Chris Hipkins holds a post-Cabinet press conference. Video / Mark Mitchell
NEW: Minimum wage to lift by $1.50 to $22.70 an hour from April 1, in line with inflation.
GONE: Merger of RNZ/TVNZ - RNZ, NZ on Air to get more funding instead.
GONE BUT MIGHT BE BACK POST 2023: Social insurance scheme. Off the table until economy improves.
GONE: Biofuels mandate.
HALTED, MORE WORK: Hate speech legislation. Will be withdrawn and considered by Law Commission.
The new Prime Minister has tossed a series of policies on the bonfire as he admitted the Government had tried to do “too much, too fast”.
Chris Hipkins’ new Cabinet met this morning to sign on what he called “an immediate reprioritisation”. He said the torching of policies was unanimously agreed to.
The RNZ-TVNZ media merger is going up in smoke, as is the Government’s social insurance scheme and biofuel mandates. Proposed changes to hate speech legislation would be kicked to the Law Commission – and the Government is also going to refine the Three Waters programme.
Cabinet has also asked the new minister of Local Government to report back on how to refine the Three Waters reforms, he said. “The Government is refocusing its priorities to put the cost-of-living front and centre of our new direction,” Hipkins said.
Business sector lobby groups labelled the hike as “problematic” but Hipkins said he had concerns for those hit by current economic conditions, mainly those on low incomes.
TVNZ/RNZ merger work to stop
Hipkins said work on the TVNZ/RNZ merger would stop.
Radio New Zealand will be given additional funding, as will NZ On Air to support public media content.
The remaining funding for the merger would be redirected to other Government priorities.
When asked about the decision on the merger, Hipkins said he didn’t have a figure on how much had been spent, but a financial breakdown would be provided “soon”.
Asked how much money RNZ would need, Hipkins said it would be around $10 million. That was the level of funding needed to make it sustainable, Hipkins said. The sustainability gap was between $5 million and $12 million per year.
Hipkins told Heather du Plessis-Allan this afternoon that he didn’t have a number of exactly how much had been spent on the RNZ merger, but said it was about $23 million.
“The overall spend and the savings that we generate from not proceeding with the merger will depend on how much money we will have to put into Radio New Zealand and New Zealand on Air to keep them on an even keel,” Hipkins said.
“When the Government make a reprioritisation decision, you can’t always go back and recoup the money you have already spent,” Hipkins said.
Hipkins said he didn’t want to look backwards with respect to the level of error it was to initiate the merger. He referenced the importance of strong public media but it could be done in a better way.
When asked whether a charter for TVNZ had been discussed, Hipkins said there were mechanisms that could be employed and wouldn’t discount any options at this stage.
Hipkins said the policy changes announced today would allow the Government to focus on immediate issues facing New Zealanders.
Michael Boggs, chief executive of Herald publisher NZME, said the company was “very supportive of having a strong public media” in this country.
“We’ve had serious concerns with aspects of the merger, and we have shared those concerns. We have had a long, constructive relationship with both TVNZ and RNZ and we look forward to that continuing into the future,” he said.
MediaWorks chief executive Cam Wallace said he was pleased the Government had decided to shelve the legislation
“It’s a shame that so much has been spent on this proposal at a time when the industry as a whole in New Zealand is dealing with decreasing advertising revenues in the face of a likely recession,” Wallace said.
Income insurance scheme to change
The social insurance scheme would also be stopped and no legislation would be introduced this term, Hipkins said.
However, inequities in this area would be addressed in the future when the economy had improved.
Hipkins said there were many issues to canvass and there were inequities to address.
The PM wouldn’t comment on the employment future of staff who had been employed as a part of the scheme.
He said if the Government plans to do further things on the social insurance scheme, it would be taken into the election
“Many of these [policies] are worthy, they’re just not priorities at the moment.”
Hipkins told du Plessis-Allan this afternoon he didn’t have a number on the income insurance scheme policy, but he said the full $60m that had been set aside for the scheme had not been spent.
Hate speech legislation
Cabinet also agreed the Hate Speech legislation would be withdrawn and the matter would be referred to the Law Commission.
The decision allowed them to fully consider the matter which was a very difficult one, Hipkins said.
He said he was hopeful of getting cross-party support for the hate speech laws in the end.
When asked how kicking hate speech down the road saved money, Hipkins said it saved time and resources and would consume some of the Government’s focus at times when focus was needed elsewhere.
Hipkins acknowledged there was certainly an appetite for hate speech reform.
He denied he had walked away from the legislation, saying today’s move honoured commitments made in 2020 to progress reform.
Hipins said hate speech would continue to be a controversial piece of reform, which indicated why it needed to be done right.
Biofuels mandate gone
The biofuels mandate would also be scrapped as it would increase fuel prices, Hipkins said.
He added ministers would continue looking at their work programme to see what else might be deemed unnecessary currently.
Minimum wage increase
The minimum wage will increase by $1.50 per hour to $22.70 per hour - coming into force in April.
Hipkins said he had concerns for those hit by current economic conditions, mainly those on low incomes.
While the fuel tax cuts benefited most families, he was concerned about those on the lowest incomes who faced “impossible decisions” as a result of the cost of living problem.
Hipkins said he understood small business owners may have concerns about this move.
Hipkins said the impact on inflation would be negligible, adding that analysis from Treasury suggests the increase won’t have a big impact on unemployment as the increase was largely in line with current wage growth.
He said an increase wasn’t raised by business representatives when he met with them last week.
These would not be the last policy changes he would be making, but they were the most substantive, Hipkins said.
When du Plessis-Allan asked why he pushed the minimum wage up higher than anyone expected, he said the changes are in line with inflation, both sitting at exactly 7.2 per cent.
“This is about the 60,000 people who are still on minimum wage not being left behind”, Hipkins said.
Over the past year, the 97 per cent of those not on minimum wage have had a 7.2 per cent wage increase already on average, Hipkins argued.
“If wage growth is going to push up prices, then that is already happening,” Hipkins said.
“The economic impact of raising the minimum wage is 0.01 per cent on inflation,” he said
He didn’t directly accept du Plessis-Allan’s accusation that the minimum wage increase would “tip business’s over” but acknowledged it would be challenging for some businesses.
“Their staff need to put food on the table,” Hipkins said
“And it’s really important that we have an economy that delivers people the opportunity to feed their families and put a roof over their heads.”
Three Waters
On Three Waters, Hipkins said the “need for reform was unquestionable”.
Cabinet had asked the new minister of Local Government to report back on how to refine the reforms.
Hipkins said Auckland’s floods had demonstrated why reform was necessary but more work was needed. It was likely to take a few more weeks, Hipkins said.
The Prime Minister said he wanted to refocus those reforms but wouldn’t speculate whether co-governance was the main aspect that needed refocusing.
Hipkins said any change to the structure would likely include a change to the governance structure.
“We want to work with local authorities on this.”
Hipkins has previously ruled out completely scrapping the reforms, saying change is needed because of the significant investment needed in infrastructure and the flow-on costs to ratepayers if it is not done.
However, he has indicated the co-governance model will be looked at.
Asked if he attempted to slow the Government’s work programme last year, Hipkins said Jacinda Ardern had accepted late last year that the amount of work needed to be reduced.
Hipkins accepted there would be some things he would like to add to the Government’s programme, but that was not what today’s announcement was about.
Asked how much of today’s reprioritisation comes down to a communications failure, Hipkins said today was an acknowledgement the Government had only so much capacity to take on work, and it could lead to losing focus, which he said indicated why there was a need to refocus.
When asked why he didn’t scrap Three Waters by du Plessis-Allan, Hipkins said repeated his previous sentiments on the “massive issues” with water infrastructure, referencing the unswimmable beaches, floods and some residents across the country having to boil drinking water.
He said they are looking at refocusing the reform programme, but hadn’t made any firm decisions on what that refocus may look like.
Speaking on the recent weather and aftermath, Hipkins said the floods had been unprecedented.
Cabinet today agreed to give Auckland businesses up to $3 million for discretionary flood recovery payments, up to $1 million to focus on business continuity and resilience, and up to $1 million on mental health for a total of $5 million.
Hipkins acknowledged all the emergency services and organisations involved in the response.
Referencing existing support contributed by the Government, Hipkins said 22,000 people had received Civil Defence payments.
Pilot taken hostage
On the pilot taken hostage in Indonesia, Hipkins said consular support was being provided to the family but he couldn’t say much about the finer details.
On the Turkey/Syria earthquake, Hipkins said they had inquired about whether New Zealand could send specialist rescue staff over, but it was understood other countries were supplying lots of personnel.
However, it would be kept under advisement and it was possible New Zealanders could be sent over to assist.
Prime Minister Chris Hipkins and his Cabinet before their meeting today. Photo / Mark Mitchell
The public broadcaster merger was tipped early as a likely casualty, given the cost and concern about it.
Hipkins said he would prune back Labour’s reform programme in his first speech as Prime Minister after Jacinda Ardern resigned, saying it was clear that the Government was trying to do too much all at once.
He has said his priority would be on the immediate issues facing New Zealand households, rather than pushing through other reforms. He has also met with business representatives to hear what they hoped for - Auckland Business Chamber head Simon Bridges listed the public media merger, Three Waters and income insurance as top of the list. The Government’s review of speed limits has also resulted in a peevish reception from some voters - it ranked as the second most unpopular measure in a recent Taxpayers Union Curia poll.
Ardern had proposed to trim down the programme, telling ministers to use their summer holidays to weigh up which programmes were not needed or doable.
It was the first time that the new Cabinet had met since Hipkins’ reshuffle last week: and a first for new Cabinet ministers Kieran McAnulty, Ginny Andersen and Barbara Edmonds.
The atmosphere was largely jovial around the circular table – the last to arrive was freshly-minted Minister for Auckland, Michael Wood, which prompted a quip from Finance Minister Grant Robertson about how his new portfolio must be keeping him busy.
Foreign Affairs Minister Nanaia Mahuta was the only absentee. Mahuta’s Local Government portfolio was given to McAnulty, which Hipkins said was partly to allow Mahuta to focus on foreign affairs travel. Mahuta is currently in India to meet with members of India’s Government.
