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Speech by Grant Robertson: The Future of Work and Labour's Economic Vision

At the election in September voters will face a choice between a government led by Andrew Little with a fresh approach to give every New Zealander a fair share in prosperity or the continuation of a tired government, out of touch and stuck in the past.

A choice between fairness and inclusion or deepening inequality and division.

When Andrew asked me to take on the Finance portfolio I was clear with him that I did not view the job as one that was just about spreadsheets and statistics, or share markets and currency movements.

Don’t get me wrong, those things matter. But they don’t matter as much as people.

People like Bharat, who sent me a copy of a letter he wrote to the Prime Minister. He and his wife both work. 60 hours a week in total. He wrote to the PM because he cannot make ends meet. He had to borrow money from a friend to pay for medicine when his son got sick. His children don’t play sport because he cannot afford the fees. He finished his letter saying “I am lucky. I have a house to live in and my wife and I both work. But we are poor.”

As a country we are so much better than that. New Zealand is a better place than one where you still feel poor even if you are working or where you count yourself lucky because you have a home to live in.

If you want to boil down my philosophy on the economy to two words then those words are shared prosperity.

We are a relatively wealthy country. We are blessed with wonderful natural resources, talented people, and strong foundations built through the hard work and vision of past generations. It is time for all New Zealanders to get a share in that wealth.

It is time for a fresh approach. The age of National’s trickledown economics is over. It is time to focus on building wealth from the ground up.

It is time now for us in Labour to create a new vision for the economy. My view of the economy is that it is the means to the end of making sure that people live lives of dignity, security and hope.

Tonight I want to mainly talk to you about how we how we take a fresh approach to ensure our economy is geared for the third and fourth decades of the 21st century.

Already this year I have outlined two critical underpinnings of our approach. First, our Budget Responsibility Rules. In order to make our bold and progressive programme credible we have to demonstrate to New Zealanders that we can deliver it. They want us to show that we understand their desire for a government that manages our finances responsibly.

What Michael Cullen and Helen Clark and the last Labour government showed was that you can be disciplined and responsible with the government’s finances and still make massive social progress.

We ran surpluses, paid down debt, carefully managed government spending- and delivered the second lowest unemployment rate in the OECD and programmes like 20 hours free early childhood education, Working for Families, Kiwisaver, Interest Free Student Loans and more.

We have done it before and we can do it again. The Budget Responsibility Rules that we have agreed with the Green Party give New Zealanders confidence that we will carefully manage our debt, run genuinely sustainable surpluses, invest in the long term, and undertake bold reform. And we are prepared to be held to account for these rules through an independent body.

You know for all the posturing on superannuation we saw from National earlier this year- the one thing that they could actually have done right now, today, to make a difference to the sustainability was to re-start contributions to the Super Fund. Well, you have my word that Labour will do that in our very first Budget. We owe it to future generations of New Zealanders to help give them security in retirement.

I have also laid out some fresh thinking in terms of monetary policy that I am sure you have all studied in depth!

Just to refresh. The Labour Party believes in full employment- anyone who can work should be able to work. As Minister of Finance I will re-assert Labour’s historic mission of full employment. In the first term of government we will lower unemployment to 4%.

And we want all parts of the economic apparatus working towards that goal. That is why we will expand the objectives of the Reserve Bank to include not just controlling inflation, but also maximising employment. We want to modernise our monetary policy, recognising that in 28 years a lot has changed, and we want it to work for us, not the other way around

But tonight I want to talk about our plan to build an economy fit for purpose for the 21st century. An economy that delivers decent, fulfilling work, supports an adaptable and resilient workforce and a just transition to a low carbon future.

This is the thinking that lay behind our ground breaking Future of Work project. We must prepare ourselves now for a world of work that is changing more rapidly than ever before. McKinsey’s have estimated that the changes being brought by technology are moving at ten times the pace of the industrial revolution and one hundred times the scale.

We’ve all read stories on the coming end of human work, of computers smart enough to do anything. We have to be a little bit careful about that- the robots are not queued outside your workplace just yet! But there are big changes ahead as a result of artificial intelligence, 3D printing, sensors, algorithms and robotics.

In May, Google’s Deepmind comprehensively beat the Chinese child prodigy Ke Jie at Go, a board game thousands of times more complex than Chess. That was a monumental victory, as it was yet another task that once considered impossible for computers to conquer, was now definitively in the realm of the machine.

In the face of this change, that is why we set up our Future of Work project. For two years we listened to and talked with Kiwis about their hopes and fears for the future.

New Zealanders everywhere were worried that the government has not been making an effort to understand what this change means for New Zealand, and what policies are needed to take full advantage of it.

Jobs are changing quickly in New Zealand. There is a lot more flexibility and opportunity to start a business, be your own boss and have flexible hours. But equally, this change has risks. Risks of inequality and insecurity. Labour as a party is focused on harnessing the benefits of change while working hard to mitigate the risks.

When Andrew came to me to lead the Future of Work Commission, he gave me the task of finding policies and programmes that would allow New Zealanders to face this uncertain future with confidence. A big request!

But over the past two years, after engaging with thousands of New Zealanders and working with many experts, I believe we have a set of policies that will truly enhance New Zealand’s ability to deal with whatever work the future may hold.

Tonight I want to focus on some of the key recommendations that we believe will be critical in supporting a just transition for New Zealanders in this time of change.

First off, what the economists call Active Labour Market policies. Sadly, New Zealand has very few of them in place right now.

These are policies that aim to make changes for workers and employers easier and quicker, and thereby reducing unemployment. This involves helping people find work in areas that need them, helping people get the skills they need to fill gaps in the labour force, and anything else that can help those without work, or in poor working conditions, to find new employment quickly, simply and without hassle.

Active Labour Market policies have grown in importance over the past decade in almost every developed country – except for New Zealand

As part of the Future of Work we commissioned a report on Denmark’s Active Labour Market policies and the lessons that New Zealand can learn from the Danes.

What we found is that Denmark works extraordinarily hard to get its citizens trained in skills that employers are demanding. This is all citizens – kids at school all the way up to workers close to retirement. They offer a catalogue of more than 2800 courses. These are either free or subsidised for all Danes.

So you get people who lose their jobs, go straight into training in skills demanded by industries, and are rehired quickly and without losing quality of life. The Danes call this system “Flexicurity” because it promotes both the flexibility of being able to change career as well as ensuring income security for those who become unemployed.

Denmark spends 1.9% of its GDP on Active Labour Market policies, compared to New Zealand’s 0.3% - and it shows. They maintain consistently low unemployment and high labour market participation.

Right next door to Denmark, Sweden is pushing its labour markets just as hard. They have a state of the art Public Employment Service – Arbetsförmedlingen for the Swedes in the audience. Those who are on an unemployment benefit are required to register, but those who are working are also heavily encouraged. It acts as an intermediary between employers and employees, with a huge Job Bank, arrangements of interviews and training, and more.

One of the recommendations in the Future of Work Report is for a culture change at Work and Income to be more like this kind of organisation. We want it to be a much more active organisation than it is currently, which connects not only with those who are currently unemployed but also those who may risk losing their jobs in the near future. There is a wealth of evidence that shows that Sweden’s version reduces unemployment and decreases average time unemployed, all for relatively little cost. Labour will make moves to capture similar success in New Zealand’s labour market.

One more overseas example for you – Singapore. Despite generally being a stronghold of liberal, market based policies, with little government intervention, they provide huge funding and subsidies for on-the-job training programmes. The first step for them was undertaking Industrial Transformation Maps. While these might sound exotic- actually it is pretty simple. The government sits down with representatives of a particular industry and works out where they are headed, what infrastructure they will need and what kind of workforce they will need over the coming decades. The government then uses that to support workers to train and re-train in those areas.

Workers can choose to participate in government run training programmes for cheap to nothing, or the government will subsidize businesses to provide their own programmes for workers. This is part of a massive push to grow productivity in Singapore, something New Zealand has struggled with for years.

Labour will put policies in place that allow New Zealand to reap the full benefits of globalisation and changes in technology while also hedging against the potential associated risks. In doing so, we can create a nation that is ready for whatever the future may bring. With a fresh approach and new hands, New Zealand can prepare itself more fully for the future of work.

That’s why Labour has committed to a policy of three years free post secondary school training and education, helping not only young people get post-secondary education, but also those who never had the chance when they were young. Labour wants New Zealanders of all ages to have to the opportunity to learn and upskill.

This support can be accessed over a person’s lifetime. It can be used for any training, apprenticeship, or higher education approved by NZQA, and can be used for full-time or part-time study. The three years don’t have to be used all at once, so for example, a person could complete a one-year polytechnic course in their twenties, then a two-year design course if they want to retrain later in life.

We will only maintain our standard of living and create truly purposeful work if we adopt a ‘learning for life’ approach in New Zealand. This requires a significant change from focusing on the cost of education and training to one in which it is viewed as an investment by society.

We also need to re-evaluate how the rest of the education system is supporting our people to face the Future of Work with confidence. The Commission found over and over again an exceptional education system with passionate teachers. But those teachers are labouring under a system that has sub-standard professional development for teachers, out-of-date assessment standards and too-narrow curricula.

Labour believes that by empowering teachers and giving students the tools they need to access the workforce easily, New Zealand can provide all kiwis the opportunity to develop their full potential and follow their dreams.

One way that Labour will bring around this change is by transforming careers advice so that every secondary school has highly trained and skilled careers advisors, every student has a personalised career development path that is integrated into their curriculum, and every young person has access to hands-on experience in schools.

The plan aims to ensure that all learners have equal access to opportunities to develop a wide range of skills and attributes allowing them to participate confidently in society and the workforce. This isn’t narrowing the range of subjects that learners take to guide them into particular jobs. In fact, it is quite the opposite. Too many students reach the end of their schooling before they realise that they have already narrowed their options and haven’t acquired the skills they need to follow their ambitions. We want young New Zealanders to make informed decisions about their studies so that they keep their options open.

On top of improving education opportunities for young and old, Labour wants to foster a more just transition in and out of work.

For this, New Zealand needs a welfare system that promotes and supports upskilling and training. Periods of unemployment should be seen as opportunities for upskilling.

Labour wants every worker who loses their job as a result of technological change to be provided with adequate retraining and support, through free training programmes.

We aim to take a page out of Denmark’s book, providing courses that would range from modules lasting a few days to six-weeks. Workers not in affected industries would also be able to take the courses for a fee, with funding help from employers and the government.

To complement this, we are proposing to introduce skills levies in some industries. These will be mandates placed on firms in particular industries to either offer apprenticeships and industry training to employees, or pay a levy to contribute to the cost of training. This will incentivise businesses to encourage those with jobs to upskill. These levies will be focused particularly on those industries which are seen as most likely to be affected by technological change.

Another part of building wealth from the ground up is encouraging innovation and entrepreneurship in New Zealand. This is vital to increasing productivity.

We are committed to a substantial increase in the research and development that happens in New Zealand. That is why we will institute a research and development tax credit for Kiwi businesses. It is also why we will make sure there are incentives in place for people to invest in our small and medium enterprises, especially our technology businesses.

Labour will also establish the Young Entrepreneurs Plan, which will allow a small number of smart, innovative young kiwis to cash in their three free years of education, and instead receive $20,000 towards starting a new business and access to training and a business mentor.

The other aspect of a just transition happens at a community level. Under Labour, the government will be an active partner in economic development. Throughout our Future of Work project we have heard that communities and regions can see potential for their residents to live good and fulfilling lives. They are not looking to be told what to do by central government, but they do want to know that we are all in this together.

The government must use the levers it has to partner in every region in New Zealand to support sustainable and decent work and a transition to a low carbon economy. We have already announced funding for a Centre of Digital Excellence in Dunedin, a wood processing plant in Gisborne and refurbishing the port in Whanganui. We want every region of New Zealand to be able to provide decent work opportunities.

I want to finish tonight on an optimistic note. There are huge challenges ahead to make sure that everyone can participate in the changing nature of work. But we must not be overwhelmed by those challenges. There are equally as many opportunities.

Opportunities, for example, whole new ways of working and models of work. Our Future of Work policy package will support for new models of business including co-operatives and social enterprises.

Our commission found that these new models of business are often pioneered by young entrepreneurs who do not feel bound by traditional structures. We’ve seen the growth of social enterprises, profit-sharing initiatives and coworking spaces such as GRID/AKL, Enspiral and SubUrban. As the new world of work develops, these new business models can reduce inequalities by ensuring the value generated is shared fairly and retained as much as possible by those who earned it.

We can create a new economic approach that is about building wealth from the ground up. The opportunity exists for working people to have greater control over their economic destiny. From a greater sense of ‘workplace democracy’, to the ease of creating a global business through your smartphone, we have the opportunity to be a leading nation in taking a fresh approach and finding the alternative to the failed trickledown theory.

This will be a future where the economy works for all New Zealanders not just a fortunate few. Where we place people back where they belong at the centre of our economy. There is every reason to be optimistic about the future of work and the economy in New Zealand if we are prepared to take the decisions to back our people and our ideas. That is the economy that Labour will build in government after September the 23rd.