New Zealand: The Government and the Economy

NEW ZEALAND'S CONSTITUTION

New Zealand's constitutional history can be traced back to 1840. Under the Treaty of Waitangi, the Maori people exchanged their sovereignty for the guarantees of the treaty and New Zealand became a British colony. New Zealand is today an independent state, a monarchy with a parliamentary government. Queen Elizabeth II has the title of Queen of New Zealand.

The constitution is concerned with the legislative, executive and judicial organs of government, their composition, powers and duties, and the relationship of these organs. New Zealand's Constitution Act 1986 brings together in one statute the most important provisions, and clarifies the rules relating to the governmental handover of power.

It deals with the main components of New Zealand's statutory constitutional provisions: the Sovereign, the executive, the legislature and the judiciary. The Act and its provisions are safeguarded by the requirement of a special procedure to make amendments. The Electoral Act 1956 is the only other New Zealand constitutional statute to have such a provision.

A number of United Kingdom Acts (referred to as 'Imperial Acts') are still in force as part of the law of New Zealand. Some are historic constitutional Acts, such as the Magna Carta and the Habeas Corpus Act 1679. These Acts are listed and defined in the Imperial Laws' Application Act 1988.

A parliamentary monarchy

A British colony since 1840, national sovereignty was established by the Statute of Westminster in 1947; however, New Zealand remains a monarchy. The Governor-General, Queen Elizabeth II's representative, summons and dissolves Parliament, and assents to legislation.

The Parliament is made up of 120 members of the House of Representatives, elected under a mixed member proportional (MMP) voting system. General elections are held every three years.

National leaders

Governor-General Hon Dame Silvia Cartwright
Prime Minister Rt Hon Helen Clark
Deputy Prime Minister Hon Dr Michael Cullen
Leader of the Opposition Hon Simon William English

The seat of Government is the Beehive, situated in Central Wellington, the capital of New Zealand.

The Maoris

The Treaty of Waitangi

The hapu and iwi are the indigenous tribes and sub-tribes of New Zealand and their peoples now comprise about 14.5% of the population. In 1840 they signed a compact agreeing to exchange their governance for the guarantees of the Treaty of Waitangi. This treaty established the modern nation of New Zealand.

While the treaty has always been recognised and valued within Maori society, it could not be enforced in the courts as it has never been incorporated into statute law. In a landmark Court of Appeal case (New Zealand Maori Council v Attorney General, 1987} the special relationship between the Maori people and the Crown was interpreted by the Court as requiring the partners to act reasonably and with the utmost good faith towards each other. A number of Acts of Parliament now require the Crown to have regard to the principles of the Treaty of Waitangi, or to Maori interests or a Maori perspective.

Waitangi Tribunal

This tribunal considers claims from any Maori who considers he or she, or any group of Maori of which he or she is a member, is prejudiced by any legislation, policy or practice by or on behalf of the Crown which is inconsistent with the principles of the Treaty of Waitangi.

In the year 1991-92 the major report completed was that concerning the Te Roroa claim in the Dargaville area. Beginning 30 June 1992 hearings and conferences were held on 17 claims. Some of the areas under examination were the Ngai Tahu fisheries, Crown Forest assets; Tainui (Waikato River dam); railway lands; geothermal claims; Waikareao Estuary and Wellington Tenths.

The Crown and the Governor-General

The Governor-General is the representative of the Sovereign in New Zealand and exercises the royal powers derived from statute and the general law (prerogative powers). The powers of the Governor-General are set out in the Letters Patent 1983, and it is for the courts to decide on the limits of these powers. The Governor-General's main role is to arrange for the leader of the majority party in Parliament to form a government. Almost all the powers of the Governor-General are now statutory.

The Crown is part of Parliament and so the Governor-General's assent is required before bills can become law. The Governor-General is required, however, by constitutional convention and by the Letters Patent, to follow the advice of ministers. In extraordinary circumstances the Governor-General can reject advice if he or she believes that a government is intending to act unconstitutionally. This is known as the 'reserve power'.

The Sovereign appoints the Governor-General on the Prime Minister's recommendation, normally for a term of five years.

How Parliament works

Parliament consists of the Sovereign and House of Representatives. The members of the House, which has one chamber, are elected by universal suffrage in accordance with the Electoral Act 1956. Each Parliament has a term of three years, unless dissolved earlier. The Governor-General has the power to summon, discontinue and dissolve Parliament. The Queen and the Governor-General act on the advice of their Ministers.

The Constitution Act provides for Parliament to have full power to make laws; a Bill passed by the House becomes law when the Sovereign or Governor-General assents to it. The Act cancels the power of the United Kingdom Parliament to make laws for New Zealand.

The Constitution Act reaffirms the constitutional principles about parliamentary control of public finance; the Crown may not levy taxes, raise loans, or spend public money except through an Act of Parliament.

The judiciary

The judiciary is the third branch of government. The Constitution Act includes mechanisms to preserve the independence of judges, an important principle of the New Zealand Constitution. The judiciary interprets Acts passed by Parliament and also reviews actions of the Executive to ensure that it is acting within the law.

New Zealand Bill of Rights 1990

New Zealand has a Bill of Rights, but the Act of 1990 is not entrenched as 'higher law'. Thus the judiciary cannot strike down laws which are inconsistent with it. Where a legal provision is ambiguous, the Courts are required to interpret that provision consistently with the rights and freedoms contained in the Bill of Rights Act.

The Bill of Rights defines basic human rights. It applies to actions of the legislative, executive and judicial branches of government and to the activities of the public services.

Other sources of the Constitution

Included among other sources of the Constitution are the prerogative powers of the Sovereign, other statutes such as the State Sector Act 1988, the Electoral Act 1956 and the Judicature Act 1908, relevant English and United Kingdom statutes as defined in the Imperial Laws Application Act 1988, decisions of the Courts and conventions such as the democratic nature of the New Zealand constitution.

Political parties

There are two dominant political parties, the National and Labour parties. The Labour Party formed the Government between 1984 and October 1990, and the National Party from October 1990 until the elections of late 1993. In the 1993 general election when the National Party was returned people were not only asked to vote for their member of parliament, but whether or not they favoured MMP (mixed member proportional) system rather than the FPP (first past the post) system. The MMP won by a small margin. At the next election in 1996 parliamentary members were elected by MMP. Third parties have also been elected to Parliament in recent years in very small numbers, and a few members have left the main political parties to sit as independents.

Public service

The state sector is responsible for carrying out the policies of the Government. It comprises government departments and ministries along with the parliamentary, education, social welfare, housing, health and defence services, and a number of statutory organisations. The role of the public service is defined in the State Sector Act 1988, the Public Finance Act 1989 and the Official Information Act 1982, as well as in a large number of specific statutes.

Voting in elections

Persons 18 years and over have the right to vote in parliamentary elections. Enrolment as an elector is compulsory, but voting is not. To qualify for enrolment persons must:

be at least 18 years old
be New Zealand citizens or New Zealand residents
have lived continuously in New Zealand for at least a year at some time
have lived continuously for one month in the electorate they are to be enrolled in.

The conduct of polls is the responsibility of the Department of Justice. It is controlled by a returning officer in each electorate, who arranges voting facilities and staff, conducts the election, supervises the counting of votes, and declares the result.

Voting is by secret ballot. A preliminary count of ordinary votes is available for each electorate on election night, and final results are normally available a fortnight later, once special overseas votes have been received and counted. But the outcome of the voting is generally clear by the following day.

A CHANGING ECONOMY

Despite the problems of being a small population separated by a tremendous distance from most of the rest of the world's population, New Zealand has become a significant trading economy. The trade has always been based on farming, but in recent years New Zealand has been forced to diversify its markets and products. At present Australia is its largest export market, followed by Japan, the United States of America and the United Kingdom.

An exporting nation

New Zealand depends much on its export earnings. The following list summarises its key export business with figures available based on year ended 2002.

Principal exports NZ$ (million)

Meat and edible offal 4,429
Fish, crustaceans and molluscs 1,402
Milk powder, butter and cheese 5,891
Wood and wood articles 2,380
Aluminium and articles thereof 1,176
Casein and caseinates 699
Mechanical machinery and equipment 1,394
Principal imports Mechanical machinery and equipment 4,371
Vehicles, parts and accessories 4,389
Petroleum and products 2,822
Electrical machinery and equipment 2,801
Textiles and textile articles 1,657
Plastic and plastic articles 1,313
Iron and steel articles 1,011

Export oddities

The Government has been promoting a drive for an export-led economic recovery, and this has led to many New Zealand businesses developing new and unique overseas trade opportunities. The following are a few of the more enterprising examples taken from information published by the Department of Statistics:

Seagram (NZ) Ltd are providing South Korea with 100,000 litres of malt whisky from its Dunedin-based Wilsons distillery.
Hills Hats Ltd in Porirua won a contract to supply 36,000 woollen berets to the United Nations Peace Keeping forces.
Orange roughy fish roe, once a waste product of orange roughy processing, is being marketed by a Wellington firm as an alternative to caviar. It has been successfully tried out in restaurants and will soon be available on Air New Zealand flights. Companies in New York, Sydney and Melbourne are interested in importing the roe which compares favourably with Russian lumpfish roe at a fraction of the price.
Suttons Moss Ltd on the West Coast is exporting $1 million worth of sphagnum moss to Japan and
Taiwan.
Southern Alpsocks, manufacturers of outdoor socks, sold a consignment of 5,000 pairs to a Canadian outdoors wear chain. The firm said that New Zealand outdoor wear products had a high reputation in Canada and that they plan to use the socks' origin as a selling point.
Deer velvet exports for 1991 topped $50m, mostly to South East Asia.
Trial exports of opossum meat to Taiwan and Hong Kong have proven promising. If trade takes off, a return of $10 per carcass is expected.
Tikaland Products have developed small but thriving niche markets in Australia, Britain and Germany for their canvas backpacks and cycle panniers.
Riverland Estate Winery in the Kumeu valley supplied 120,000 bottles of sparkling kiwifruit wine to an importer in Florida. The wine is like an Asti but drier, suiting the American palate for dry wines.
A Palmerston North entrepreneur is importing live ostriches for farming in New Zealand. Ostriches produce edible meat, feathers, oils for cosmetics, and soft leather suitable for making bags and leisure wear. The birds will be slaughtered in New Zealand and sent overseas for processing.
Earnest Adams Ltd made an initial export sale of 54,000 microwave pies to supply 500 supermarkets throughout Taiwan. The mince and beefsteak pies are the first of the type available in Taiwan.
Christchurch boat-engine manufacturer CWF Hamilton received an order for six twin jet engines to power rescue boats for the Italian Coast Guard.
The largest-ever shipment of hydrogen peroxide, 800 tonnes valued at $lm and manufactured by Du Pont New Zealand, was exported to South America.

Agriculture

Farming and horticulture are major industries, providing a high proportion of New Zealand's export earnings. Traditionally farming has centred on sheep and cattle to produce sheepmeat, beef, wool, dairy produce and hides, although in recent years new types of livestock have included deer, goats and fur-bearing animals such as fitch. Horticulture has always provided well for the home market, but since the 1970s horticultural produce has become an important export earner.

Meat

Meat industry products are New Zealand's second largest export income earner, accounting for about 18% of merchandise exports. New Zealand's main meat exports are lamb, mutton and beef. About 80% of these products in 1997-98 were exported overseas. The domestic market purchases over 99% of the pigmeat and poultry produced in New Zealand.

Export marketing

New Zealand is a major exporter of sheepmeat, accounting for 54% of the world export trade; it is a small player in the global market for beef, accounting for about 6.4% of all the world beef exports.

New Zealand's major meat markets include the United Kingdom, Germany, France, Saudi Arabia and the United States for lamb; the United Kingdom, South Korea and France for mutton; and the United States, Canada, Japan, South Korea and Taiwan for beef.

Wool

New Zealand sheep are largely dual purpose meat/wool animals and their wool is predominantly strong; 75% of the clip is greater than 33 microns in diameter. This contrasts sharply with Australian wool, of which 99% is less than 33 microns. New Zealand is by far the largest producer of strong wools: it contributes a quarter of the world total and two and a half times as much as either the former Soviet Union or China, the next most significant producers. When the quantity of strong wool entering world trade is considered, New Zealand's share becomes even greater. Over 70% of traded strong wools are estimated to originate in New Zealand.

Net domestic consumption of wool in New Zealand is amongst the highest in the world on a per head basis. In 1997-98 the largest importers of New Zealand wool were China, the United Kingdom, India, Germany and Belgium.

New Zealanders love to luxuriate in pure wool products; the babies lie on pure sheepskin rugs, and customers look for the 'Pure New Zealand Wool' labels when purchasing clothing. Beds often have pure sheepskin underlays, and pure wool blankets. The shops and offices usually have wall-to-wall carpets, and so of course do private homes.

Wool product exports

The most important wool product exports from New Zealand are floor coverings and yarns. It is estimated that 34% of New Zealand wool is used in machine-made carpets, 12% in handknotted and hand-tufted carpets, 44% in apparel, and 10% in other uses, primarily upholstery and bedding. Total export earnings from wool products were $25.5 million in 1997-98.

Dairy produce

Dairy product exports constitute over 20% of total merchandise trade receipts for New Zealand, and, with the exception of milk and some dairy products for local consumption, the industry is primarily geared towards overseas markets – which account for between 90 and 95% of all milk produced on an annual basis.

Overseas marketing

The international market for dairy products is characterised by its small size relative to total world milk production, with only about 5% of production entering international trade. Because of this the market is especially vulnerable to shifts in climatic, commercial and political forces. Marginal production changes in the major producers can trigger massive shifts in supplies of, and prices for, products on the international market.

The major dairy exporters are the European Union, New Zealand, Australia, and to a lesser degree the United States of America and Canada. These five exporters supply between 90 and 95% of dairy products traded on the international market. Relatively smaller quantities are exported by the Nordic countries and from Eastern Europe.

The dairy industry has been working to diversify its markets for many years. Today, New Zealand's major markets vary for different products. There has been reduced access to both the United Kingdom and the European Union butter market; Britain, however, remains New Zealand's most valuable market for butter. The old Soviet Union countries are important purchasers of New Zealand butter, as is the Middle East and North Africa, both of which have recently risen to prominence as markets for New Zealand produce.

The Dairy Board's export earnings from dairy products in 1998 were $4.6 billion, over 20% of total New Zealand merchandise exports.

Grape growing and wine production

The major grape growing regions are Gisborne, Hawkes Bay, Marlborough, Auckland and Poverty Bay. Perhaps you may have seen these names on wine labels at your own supermarket.

The area planted in wine grapes has doubled since 1990 to 12,665 hectares. In 1990 wine exports were valued at NZ$244 million. Chardonnay and Sauvignon are the major white grape varieties, and the major premium red grape varieties are Pinot Noir and Cabernet Sauvignon. The key export markets for New Zealand are the UK, Australian and the US.

Jane Hunter and Hunter's Wines

Leading international viticulturist and managing director of Hunter's Wines (NZ) Ltd, Jane Hunter has successfully led Hunter's Wines since the death of her husband Ernie Hunter in 1987. Jane grew up in the Riverland area of South Australia where her parents owned vineyards. Jane married Ernie Hunter, an Irish immigrant, in 1984. Ernie had pioneered the overseas marketing and promotion of New Zealand wines and had established Hunter's Wines at Blenheim in the early 1980s.

Since taking over Hunter's Wines, Jane has expanded the winery's operations – 40,000 cases of wine are now produced annually, three times the amount produced in 1987. Twenty per cent of the winery's produce is exported to Britain, Ireland, Switzerland, Canada and Australia. Hunter's wines have earned an international reputation.

Jane Hunter has been billed as one of the five best female 'wine makers' in the world, and her wines have been requested by the King of Sweden and the Prince of Thailand. The winery has won many international awards ranging from number one chardonnay in the world for its 1986 vintage, to the 1991 sauvignon blanc being awarded the Marquis de Goulaine trophy for the best in its class at the 1992 London International Wine and Spirit Competition. More recently the winery has concentrated on producing dry white wines and promising red wines. If you haven't done so already, try some!

Forestry

Forests cover about 29% or 8.1m hectares of New Zealand's land area. Of this about 6.4 million hectares are in natural forest and the rest is planted in production forest. Of the total planted production estate, about 91% is radiata pine (pinus radiata) and 5% douglas fir. Hardwoods comprise about 3% of New Zealand's planted production forests. The most important hardwood plantation species are eucalyptus originating from Australia.

Many of the earlier plantation forests were developed by the state, but the impetus for development and ownership has moved increasingly to the private sector over recent decades as the industry's capital and infrastructure has expanded. This led to the planting of 52,000 hectares of new forest in 1998. The volume of wood available for export is expected to increase dramatically, with about a 74% increase between 1996 and 2010. This projected increase assumes 60,000 hectares of new plantings occur each year.

Exports

Forest products are important earners of overseas funds. In one year recently exports of forest products were valued at about NZ$2,242m. Australia was the largest customer, taking 31%, mainly in sawn timber, paper and paperboard, panel products and wood pulp. The rest is taken by smaller customers, of which the largest was Korea at 11%.

Fisheries

New Zealands 200 nautical mile Exclusive Economic Zone (EEZ) is, with an area of 1.3 million square nautical miles, one of the world's largest. There are about 1,000 species of marine fish known in these waters, of which about 100 are commercially significant.

For a number of years the Government has limited foreign fishing in New Zealand waters to the tuna fisheries. Foreign charter fleets used to dominate the deepwater fisheries. There has been a significant investment by the seafood industry in new vessels with 63% of the total catch been taken now by New Zealand vessels.

Energy and minerals

New Zealand depends on a sustained supply of energy and mineral resources to fuel the economy, maintain industry and commerce, and sustain the well-being of its citizens. New Zealand is not self-sufficient in a number of key energy and mineral commodities; the shortfall is made up by imports.

The importance of oil security was highlighted during the 1990-91 Gulf crisis, when measures were taken to boost local oil production. This was done in conjunction with International Energy Agency emergency procedures. While the crisis did result in price rises, these were not as great as in some other countries nor were there any problems with continuity of supply. International oil markets are now more flexible than they were in the 1970s, with less risk of major disruptions to imported oil supplies. Thus, while oil supply security is still an important issue, it is unlikely to be as crucial as it was in the 1970s.

Unless significant new oil and gas discoveries are made, New Zealand's long-term self-sufficiency in hydrocarbons is expected to decline after 2005 as known oil and gas reserves run down.

Electricity

New Zealand is fortunate to have many rivers suitable for generating cheap hydro power. Hydro electricity was first used in New Zealand in the gold mining industry and the first generating station supplying the public with electricity was installed in Reefton in 1887 by the Reefton Electric Lighting Co. The first general government operated station was the Lake Coleridge scheme opened in 1914. The first thermal station was Meremere which was opened in 1958.

The winter of 1992 was quite severe, with record snow falls, and hard frosts. Unfortunately the hydro lakes were also quite low after a dry summer and autumn, and so everyone was encouraged to 'switch off – and even shower together! – to save electricity.

The possibility of 'wind power' is now being looked into as a real alternative to hydro. In Wellington recently, high on a hill overlooking the Harbour, a propeller was erected on top of a tall pole, to test the viability of wind power.

Natural gas

Almost a third of the gas produced in New Zealand is used by electric power stations at New Plymouth, Huntley and Stratford. Another third is used to produce synthetic petrol at Motunui and 13% goes to produce methanol at Wairata. Industrial and commercial users consume the rest. Not all areas can receive gas for residential use.

Geothermal energy

Geothermal steam is used for electricity generation in the Wairakei and Ohaaki geothermal power stations. It is also used for direct process industrial heating, and for commercial and household heating. Geothermal waters are also used for recreational purposes and tourism.

Although geothermal systems are found throughout New Zealand, only those in the area between Lake Taupo and the Bay of Plenty (15 high temperature fields), and in Northland (Ngawha field) have the potential to provide a significant energy resource.

Whilst travelling from Tauranga in the Bay of Plenty, to Lake Taupo, you will pass through Wairakei Thermal Area; you will see signs as you approach, warning you of the danger of steam blocking your visibility as you drive through. The children always used to play 'spot the geyser' and look for areas where steam would just be pouring out of the earth, as there are many such locations in the Taupo area. The sheer delight of plunging into a thermal 'hot pool' is something indescribable. There are several of these in commercial areas throughout the Bay of Plenty, Rotorua and Taupo areas. In Rotorua many of the motels have their own thermal hot pools.

Minerals

New Zealand's mineral resources are diverse, but mining is generally small scale. Gold, ironsand, clays and sand and gravel for construction are the main minerals mined. Total yearly production of non-metallic minerals recently was valued at about $208m, while the value of metallic minerals totalled about $5164m.

New Zealand has in the black sands of the west coast beaches a large potential resource, stretching from Westport in the South Island and from Wanganui to Muriwai in the North Island. New Zealand Steel Ltd has two mining operations in the North Island. Titanomagnetic slurry is pumped to ships moored offshore for export to Japan.

Manufacturing

Small firms make up a big slice of the manufacturing sector. Companies with fewer than 50 employees produce 85% of manufacturing output and represent two-thirds of the manufacturing workforce. Here is a quick overview:

Aluminium

New Zealand Aluminium Smelter Ltd's Tiwai Point smelter has an annual production capacity of 244,000 tonnes of ingots.

Chemicals

A number of policies affecting the use of industrial chemicals have been modified to give greater protection to the environment. Timber treatment chemicals such as PCP are no longer used in New Zealand, but their accumulation in and around major mills poses environmental problems.

Electronics

The main consumer products are whiteware, plus a few niche market products. Strong growth has been enjoyed in the agricultural technology, health, commercial/industrial and professional radio and communication sectors.

Engineering

The most significant contribution to growth in engineering has been the government's decision to commission two ANZAC frigates, in partnership with the Australian Government.

Motor vehicles and components

New Zealand no longer has a motor vehicle assembly industry. All vehicles are imported in a fully built-up state. Imports of popular cars include: Nissan, Ford, Mazda, Mitsubishi, Toyota and Honda.

Tyres

To protect the two tyre manufacturers in New Zealand there is a tariff levy of 15% on all imports.

Paper

The Kinleith Mill operated by NZFP Pulp & Paper Ltd produces kraft linerboard, sack kraft and market pulp. Most of this is destined for overseas markets.

Software

New Zealand software manufacturers are in the forefront of export growth. Concerted efforts are under way to increase software exports to Australia.

Carpets

The two main manufacturers which produce wool-rich carpets are Feltex Carpets and Cavalier Bremworth, both based in Auckland.

Footwear

New Zealand has a long established footwear manufacturing industry. Shoe exports have risen dramatically in recent years. Australia is the main destination of New Zealand footwear exports.

Assistance to industry

The Government's business development policy is aimed at assisting regions to identify and capitalise on their own opportunities for development. As part of this policy the Government provides targeted assistance through its Business Development Programme.

The object is to encourage businesses to become more innovative and internationally competitive. Currently the programme comprises a network of 21 Business Development Boards, three grant schemes, and the 'ExcelleNZ' quality products:

Business Development Board, Box 1041, Napier 4015. Tel: 64 6 835 2044.
Business Development Board, Box 7040, Auckland. Tel: 6493089141.
Business Development Board, Box 960, Hamilton 2015. Tel: 64 7 834 0100.
Business Development Board, Box 7045, Wanganui 5031. Tel: 64 6 345 0949.

Beyond 2000

The shape of New Zealand society today, as in the past, is the outcome of the interaction of global trends with uniquely local circumstances. There have been strong, interconnected and highly influential changes in the world that we live in. For example:

awareness about globalisation, the effects that this places on the society, the economy and the government
strengthening of the Information Technology industry which has provided new opportunities for both acquiring information and exploiting a global market
shifts towards more service-based businesses
changes in export requirements from the diverse number of trading partners New Zealand now has.

Running alongside these significant economic alterations are changes within New Zealand's social and demographic environments. These three factors all play a significant part in the shaping of New Zealand's future.

Statistics have shown for over a decade that New Zealand has been characterised as an aging population. However, New Zealanders are also becoming more educated. The knowledge economy may be creating more opportunities in employment for those who are now involved in the education systems.

Globalisation will challenge the identity of New Zealanders. The results could change current economic and social policies and processes, blur international lines and characteristics and open up networks and access to information.

The effects of these complex and interrelated changes on New Zealand fall beyond the social and economic capital base, to impact on social and economic progress and wellbeing.

As the Government is in a current stage of change following the election of a new Labour lead alliance, new polices and practices will soon come into place. For a closer look at the changing economy go to the New Zealand Immigration Service Website: www.immigration.govt.nz.