From APEC HRDWG Wiki

The New Zealand Context

• Backdrop of ten years of job rich growth until end of 2007
• Small, export dependent economy based around items for which there is ongoing demand (particularly food)
• Downturn began in early 2008 due to local factors (drought conditions, high interest rates, falling house prices, rising fuel prices)
• Economy contracted in all four quarters of 2008
• Labour market weakened with unemployment rising from a 22 year low of 3.5% (Dec 2007) to a six year high of 5.0% GDP) in 2009-10
• Employment has so far held up well: labour force participation rates are more than 68%

Impact of the Global Crisis:

• Labour market less affected than some other countries due to:
  • Unemployment very low when the crisis began
  • Banks relatively unexposed to the global crisis due to tighter lending criteria
  • Official interest rate reduced to 2.5% at 30 April 2009
  • High level of fiscal stimulus (around 5% of GDP) in 2009-10
• Employment has so far held up well: labour force participation rates are more than 68%
• Impact of the Global Crisis – looking ahead
  • Tax take is falling, deficit forecasts have increased, credit squeeze continues and risk of medium-term inflationary pressures
  • Many jobs linked to the export sector and affected by the slowdown in world growth, lower commodity prices and the fall in international tourism arrivals
  • The residential construction industry and service sector have been hit, as house prices fall and consumer spending weakens
  • The unemployment rate is expected to rise towards 7% by March 2010

Government Responses to the Crisis

• Boosting productivity growth is a key focus for the new government
• Responses have attempted to address short term risks while also achieving medium and long term aims
• Discussion of responses to the Crisis through Prime Minister’s Summit on Employment, February 2009
• Need to consolidate Government’s fiscal position - keep debt under control
• Banking Guarantee scheme (the Government guarantees deposits in New Zealand banks, many building societies, credit unions, finance companies)
• Taxation initiatives
• Entitlements to income support – safeguarded
• Temporary assistance for redundant workers (ReStart Package)
• Small Business Relief Package – (makes it simpler and less expensive for small businesses to manage cash flows and pay taxes)
• Public sector expenditure caps, pay restraint & value for money reviews
• Development of the best ideas from the Prime Minister’s Job Summit, (i.e. 9 day working fortnight, increasing the education options for young people)
• Reviews of legislation, (e.g. Overseas Investment, Resource Management, Building, and environmental) and review of the Electricity Industry
• Funding of IT broadband initiatives
• Renewed Free Trade focus (India, Korea, US) & coordination with Australia re Trans Tasman economic links & flows
• Public Infrastructure package (housing, transport, education) and funding to upgrade private home insulation
• Education and training initiatives including funding for more teachers and a focus on initiatives to support 16 and 17 year olds attainment of educational qualifications
• Contestable funding pool for tourism so that Regional Tourism Organisations, businesses, and other tourism bodies can bid for funding as long as they invest

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