Budget 2013 is investing in growing New Zealand’s exports markets and boosting our overseas profile and international competiveness, Economic Development Minister Steven Joyce says.

“Under our Business Growth Agenda the Government has a specific goal of lifting our exports to 40 per cent of GDP by 2025,” Mr Joyce says.

“To help achieve this and create more and higher paying jobs for New Zealanders, the Government is investing a further $100 million a year over the next four years as part of our Internationally Focussed Growth Package.”

The new spending will be invested in extra research and development assistance to businesses and supporting new start-ups ($106.5 million over four years), investment in public science ($93.5 million over four years); additional funding for high-value tourism ($38 million for 2013/14, increasing to $40 million a year from 2014/15); and more resources for marketing New Zealand to international students ($40 million over four years) and marketing of New Zealand under the ‘New Zealand Story’ ($2 million for 2013/14).

To meet the target of 40 per cent by 2025, the value of New Zealand’s exports will need to double. This requires nominal export growth on average of between 6.7 per cent and 7.6 per cent per year to 2025.

Government statistics show that our nominal exports of goods and services has been growing by a compound annual average of 4.6 per cent in the last four years.

“This is a promising start given the on-going headwinds internationally from the Global Financial Crisis and the high New Zealand dollar,” Mr Joyce says.

“The aim of the Internationally Focussed Growth Package is to help accelerate this growth over the medium term and, in particular, build on the opportunities that exist in China, India, Southeast Asia, Latin America and in the Middle East.

“Increased levels of exports and strong international linkages are critical to lifting New Zealand’s long term productivity performance and economic growth rate. The Government’s $400 million investment through the Internationally Focussed Growth Package is about growing our export markets and building an export-focused economy that puts New Zealand on the path to greater prosperity.”

Economic Development Minister Steven Joyce today announced $2 million in new funding to launch the New Zealand Story project – an initiative to help New Zealand companies gain a competitive advantage from the use of the New Zealand brand in international markets.

The funding forms part of the $400 million internationally focused growth package which is a centrepiece of Budget 2013.

The New Zealand Story project was outlined in the Building Export Markets progress report as part of the Government’s Business Growth Agenda, and received initial baseline funding of $1 million.

“This project is about broadening New Zealand’s international brand beyond the scenic beauty of the country to include attributes like our innovation and resourcefulness, our Māori heritage, and our welcoming friendly approach,” Mr Joyce says.

“We need a compelling, but authentic story which will differentiate New Zealand from other countries and showcase what we have to offer around the world. It needs to be able to be used by educationalists, food and beverage producers, hi-tech manufacturers and other organisations in their marketing efforts offshore. 

“We are a small country so we need all our international players, private sector and public sector, as much as possible to tell a consistent New Zealand story that reinforces each other’s activities for the benefit of New Zealand as a whole.

“The New Zealand story is being developed with extensive input from leaders in the primary sector, manufacturing, wider government, services, export education and Māori, and being tested in six key and emerging markets.

“This new funding will be used to bring the story to life and ensure we use it effectively.

“The funding will include  the development of creative tools which New Zealand  businesses and the public sector can draw on to tell the New Zealand story, including consistent branding, messaging, audio visual elements, and photos.”

The latest student loan statistics show that the gap between the repayment rates of New Zealand-based borrowers and overseas-based borrowers continues to grow, despite overall lifts in the number of people paying off their loans.

Overseas-based borrowers make up 60 per cent of the 84,562 borrowers in default as at March 31 this year, despite comprising only 15 per cent of the borrowing population. They are responsible for 82 per cent of the $520 million currently in default.

“More overseas-based student loan borrowers are paying more off their student loans as a result of the Government’s compliance initiative, but we need a major behavioural change if we are to see the pay-back rate even begin to match what we currently receive from domestic borrowers,” Tertiary Education, Skills and Employment Minister Steven Joyce says.

“It is simply not fair for those overseas to get a far easier ride than people who stay in New Zealand, contribute here, and pay off their loan responsibly.

“Our initiatives to date to encourage overseas-based borrowers to repay their student loans have collected $64 million since October 2010,” says Revenue Minister Peter Dunne.

“Overall we have collected $812 million from all borrowers (overseas-based and domestic) up until March 2013, which is up over $263.4 million on the same period last year. However some of that is undoubtedly a one-off as a result of people paying more before the end of the repayment bonus programme at the end of March.

“While the default amount owed by New Zealand based borrowers has decreased by 5.9 per cent in the last year, the default amount of overseas based borrowers continues to increase – since March 2012, it has risen by 34.3 per cent.

“While that’s partially the result of shortening the repayment holiday for overseas borrowers, the evidence we had was that the long holiday just masked the overall low level of compliance,” he says.

The outstanding student loan balance is currently $13.5 billion.

The Government has been considering further initiatives for overseas-based borrowers and will make announcements regarding the selected initiatives shortly.

“We are determined to lift the rate of overseas-based borrowers repayments to ensure people are meeting their commitments to New Zealand taxpayers, just like the New Zealand-based borrowers are doing,” says Mr Joyce.

“The initiatives that we have been considering will further encourage overseas-based borrowers to get in touch with Inland Revenue and get on top of their loans. The message for borrowers living overseas is to not leave it too late and that while they may go away, their loan will not,” Mr Dunne says.

The drop in the unemployment rate from 6.9 per cent to 6.2 per cent in the March quarter is encouraging news, Tertiary Education, Skills and Employment Minister Steven Joyce says.

The Household Labour Force Survey released today showed that 38,000 more people were employed in the quarter.

“The result follows news the economy grew 3 per cent in the year to December and is another sign the economy is continuing to head in the right direction,” Mr Joyce says.
“While the fall in unemployment is a good result it may be a little too good as this survey is known to move around and we need to be cautious.”

The result puts New Zealand in 11th place in the OECD, which has an average unemployment rate of 8 per cent. Our participation rate grew from 67.2 to 67.8 per cent and remains higher than Australia’s at 65.3 per cent.

Hours worked increased 3.2 per cent for the quarter – the highest since 1994.

“The Government’s economic management and Business Growth Agenda were praised last month by IMF Managing Director Christine Lagarde who described the New Zealand economy as being ‘very stable’ and ‘very promising’ and a lot better than other parts of the world,” Mr Joyce says.

“The National-led Government is encouraging more investment right across the New Zealand economy as we know that nothing creates jobs and grows incomes for New Zealand families better than business growth.”

Minister Responsible for Novopay Steven Joyce today announced the Ministry of Education will not be seeking to recover small overpayments to school staff that are uneconomic to recover.

“In order to assist the recovery of the system and clearance of the overpayment backlog, I have taken the pragmatic decision that the Ministry should not seek to recover a number of smaller overpayments that would take up a lot of time for little benefit to any party,” Mr Joyce says.

“Since Novopay went live in August last year there have been thousands of school staff around the country that have received overpayments as a result of errors with the payroll system. Recovering the smaller overpayments would’ve cost the Education Ministry more money than the amounts that have been overpaid and slow down the clearance of the backlog.”

The errors where recoveries will not be sought are:

• A public holiday related defect which caused 7,949 staff to be overpaid an average of $6.05 for a total of $48,106
• A previously-advised voluntary bonding configuration error that occurred in Pay Period 1 which caused 1,478 staff to be overpaid an average of $64.75 for a total of $92,323
• All other overpayments where the individual overpayment amount does not exceed $100; to a maximum of $300 in a calendar year.  It is estimated that this will involve writing off a total between $200,000 and $300,000 known overpayments.

Individual staff will be notified of overpayment debt write-offs when they occur, and that the Ministry will not be seeking the repayment.  However, staff will still be able to pay it back if they wish to.  Schools will also be advised and school budgets will not be affected.  The amounts written off will be deducted from Ministry baselines.

Mr Joyce says that the write-off is estimated to reduce the number of known significant overpayments immediately from 13,200 to around 10,000 (these numbers excluded the 7,949 listed in bullet point one above). He says that list will still take considerable time to clear and will involve recovering some millions of dollars.

“This has always been expected to be the slowest and hardest part of the remediation programme,” Mr Joyce says. “These pragmatic steps will help speed it up but we have a long way to go on clearing the overpayments.

“We make further decisions in regards to low-value write offs, if other particular examples come to light during the overpayment clearance process.”

Mr Joyce says the use of debt collectors to recover overpayments caused by Novopay remains suspended by the Ministry until further notice.

Minister Responsible for Novopay Steven Joyce today released the PricewaterhouseCoopers (PwC) report on complaints and notifications in regards to Pay Period 3 of the schools’ payroll.

Pay Period 3 of the new financial year, which was paid on the morning of 1 May, paid 87,812 people a total of $164.55 million.

The PwC report shows that complaints and notifications were received regarding 0.26 per cent of staff across the country, 27 staff were notified as not paid, 80 were overpaid, and 121 underpaid. Affected staff were from 166 schools or 6.8 per cent of schools in the payroll system.

“This is the best performance we have seen since PwC began tracking the performance of the individual Novopay pay rounds in February,” Mr Joyce says.

 “The result was well within the 0.5 per cent steady state error level identified by the technical review team.  Three of the last four pay rounds have met that mark.

“At this stage indications show that Pay Period 4 is likely to have a similar low number of issues.”

*This was higher due to the one-off Voluntary Bonding error

Mr Joyce provided an update on the work to clear software bugs as part of the Novopay Remediation Programme.

Since the start of the Remediation Programme, 426 bugs have been resolved – including 53 Category Two (very serious). However, 197 new bugs have been identified over the same period.

“In total there are 379 outstanding bugs, including 20 Category Two ones..  This compares to 526 as at March 19.  So we are making progress but there is a way to go yet.

“In order to ascertain exactly how many ‘live’ bugs there are that are impacting on schools, a reconciliation process has been undertaken to separate them into three categories: those in the development environment, the test environment, and the live-production environment,” Mr Joyce says.

“What this work has shown is that 316 of the 379 bugs – including the 20 Category Two ones – have an impact on schools in the ‘live’ production environment and they are being prioritised for resolution.

“The target under the Remediation Plan remains to have fewer than 10 very serious bug defects by the end of June.”

Mr Joyce says clearing the backlog of outstanding issues from previous pay periods remained a priority with 100 people now working in the Backlog Clearance Unit (BCU) in Wellington, Christchurch and Auckland.

“Around 9,800 issues have been resolved but new queues in relation to tax and leave balances have been added to the list for resolution,  and more issues have been raised by some schools as they have been  contacted,” Mr Joyce says.

Outstanding tickets now number in total about 25,000, and include issues relating to past overpayments, underpayments, non-payments, leave balances and 2012/13 tax reconciliations.

The BCU with the help of the IRD is expected to resolve nearly all known outstanding 2012/13 financial year tax issues caused by Novopay for school employees by this Friday 10 May. This is obviously an immediate priority for the Ministry and the IRD on behalf of affected staff.

“I want to continue to thank affected staff, school administrators and principals for their on-going patience and professionalism in what are trying circumstances,” Mr Joyce says. 

“We are seeing progress – especially from pay period to pay period – but we still have a lot of work to do to resolve the backlog of issues of the last nine months.”

Minister Responsible for Novopay Steven Joyce today announced that Talent2 will continue to administer the school payroll – but that the long-term future of the system will stay under review.

“The decision to stay with Novopay at this point was made very carefully after a great deal of consideration and weighing up of all the risks,” Mr Joyce says.

“The improvements we have seen in delivering school pay from pay period to pay period and the progress to date in clearing bugs, means it wouldn’t be sensible to make a change at this point.  Making a change now would increase the work for payroll administrators in the short-term during the cut-over from where we stand today, not decrease it.

“Three out of the last four pay periods have had a reported error rate of less than 0.5 per cent – which we have been advised by our independent technical reviewers is a reasonable error rate for a stable system. However, that is not to say that we are out of the woods yet or endorsing the current state of the pay system.

“The Novopay Remediation plan has a long way to run – in particular the level of the backlog and the slower than targeted progress in clearing it to date. This is something that remains very frustrating for schools and for staff who have unresolved issues.  However, it is important to note that this work has to be done regardless, and a further change in system would definitely divert staff from the backlog clearance task.

“The only other realistic option at this point was to switch back to the old Datacom system and then upgrade again later to a new Datacom system.  That would mean substantial additional work and two further changes for school administrators.  We would do that if required, but it is not a step to be taken lightly.

“You can’t just switch a complex $4.4 billion a year payroll that pays around 90,000 people every fortnight without creating more issues – no matter which system you are using.

“A go or no-go decision had to be made at this point because the current Datacom backup proposal is time-sensitive, and has now reached the point where it will have to be re-worked for them to be able to assist.

Datacom have made it clear they remain ready to assist if they are required at any further stage. I appreciate that, and may call on them again at any time. I thank them for all their work and assistance to date.”

Mr Joyce says the focus for the next two months will continue to be on the Novopay system remediation in which progress will continue to be monitored on a daily, weekly and monthly basis.

“Staff from the Ministry, Talent 2, and schools are working hard on the remediation.  I appreciate all their efforts as we work towards a business-as-usual state,” Mr Joyce says.

The next key milestones are the Novopay Ministerial Inquiry, which is due to be presented to the Government at the end of this month, and the review of progress in the Remediation Plan at the end of June.

“At that point we will reassess progress and start assessing what further changes may be needed to the delivery of school payroll in the medium term. These are likely to include alterations to the service delivery model and options to revise the business processes of the school payroll to reduce the complexity in the system,” Mr Joyce says.

“The focus of the Government is to make sure school payroll returns to business as usual as quickly as possible. Progress is being made but there is still more work to be done to ensure the on-going stability of the system.”  

The Datacom payroll proposal is available at:

http://www.minedu.govt.nz/~/media/MinEdu/Files/TheMinistry/NovopayProject/DatacomProposal/DatacomProposal.pdf

Construction of the Emirates Team New Zealand (ETNZ) base for the America’s Cup has begun in San Francisco signalling the start of a series of events to showcase New Zealand businesses.

Economic Development Minister Steven Joyce says major events like the America’s Cup provide an opportunity for New Zealand companies to showcase their expertise on the international stage.

“New Zealand has a strong marine and digital technology association with the America’s Cup, and this programme is about leveraging off and growing that strong relationship,” Mr Joyce says.

The programme is being developed alongside the sailing event. As part of an agreement signed between the Government and Emirates Team New Zealand, New Zealand businesses will have exclusive access to the America’s Cup racing and ETNZ’s base in San Francisco.

The home base for the events organised by ETNZ, Auckland Tourism, Events and Economic Development (ATEED) and New Zealand Trade and Enterprise, will be Waka Māori – a 70-metre venue fashioned in the form of a traditional waka, built by Ngati Whatua o Orakei and used on the Auckland waterfront for Rugby World Cup 2011.

“New Zealand is a dominant player in the America’s Cup and we are taking full advantage of that position to promote New Zealand’s other stories and capabilities,” Minister Joyce says. “The United States is our third biggest trading partner and our goods and services exports continue to grow there. California alone is a market of 38 million people and remains at the heart of global innovation.

“Waka Māori creates a New Zealand landmark that will be seen from the surrounding high rises and Bay Bridge during the America’s Cup.”

New Zealand innovation will be evident during the Cup, with componentry for three of the four racing yachts designed and built in New Zealand; Kiwi-made super-yachts berthed at the marina, an official America’s Cup smartphone app made by Dunedin’s Animation Research Ltd, and New Zealand food and wine featuring on the menus of San Francisco restaurants.