Minimum wage

In the last three years the minimum wage has been raised in three increments from $12 to $13. Australia’s minimum wage is considerably higher but is lower in relation to average wage levels, while New Zealand’s minimum wage is high internationally as a proportion of average wage levels.

Youth wages

In April 2008 the youth rate (80 percent of adult minimum) for 16-17 year-old workers was abolished and replaced by a new entrants wage of 80 percent for 16-17 year-olds for the first three months or 200 hours of employment.

Youth rates have been debated for some time as governments look at the relationship of wage levels to youth employment. The youth rate for 16-19 year-olds (introduced in 1994) was 60 percent of the adult minimum wage. In 2001 it was made applicable only to 16-17 year-olds and raised in two steps to 80 percent. While earnings for youth rose significantly following 2001, research suggested that there had not been a negative impact on employment. Research on the 2008 change concluded that there was a considerable impact on youth wages as young people were moved onto the adult minimum wage rather than taking up the new entrant option. This time there was a loss of employment, particularly of part-time employment of students. Wages for young people are likely to remain on the agenda, especially as the extent of youth unemployment is of concern.

Dr John E. Martin, Research Services Analyst

Youth unemployment

Youth unemployment remains of concern. A disturbingly large number of young people are not in education and are not engaged with the labour market. The statistical category of ‘NEET’ (Not in Employment, Education or Training), drawn from the HLFS, measures this phenomenon. It includes both the unemployed and those outside the labour market who are not studying. The recent revision of this statistic by Statistics New Zealand has included caregiving not in the labour force in NEET.

The NEET rate has grown in recent years and is at a relatively high level internationally. The rate is substantially higher for 20-24 year-olds than 15-19 year-olds. Current rates (September 2011): 15-19 year-olds 8.4 percent; 20-24 year-olds 16.0 percent. The annual cyclical pattern is likely to produce higher rates again in the next year.

Looking to the future

Since the latter part of 2009 unemployment has stabilised. However, with a lengthening of the duration of unemployment, persistent high youth unemployment and many youth not engaged with the labour market, unemployment policy remains salient, particularly if a ‘jobless’ recovery threatens in which economic growth is not accompanied by employment expansion. The Department of Labour’s lead employment indicator fell slightly in September 2011 after increasing for nearly two years. While the expectation was still for moderate employment growth in the short-term, another fall in December 2011 could indicate a downturn in employment for 2012.

Treasury and the Reserve Bank forecast unemployment to decline somewhat from the current level of around 6.5 percent. The Reserve Bank also notes a current possible jobs/skills mismatch between the relatively high, stable unemployment rate and the tight labour market for skilled labour. The Department of Labour forecasts about 200,000 jobs will be created, 2010-15, about 1.8 percent per annum. Growth is expected across the range of skills during this period but a central issue will be the gap between skills required and those held by the unemployed.

Dr John E. Martin, Research Services Analyst

Types of ECE provider in New Zealand

Following is a simple classification of the diverse range of ECE provider types operating in New Zealand.

ECE providers in New Zealand are either teacher-led or parent-led.

Teacher-led providers: These are providers that require fifty percent of the adults who educate and care for children to be qualified and registered ECE teachers.

Parent-led providers: These are providers that require parent and/or whānau involvement in providing education and care for children.

ECE providers can be further divided into the following five types of service:

Centre-based ECE services: These are services that operate regularly from specified premises. While services of this type must all fulfil the same licensing criteria they may take different approaches to care and education, and may be known by different names. For example, Kindergartens, Playcentres and crèches are all centre-based ECE services. These services may be either teacher-led or parent-led providers.

Home-based ECE services: These are services that operate in private homes. Licensing is optional, with specific conditions depending on the details of the home-based service provided. Licensed services are teacher-led providers.

Hospital-based ECE services: These are services that operate from hospital premises solely for the children of patients at that hospital.

Ngā Kōhanga Reo: These are services that provide a total immersion programme in which the language of communication is solely Māori. These services are licensed under the same regulations as the above three types of services. These are parent-led providers.

Playgroups: These are groups of parents who regularly meet so that their children may play together. They differ from the above four service types in that they are not licensed, although they may be certified in order to receive government funding. Certification occurs under a separate set of regulations from licensing regulations.

ECE expenditure 2006-2010

ECE expenditure has increased between 2006 and 2010 both as an absolute amount and as a proportion of total government spending on education.

Participation in ECE by ethnicity 2006-2010

At present there is no direct measure available of the percentage of children of each ethnic group who attend ECE. However, by looking at those new school entrants who attended ECE prior to entering school, it is possible to obtain an indirect measure.

Government expenditure on tertiary education

In the 2010/11 financial year the Government spent a total of $4,464 million (exclusive of GST) on tertiary education. This is the equivalent of 2.2 percent of gross domestic product.

How expenditure is apportioned

Government expenditure 2010/11

Source: Student Loan Scheme Annual Report 2011

Tuition subsidies

These are paid to providers. The figure of $2,280 million given above is an estimate and includes the following tertiary provider funds:

• Student Achievement Component
• Performance-Based Research Fund
• Tertiary Education Organisation Component – Capability Fund.

Student allowances

This does not have to be paid back. Not all students are eligible. The amount a student is paid depends on their personal circumstances. Factors taken into account include:

• parental income of students aged under 24
• how much the student earns from other sources
• whether the student has a partner and if so how much the partner earns
• whether the student has children.

According to Studylink the average student allowance in 2010 was $5,803.

As part of the student allowance some students also receive an accommodation benefit. Generally, a student may receive this benefit if he or she lives away from the parental home while studying. However, a student’s specific living arrangements and weekly income will determine eligibility. The amount paid will generally depend on the region the student lives in while studying.

In 2010, 70.7 percent of students who received a student allowance also received an accommodation benefit. The average accommodation benefit paid in 2010 was $1,191.

Student Loans

Timeline of major events

1992 – The student loan scheme is introduced. Students can borrow course fees, course costs and living costs. The interest rate is connected to the cost of government borrowing and to the consumer price index and some interest may be written off.

1998 – Some restrictions on borrowing are introduced, including:

• parental consent required for those under 18 to borrow
• borrowed course fees are paid directly to providers.

2000 – Interest is no longer charged to students who are studying. This applies to full-time students and part-time student on low incomes.

2006 – Loans are made interest-free for borrowers who meet New Zealand residency requirements.

2010 – Major changes are introduced in the 2010 Budget, including:

• student loan eligibility dependent on academic performance
• a life-time limit on the amount of study that may be paid for with a student loan
• requirement for permanent residents and Australian citizens to have lived in New Zealand for at least two years before they may access a student loan
• increases in administration fees charged to borrowers.

Student Loan balance

There is more than one way of measuring the value of student loans. The nominal value is the measure most frequently referred to. This is the total amount owed by borrowers at a point in time. The nominal value as at 30 June 2011 was $12,070 million.

Other assessments of value are also important, including the fair value. The fair value is the hypothetical price at which the scheme’s assets could be sold. The fair value as at 30 June 2011 was $7,221 million.

Average amount borrowed: In 2010, the average amount borrowed was $7,298. This is an increase of 4 percent ($307) on the previous year.

Student Loan Scheme Amendment Bill (326-1)

This Bill gives effect to reforms announced in Budget 2011. The proposed changes include:

• to exclude investment and business losses from the calculation of net income for repayment purposes
• to reduce the repayment holiday entitlement from three years to one year
• to obtain such a repayment holiday, the borrower must supply the details of a contact person who must reside in New Zealand.

Dr Damien Cole, Research Services Analyst

Earthquake Commission

The Earthquake Commission (EQC) is a government owned Crown entity that provides primary natural disaster insurance to the owners of residential properties in New Zealand. A levy is collected from all private insurance premiums and contributes to the EQC’s Natural Disaster Fund. Prior to the Canterbury earthquakes there was $5.6 billion in the Fund. However, in August 2011, the EQC announced that its Natural Disaster Fund is likely to be exhausted by earthquake claims. The Commission pays up to $100,000 + GST for house repairs and $20,000 + GST for contents.

Private insurers

The private insurance sector is characterised by a small number of large insurers with large market share and several smaller providers. One of the larger insurers, AMI Insurance Limited, was particularly affected by a high number of building and household claims after the earthquakes. Concerns surrounding the ability of AMI to meet these claims led to government intervention. In April 2011, the government announced a backup financial support package to give AMI policyholders certainty and to ensure an orderly rebuild of Christchurch in the aftermath of the Canterbury earthquakes. The support package will be called on only as a last resort if AMI’s own reserves are completely depleted.

If required, the package will involve the government investing up to $500 million of equity in AMI, with the right to take ownership and assume control of the company if needed. The ultimate cost to the government will depend on the final cost of AMI’s claims, which remain uncertain, and the outcome of AMI’s recapitalisation process which is currently underway. However, Treasury estimates that the likely cost of the support package will be $337 million.

Reinsurance

Reinsurance is insurance that is purchased by an insurance company from another insurance company (referred to as the reinsurer) as a means of risk management. Without the support from reinsurance there would have been either more insurers in financial difficulty as a result of the earthquakes, or reduced levels of insurance coverage. Reinsurance cover will contribute the majority of total funding for property-related insured losses from the Canterbury earthquakes. The remainder will be met by a combination of funding from the EQC and the original private insurers. The EQC also relies heavily on reinsurance to cover a significant proportion of its residential insurance claims.

Insurance costs and availability

An important short-term impact of the Canterbury earthquakes has been the reduction in the availability of new insurance in the region. Most businesses and households are unable to change insurers at present. For those currently without insurance cover, the impact is more significant. For example, owners of some earthquake-prone buildings and infrastructure can no longer get insurance cover in Canterbury or elsewhere in New Zealand. Other changes to date include higher premiums to fund increased reinsurance costs and larger excesses. On 11 October 2011, the Government announced that EQC levies would triple from February 2012 to meet EQC’s higher reinsurance costs and begin replenishing the Natural Disaster Fund.

In the long term, insurers and reinsurers will reassess their risks and opportunities in New Zealand. It is expected that this will include the eventual return of an active market for new customers in Canterbury. There will also be a review of EQC within the next few years which could affect the interaction between the public and private provision of insurance for earthquake related risk in New Zealand.

Charles Feltham, Research Services Analyst

Demand and allocation

It is estimated that total water use in New Zealand currently equates to two to three times more water per capita than in most other OECD countries. This is due, in part, to hydro-electricity generation which accounts for 60 percent of New Zealand’s electricity requirements. Allocation of freshwater “takes” (the amount of water that is permitted to be used) is largely managed by regional councils through the issuing of resource consents under the Resource Management Act 1991 (RMA). Demand for water is increasing, particularly in areas that are already short of water. Drier parts of the country have the highest demand. In addition, several eastern regions, including Canterbury and Otago, have surface water catchments that are highly allocated, so come under increased pressure during drier times of the year.

There are currently over 20,500 consented freshwater takes in New Zealand of which around 200 consents are for hydro generation. Most of the hydro generation takes are termed non-consumptive, because this water, after hydro-power generation, generally returns to rivers and downstream storage lakes and can be used again by other water users.

Present and future management

A National Policy Statement for Freshwater Management took effect on 1 July 2011. National Policy Statements (NPS) are planning documents under the RMA that give central government direction for making resource management decisions about nationally significant issues. Councils have to ensure that their policy statements and plans “give effect" to an NPS. The NPS for Freshwater Management requires councils to provide for improved freshwater management in their policies and plans. It includes direction in setting limits for water quality and improving and maximising the efficient allocation and use of water. Councils are required to implement the NPS for Freshwater Management by the end of 2014.

Environment Waikato, in accordance with the NPS for Freshwater Management, is proposing an addition in its regional plan. The council considers the current ‘first in, first served’ system used to grant water take consents is ineffective in prioritising water supply. Referred to as Variation 6 (to its regional plan), it proposes that the ‘first in, first served’ process is retained to a degree, but only after domestic and municipal supply requirements are met and there is enough water for other ‘in stream’ uses such as renewable electricity generation. In addition, water use consents in each catchment would expire at the same time rather than a whole range of times, as happens at present. Allocations would thereafter be made for 15 year periods and water take consents could be transferable to someone undertaking similar activities in the same area.

Water allocation will continue to be the focus of freshwater management in New Zealand. Balancing the competing needs of water users – recreational users, town water suppliers, hydro-electricity generators, tourist operators, and farmers – is likely to become increasingly important.

Charles Feltham, Research Services Analyst

Housing ownership and costs

Home ownership has fallen and the cost of housing has increased. The 2006 census indicated that 66.9 percent of all private dwellings were owned by their occupants. This was the third successive census in which rates of home ownership had fallen, the rate in 1991 having been 70.7 percent. Since the late 1980s, the proportion of households spending over 30 percent of their income on housing has increased significantly. High housing costs relative to household incomes are especially a concern for low-income households. Furthermore, households with housing costs over 30 percent of disposable income are more common when they include at least one non-European adult.

According to the Household Economic Survey for the year ended 30 June 2011, in the two years since 30 June 2009, housing costs increased while household income was relatively unchanged. Thus, the proportion of total household income that households spend on housing costs has increased. The proportion increased from 15.1 percent in 2008/09 to 16 percent in 2010/11. The proportion of households spending 30 percent or more of their income on housing costs increased from 19.5 percent in the year ended June 2009 to 21.8 percent in the year ended June 2011. Components of housing costs that increased between 2008/09 and 2010/11 were average weekly expenditure on rent and average weekly expenditure on property rates. Average expenditure on mortgages and loans was relatively unchanged over the two years.

There have been signs of a recovery in the housing market. The Treasury in October 2011 said the national market for new houses was showing signs of a recovery. The Quotable Value residential property index for October 2011 indicated that nationwide property values have gradually increased since the start of 2011. They were 1.2 percent above the same time last year, and 4.4 percent below the 2007 market peak. Based on the index, the initial upward movement in values was due to Auckland and post-quake Christchurch but now many other areas are also increasing. Real Estate Institute of New Zealand data on the housing market for November 2011 showed 6,008 unconditional sales for the month, an increase of 16.9 percent compared to November last year.  The national median house price was $367,500, a new record.

Housing stock and crowding

The Registered Master Builders Federation has estimated that 20,000 to 25,000 new homes must be built annually to maintain housing stock and meet demand. However, in recent years less than 15,000 have been built yearly. In the September 2011 quarter residential building activity was at its lowest level in 18 years. This coincided with a near-record low earlier in 2011 for consents issued for new homes.

In 2006, 389,600 people (10 percent of the resident population), lived in households requiring one or more additional bedrooms to adequately accommodate household members. The level of crowding was similar to that in 2001, but had declined since 1986 when 392,700 people (13 percent) lived in crowded conditions. In 2006 living in a crowded household was more likely for the unemployed, younger people and Pacific peoples. Crowding was more likely for households in the bottom quartile of equivalised household income compared with those in the top income quartile.

State and social housing

As at 30 November 2011 there were 6,009 people on the waiting list for Housing New Zealand Corporation (HNZC) rental homes. Of these, 351 were Priority A, 2,358 Priority B, 1,656 Priority C and 1,644 were Priority D. Priority C and D were confirmed before 30 June 2011 as since 1 July 2011 only Priority A and B applicants have been eligible for a state house, and thus added to the waiting list. Priority A applicants are those whose housing need is assessed as being “at risk”, while the housing need of Priority B applicants has been assessed as “serious”. In 2010/11 Priority A applicants were housed on average in nine days.

HNZC forecasts a significant change in the distribution of demand for State housing. In numerous regions demand is expected to remain constant or even decrease. However, in many major urban areas a significant increase is expected. The composition of families requiring housing has also changed in recent years. The HNZC finds that many applicants now are single-parent families, families with four or five children, or single persons with high needs. In the past the usual family seeking housing would be a two-parent household with two or three children.

Social housing is the provision of assistance with housing to those who cannot otherwise meet their own housing needs. This assistance can either be ‘in kind’, or ‘in cash’. The Social Housing Unit at the Department of Building and Housing was established in July 2011. It aims to increase the supply of social and affordable housing.

The Christchurch earthquakes have impacted on the region’s State housing stock. HNZC houses approximately 18,000 people in 6,122 properties in Christchurch. Around three quarters of its houses were damaged by the earthquakes.

Weathertight homes financial assistance package

A PricewaterhouseCoopers report has identified about $11.3 billion of leaky home damage, but there are potentially more leaky homes. Under the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Act 2011, qualifying home owners will receive a 25 percent contribution from the Government and may receive 25 percent from their local council. The contributions will be based on actual repair costs. As at 30 November 2011 the Department of Building and Housing had received 6,677 Weathertight Homes Resolution Service claims. These had been lodged for 9,262 properties.

Paul Bellamy, Research Services Analyst

Household Income

Median household income increased 47 percent in real terms from the low point in 1994 to 2010. The growth for Māori was 68 percent, and for Pacific people 77 percent. In 2010, just over two thirds of two-parent families were dual-earner families, up from a half during the early 1980s. This change and the increasing proportion of dual-earner couple-only households were the main factors increasing median household incomes more rapidly than the average wage for individuals. In 2010, half of older people (aged 66 years+) had less than $100 per week income from sources other than government transfers.

Income Inequality

Two ways of measuring income inequality are percentile ratios and the Gini coefficient. Percentile income ratios summarise the relative distance between two points in the income distribution. The ratio of the 80th percentile to the 20th percentile of the equivalised disposable household income distribution is used to measure inequality. The higher this ratio is, the greater the level of inequality.

Based on the 80:20 ratio inequality increased from 1986 to 2010. Inequality increased most rapidly from 1988 to 1992. There was a further net rise from 1994 to 2004. The ratio was 2.2 in 1986, 2.7 in 2001, 2.6 in 2007 and 2.4 in 2010. According to the Ministry of Social Development (MSD), the decline from 2004 to 2007 was primarily because of the Working for Families (WFF) package, and the resulting growth in incomes for low to middle income households with children. The lower 2010 figures compared with 2007 reflected the decline in real incomes for the top two deciles, and a small real gain for lower deciles.

In 2010 the top 10 percent received a quarter, and the top 30 percent received slightly over a half, of the total population (equivalised) income. The distribution of household income in New Zealand was broadly similar to that in the United Kingdom and Australia.

The Gini coefficient takes into account the incomes of all individuals. In 2010 income inequality as measured by the Gini coefficient was lower than in 2001 (the lower the Gini score, the lower is inequality). Based on 2008-2009 Organisation for Economic Cooperation and Development (OECD) figures for 34 countries, New Zealand’s inequality score of 33 was slightly above the OECD median (31). New Zealand was ranked 25th. New Zealand’s score in 2010 was 32, just above the OECD median. Inequality increased rapidly from 1988 to 1992, followed by an increase until around 2001 and then declined from 2001 to 2010.

Based on OECD data from 1985 and 2008, the Gini coefficient indicated that inequality increased in 17 of 22 countries. Inequality in New Zealand increased from 0.27 to 0.33 (see the graph below). The main factor increasing income gaps was greater wages and salary inequality. The rise in part-time and low-paid work extended the wage gap too.

Poverty

New Zealand does not have an official poverty measure. However, low-income thresholds or poverty lines can be used. The ‘fixed line’ measure anchors the poverty line in a reference year, then adjusts it each survey with the Consumer Price Index. The ‘moving line’ or ‘relative’ measure sets the poverty line as a proportion of the median income.

The fixed line measure (60 percent of median income) adjusted for housing costs indicated 15 percent of the total population lived in poverty in 2010, the same as in 2009. This ended a decline in poverty started in 1994. Child poverty rates were 22 percent from 2007 to 2010, following major falls from 2001. According to the MSD this was due to improving employment, income-related rents and WFF. Poverty rates for older New Zealanders (7 percent) were lower in 2010 than for any other age group (13 percent for 25 to 64 year olds and 22 percent for dependent children).

The poverty rate also remained unchanged on the moving line measure after adjusting for housing cost. The rate remained 18 percent from 2007 to 2010, as during the mid 1990s, but was double the 1984 rate. Based on OECD and European Union 2008-2009 figures, New Zealand’s population and child poverty rates were close to the overall medians.

According to the MSD, WFF had little impact on poverty rates for children in beneficiary families (around 70 percent in recent years), but halved child poverty rates for those in working families (8 percent in 2007 and close to the same since then). Poverty rates for Māori and Pacific children were higher than the rates for European/Pakeha children.

The Office of the Children’s Commissioner has found that children emphasised the impact of poverty on schooling, social inclusion and self-esteem. The experience of poverty was almost always negative, and could have psychological, physical, relational and practical effects.

Paul Bellamy, Research Services Analyst

Progress so far

Construction of the Victoria Park tunnel is almost complete with the tunnel opening to two of the three lanes of traffic on 14 October 2011. The third lane north is due to open to traffic in March 2012. The Victoria Park flyover will open in a new southbound-only layout in early January 2012.

Construction of the Tauranga Eastern Link between Tauranga and Paengaroa started in 2011. This road will run from the Baypark speedway to Paengaroa. The road will be partially funded by tolls. It is planned that the Tauranga Eastern Link will be open to by 2016.

The Waikato Expressway will provide 102km of continuous divided four-lane highway. The expressway is to be built in sections. Thirty two kilometres have been completed so far. Construction on the Ngaruawahia and Te Rapa sections is currently under way, with the other sections being investigated and designed.

The Wellington Northern Corridor has a total length of about 110km. Some elements of the project such as the section from MacKays Crossing to Otaki, around the Basin Reserve, and from Aotea Quay to Ngauranga Gorge are scheduled for completion within 10 years.

The Puhoi to Wellsford road of national significance will run for 38km through northern Auckland. The project aims to improve the state highway network from the Northern Gateway Toll Road to just north of Wellsford. Expected completion is 2022.

The contract for the Waterview Connection was announced on 19 August 2011. NZTA is working with the successful consortium to finalise all aspects of the design before construction commences. With an anticipated cost of $2 billion, the project will be the biggest ever to be undertaken by the NZTA. The NZTA expects the project to be completed by mid 2017.

The Christchurch Motorway projects will improve the southern and northern approaches to Christchurch, and provide a western bypass that links points north and south of Christchurch with the International Airport. Following the Canterbury earthquake Christchurch’s wider transport priorities need to be confirmed. As a result there is still some uncertainty around the construction timing for this project.

Further reading : Roads of National Significance website.

Nick Robertson, Research Services Analyst

Introduction

Land Transport funding is governed by the Land Transport Management Act 2003 (LTMA). Amendments made in 2008 changed the way New Zealand’s land transport was funded. The purpose of the Act is to contribute to achieving an affordable, integrated, safe, responsive, and sustainable land transport system. The agencies involved in land transport funding and funding process are outlined below.

The Ministry of Transport

The role of the Ministry of Transport is to be the government’s expert adviser on transport. The Ministry provides advice to support the government in growing the New Zealand economy to promote greater prosperity, security, and opportunity.

The Ministry helps the government give effect to its policy by supporting the development of legislation, regulations, and rules.

The New Zealand Transport Agency

The New Zealand Transport Agency (NZTA) is charged with ensuring New Zealanders travel reliably and safely, and investing in moving people and freight. The NZTA plans and delivers national transport networks and supports local transport networks.

The NZTA is responsible for allocating funds from the National Land Transport Fund (NLTF) to land transport activities. Activities include local road and state highway improvement, road maintenance and renewal, and passenger transport. The NZTA makes the decisions on the specific activities and combinations of activities it will invest in, but must comply with the Government Policy Statement on Land Transport Funding (GPS) and the LTMA.

The NZTA is responsible for all state highways. The NZTA, together with local and regional government, funds local roads and public transport infrastructure and services. The NZTA also provides assistance and advice through membership of regional transport committees which develop regional land transport programmes.

Local government

Regional councils (except Auckland) are required to appoint a regional transport committee (RTC). The RTC is responsible for establishing a regional transport strategy and a regional land transport programme (RLTP). The RLTP will prioritise the region’s projects. The RLTP will feed into the NZTA’s planning when deciding which projects to fund.

Auckland Transport, a council controlled organisation, is responsible for Auckland’s roads. Auckland Transport is responsible for all of the region’s transport services (excluding state highways). Auckland Transport is responsible for the regional transport strategy and the RLTP.

Regional, district, and city councils are responsible for delivering land transport infrastructure and services in their areas. The NZTA contributes funding for these local activities. The NZTA allocates funds based on population size. Auckland is guaranteed 35 percent. This funding for local government projects is often not 100 percent. In 2010/11 local government contributed 42 percent of the cost of local roads. Local governments source these remaining funds, often through local rates and development contributions.

For 2009-2012 local government was expected to spend $2,524 million on land transport activities.

The Government Policy Statement

The Minister of Transport produces the Government Policy Statement on Land Transport Funding (GPS). The GPS covers the outcomes the government wishes to achieve from its investment in land transport, how it will achieve these outcomes through funding certain activity classes, how much funding will be provided, and how the funding will be raised. The NZTA allocates funds to give effect to the GPS. A new GPS is required to be produced at least every three years.

The current GPS was prepared for 2009/10-2018/19. The GPS covers the financial period 2009/10 to 2014/15 and provides indicative figures from 2015 – 2019. A new GPS has been prepared and will come into force on 1 July 2012 to cover 2012/13- 2021/22.

The National Land Transport Fund

New Zealand's road users primarily fund the country's land transport system through petrol tax, road user charges, and vehicle registration and licensing fees. These funds are paid into the National Land Transport Fund (NLTF) for investment in maintaining and improving land transport networks and services.

There are three types of NLTF funding:

Nationally distributed funds - this is the main funding stream for investment in national priorities, most often state highway projects. This funding is guided by LTMA objectives and the GPS.

Regionally distributed funds - these are the funds allocated to regions for transport projects. Allocation of the funds is based on population size. There is currently a 5 cent per litre tax on petrol that goes directly to fund regional roads. This tax is set to expire in 2015.

Special funding for specific regions for investment in specific transport needs - Allocation of this funding is in line with the LTMA, RLTPs, and Crown objectives.

National Land Transport Programme

The National Land Transport Programme (NLTP) includes the activities that the NZTA anticipate will be funded from the NLTF. The NLTP is prepared for a three year period. The NZTA must adopt a NTLP before the start of the first financial year to which it applies.

To be included in the NLTP, and receive NLTF funding, activities must either be proposed in an RLTP or be an activity that is to be delivered nationally, such as Roads of National Significance.

The NZTA has a framework they use to determine the priority of the projects proposed both nationally and regionally. This framework includes assessments of the activities against the GPS, regional land transport programmes, regional transport strategies, NZTA national activities, strategic fit, economic efficiency, and effectiveness.

For 2009-2012, $7,815 million from the NLTF was expected to be spent on projects in the NLTP and $895 went to road policing. Of the $7,815 million $4,605 million went towards state highways, $1,919 million was spent on local roads, $630 million was spent on public transport services, $269 million on public transport infrastructure, and $51 million was spent on walking and cycling facilities.

Between 2009 and 2012, local government were anticipated to spend $1,748 million on local roads, $554 million on public transport services, $115 million on public transport infrastructure, and $38 million on walking and cycling facilities.

Nick Robertson, Research Services Analyst

Enhancing Victims’ Rights Review

In 2009 the Ministry of Justice began a review of victims’ rights and access to support services. It consulted with government and non-government agencies and gathered information from a range of sources, including the 2007 Inquiry into Victims’ Rights conducted by the Justice and Electoral Committee. In December 2009, the Ministry released a discussion document A Focus on Victims of Crime: A Review of Victims’ Rights that sought feedback on a number of proposals aimed at enhancing “victims’ rights and role in criminal justice processes” and improving “the responses of government agencies to victims of crime”.

The Ministry had identified three broad issues for victims:

• Victims were frustrated at having to deal with multiple government agencies to get information about the criminal justice system, their rights and how to access services.
• The mechanisms to make criminal justice agencies accountable for victims’ services were weak.
• Many victims were bewildered by criminal justice processes. Often victims felt they did not have a role in the case that involved them.

In response to the Enhancing Victims’ Rights Review, the government approved a package of reforms, some of which required legislation. Other reforms involved operational changes.

Victims of Crime Reform Bill

The Victims of Crime Reform Bill was introduced on 16 August 2011 to implement reforms requiring amendments to the Victims’ Rights Act 2002, the Children, Young Persons and Their Families Act 1989, the Parole Act 2002, and the Sentencing Act 2002. The Bill received its first reading on 4 October 2011 and was referred to the Justice and Electoral Committee.

The Bill’s policy objectives are set out in the Bill’s explanatory note. They are to:

• strengthen the existing general provisions in legislation for victims of crime
• expand the rights of victims of serious offences
• give victims more opportunity to be involved in criminal justice processes
• ensure victims are better informed about their rights
• increase the accountability and responsiveness of government agencies providing services to victims
• ensure victims’ rights in the adult criminal jurisdiction are applied in the youth justice jurisdiction.

To meet these objectives, the Victims of Crime Reform Bill proposes a series of measures. Among these, the Bill:

• requires the Secretary of Justice to prepare a code for victims outlining victims’ rights, the services available to victims and the duties of government agencies
• requires certain state agencies to include in their annual reports a summary of services provided by the agency to victims and statistical information about complaints received and how they were resolved
• requires victims to be given more information about the progress of the case
• widens the scope of what may be included in a victim impact statement
• gives victims of specified offences the right to read their victim impact statement to the court
• provides that victim impact statements may be submitted to the Youth Court
• expands the scope of victim notifications. For example, victims of specified offences will be able to be notified when offenders are convicted for breaching any conditions of a sentence of home detention or for breaching any conditions imposed on release from a term of imprisonment of 24 months or less
• establishes a formal process for court-referred restorative justice before sentencing takes place, in certain cases.

Bills Digest No. 1928, prepared by the Parliamentary Library’s Legislative Analyst, provides a detailed analysis of the Victims of Crime Reform Bill.

Victims Centre

A Focus on Victims of Crime proposed the establishment of a Victims’ Services Centre. On 1 July 2011, a Victims Centre was launched within the Ministry of Justice for a period of 18 months “to oversee victims’ rights and services, provide information to people who work with victims and improve the coordination of services to victims”. The Centre is responsible for developing a Victims Code. A draft Code is due to Cabinet by June 2012, to be followed by public consultation.

New Zealanders’ experiences as victims of crime

The 2009 New Zealand Crime and Safety Survey (NZCASS) measured the nature and extent of crime in 2008 experienced by New Zealand residents aged 15 years or more, based on interviews with over 6,000 people. The New Zealand Crime and Safety Survey (NZCASS):2009 Main Findings Report, published in December 2010, includes the following findings:

• an estimated 449,000 households were victimised in 2008, equating to 28% of all households in New Zealand experiencing at least one form of victimisation;
• an estimated 537,000 adults were victimised in 2008, with 16% of adults experiencing at least one offence;
• most people (64%) experienced no crime in 2008 but 6% of the population experienced 54% of all the crime reported in the NZCASS;
• victims indicated they reported one-third of the crime they experienced to the police.

Further reading: Matthew Hall Victims and Policy Making: A comparative perspective (Willan Publishing, Oxford, 2010).

Alex MacBean, Research Services Analyst

Economic costs

Treasury’s Pre-Election Fiscal and Economic Update released in late October 2011 notes that ‘disruption to economic activity has been less than anticipated’. Conversely, ‘damage estimates are higher, partly owing to continuing aftershocks’. Damage estimates have increased from $15 billion in the 2011 budget to $20 billion and possibly up to $30 billion if ‘business disruption or additional costs from inflation, insurance administration or rebuilding to higher standards than before the earthquake’ are included. The $20 billion includes $13 billion for the residential sector, $4 billion for the commercial sector and $3 billion for infrastructure. The estimated total net cost to the Crown is now $13.5 billion. Commentary from the New Zealand Institute of Economic Research (NZIER) in November states that ‘the immediate clean-up and reconstruction is boosting demand in certain sectors like utilities, construction, safety, healthcare and social assistance. These have not fully offset reduced activity in other sectors’. The NZIER report notes that, anecdotally, regulatory and insurance risks are key barriers to retaining skills, jobs and businesses in the Canterbury economy.

Employment

Employment in the construction industry increased by 4,500 (18 percent) in Canterbury over the year to September 2011. Demand for tradespeople and other construction workers will continue to increase once the rebuild is fully underway later in 2012. This may lead to possible labour or skills shortages in some trades. Total employment in the Canterbury region decreased by 26,800 (8 percent) in the year to the September 2011 quarter. Part-time, youth and female employment have been particularly badly affected. This may reflect the sectors (accommodation, food services and retail) which have been hit hardest, with a fall in employment in these sectors of 12,600 people (22.4 percent) during the year. The fall in employment in Canterbury is substantially more than other regions, although it has not flowed through to a large rise in people unemployed, with rates still comparable to the rest of New Zealand. Instead, it appears that people have either left Canterbury or left the labour force, with the number of people not in the labour force increasing significantly, up 12,500 (8.3 percent).  Manufacturing has remained relatively resilient although there was a fall in activity in October 2011. Internet-based job advertising was much higher in the last quarter so conditions in some areas of the labour market may be starting to improve.

Population

Prior to the earthquakes, Christchurch city's population was growing by around 1 percent per year. However the latest population estimates indicate that Christchurch city's population decreased by 8,900 (2.4 percent) in the year to June 2011 while the Canterbury region's population decreased by 5,000 people (0.9 percent). Conversely, population growth in a number of South Island cities and districts accelerated as people relocated from the earthquake-affected areas. Since the 22 February earthquake, there have been 5,500 departures from Christchurch, compared with 3,300 during the same period in 2010. Arrivals to Christchurch have totalled 2,800 since the February earthquake, compared with 3,700 during the same period in 2010.

Building Activity and House Sales

So far, earthquake-related building consents remain at a low level in Canterbury partly due to insurance issues, continuing aftershocks and the necessary decisions around land viability. The National Bank Regional Trends survey states that ‘internally, we are starting to see a flow of insurance money for significantly damaged properties, with owners taking the indemnity sum while they decide what to do. Most have indicated they will invest again but are waiting at least 12-18 months, with the insurance pay-out being used to reduce debt’. In the latest building activity figures for the quarter ending September 2011, Statistics New Zealand comments that building activity in Canterbury has fallen along with the rest of New Zealand.

Building consents identified as being earthquake-related totalled $80 million in the September 2011 quarter. This comprised $63 million for non-residential building consents, and $17 million for residential building consents. The residential consents included 97 new dwellings, of which 78 were relocatable units intended to house displaced residents.

The latest National Bank Regional Trends survey noted that the Canterbury region recorded a large rise in house sales in the quarter (from 1,653 in June to 2,021 in September).

Tourism

The overall accommodation capacity of the Canterbury region has decreased since the earthquakes, particularly hotels and backpacker accommodation. International guest nights were down 32 percent in the Canterbury region in September 2011 (compared with September 2010) and domestic visitors down 23 percent.

Further reading : Statistics New Zealand Earthquake Information Portal

Emma Doherty - Research Services Senior Librarian

The eight MDGs are:

• Goal 1: eradicate extreme poverty and hunger
• Goal 2: achieve universal primary education
• Goal 3: promote gender equality and empower women
• Goal 4: reduce child mortality
• Goal 5: improve maternal health
• Goal 6: combat HIV/AIDS, malaria and other diseases
• Goal 7: ensure environmental sustainability
• Goal 8: develop a global partnership for development.

The eight goals are broken down into 21 International Development Targets (IDTs) and 60 indicators in order to measure progress and achievement. Each country’s progress on these indicators is on the Millennium Development Goals Indicators website.

The Millennium Development Goals, developed countries and Official Development Assistance

Most of the goals are targeted towards developing countries, but there is also a role for developed countries. Goal 8 sets objectives for developed countries to enhance debt relief for least developed countries, make technological benefits (such as telephones, computers and access to the internet) available to them, and greatly enhance Official Development Assistance (ODA)

The MDG target for ODA is set at 0.7 percent of Gross National Income (GNI). This target was first pledged in a General Assembly Resolution in 1970 and has been repeatedly endorsed since then. As at 2009 the countries to have achieved the 0.7 percent ODA level were Denmark, Sweden, Luxembourg, the Netherlands, and Norway.

The Pacific Region and the Millennium Development Goals

Over half of New Zealand’s ODA goes to the Pacific. Approximately 71 percent of the 2011/12 country programme expenditure is allocated to eight countries: Solomon Islands, Papua New Guinea, Indonesia, Vanuatu, Tonga, Cook Islands, Tokelau and Samoa (italicised below). New Zealand also allocates additional funds to Pacific Regional Agencies and other Multilateral Agencies.

After Sub-Saharan Africa, the Pacific region is the most off-track for achieving all of the MDGs by 2015. A 2011 Workshop Report of the Asian Development Bank assessed fifteen Pacific Island countries’ overall progress and found that:

• Five Pacific Islands were on track to meet 7 or all goals (Cook Islands, Niue, Palau, Samoa and Tonga)
• Four had mixed progress and were likely to meet 3-6 goals (Marshall Islands, Solomon Islands, Tuvalu and Tokelau)
• Six were off track and likely to meet, at most, 2 goals (Kiribati, Nauru, Papua New Guinea, Federated States of Micronesia, Fiji and Vanuatu).

Concern that the Pacific region remains off-track to achieve MDGs inspired the Leaders of the Pacific Islands Forum to create the Cairns Compact on Strengthening Development Cooperation in the Pacific in 2009. The key objective of this compact is to drive more effective coordination of available development resources from both Forum island countries and all development partners, with the aim of achieving real progress against the MDGs.

Current status of the Millennium Development Goals

2010 was the two-thirds mark towards the MDG deadline, and was marked by a UN High-level Plenary Meeting on the MDGs in New York in September 2010. Despite the effects of the economic situation currently being felt worldwide, the UN once again reaffirmed its commitment to meet the goals of ODA set out in the MDGs by 2015.

Sources and Further Reading:

New Zealand: Development Assistance Committee (DAC) Peer Review 2010, OECD

United Nations Millennium Development Goals

The Millennium Development Goals in Pacific Island Countries: Taking Stock, Emerging Issues, and the Way Forward, Asian Development Bank, 2011

Aid Allocations 2011/2012, New Zealand Aid Programme, Ministry of Foreign Affairs and Trade

Jessica Ihimaera-Smiler, Research Services Senior Librarian.

Introduction

This paper examines recent trends in the size and composition of New Zealand’s medical workforce, not including nurses and carers. This has significant implications given New Zealand’s growing ageing population. The data presented is derived from multiple sources including the Medical Council of New Zealand’s 2010 Workforce Survey.

Size of Medical Workforce

• The number of registered active doctors in New Zealand is 13,883 as of 31 March 2010.
• This is estimated to be an average of 317 doctors per 100,000 of the population.
• Wairarapa District Health Board has the lowest ratio of doctors to population with 142 doctors per 100,000 of the population, followed by Waitemata (154) and West Coast (156) District Health Boards. Auckland District Health Board has the highest ratio of doctors to population with 543 doctors per 100,000.
• The number of practicing specialists registered in 2010 was 4,262. This is an estimated average 97.6 specialists per 100,000 of the population. In 2007, the OECD average was estimated to be 180 specialists per 100,000.

Demographics

• The medical workforce is gradually getting older. The average age of doctors was 45 years in 2010 compared to 42 years in 2000.
• In 2008, the 45-49 year age group made up 17 percent of the medical workforce compared to 13 percent in 2000. A medical school cap reduction on the number of places in 1982 to 285, that was unchanged until 2004, may have contributed to this age imbalance. Between 2004 and 2011 the number of places rose to 445.
• The age structure of the medical workforce indicates that there will be a significant portion of the medical workforce retiring over the same period of time in the near future.

Graduates

• In April 2010, the Health Insurance Amendment (New Zealand Overseas Trained Doctors) Act 2009 came into effect in Australia. It removed the 10 year moratorium on billing Medicare for New Zealand-born and trained doctors working in Australia. This removed a disincentive for New Zealand graduates to work in Australia.
• New Zealand relies heavily on international graduates staffing the medical workforce. According to the New Zealand Medical Workforce Survey in 2010, the average proportion of international medical graduates is 41.1% of the workforce, one of the highest in the OECD.
• International doctors are a highly mobile workforce. In 2009 it was estimated on average that only 50.8% of new international medical graduates are retained in New Zealand after one year.
• New Zealand had a higher number of medical graduates per 100,000 of the population in 2009 compared to Canada and the United States (see graph below). New Zealand remained behind Australia and the United Kingdom’s graduate numbers as theirs increased over 2004-2007.

Recent policy initiatives

• A ministerial taskforce recommended in 2009 the need for a single agency responsible for the entire health and disability services workforce. Health Workforce New Zealand (HWNZ) was established the same year to co-ordinate the planning of New Zealand’s health workforce.
• HWNZ is working with the University of Otago and the University of Auckland to develop multidisciplinary Rural Immersion Health Training Placement programmes (an expansion of a previous programme) to encourage students to enter the rural medical workforce.
• A voluntary bonding scheme for medical, midwifery and nursing graduates was announced in 2009. This provides incentive payments for up to five years to assist with the student loans of graduates who work in hard-to-staff locations.
• HWNZ in conjunction with Auckland District Health Board are offering a 12 week programme to assist International Medical Graduates (who are residents in New Zealand) prepare for the Medical Council of New Zealand Registration Examination (NZREX).

Alexandra Marett, Research Services Analyst.

Te Puni Kōkiri

This paper focuses on subjects that fall within the remit of Te Puni Kōkiri (TPK). Te Puni Kōkiri was established in 1991 to promote increased Māori achievement across key social and economic areas. As at June 2011, TPK had 336 FTE staff (404 in June 2009). TPK has monitoring responsibility for two Crown entities: Te Māngai Pāho (the Māori Broadcasting Funding Agency) and Te Taura Whiri i Te Reo Māori (the Māori Language Commission); as well as the Māori Television Service. It also supports the newly independent Māori Trust Office. TPK administers 27 pieces of legislation and 40 regulations. TPK has a range of policy functions and maintains a network of regional offices. Its budget for 2011/12 is $210,692,000.

TPK provides support and advice to the Prime Minister, Deputy Prime Minister and Minister for Treaty Negotiations as required. TPK operates in a complex political environment. In both the previous and current parliamentary term, the Minister of Māori Affairs has been a minister outside cabinet, with the Associate Minister inside cabinet. A separate minister is responsible for Whānau Ora.

Key areas of activity include: Treaty settlements, including Māori interests and rights in natural resources; broadcasting and language, including the reassessment of the Māori Language Strategy; economic development, including supporting the Māori Economic Taskforce; and social welfare.

A change to the functions of TPK has been signalled as part of the confidence and supply accord between the Māori Party and the National Party. The new focus of Te Puni Kōkiri will prioritise improving Māori employment and training, housing, and education outcomes. A high-level policy unit is to be created within TPK.

Treaty Settlements

Fifteen groups are presently awaiting settlement legislation, with 19 more settlements well progressed. It is estimated that historic claims will be settled by 2016, rather than the aspirational date of 2014. Existing mechanisms to fast-track legislation were used during the last term, and further streamlining of the settlement legislation process has been signalled.

It is expected that the settlement relativity mechanism will be triggered in 2012 or 2013. Where the total redress amount for all historical Treaty settlements exceeds $1 billion in 1994 present-value terms, the Crown is liable to make payments to retain the proportionate value of the Waikato-Tainui (17 percent) and Ngāi Tahu settlements (16 percent).

This term will see the whole of government response to the Waitangi Tribunal’s report on Wai 262, Ko Aotearoa Tēnei. The claim, initially known as the Flora and Fauna claim, relates to New Zealand’s law and policy affecting Māori culture and identity. Recommendations include: the establishment of new partnership bodies and changes to the roles of some existing bodies; increased support for Māori culture and traditional knowledge; and amendments to several laws.

Māori Language Strategy review

In July 2010 the Minister of Māori Affairs invited an independent panel to review the Māori Language strategy and sector. The intention is to include some of the recommendations of their report, Te Reo Mauriora, in a new strategy. In May 2011, extra budget funding of $2 million was announced to be spent on revitalising Te Reo Māori via community-driven projects. This increased the total spend for 2011/2012 to $5.2 million.

Māori Economic Development Strategy

An independent Māori Economic Development Panel funded by TPK and the Ministry of Economic Development was established in September 2011. The panel is to report by July 2012 on the development of a Māori Economic Strategy and Action Plan. The panel continues the work of the Māori Economic Taskforce, which was established in March 2009.

Implementation of Whānau Ora

Whānau Ora, an interagency approach to providing health and social services to build the capacity of families, is jointly implemented by Te Puni Kōkiri and the Ministries of Social Development (MSD) and Health. The framework, designed in 2009, requires multiple Government agencies to work together with families rather than separately with individual family members. The programme received implementation funding of $134.3 million over four years, beginning in 2010, and an additional $30 million in 2011. A governance group of three community representatives and the chief executives of the three agencies provides leadership and co-ordination. Some regions do not yet have providers, but 25 collectives of providers of social and health services have been selected and have developed action programmes. MSD’s baseline information and Statistics New Zealand’s new Māori Social Survey will provide long term measures of Whānau Ora, with constant reassessment provided by researchers engaged by TPK.

Constitutional review and the Crown-Māori relationship

A constitutional review was announced in 2010 as part of the 2008 confidence and supply agreement between National and the Māori Party, and was reconfirmed in December 2011. The discussion phase begins in 2012, with a final report due to Cabinet by the end of 2013. The review includes consideration of Māori representation including: the Māori Electoral Option, Māori electoral participation and Māori seats in Parliament and local government; and the role of the Treaty of Waitangi within New Zealand's constitutional arrangements.

Further reading: State Services Commission. Performance Improvement Framework: Formal Review of Te Puni Kōkiri. September 2010.

Lee Taylor, Research Services Senior Librarian