I'm here today to talk to you principally as Minister of Immigration to talk about the RSE (Recognised Seasonal Employer) Scheme, and I'm going to be making a policy announcement on how the Government is going to be taking that scheme forward, enhancing it and making it better so that New Zealand growers can be assured of getting the supply of labour that they need.

First though I thought I'd make a few comments on the general political and economic scene.

Of course last Thursday we had the budget. The main priority for the Minister of Finance was to come out with a balanced response to the recession.  The most pressing issue we faced was the ballooning debt situation. When the Government books were opened in October just before the election the country had a surplus to the tune of $3.3 billion.  Even with the measures taken in Budget 2009, we're now talking about a deficit in the year to June 30 2010 of $7.7 billion, increasing to $9.3 billion in 2011, before tracking down. Treasury estimates showed that without policy changes, gross government debt would rise alarmingly, reaching 48 per cent of GDP by 2013 and 70 per cent of GDP - about $227 billion - by 2023.

Why does this matter?

Well, if we can't keep our national debt down, our international credit rating is affected, making it more expensive and harder to borrow money internationally to finance projects that we need to pursue. In the Budget, we have taken steps to reduce that forecast blow-out and ensure that gross debt as a percentage of GDP peaks at 43 per cent in 2016/17, before starting to fall after that.

The country's financial situation has changed markedly since we campaigned on tax cuts at the 2008 election. Simply put, the two further tranches of tax cuts in 2009 and 2010 were unaffordable.

Likewise we are also suspending full payments to the Superannuation Fund. In our view it doesn't make sense to borrow large sums to invest in currently uncertain global financial markets while running large deficits. Next year we would have had to borrow $1.5 billion extra if we continued with full payments. This will not affect people's entitlements to New Zealand Superannuation - it will continue to be paid at a minimum 66 percent of the average wage from age 65.

If all this sounds like belt tightening, it is. However, there is still plenty of money going into health and education. We've gone across every Government department looking for wasteful spending and areas of saving, and have redirected that money to where it will actually provide front line services. So we're actually able to increase overall spending on services by $1.5 billion, including $3 billion on health and $1.68 on education.

Overall we've had to balance funding public services, maintaining entitlements, and meeting the increased cost of benefits, while at the same time taking the first steps towards improving productivity and competitiveness in the longer term.

The focus over the next year will be rebuilding business confidence, and that leads on to what I really want to talk about today.  We're a small trading nation, and the only way we're going to get out of this recession is to trade our way out. As such, this Government is very conscious of the need to support our industries so that they can be as competitive as possible on the world stage and earn the foreign exchange on which the New Zealand economy depends.

In order to operate successfully I am fully aware that you require a dependable labour supply at peak times, and you need to know that you can get the workers you need from one season to the next.  I understand Recognised Seasonal Employer (RSE) has helped you to achieve that.

RSE policy was introduced in April 2007. It  has enabled horticulture and viticulture employers to supplement their New Zealand workforce with temporary workers to ensure that they have the supply of labour required to pick, prune and pack export crops. The quid pro quo is that to make the scheme work, employers have had to take responsibility for some aspects of the pastoral care relating to their workforce.

One important outcome of RSE is that it has helped Pacific workers to gain offshore employment and skill development opportunities so they can remit money and take new skills back home. However while that's a beneficial effect of the scheme, that's not the primary reason why this government is backing RSE. We are backing it because it's vital to our horticulture and viticulture industries.

There are currently 138 accredited RSE employers, who last year brought 7000 workers into New Zealand into New Zealand since 1 April 2008. The Bay of Plenty, Hawkes Bay and Marlborough are the three biggest regions in terms of workers, but there are significant numbers in Otago. Workers have come mainly from Vanuatu, Tonga and Samoa. Significant numbers have also come from the Solomon Islands, Indonesia, Thailand and Malaysia.

The Recognised Seasonal Employers Scheme has been a success and this government plans to continue the scheme and in fact enhance it. I have seen for myself RSE at work in Otago, Hawkes Bay and the Bay of Plenty. From the growers' perspective and RSE workers who have been part of the scheme I hear mostly very positive feedback.

There was no doubt that this season's record apple crop reached the market in premium condition and achieved top prices because of the labour that RSE supplied.  With the New Zealand summerfruit season now over for 2008/2009 it is clear that as far as the New Zealand market is concerned, it has been a good one.  80% of last year's workers from the South Pacific have returned this year and of course, returning workers are more productive.

And that's why this Government is committed to the RSE scheme because it provides certainty to growers for this and future seasons. In line with that, today I'm announcing the following improvements to the scheme.

The first important amendment to RSE policy I'm announcing today is the requirement that workers will need to hold current health insurance. This is the best means of ensuring that RSE workers have access to healthcare while costs to the New Zealand taxpayer are minimised. Employers will be expected to arrange (but not pay for) health insurance that meets the minimum requirements.

Previously health insurance has not been compulsory for workers. RSE workers are not eligible for publicly funded healthcare and this has created problems because some workers have not been covered for healthcare costs.

We are also amending RSE policy to ensure that rules for deductions from RSE workers' wages are the same as those for New Zealanders.

The changes to pay and deduction rules will make life simpler for both employers and workers. All deductions will need to be declared by the employer as part of their application to recruit RSE workers. Workers will also need to be fully aware of any deductions before accepting employment. This will ensure that the interests of all parties are protected and that there are no surprises for anyone. The Department of Labour are also exploring with Inland Revenue whether it would be possible for RSE workers to be issued with their IRD numbers before they arrive in New Zealand

And finally, and probably of greatest interest to you I'm using this speech to announce the introduction of a new type of work permit which will be called the Supplementary Seasonal Employment Permit. The SSE work permit will provide extra labour at peak harvest times and will be a mechanism for growers to top up their labour pool. Like RSE, SSE will be labour market tested. To apply for a SSE work permit, the workers would need to be already in New Zealand lawfully. SSE permits will be valid for six months and will allow workers to move from one approved SSE employer to another. This will assist growers to meet demand when there are no suitable New Zealanders and they are unable to get sufficient numbers of workers through the RSE scheme. Those growers who are too small to qualify for RSE will be able to access workers through this new policy.

In the current economic climate, some will inevitably question whether the RSE scheme will take jobs away from New Zealanders. To this I can answer with a categorical NO.

The RSE and SSE are not a cheap alternative to employing New Zealanders. Rather they are schemes that are designed to ensure that key industries are able to operate productively. RSE has been successful in this and in some cases has resulted in the creation of permanent jobs for New Zealanders. Mr Apple is New Zealand's largest apple grower. In the past five years, the company has increased the number of permanent jobs for New Zealanders by 21 per cent - in large part because of the success of the RSE scheme. 

The Department of Labour will continue to work closely with Work and Income in each region to ensure that the RSE and SSE schemes give New Zealanders the first opportunities for employment. Permits will not be given where New Zealanders are available for work. However, where this is not the case, accredited employers will be able to recruit workers under the RSE and SSE schemes.

This is a responsive approach to labour market demands. With the mix of policies we now have in place, I am confident that the Recognised Seasonal Employer and the Supplementary Seasonal Employment schemes will continue to meet a balance of needs that is in the interests of us all. I wish you well for the next year and as you plan for the future.