A Year In Review

  • Jenny Shipley
Prime Minister

On becoming Prime Minister last December, I set out five key areas where I hope gains would be made.

To lead and settle the debate on family and social responsibility;
To improve the efficiency and effectiveness of running the Government and Parliament;
To continue to build a strong, growing economy;
To invest in our future by making our children and young people's health and education a priority;
To ensure that the tax system makes New Zealanders feel rewarded for their efforts.
In the Prime Minister's statement in February we further laid out the goals of this Government and what we thought we could do to help New Zealand achieve. These were to:

Make a difference with social assistance which genuinely breaks cycles of disadvantage.
Ensure low income people are not taxed to pay benefits to the better off.
Improve business competitiveness and increase the living standards of New Zealanders.
Strengthen our economic and fiscal management.
As New Zealanders, we produce goods and services at home and sell them to the world. This is how we generate the wealth necessary to invest in our country and our people. The creation of wealth is also how we, as a country, meet our social goals.

Unfortunately a difficult international environment and a demanding domestic political environment has hampered New Zealand's ability to generate wealth and economic growth this year. However, despite these difficulties, the Government has delivered positive results in a whole range of areas which will benefit most New Zealanders.

The following is a brief summary of the progress we have made in the key areas of Government over the past year.

At the beginning of the year we undertook to improve business competitiveness and promote growth and we have come a long way since then.
Government has completed the policy development of the ACC reform package, which is currently being considered by a select committee. It is our hope that this reform will be completed for implementation from July 1 1999.

APEC preparation
Government is well down the track in developing New Zealand's policy position for our chairmanship of APEC year.

We are also well underway with the preparations for hosting the APEC Conference in 1999. This conference is expected to bring significant economic benefit through the number of visitors who will be here and significant international exposure through the many media outlets that will be present.

This will give an opportunity to showcase New Zealand's tourism potential and also our business expertise.

Government successfully completed the negotiations and legislation associated with the Auckland Regional Services Trust, now known as Infrastructure Auckland.

Completion of this policy work allows Aucklanders to have full control over a very significant financial resource that will assist them in meeting the costs of transport and stormwater pressures.

Asset sales
Government has completed a number of important asset sales that have allowed us to pay off debt, thus reducing the debt servicing cost and increasing competition in service provision.

The Auckland and Wellington airports sale, plus the impending sale of Rotorua and Palmerston North airports, have assisted in this area.

Government is also actively involved in the continued sales of the small hydro-electricity stations, GPS, the Government Property Service company, Public Trust, Solid Energy and Contact Energy. All of these asset sales are expected to be completed by mid 1999, subject to market conditions.

Business development programme
Government has completed the policy decisions that will allow a wider range of business development providers in different towns and cities throughout New Zealand.

We are well on the way to implementing this programme. It will provide increased flexibility and responsiveness to small and medium size businesses.

Electricity reforms
Government has completed the legislation for the splitting of the line and energy companies. Already many New Zealand consumers, both domestic and industrial, are receiving significant benefits of increased competition.

Many businesses have received a reduction of up to 15 per cent in their power prices already, thus improving profitability and New Zealand's international competitiveness.

In recent weeks Government has completed significant changes to our immigration targets, business immigration and education immigration procedures.

This will benefit New Zealand by an increase of skills and investors and also assist in stimulating economic growth.

Improving border management
A discussion document is well underway as to how we can recover the costs at the border and improve the performance of the border management agencies.

Meat and Animal Products Act
This important piece of work is near completion and it will ensure New Zealand's ongoing interest is protected as an international meat trader.

Open skies access
Five new agreements have been entered into during 1998, increasing the international tourism and trade potential of our aviation relationships.

Parallel importing
The budget decision to allow parallel importing has brought down the price of many consumer goods and inputs to business.

Many New Zealanders in a wider range of goods being available at a more competitive price.

Postal deregulation
Postal deregulation allowed further competition to develop in the postal market. Business and domestic users now have a wider range of mail service providers as a result of this decision.

Producer boards
Government is working with the nine agricultural industries covered by producer board legislation to ensure that profitability to growers is improved over the next decade and that the industries are planning strategically for the challenges of the international and domestic marketplace.

This will benefit growers, the processing industries and the national interest as this work is completed.

Rating powers review
Government has begun the initial stages of work to do with the reviewing of the rating powers legislation, which has been called for by local authorities.

A wide-ranging public consultation is being completed on the substance and implementation issues of the Resource Management Act. Policy work is well underway and amending legislation will be considered early in 1999.

Roading reform
Government has continued to do policy work on options as to how to introduce improved rules for the investment in the roading infrastructure.

Further policy work is underway.

Tariffs/motor vehicles/the general tariff review
The removal of tariffs on motor vehicles has allowed New Zealanders to dramatically improve their ability to purchase new vehicles. It has also helped bring down the price of good quality second hand cars. All New Zealanders have benefited from this move.

Decisions taken recently on the general tariff review have given certainty to employers and employees and allowed us to clearly indicate to our international trading partners how we will meet our tariff reduction obligations by the year 2010.

Most importantly, New Zealand consumers will get the benefit of purchasing cheaper goods as tariffs on New Zealand goods are removed and the range of options available for New Zealanders to purchase will increase in both choice and price reduction.

Tax cuts
Over two million New Zealanders received more of their hard-earned money to keep in their hand as a result of the tax cuts in July 1996 and in July 1998.

The tax cuts have assisted the New Zealand economy to ride out the worst of the impacts of the economic downturn due to the stimulation they provided.

Tax simplification
Government has completed the legislation for the tax simplification measures and is well on the way to the implementation of these decisions. This will assist small business and will reduce the cost of compliance.

Tertiary education reforms
Government has almost completed its tertiary education policy consideration. Public announcements are imminent and implementation will follow through the next 12 month period.

Tourism initiatives
The tourism industry is proving to be of ongoing importance to the New Zealand economy. Recent tourism initiatives are aimed to boost the numbers of people considering coming to New Zealand as a destination.

Government is particularly targeting those markets that have held up well during the international economic downturn and intend to continue to do so during the latter part of 1998 and 1999.

Water review
Government has begun a two-year work programme of considering public policy issues related to water management.

Y2K Readiness Commission
Government has completed a significant study into the public and private sectors Y2K readiness.

Further work is being done through the establishment of the Y2K Commission in order to educate and prompt public and private sector interests in order to see that we don't get any economic stall associated with Y2K issues.

Completion of this range of work has contributed to New Zealand's business competitiveness and has assisted in creating an environment for growth. This is a significant achievement and we need to continue to remind New Zealanders of these gains.

In the area of Treaty issues, both significant land settlements and also progress on particular Maori issues have been achieved.
Customary fishing regulations
After significant analysis and negotiations with Maori and other fishing interests customary fishing regulations in both the North and South Islands have been completed.

Maori broadcasting and language
Government is nearing the completion of this complex piece of work which has been frustrated by the complexity of legal requirements and also the challenge of meeting many sectional interests that are associated with this issue.

Ministers are confident that this matter will be settled towards the latter part of 1998.

Maori housing initiatives
Government recently released a series of important Maori housing initiatives. They are already a positive response and are likely to lead to a significant number of Maori families moving into home ownership.

Ngai Tahu Settlement
Government has completed the long-running negotiation on the Ngai Tahu land settlement.

Ngati Awa Agreement
This agreement has recently been achieved to the satisfaction of both parties.

Taranaki negotiations
Good progress has been made on the Taranaki land settlements. This is a complex settlement but the Minister is optimistic that progress will be made during the latter part of 1998 and 1999.

Turangi Deed of Settlement
Government has completed the negotiations associated with the Turangi issues which have been outstanding for some time.

We undertook to do work on sustainable management of the environment. Our policy initiatives have included:

Climate change policy
The Minister for the Environment continues to show both domestic and international leadership in this complex area. New Zealand is likely to settle on its climate change policy during 1999.

Indigenous forests management, SILNA and the West Coast Accord
Good progress is being made on both issues. A resolution should be reached during the early part of 1999.

Marine reserves
The Minister of Conservation and other interested parties are making good progress on establishment of further marine reserves around the New Zealand coastline.

This will bring benefits to both the commercial fishery and recreational fishermen as well as those who enjoy diving for pleasure.

As noted above, is continuing to have good progress made.

Government undertook to deliver sound fiscal management. During 1998 Government took three decisive steps to meet this objective.

Budget 1998
Prior to the May 1998 budget it became clear to the Coalition Government that we would need to reduce our spending intentions because of the obvious impact of the Asian economic downturn.

We therefore decided not to proceed with $300 million of extra spending that had originally been intended as was foreshadowed in the Coalition Agreement.

$300 million savings package in July 1998
Based on advice that the international economic environment was continuing to deteriorate, the Coalition Government took the decision to make a further $300 million of savings from areas that we had announced in the budget. They asked something of many sectors:

Students had the amount of money contributed by taxpayers to each of their annual year's course costs reduced from 75 per cent of costs to 72 per cent. This produced significant immediate and ongoing savings.

We asked Government departments to reduce their operational expenditure by one per cent, thus saving $25 million.

We removed $53 million of surplus from Government departments' superannuation schemes over and above what was required for this year's increment.

We capped ministerial budgets in order to ensure that they live within their means in the same way as we expect some in the education sector to do.

We deferred a decision to allow Pacific Island people to take their superannuation pensions back to the islands as part of their retirement income.
Policies for Progress - September 1998 - in response to further deterioration in the international economic environment.
Government took the decision to produce a package of measures known as Policies for Progress.

They provided some short, but mainly medium-term savings, that will assist New Zealand's fiscal position as we come out of this period of deterioration in the international economy.

This package of measures included a decision to increase superannuation by the CPI each and every year in the future instead of pegging it to 65 per cent of the average wage.

It also included an announcement concerning the potential sale of Contact Energy and gave clarity as to the tariff reduction track.

Government also progressed the retiring of debt which is part of our ongoing commitment and progressed two tax bills, the March Tax Bill which is still being progressed through the Parliament, and the June Tax Bill, which is now completed.

All of these measures have assisted New Zealand to manage its way forward in a responsible fashion, within the context of a very difficult international economic environment.

Government undertook to introduce a series of initiatives that would deliver effective social assistance and improve the delivery of social services. The policy initiatives include:

Community Wage
Government has completed the legislation for and implementation of the Community Wage. This is an important measure that sends a clear signal that Government expects New Zealanders to commit themselves to work if that opportunity exists. It also clearly indicates that if a work experience opportunity is provided then that will be taken up.

Increased work expectations for people on DPB
Government has made it clear that Domestic Purposes Benefit is available to support people who are taking care of children and have no other source of income. However, Government has also made it clear that as those children increase in their independence the person in receipt of a benefit should begin to actively plan as to how they will move back to an independent income situation over time.

Integration of the Employment and Income service, known as Work and Income New Zealand
This project has been completed to the satisfaction of the users of the service and also the two Government departments.

Work capacity assessment
Government is going through the process of a work capacity assessment in order for us to establish the ability of people to participate and contribute to the workforce regardless of which benefit they may be on.

This will allow people with some disability to have their work capacity assessed and if they, for example, have a 15 per cent work capacity they will be supported and encouraged to find work that will allow them to participate to that extent. As they do so they will of course receive a benefit to adequately meet their needs in income terms.


Government has completed a significant number of areas of benefit reform
They include:

The Sickness Benefit being aligned with the Community Wage.
Invalids Benefit being improved in terms of the specifications of eligibility.
The Emergency Benefit eligibility being tightened up.
Disability Allowance has had the eligibility criteria clarified.
The alteration of the indexation procedures on superannuation.
Public discussion of the Code of Social Responsibility
Government has recently made clear that we have no intention of progressing a legislative Code of Social Responsibility. However, Government has also made it clear that the issues that New Zealanders very strongly recommended in their feedback on the code will be fully investigated and picked up by the Government in coming weeks.

Rural and Maori housing initiatives
Government has completed the policy work and implementation design of this important initiative.

Already there are good signs that it will be taken up in a way that will begin to solve the housing problems of the East Coast and the North, in particular.

Youth Advisory Council
Government has completed the establishment of a Youth Advisory Council.

Government is also close to completing the amendments to prevent youth offending. These amendments in relation to the Children, Young Persons and Their Families Act, are being progressed well.


Asset testing threshold for geriatric rest home care
Government has completed a review and extended the provisions of the Income and Asset Test threshold to make them fairer to those who are using them.

Child health and national drug strategy
Government has completed the publication of this strategy and is well on the way to implementation. This is overseen by a group of Ministers working in closely with service providers in the wider community.

CHE changes
Government has completed the process of moving from Crown health enterprises to hospital services. They are now not for profit services in terms in the way in which they are run and managed.

Compulsory assessment for mental health
Good progress is being made on establishing rules on when people can be required to have compulsory assessment. This completes an area of contentious public policy that is needed progressing for sometime.

Health booking system
The Government, the medical fraternity and the New Zealand community, are making good progress in establishing the rules and entitlements of accessing non-urgent surgery.

National hospital plan
The Government has provided certainty in terms of the configuration of hospital services in New Zealand and the range of services that will be provided on each site.

This will allow it to be fairer to all people and stop queue-jumping and will also ensure that people in most urgently in need of care will get it first.

Rural health policy
The Minister of Health has recently released a policy document that clearly identifies rural health policy and service entitlement.


Fully funded option for schools
Government has completed the policy programme for this option and has offered schools the opportunity to enter this programme at a rate and time that they see fit.

Very good progress is being made with a significant number of schools taking this option up.

Literacy, numeracy and national assessment
Government has recently announced a significant initiative to ensure that all children at age nine will have adequate skills in literacy and numeracy.

Government is also close to completing the national assessment procedures and these will be announced shortly.

Sixteen to nineteen year-olds qualification for student loans
Government has completed the policy work associated with this project and it will be announced very shortly.

Over coming months the full implementation of this programme will be completed.

Special Education 2000
Government is nearing the end of completing the policy and implementation procedures of this important programme.

Strengthening families
Ministers of Social Services, Health and Education have made outstanding progress in establishing the Strengthening Families procedures. This has seen a wide range of Government services and non-Governmental organisations working together in a way that is allowing excellent social outcomes for disadvantaged families.

A number of Family Start pilots have been established and a further extension of local co-ordination of services is continuing to unfold New Zealand-wide.


Matrimonial property and de facto property legislation
Government is continuing to progress these important social policy initiatives. We expect to have this legislation completed by early 1999.


Government can be pleased with the progress that we have been able to make in areas of social policy which are of significant concern to New Zealanders.

It has targeted assistance to those in greatest need. It has ensured that those who need prompting in the welfare system receive that prompting in an appropriate and careful way. It ensures that taxpayers' money is being directed into the areas where greatest concern from taxpayers is being expressed. It has also advanced the public debate on the role of families, community and government in the provision of social services and social and family responsibility.

Overall, Government Ministers and Members of Parliament can be very pleased with the balance that we have achieved in the social and economic areas at a time where domestic politics has been complex and demanding.

We have been able to succeed in delivering very effective results at a time when the international economy has been difficult, but New Zealand's economic framework, plus responsible government, has allowed us to maintain our good reputation as a country, with whom people can do business with and also a country that cares about its people.

1998 can be described as a year of real progress in political terms and also in public policy terms. It's a year that New Zealanders will benefit from because of the wide range of decisions that this Government has taken.

Our challenge now is to set goals that are achievable and relevant for New Zealand today, taking into account the economic outlook and also the need for this generation of New Zealanders to set expectations that can be funded by this generation of taxpayers.

This will take foresight, discipline, energy and determination. But a National-led minority Government is by far and away the most likely party that is able to do it in a successful way in the interests of all concerned.

That is our challenge which we must be equal to.