Employment Relations Conference

  • Max Bradford
Enterprise and Commerce

Ladies And Gentlemen ... Thank you for giving me the opportunity to be with you as you look at some issues that are of concern to all employers.

But before I do I'd like to give some perspective to where New Zealand is at the moment. And it is surprisingly good news.

Like our neighbours we've had to adjust to the Asian crisis and the flow on from that around the world. Fortunately, because of the last decade of reform, New Zealand adjusted to the crisis through the normal market mechanisms - both the dollar and interest rates fell, lowering costs to business and helping our exporters.

Let's look at two important statistics that have been released in the past few days: Unemployment in September fell to 7.4%, which is better than expected in difficult times such as these, and the first drop since 1996.

I know that unemployment does tend to be a regional issue, and locally unemployment rates are higher, and you have just had the AFFCO closure announcement this week.

That makes it all the more important that we keep the work coming into Whangarei, such as the potential spin-offs from the Anzac Ship programme, and keep the rest of our reforms on track.

Let's now look at our last 12 months' exports to the end of September when -- during the toughest year in world trade for many decades -- New Zealand's exports rose by 4.8%, year over year. Comparing September 1998 with the same month last year, our exports were up 9.6%. And even with the problems in Asia we earned as much from those markets this September as we did last.

Now in the circumstances, that's great news, great encouragement, and great testimony to the value of our decade-long reform programme.

As you may know this week we've had Professor Michael Porter visiting us. He's the Harvard "guru" who came here almost a decade ago to study our industry in what was known as the Porter Project, when we were in the early days of deregulation.

Fortunately at that time, his prescription for reform to improve our international competitiveness was very much in tune with the programme we had developed.

Some time ago Government concluded that we had successfully surfed the deregulation wave and that we had to move the emphasis from reform to innovation and expansion.

We have begun planning for that, so it was good fortune that Prof Porter was able to meet with Government, academics and industry leaders for a busy two days and effectively audit our progress.

He agreed that we had ridden the wave as far as it went, and that we now had to prepare our industries to catch the inevitable Asian revival and world growth.

In short, Porter gave us a pat on the back, but he reinforced the need to nurture our industries, encourage innovation and promote industry clusters.

And once again his prescription is in tune with the work we are already doing to make us more productive and competitive, and ready to take on world, and in so doing improve the standard of living for all New Zealanders.

As you know I am the leader of the Enterprise and Innovation Ministerial Team charged with making this happen, and believe me it will happen.

We will meet the challenges ahead by building on our current achievements using the political and economic tools of tomorrow.

Let's look at some of what has already been done in the micro-economic area, and what is on the way:

we've lowered taxes
competition has cut petrol prices
removing tariffs on cars has cut prices by $3-6,000
we've set a timetables to quit all tariffs
we've allowed parallel importing
lower power prices will save about $440m a year
telecommunication prices have fallen
there's competition in mail, parcel and courier post
we're opening ACC to private competition
we're reforming management of roads and our resources
and the rating powers of local bodies
We're selling Capital Properties, small hydro power stations, and airports
we're scoping the sale of Contact Energy and calling bids for Solid Energy
we're reviewing the Commerce Act
we're considering an Internet investment exchange where companies needing capital for growth can meet private investors
And we will encourage innovation and initiative - not stifle it with higher taxes.
We won't nurture businesses with bureaucracy and subsidies in the old-fashioned Labour/Alliance way - we'll make sure nothing stops business making its own progress, because we will have removed all the barriers.

But that's only part of the job, and we must now build frameworks for growth, and nowhere is that more important than in the improvement of our human capital.

We know some industries are short of skilled staff and if they aren't in New Zealand we'll make it easier for them to immigrate here.

But we're also determined to increase the skill and flexibility of tomorrow's workforce, starting at the very beginning, with a goal that from 2005, every child will be able to read, write and do maths by the time they're nine.

Secondary schools qualifications are being brought into the 21st century with a new qualification programme beginning in 2001.

And we're improving the access and quality of tertiary education, with details available next week.

We need to continue to combine the benefits of labour and technology, through the freedom and flexibility of the ECA which is an important and fundamental part of the cluster concept.

The ECA has helped us weather the Asian storm and with a little fine tuning it will help further towards prosperity.

I remain in the firm belief that the National Government got the basis of the framework right through the ECA, and in doing so we have one of the most progressive pieces of industrial relations legislation in the world.

As you know, in July this year the then coalition government announced a number of industrial relations reforms following reviews of the ECA and Holidays Act.

The reforms - to summarise very briefly - involve fine tuning of the ECA, particularly relating to probationary periods and personal grievance provisions.

In regard to the Holidays Act, the package proposed keeping the status quo on holidays, but some significant tidying up of the Act to bring it into the 1990s.

So what has happened to this package? The now National-led minority Government is currently in the process of assessing our legislative timetable. That means we must prioritise a number of major issues - including (in no particular order): roading, ACC, tax simplification, immigration, telecommunications, fisheries, producer boards and the Commerce Act.

Collectively all the legislative bids will play a part in strongly positioning New Zealand for the future. The Government will be making decisions on these issues by the end of the year - deciding what to proceed with and how.

What I can say today is that we will be removing roadblocks to businesses prospering, and reducing compliance costs.

One aspect of our industrial relations environment that I haven't mentioned is the Employment Court. As I have said on many occasions, the Government is committed to a specialist employment court.

We are also committed to certainty in employment law. We recognise that the significant number of Employment Court decisions that have been overturned on appeal can be destabilising for business.

The statistics show us that of the 92 appeals against decisions of the Employment Court since 1991, 43 have been allowed in whole or in part. However, as a result of these decisions there are now signs that many of the key areas of uncertainty in relation to the ECA have been settled.

Employers and employees need and deserve relevant and modern legislation and institutions, with flexibility, clarity and certainty in all areas. This is what the IR package is intended to achieve - to remove residual uncertainty in the system.

Another issue which I'm sure you are all watching closely is the Paid Parental Leave Bill, which is currently before the Social Services Select Committee. As the Bill stands the costs will be met by a payroll levy, and the impact of this should be carefully considered by the small and medium sized businesses that are our major employers.

The Government has yet to make a decision on its position on the issue but it deserves a full debate and careful weighing of the pros and cons. Submissions close on December 11 and it's important the voice of small business is heard.

Ladies and Gentlemen, to sum up, the key strategies for business growth are:

less Government imposed costs
better regulations
more competition
more investment in business and human capital
taking advantage of international markets and forums like APEC
and building better dialogue with business
So it won't surprise you that I'm beginning a major "listening" programme, to meet the owners of small businesses and their stakeholders. I want to learn at first hand of their needs and ambitions, their apprehensions and their achievements.

We've handled the world crisis very well so far, and we're getting into good shape to catch the next wave.

But Government must continue to be prudent, managing the increased international risk, while at the same time helping business attack local and world markets in the most competitive way possible.

There is no doubt there will be faster growth again in the near future. With that growth will come better times for everyone - employers, employees and for those whom the Government must nurture and protect.

And with it will come more choice, more freedom and greater confidence and pride in ourselves, and our nation.