in collective bargaining processes before, and the changes have also affected unions. To assist the parties to collective bargaining the Government has developed a best practice code, provides mediation services and funds education on employment relationships.

The Government, the New Zealand Council of Trade Unions and the Employers Federation developed a Code of Good Faith. The code gives guidance to employers and unions in applying good faith principles to bargaining for a collective agreement or variation to one.

Mediators from the Department of Labour's Mediation Service have also been involved in many collective bargaining issues, helping the parties to come to a mutually acceptable agreement on how to solve their employment relationship problems. Mediators can be approached by the parties, but will also approach the parties themselves.

The government recognises that practical support is required to help shift attitudes toward the goals of the ERA. As a result the:

• ERA provides for employment relations leave for employees covered by collective agreements to attend training courses
• government has made available $5 million in funding over the first three years of the ERA to help the development and delivery of employment related education programmes, and
• government has developed best practise guidance to help employees, employers and unions to achieve productive employment relationships (these cover all aspects of the employment relationships such as hiring, dismissal etc).

THE BENEFITS OF THE EMPLOYMENT RELATIONS ACT

Resolving disputes results in savings in terms of less litigation, time wasted, and encourages a focus on long-term gains from the relationship.

Mediation, and the adjudication body, the Employment Relations Authority, are designed to reduce the costs of excessive legalism.

Mediation services are free, fast and fair, and enable flexible and innovative problem solving. Resolving a dispute may only require some information being given to the parties, or it could require a formal, mediated hearing to help the parties reach an agreement.

Over half the requests for mediation are dealt with within three weeks and 92% are dealt with within 3 months. Only 13 percent of completed mediation applications were recorded as being "not settled".

If a problem is not solved in mediation, the Employment Relations Authority and the Employment Court make decisions that focus on the employment relationship problem not just what the parties are arguing about.

The Employment Relations Authority has received 2,449 applications and dealt with 1,551 in its first 18 months. Where possible lower cost solutions are sought out. For example the Authority referred an additional 1,116 applications to mediation.

Half of the Authority's cases are dealt with within three months and 90 percent within seven months. These figures are a contrast to the situation under the previous environment, roughly halving the wait people faced in the Employment Tribunal under the Employment Contracts Act, when some cases took over a year to have a hearing. The backlog of Employment Tribunal cases has almost been dealt with just 314 remaining from an original 2,680 inherited from the ECA.

ACCIDENT COMPENSATION AND OCCUPATIONAL SAFETY AND HEALTH

Let me now comment briefly in turn on the changes to Accident Compensation and Occupational Safety and Health.

The return of accident insurance to public provision by ACC was based on returning the Accident Compensation Scheme back to its founding principles.

The removal of competition is consistent with focusing the scheme on sustainable prevention and rehabilitation rather than short term-profit making. More recent changes in the Injury Prevention, Rehabilitation and Compensation Act 2001 are designed to improve the focus on prevention and the responsiveness of the scheme to claimant needs and returning the scheme to the Woodhouse principles.

In order to improve further New Zealand's workplace health and safety performance the government introduced the Health and Safety in Employment Amendment Bill. The Bill is the result of a comprehensive government review of New Zealand's workplace health and safety legislation. This review was undertaken as part of the Government's wider labour market legislation reforms, and the Bill complements the Government's legislative initiatives in the Injury Prevention, Rehabilitation and Compensation Act and the Employment Relations Act (the ERA).

The key areas of change in the Bill relate to:

• coverage [brings Air, Rail and Maritime workers under the Act]
• employee Participation in ongoing development of workplace health and safety
• effective Enforcement [increased fines, infringement offence notices following warning]
• other Issues [coverage of stress and fatigue, prevents insurance against fines].

Good faith and co-operation are a critical part of Health and Safety in Employment Amendment Bill.

The HSE Amendment emphasises that working co-operatively in good faith applies equally in a health and safety context as it does in other parts of the employment relationship. This requires co-operation between employers, employees and unions in exercising their responsibilities for health and safety performance in the workplace.

The Ministerial Panel on Business Compliance Costs raised concerns about compliance costs associated with the HSE Amendment Bill. The government has established an implementation advisory panel, comprising both business and labour representatives, including a member of the Business Compliance Costs Panel, to advise the government on operational issues arising from implementation of the Bill.

TERTIARY EDUCATION AND TRAINING

The Government is committed to revitalising the tertiary sector. There is much about our current tertiary education system that is excellent and many examples of innovation and success. Preserving and building on these strengths is vital. However what the present system lacks is a clear and shared strategic direction.

It has been necessary, therefore, for the Government to embark on a comprehensive programme of tertiary education reforms to effect the long term shifts that we know are essential. These new directions are supported by increased investment by Government, across the board.

A key focus of the Government's reforms, is the notion of better connecting tertiary education to the nation and its needs.

We want to open up tertiary education so that it is dynamic, outward looking and enjoys a closer relationship with our economy and society - we must improve relevance, excellence, and access.

At the same time we must consolidate the sector so that it functions as one internally consistent system with a focus on quality and maximum return on the investments made.

It is our belief that once the new systems are in place, New Zealand will have a tertiary education sector in which the key participants are working together effectively, towards the national priorities for education.

This is critical from a financial point of view, also. As a nation, we make a huge investment in tertiary education. Every day we spend more than $5 million to keep the system operating. This translates to more than $1.75 billion per annum. We must make sure that this investment also feeds into the achievement of our national social, economic and environmental goals.

THE TERTIARY EDUCATION STRATEGY

Earlier this year the Government released its Tertiary Education Strategy. This document is absolutely pivotal to the future of tertiary education in this country. The strategy not only articulates a vision for the development of tertiary education in New Zealand over the next five years, but also weaves this into the Government's broader economic and social directions.

The strategy signals the key challenges for the sector over the next five years and identifies the steps that will enable us to achieve a connected and collaborative tertiary sector that sits harmoniously within the community at large. These include:

• Stronger linkages with businesses and other external stakeholders
• Improved connection to the needs of learners
• Increasing connection within the system
• Improving global connections
• Increasingly able and visionary leaders
• The development of future focussed strategies
• A culture of connectivity, innovation and optimism

I have been encouraged by the strong support that we already received following the release of the Tertiary Education Strategy, including from Business New Zealand.

To give effect to the strategy it has been necessary to introduce a range of new implementation instruments, including a revised funding system.

GROWTH AND INNOVATION FRAMEWORK FOR NEW ZEALAND

The Government's strategy for reforming tertiary education has not been developed in isolation. It is also central to our overall intention to nurture and grow an innovative New Zealand that will lift our nation back into the top half of the OECD rankings.

The Innovation Framework, launched in February highlights the critical links between a highly effective tertiary education environment and the successful attainment of these national development goals.

For example, if we are able to achieve better connections between the tertiary system and other sectors, then New Zealanders will have more relevant skills and better information and knowledge. This will support innovation and productivity.

If we are able to provide greater access to opportunities for people to build their foundation skills then they will be able to better participate in society and contribute more productively through their work.

And, if the tertiary system better supports Maori advancement and aspirations then New Zealand will be a more prosperous and confident nation.

PARTNERSHIPS FOR EXCELLENCE

I would like now to outline for the first time details of the decision-making framework for joint public-private sector investments at our tertiary institutions.

A substantial amount of money has been set aside to support the new Partnerships for Excellence framework. Under the framework the government can provide capital injections of $5 million or more, provided that this is matched or bettered by funding from non-government sources, chiefly the private sector.

Public Tertiary Education Institutions can apply each year for this funding via the governments annual budget round, through a robust application process. Cabinet will make final decisions on applications.

The framework aims to increase private sector investment in public tertiary education and foster positive links between business and the tertiary education sector.

The Partnerships for Excellence framework is another example of the government's commitment to fostering partnerships and pooling resources to achieve greater innovation and economic transformation.

The government looks forward to exciting opportunities arising from the new framework to work with tertiary institutions and the private sector.

Proposals will need to meet criteria that include adding value to New Zealand's tertiary capability at world-class level, supporting national economic and social goals, including regional development, increasing New Zealand's global connectedness and enhancing innovation.

The framework will increase private investment in the tertiary education sector by enabling institutions to leverage off new Crown capital.

Development of the framework was prompted by a proposal put to the government for a separate capital contribution of up to $25 million towards the development of a new business school at the University of Auckland. We have accepted this proposal in principle provided matching contributions from private donors are secured and a business case, consistent with the new framework, is approved by the government.

CONNECTING THE SECTOR

A constant theme throughout what I have been saying, and indeed a driver of much of the reform work taking place in the tertiary world, is the need to better connect tertiary education with our economy and with our society at large.

It is no longer economically or socially viable for tertiary learning to be driven solely by the wishes and needs of individual learners.

If connections are to be made and collaborative approaches encouraged then they must be meaningful, they must lead to real innovation and contribute to economic and social advancement.

The need for there to be transparency, articulation, dialogue and collaboration goes beyond the tertiary reforms themselves.

At the highest level, the innovation framework cites a kiwi model of development that sees the government as a leader, partner, facilitator and broker working with other sectors to get results.

And at a more grassroots level, effective partnerships and collaborative approaches have been critical to the success of innovative new workplace initiatives such as Modern Apprenticeships and gateway.

As has been quoted a number of times recently, it is a fact that an estimated 80% of the workforce of 2010 is already in the workforce of today. This means that our strategy to build the capability of the New Zealand workforce must focus on those people working now - if it is to be successful.

The ongoing skill development for these people will be critical to business and to New Zealand. High quality vocational education and training not only provides learning opportunities for those people who learn best in a practical setting - it is also central to our efforts to build an economy characterised by high skills, innovation and growth.

To respond to these challenges, Government and industry have built partnerships and are working together with individual enterprises to develop a huge range of workplace training arrangements.

THE INDUSTRY TRAINING STRATEGY

The Industry Training Strategy underpins these developments and is responsible for the huge numbers of employers and trainees currently participating in industry training.

To give an idea of the numbers involved, at the end of last year (December 2001), there were well over 66 thousand (66,225) industry trainees working towards national vocational qualifications. During 2001, 95,263 trainees participated in systematic on-the-job industry training.

In the same year, nine and a half thousand (9,498) National Certificates were completed by industry trainees. This represented a staggering increase of 52% on 2000's achievements.

It is not an exaggeration to say that the Industry Training Strategy gives access to national qualifications to tens of thousands of people who would not otherwise take part in tertiary education and training.

Workplace learning not only passes on industry-specific skills but also ensures people can gain other important foundation skills, in areas such as communications, teamwork, literacy, numeracy and technology.

The numbers of industry trainees are impressive and continuing to grow. It is vital then, that New Zealand's industry training strategy can respond to emerging skill needs and keep pace with rapid global and technological change. The system must be robust but also dynamic and responsive.

It was with these imperatives in mind that the Government completed a review of Industry Training in March 2001. The aim was to enhance the system so that it provides high quality training right across the economy and ensures that training investment yields the best possible results.

The review was positive about the direction of industry training and the key decisions from the review sought to build on achievements and make improvements to boost the flexibility and responsiveness of the system. Of great significance, however, was the Government's decision to enhance the strategic leadership role of Industry Training Organisations (or ITOs).

These developments mean workplace learning will take its place as a highly valued partner alongside other learning pathways in a stronger more forward looking tertiary sector.

By 2007 the Government expects that decisions arising out of this review will have lifted the volumes, quality and responsiveness of industry training and encouraged higher rates of completion. ITOs will have embraced their enhanced leadership role - they will be identifying and meeting skill needs in their industries, effectively promoting their training to employers and employees and developing strategic collaborative partnerships with other ITOs.

On the 4th of July I announced the Labour Party's industry training policy. In that policy Labour has committed itself, in government to getting a quarter of a million New Zealanders into industry training by 2007 - the single biggest increase in industry training that the country has ever seen.

The goal is an ambitious target, but an essential one so that New Zealand businesses can employ sufficient numbers of skilled staff and if workers are to build a better future for themselves and their families.

As I noted in releasing the policy, in government we have worked with our social partners -with Business New Zealand and the New Zealand Council of Trade Unions in particular - and earlier this year we committed ourselves jointly to a shared strategy to lift the number of New Zealanders in workplace and lifelong learning, and to improve the quality and relevance of the training they receive.

If given the privilege of continuing in government we will continue to work with our social partners.

As part of the "revitalisation" of industry training, the Government has also introduced innovative new arrangements, not only to boost numbers but also to try out new ways providing workplace learning opportunities to the many people who prefer to learn in this way.

New workplace initiatives such as Modern Apprenticeships and Gateway demonstrate what can be achieved with some fresh thinking and a collaborative approach to skills issues between Government, business and the community.

MODERN APPRENTICESHIPS

Of the many examples of learning in the workplace, the Modern Apprenticeship initiative is one of the most exciting. The gap that it has filled is illustrated by the uptake since its inception in the year 2000.

There are currently in the vicinity of 3000 Modern Apprentices working and learning in a wide range of industries.

Modern Apprenticeships does more than simply offer learning and work opportunities to young people. The involvement of Modern Apprenticeship co-ordinators to support and mentor each apprentice helps to create a learning environment that maximises the benefits for both the employee and employer.

A further critical innovation of Modern Apprenticeships is that the training is not restricted to industry-specific skills. It also includes key foundation skills, such as communication, numeracy and information technology.

GATEWAY

On this note, I would also like to mention the Gateway programme which builds links between schools and businesses and allows schools to offer work-based learning opportunities for their students.

At this stage the programme is still being piloted and is, therefore, modest in scale with just over 1000 students involved during 2001. However, it is already proving highly popular and very successful for those involved - and it offers exciting possibilities for the future.

AN EDUCATION AND TRAINING LEAVING AGE STRATEGY

A key element of Labour's industry training policy released on the 4th of July is a commitment to the introduction of an Education and Training Leaving Age Strategy.

Labour believes that all young people under the age of 19 should be in education, training, or a job.

The education and training leaving age strategy will involve:

• the expansion of Modern Apprenticeships to 7,500 by June 2006 - this will mean that approximately 4,500 young people aged 15-18 will be Modern Apprentices;
• expanding opportunities for Maori in trade training;
• expanding the Gateway, school-to-work transition, programme to all decile 1-5 state schools by 2006/07. This will give Gateway opportunities to some 12,000 senior secondary school students;
• and providing post training support services for all participants in the Youth Training programme (13,000 per year) by 2006/07.

The school leaving age will not be increased. The Education and Training Leaving Age will ensure there are a variety of education, training, and employment pathways. We expect that this will see some students staying on at school because they will be able to mix school and work-based study, and, for example, build credits towards an apprenticeship.

The programmes that make up the Education and Training Leaving Age Strategy will provide support and training for 17- 18,000 young people per year. In addition, the expanded Gateway programme (school-to-work transition) and the development of NCEA options will increase school retention rates and are likely to have a positive impact on rates of enrolment in polytechnics.

CONCLUSION

The Education and Training Leaving Age Strategy will support the development of productive workplaces. So will the tertiary education reforms more generally.

And so too will the more cooperative arrangements we have set in place in employment relations, accident compensation and occupational safety and health.

All of these combine together to form the basis for the success of individual enterprises and the economy as a whole.

That is in part because the productive workplace is as much a social entity as an economic entity.

We have moved on from the days of arbitration and conciliation. But we've also moved on from the experiment of the 1990s, which brought neither high trust nor the necessary productivity gains.