Opening Address to SPECNZ Conference

  • Peter McCardle

Ancient Mariner Motor Inn

Thank you Gail, and good afternoon ladies and gentlemen.

I appreciate the invitation to open this year's SPECNZ Annual Conference. It provides me with an excellent opportunity to
share with you details of the Coalition Government's employment strategy and the far-reaching changes that will be
happening over the next twelve to eighteen months in the area of employment.

Let me say from the outset that the role of Small Business Enterprise Centres in facilitating new business development in our
communities is a significant one, and will continue to play an important part in the achievement of the Government's
employment policy objectives into the future.

It is therefore a pleasure to be able to speak with you today, to outline for you the details of the Government's Employment
Strategy. Since taking up the role as Employment Minister late last year, I have found that media interest, and for that matter
public interest, has largely, and I guess inevitably, focused on the proposal to replace the Unemployment Benefit with a
Community Wage and Training Allowance.

However, the disproportionate attention given to that one aspect of the new strategy means that the wider context of the new
approach to employment, and the understanding of the central objectives behind the new strategy have not enjoyed the same
widespread attention.

To begin, let me first draw your attention to the issue of unemployment itself; because to understand the rationale behind the
Government's radical new approach to employment policy, we must first have clear in our minds the size of the
unemployment problem we are dealing with.

[Overhead 1] The last decade and a half has seen an explosion in unemployment that you here today will be very aware of.
The Household Labour Force Survey puts New Zealand's official unemployment rate at 5.9%. While that places us
favourably amongst OECD countries, and reflects the fact that our total labour force is the biggest it has ever been, we still
have well over 150,000 registered job seekers in this country.

And with the changes that came into force on April 1 designed to encourage new groups of beneficiaries to actively seek
work, the register is projected to rise.

I should say at this point, as the Government has quite clearly stated in its Coalition Agreement, it is economic policy that
largely determines the total number of people out of work at any one time. It is the economic environment that enables
businesses to expand and prosper, providing the conditions for sustainable job growth.

However, what employment policy can and must do is address the length of time that individuals remain out of work, as well
as influence what happens to job seekers while they are between jobs.

[Overhead 2] This leads me to the most pressing issue with unemployment. That is, the length of time our job seekers are out
of work.

Despite the plethora of employment programmes and interventions that have been developed and introduced in the last dozen
or so years, there has been an undeniable explosion in the number of long-term job seekers. In 1984 approximately 12,000
job seekers of the 74,000 on the register were out of work for longer than 6 months. Six years later, that proportion had
jumped by 600%, and today we have nearly 70,000 long-term job seekers in this country.

[Overhead 3] Taking a closer look at the composition of that long-term register, we can see that there is a real challenge
ahead of us if we are to make significant inroads into pulling back the length of time our job seekers are out of work.

There are well over 6000 job seekers who have been registered unemployed for over four years. In the face of the total
register, that number 6000 may seem relatively insignificant. However, if that statistic were to be compared to any other
social statistic - take, for example, the number of people killed on our roads - it would receive far more concern as a serious
issue for our country; requiring our immediate attention and a focused strategy.

It is these unemployment statistics that are the key drivers behind the Government's new approach.

[Overhead 4] Our strategy quite simply has two objectives. The first is to reduce the duration of unemployment. All the
money we have spent on over one hundred and fifty different employment programmes and schemes over the last decade has
not produced the result that New Zealand Employment Policy should have sought - specifically, a reduction in the number or
percentage of job seekers long-term unemployed.

A key difference between the current and future approach can be described as the difference between ``activities'' and ``the
final outcome''; the difference between activity goals such as placing 10,000 job seekers into training, or onto Taskforce
Green versus the outcome of having no job seeker being unemployed over two years.

The activities we as a Government purchase to assist our job seekers must no longer be the end in themselves. Rather, the
activities must be a means to the end; with the end result being the reduction in the percentage of long-term job seekers.

The second objective of the Government's new approach focuses on the way we treat job seekers while they are between
jobs and receiving income support.

I believe that the least productive of the taxpayers' investments in helping job seekers has to be the payment of around $1.3
billion to fit and able job seekers to do nothing but stay at home and lose their self-esteem, their dignity and their connection
with the workforce.

As one who has worked for many years with unemployed job seekers, I have found that one can almost literally graph the
decline in their efforts to seek work, to the point where after 20 or 30 rejections they simply stop looking.

Today we have a large number of job seekers who have given up their search for work. Not only does long-term
unemployment involve a loss of skills, dignity and motivation, but it involves the loss of the work ethic. It is my personal
view that the work ethic is a fundamental part of human nature and human character.

To therefore pay fit and able people to do nothing is one of the worst and most senseless things we can do to our job seekers.
It is not only a social loss, but of course it is also an economic loss. It is an economic loss to the individual and it is an
economic and social loss to the community.

For this reason, the Government's second fundamental employment policy objective is to involve job seekers in appropriate
part-time work or training while they are registered unemployed and receiving income support.

[Overhead 5] To achieve these two employment objectives, the new approach comprises four mechanisms, which are
essentially based on sound management principles.

The first relates to my earlier comments about activities being the means to achieving the outcomes, instead of being the
outcomes themselves.

Outcomes, not activities, will become the focus of our employment policy accountabilities. The success of the activities we
undertake will be measured by the results we achieve in reducing the duration of unemployment.

To support this change to a focus on outcomes, the services we have to assist job seekers with their job search, training and
income support needs will be integrated.

Today there are four different Services dealing with the needs of our job seekers - in fact we have more, but we have four
major ones - the New Zealand Employment Service, the Unemployment Benefit division of the Income Support Service, the
Community Employment Group and the TOP Division of the Education and Training Support Agency. The Government
proposes that these agencies be integrated into a one-stop-shop, to improve the delivery of services to our unemployed job

The third component part of the new approach involves the regionalisation of employment resources. The resources
available to achieve the Government's employment outcomes will move from central control to regional control.

New Zealand is made up of many different labour markets, with many varying needs and characteristics. The mix of services
and interventions most appropriate to the needs of unemployed people should therefore largely be determined within the
community and labour market in which those job seekers live.

The fourth, and arguably most radical change to employment policy comes with the replacement of the Unemployment
Benefit with a Community Wage and Training Allowance.

As I said earlier, we spend around $1.3 billion every year paying fit and able job seekers to generally stay at home; losing
their self esteem, motivation and job skills.

The Government proposes to turn that negative payment into a positive resource for keeping job seekers connected to the
workforce; viewed and treated as much like other members of the workforce as is practically possible.

Let me take you through each of the four component parts of the policy more closely.

[Overhead 6] As Government Agencies are structured at the moment, a job seeker deals with one agency for their income
support requirements, they go to another agency for job search assistance, and their training assistance is provided through
yet another agency.

It is my experience and view that we need a one-stop-shop structure which ensures that our job seekers are assisted by one
employment professional for all their employment and income-related needs. That employment professional must have the
range of tools and skills to meet the full needs of each job seeker.

The shift to the one-stop-shop approach is a sensible one, both from the point of view of being cost-effective, and more
importantly from the point of view of ensuring that the delivery of Government employment support is done in such a way as
to best meet the needs of our job seekers, not the other way around.

[Overhead 7] It is my view, and it is the Government's view that the best decisions about what employment assistance is
most suitable in each community are made within those communities.

The mix of resources required to tackle unemployment in South Auckland is vastly different to the mix of resources and
interventions appropriate to the needs of job seekers on the East Coast.

For this reason, centrally-controlled employment resources will be regionalised, so that the centralised, Wellington-based
control we have today will be a thing of the past.

Staff involved in the delivery of integrated services to job seekers will have the flexibility to use their resources as well as
they can to produce the Government's employment outcomes in their particular labour market regions.

To ensure that the Government's outcomes of reducing the duration of unemployment and involvement of job seekers in
community work and training are delivered on locally, a structure of Regional Employment Commissioners will be

Regional Employment Commissioners will be the best professionals available, responsible for developing and
implementing regional employment plans that deliver on the two employment outcomes.

Commissioners will be supported and advised by Regional Employment Committees - committees made up of
representatives of Government & Community Agencies, Local Authorities, industry and business representatives and
employer and worker representatives.

With the support of their Committee, and the professionals of the Integrated Employment Service, Regional Employment
Commissioners will be accountable for the delivery of services to job seekers, a reduction in long-term unemployment and
the involvement of job seekers in community work and training in their Regions.

They will have the expertise and the resources to determine how best to achieve the Government's outcomes given the unique
labour market conditions prevailing in their particular region.

While the exact detail is still to be worked out as to how many regions and Regional Employment Commissioners there
might be, I envisage that we may well be looking at around 15 regions, but that is yet to be finalised.

[Overhead 8] The commitment to involve the maximum possible number of job seekers in community work and training is a
positive way to ensure that job seekers are viewed as and treated as much like any other member of the paid workforce
while they are unemployed.

Contrary to the suggestion that it could a punitive measure, this change seeks to convert what is a negative payment of the
present unemployment benefit which encourages fit and able people to do nothing, into a positive payment which can be used
by the job seeker to keep them connected to the workforce, contributing to their community and maintaining their motivation,
dignity and skills.

No job seeker will be financially worse off under this new policy. Cost issues associated with undertaking community work
or training, where it is made available, are being considered as part of the policy development process.

It is absolutely essential that the introduction of community work for unemployed job seekers in our communities does not
see the displacement of the paid workforce. In my experience, an additional means of achieving this is to involve employer
and contractor representatives in the process of approving community work projects. There is a vast range of work to be
done in our communities that would not otherwise be done, and would not be work carried out by the regular workforce. For
example, simple household repairs and maintenance for low income earners or beneficiaries who cannot afford to employ a
contractor or tradesperson to do the work.

Another key aspect of the Community Wage and Training Allowance initiative is that the part-time work or training must be
suitable to the job seeker. No job seeker will be asked to participate in part-time community work or training that is not
appropriate to their capabilities, suitable to their skills, or likely to enhance their ability to secure paid work.

[Overhead 9] So what does this radical change in employment policy mean for you? How can Small Business Enterprise
Agencies continue to play a part in the achievement of the Government's new employment objectives?

I am totally committed to the fact that in moving to the new approach over the next twelve to eighteen months, we must not
lose the good things we have now. The work you do delivering programmes and services to assist unemployed people
towards employment and financial independence, such as the Be Your Own Boss Programme, is an important role in the mix
of employment resources available in our communities.

That role will continue to be an integral part of the new approach. As I said, I am committed to maintaining the good things
we have now as we move towards the future.

Regional Employment Commissioners will be looking at the good initiatives they have locally, and looking to assess the
contribution each of those current initiatives can make to the achievement of the Government's employment goals in their

You need to start thinking now about the activities of your agencies, and how they will fit with the mix of training
interventions and resources that will contribute to a reduction in long-term unemployment in your areas.

[Overhead 10] There is a great deal of interest in the timeframe for the changes. The move to the new approach to
employment is not an insignificant task. There are many aspects to the changes, that require careful and thorough planning to
ensure successful implementation, and the realisation of the two outcome objectives.

Currently there is an inter-departmental steering group, headed by Alf Kirk and comprising senior representatives of the
major government agencies involved in and affected by the changes, who are working on the policy development details.

This group is due to report back to Ministers with their policy recommendations by July this year.

Whenever there is significant change to Government policy, there are inevitably accompanying legislative changes needed.
This process, and the associated consultation will require about six months.

This means that full implementation; that is, the entire new approach being in place and up and running, is unlikely to occur
until the second half of 1998.

That is not to say that aspects of the changes will not be seen sooner. It is my intention that we will have Regional
Employment Commissioners in place by the end of this calendar year.

Regional Commissioners will have a significant amount of ground work to do in the lead up to the start of the 1998/99
business year in July 1998. As such, they will need to be in place later this year in order to complete that preparation.

And it is possible that we may be able to achieve an increased focus on community work and training through existing
programmes in the new business year commencing this July.

[Overhead 11] In closing Ladies and Gentlemen, it is my vision that, in commencing towards the introduction of this
far-reaching new approach, we could reach a stage in the future - and not too far into the future - where we have no job
seekers in this country registered for longer than two years, or even better, perhaps one year.

And in this vision we will have an unemployment register in this country that is made up of motivated and willing job
seekers whose skills are being enhanced, and whose connection to the workforce is being maintained while they are between

No government can guarantee that people will never be unemployed. However what this Government can do, and is seeking
to achieve with the new approach I have outlined here today, is a register with short duration, and highly motivated job
seekers, who have the ability to remain connected to the workforce and contributing to their communities as they move
between jobs.

Ladies and Gentlemen, I thank you for the opportunity to share with you my and the Government's vision for employment. I
am sure there is food for thought in it for you and your Agencies, and that perhaps you have the chance, while you're here
together at this Conference to start thinking about the opportunities the changes will bring for your Enterprise Agencies, and
the contribution you as a group will be able to make to the achievement of those two very important outcomes; the reduction
in the duration of unemployment, and the involvement of job seekers in community work and training.

I wish you a productive and fruitful conference, and thank you once again.