PM Pre-Budget Speech to Business New Zealand
Kia ora koutou katoa
Thank you to Business New Zealand and Fujitsu for hosting us here today, and I am grateful to be joined by Minister Faafoi, and Minister Hipkins.
Can I thank you also for being so agile in the arrangements for our lunch event. I had of course hoped to be with you in person, but instead I am having the very ‘2022’ experience of isolating with my family. I apologise in advance for any unexpected visitors. I have decided that Zoom and media calls have an almost uncontrollable magnetism for small children.
I wanted to kick off today with a couple of reflections from further afield than these four walls.
Last month I was privileged to lead a trade delegation into Singapore and Japan. While there were many excellent outcomes for New Zealand from both visits, it also served as a reminder to me of the shared experience we are all having as nations right now.
There was one visit in particular that served as a visual reminder.
Singapore has been a critical partner through COVID as we addressed supply chain issues, in fact we agreed to bring together an ongoing taskforce of sorts on this issue going forward. As part of this agreement, I visited the port in Singapore, a place where a fifth of our exports pass through. As you can imagine, it was a logistical sight to behold.
While the CEO talked us through the port’s 30 year plan, I asked him what COVID impacts he was continuing to see in the here and now. He paused briefly before saying: “You won’t find a major port that isn’t impacted even now.”
He then pointed out to the scene in front of him and remarked that he never liked to see shipping containers at his port stacked more than five high, because that tells him there is congestion in the network. As I looked out, I saw a sea of stacked shipping containers.
For me that highlighted two things: there is still a pandemic in the world and it continues to have an impact in many ways, and at the same time, the war in Ukraine is compounding the global shocks we are seeing reverberate through our economies.
I have been on bi-lateral calls just this week with European leaders, to ensure our free trade agreement remains high on their agenda, but also to get their take on the current status of Putin’s war.
These calls in recent weeks have included the Prime Ministers of the Netherlands, Spain and Sweden.
My conversation with Spain’s leader Pedro Sánchez in particular, lingers. He had been in Kyiv only weeks prior and saw in real time what the war means for Ukrainian citizens, but also what it means for the region.
Russia’s invasion of Ukraine has resulted in the destabilisation of Europe in a way that has reverberated around the world. It is having an impact on the sense of security we feel as a global community, as well as contributing to an already difficult inflationary cycle that on the individual level brings cost of living to the fore.
Those are the heavy clouds over the world at the moment and I know that New Zealanders feel the weight of it all right now too.
But the reason I outline this is because while there is no question that currently it is tough, and there are challenges to confront, I’ve been reflecting on the perspective provided by visiting and talking with counterparts overseas.
There is cause for New Zealand, in particular, to feel optimistic, because we are well positioned to accelerate our economic recovery.
We’ve come through the COVID shock better than almost anywhere in the developed world. In fact, our economy is one of the strongest in the world. We have record low unemployment of 3.2 percent and economic activity is up on what it was pre COVID. Our debt levels are half of what Australia’s are. Annual GDP growth is 5.6 percent over the past year, compared to 1.2 percent in 2009 after the Global Financial Crisis.
None of these results were an accident or even a coincidence. They’re a result of deliberate decisions we have made as a Government, and the efforts of the whole team of 5 million.
It’s due to the investments we have made in training and supporting New Zealanders into work – while protecting people and livelihoods from the worst effects of the pandemic. The wage subsidy, which supported nearly half of all Kiwi workers. The resurgence support. The business loan scheme.
It’s due to the Apprenticeship Boost which has supported 43,000 apprentices despite tough times.
And job support schemes like the flexi wage that have financially supported employers to take on workers who might otherwise be on government support.
And it’s in part too because we took the hard edges off the immediate cost of living crisis, lifting the incomes of 60 percent of New Zealand families on April 1 and cutting fuel excise for a period.
And now, it’s because we are casting our eyes to the future as we continue our reconnecting plan, welcoming back our Australian neighbours and tourists from around 60 visa waiver countries earlier than expected, because we controlled COVID and it was safe to do so, as well as bringing in over 29,000 workers to do the jobs that couldn’t wait, while our borders were closed.
It’s a plan that has worked, but there is a lot more to do.
Next Thursday the Minister of Finance will release Budget 2022.
It’s a front row event I hope I’ll get to check my ticket on.
A Budget that takes the opportunity to make investments that secure our future, while also responding to the most pressing issues in front of us.
Because we must do both.
In my conversations over the past few months, with both international partners and businesses here at home, the biggest economic constraint we face – but also the biggest economic solution – is workforce. Getting the right skills for the right job.
This was the case after the Global Financial Crisis too – but back then a different tack was taken. Business support was withdrawn, and those still learning their trades were, out of necessity, often let go. An infrastructure deficit ensued.
Instead of continuing to invest in and train New Zealanders who build our homes, upgrade our infrastructure, work in our hospitals, and help us innovate to meet long term challenges like climate change, our economy reverted to seeking workers from offshore.
This often resulted in labour that drove down wages and productivity across the country, while also depriving migrant workers of the experience they deserved here in New Zealand. It was a situation that was letting everyone down, and the numbers tell that story.
Between 2012 and 2019 – the number of migrant workers employed in New Zealand increased by approximately 144 per cent. At the same time the New Zealand workforce increased by about 15 percent. New Zealand has been shown to have the heaviest reliance on temporary migrant labour in the OECD.
I want to be clear, migrants shape our society for the better in so many ways. They make enormous sacrifices and massive contributions to New Zealand. That’s one of the reasons why as a Government, we recently provided 192,000 migrants a streamlined pathway to residence through the 2021 Resident Visa.
But we have a duty of care to everyone, that as we reopen our borders, we do so with a plan in place that means we learn the lessons of the past.
The aftermath of the GFC cannot be repeated. It was never tolerable for us that unemployment at the height of COVID would reach for example 10 percent as projected by Treasury, and 3.2 percent today is testament to our actions to ensure that didn’t happen. For Maōri after the GFC unemployment hit 14 percent – today it’s 6.3 percent.
And this has been down to deliberate decisions, including investment in our people.
One of the biggest successes of the Government in the past two years is the 190,000 people that our investments in trades training, including apprentices, have helped to deliver. And I do want to acknowledge Minister Hipkins in that.
On Monday we announced a further extension to Apprenticeship Boost to continue fuelling that success, ensuring businesses are supported to grow as much talent in New Zealand as possible.
To meet our long term challenges such as building the homes and the infrastructure our country needs to grow, and ensuring every New Zealander can get a tradie when they need one.
But still, COVID has left us with a skills shortage in New Zealand.
And businesses need to be able to access the labour they need, and look after the people they hire, year round, in a sustainable, easy, faster way than current immigration policies allow.
That is why today I can announce a package to speed up our economic recovery while setting us up to address long term challenges.
First, today I can announce that New Zealand fully reopens to the world by July 31, completing our reconnecting work two months ahead of schedule.
In a few days’ time, on the 16th of May, visitor visas from the Pacific Islands open online.
From the 4th of July, all work visa categories, including the new Accredited Employer Work Visa, will open for applications.
A few weeks later on the 31st of July, student and visitor visas from the rest of the world will reopen. International education returns.
Cruise ships will return too, with the maritime border reopening on the 31st of July.
Now that we have dates, I understand that the next question naturally is whether all of our border settings, including pre-departure testing, will remain in place. As we begin the consultation on our variant plan, it’s clear that monitoring at the border will continue to be important.
But we will be able to change up the role that pre-departure testing has played. While we are still working through this transition, it’s fair to say we are confident that pre-departure testing will be removed by the time we come to the final phase of our reopening in July.
Overall, these announcements mean we have brought forward our complete reopening by two months, and we are giving enough time for our cruise ship industry to prepare for the next big season starting in October. I know this will be welcome news, and it’s a phase we are ready for.
Second, today I can announce a rebalance of our immigration settings that will simplify and speed up access to skilled workers in hard to fill roles while creating new pathways to residence.
Central to this rebalance is the new Accredited Employer Work Visa.
The streamlined Accredited Employer Work Visa process combines six visas into one and uses a simple three step process: an employer check, a job check and a worker check. For an employer this will cut the processing time from up to 80 days pre COVID, to less than 30. The process to become accredited opens on the 23rd of May, in 12 days’ time.
The Accredited Employer Work Visa comes with a median wage requirement, which will be $27.76 by July. Not only does this bring the added benefit of lifting wages, conditions, and productivity for everyone in these jobs, including New Zealanders, it will also help us better protect those who come here to help us.
And we’re ready to kick off in just eight weeks, with processing of these visas beginning from the 4th of July.
The second significant change is the introduction of what will be known as a Green List for highly skilled and in demand workers. For those professions on this list, they will have a faster and simpler pathway to residence.
The Green List will include globally in demand roles such as:
- Health professionals – GPs, nurses, midwives;
- Trades people and engineers – surveyors, project builders, geotechnical and environmental engineers, plumbers, electricians;
- Teachers – ECE registered, secondary with specialisation;
- Dairy farm managers;
- Tech sector specialists.
- Just to name a few.
From the outset this list will cover 56 roles on a straight to residence pathway, and 29 roles on a two-year work to residence pathway.
Simply put, this means a doctor or a structural engineer will be able to apply for residence as soon as they decide they want to come to New Zealand and have a job offer, and a nurse or an electrician will be eligible to apply for residence after two years working here on an Accredited Employer Work Visa.
Workers earning twice the median wage for an Accredited Employer will also be able to apply for residence after two years.
The jobs on the Green List will be reviewed after 12 months initially, then every three years after that.
The introduction of the Green List is significant and its purpose is simple. There are some areas we know we have skills gaps and we want to make recruitment as easy as possible. Giving certainty around the ability for people to stay if they bring these skills in, has been a missing piece in our immigration system.
Alongside these changes, we will have transition arrangements in place.
For those sectors where it’ll take time to get wages to meet the median wage, we are introducing sector specific agreements to allow sectors to continue accessing some migrant workers who are paid below the median wage.
These agreements give time for those sectors to improve working conditions and put significant efforts into retaining, training and upskilling New Zealanders.
In acknowledgement of the tough time in particular for tourism and hospitality and to support their rebuild, we are providing a transitional measure for many of the roles in those sectors by exempting them from the median wage and instead including a lower wage requirement for the time being, while they recover from the effects of the pandemic. This recognises that these sectors rely heavily on working holiday visas and students, whose numbers will take time to regrow.
In addition, we will extend visas for most temporary work visa holders in New Zealand to ensure skilled workers already here can remain as we accelerate our recovery.
This will cover about 20,000 workers and their families, many who will also receive open work rights so they will be able to work for any employer.
Finally, there will also continue to be the additional schemes that allow people to come to New Zealand to work, including through Working Holiday schemes, student visas, and the RSE scheme.
These workers are crucial to our workforce and will help bolster the industries that will be in demand during our COVID recovery.
There’s a lot of detail in these announcements, and I want to give Minister Faafoi a chance to speak in a bit more detail before we open up for questions. But before I do, a couple of closing thoughts.
Today represents a significant milestone in our recovery plan.
This package is designed to address the urgent skills shortages created by COVID while also putting our immigration settings on a better and more sustainable footing.
Employers will have greater access to skilled workers to address workforce needs, and with our new opening dates, families and friends can reunite, international students can return to New Zealand, and the return of international visitors will provide a much-needed boost to our tourism and events sectors.
The July reopening dates will also provide confidence to airlines planning a return to New Zealand routes for the peak season, and in the wider tourism sector recovery.
But overall, we had an opportunity here to get smart about immigration, and we’ve taken it, to speed up our recovery.
I will now handover to Minister Faafoi to lay out further details.