Annual Report 2010/11

4. Achieving our outcomes

The overall outcome for the Department noted in the Statement of Intent 2010/11- 2013/14 is 'Grow New Zealand's economy and improve the quality of lives through a high-performing labour market and immigration system'. The 2010/11 outcomes framework from the Statement of Intent 2010/11-2013/14 is set out in Table 2.

Table 2: Outcomes framework 2010/11

Departmental outcome
Grow New Zealand's economy and improve the quality of lives through a high-performing labour market and immigration system
Intermediate outcomes
A more effective immigration system	More productive workplaces and sectors	More people in quality work	A better performing accident compensation system

During 2010/11, the Department revised the middle two intermediate outcomes to place more focus on the Department's role in the labour market as a contributor to more productive workplaces and sectors and more people in quality work. The Department's immediate outcomes were also updated to provide a sharper focus on the organisation's core business. This change provides the Department with an improved performance framework for reporting purposes while still enabling the Department to report against the commitments set out in the Statement of Intent 2010/11-2013/14.

The Department's progress towards achieving its outcomes is detailed below. Progress is reported against the updated strategic framework outlined in Table 3, and expectations set out in the Statement of Intent 2010/11-2013/14. Outcome performance measures and results are provided for each intermediate outcome to quantify the Department's progress towards the outcomes the Department was seeking to influence. The measures are those set out in the Statement of Intent 2010/11-2013/14, with some additional results to reflect the updated outcomes framework.

The Department measures shorter-term performance against the outputs for each Vote, with the results for 2010/11 identified in the Statement of Objectives and Service Performance (section 10).

Table 3: Updated strategic framework

Departmental outcome
Grow New Zealand's economy and improve the quality of lives through a high-performing labour market and immigration system
Intermediate outcomes
A more effective immigration system	A more effective labour market	A better performing accident compensation system
Immediate outcomes
The attraction and retention of the people New Zealand needs is improved The delivery of visa services is improved The integrity of New Zealand's immigration system is maintained	Labour market decision-makers are better informed Employers have greater access to the skills and workers they need Employer-employee relationships are improved Workplaces are healthier and safer	A comprehensive 24/7, no-fault coverage system, designed to support: injury prevention effective rehabilitation appropriate compensation The system is administered in a way that is sustainable and represents value for money
Vote and output expenses
Vote Immigration Immigration Advisers Authority Services to increase the capacity of New Zealand through immigration Services to position New Zealand as an international citizen with immigration-related interests and obligations	Vote Employment Labour market analysis and knowledge Policy, research, and evaluation Vote Labour International services Policy advice - labour Services to promote and support fair and productive employment relationships Services to promote and support safe and healthy people and workplaces Services to promote and support the safe management of hazardous substances in the workplace and amusement devices Vote Immigration Services to increase the capacity of New Zealand through immigration	Vote ACC Regulatory services Policy and monitoring

Intermediate outcome 1: A more effective immigration system

Immigration plays a key part in growing New Zealand's economy. Migrants make up more than one quarter of New Zealand's workforce and contribute around $1.9 billion to gross domestic product. Business and skilled migration, together with export education and tourism, also help stimulate growth. Each year, export education contributes about $1.8 billion to the economy and tourism about $5 billion.

Immigration's contribution is important in ensuring that New Zealand remains an attractive destination for skilled migrants, workers, students and tourists.

The revised immediate outcomes the Department sought to achieve in 2010/11 were:

• the delivery of visa services is improved
• the attraction and retention of the people New Zealand needs is improved
• the integrity of New Zealand's immigration system is maintained.

In particular, Immigration New Zealand paid significant attention to improving service delivery, supporting economic growth through facilitating the attraction and entry to New Zealand of high-worth and highly skilled migrants, and supporting export-earning industries.

Improving the delivery of immigration services

Immigration New Zealand has addressed all but 11 of the 226 recommendations across reviews undertaken internally and by the Office of the Controller and Auditor-General, State Services Commission, and Ernst and Young. The remaining recommendations are being actively worked on. A critical issue raised by the review into Immigration New Zealand by the Office of the Controller and Auditor-General was the inconsistent and poor quality decision-making.

During 2010/11, the Department placed significant emphasis on improving the core delivery of immigration services. This resulted in significant improvements in the quality of decision-making and a strong increase in the satisfaction of employers with Immigration New Zealand services. In addition, efforts to clear backlogs of (particularly) student applications resulted in a five percent reduction overall.

Figure 1 is a good example of the improved delivery of immigration services and demonstrates the shift in quality over the two year period to 31 March 2011. Decisions rated "good" improved by more than 31 percent while "poor" declined in the same period by more than 12 percent, to 4.2 percent.

Figure 1: Overall quality of decision-making April 2009-March 2011

Data table for Figure 1

A new leadership structure and senior leadership team is in place in Immigration New Zealand (since March 2011), ensuring a continued focus on strong leadership for performance and immigration outcomes.

Supporting economic growth

During the year, the Department continued to support the development and implementation of immigration products for the business sector and investors. As a result, long-term business visas increased over the year with just under 700 visas issued, bringing in entrepreneurial skills to support economic growth.

In addition, over the last two years New Zealand attracted $660 million in potential investment capital through its Business Migration Package. By 30 June 2011, almost $195 million was transferred and invested in New Zealand, with an additional $234 million approved for funds transfer. Applications from investors worth an additional $232 million are being processed. Figure 2 demonstrates this growth.

Figure 2: Investor inflows

Data table for Figure 2

The Department also undertook a significant body of work to ensure that immigration supports the Government's economic growth objectives. Consistent with the work, the Department completed a number of major policy reviews. This resulted in wide-ranging changes to Student policy and pathways to residence for international graduates, the Skilled Migrant Category, and the Essential Skills in Demand lists.

Supporting export industries

Tourism and export education deliver significant economic inflows to New Zealand. The Department has supported these sectors to remain internationally competitive by:

• establishing quarterly strategic forums with tourism and export education sectors to ensure immigration settings and, delivery support, for these sectors to successfully implement their growth strategies
• aligning its planning with these sectors to support the emergence and growth of new markets, including:
  • ensuring the Department's response to the entry of Southern China Airlines into New Zealand is effective, including the expansion of in-country capacity to process visa applications
  • establishing in Mumbai (in March 2011) a second branch in India to support significant growth in the region
• implementing ambitious performance improvement targets to drive more timely decision-making for students.

This year, the Department also improved the Study to Work programme to encourage high-value students to come to New Zealand, and introduced numerous changes to export education policies to make the system work better for the people New Zealand wants to attract.

Although the Canterbury earthquakes resulted in a decline in visitors (and applications for visitors' visas), the Department expects a recovery in demand over time.

Delivering better immigration outcomes

During the year, the Department continued to focus on driving effective immigration outcomes by:

• implementing the Immigration Act 2009, which is designed to create a system that is fairer, more transparent, easier to use, more flexible, and modernises New Zealand's immigration laws to ensure they will be fit for the future
• working with industries, such as dairy, as part of the Vulnerable Migrant Project, to ensure migrants are not vulnerable to poor employment practices
• resettling 527 refugees to New Zealand as part of our international commitments for refugees, which was less than planned primarily due to a shortage of adequate housing as a result of the Canterbury earthquake
• facilitating the education and professional development of approximately 500 immigration advisers through the Immigration Advisers Authority, with 67 percent of advisers saying they are able to provide a better service to clients, and 75 percent of customers expressing satisfaction with the overall quality of service provided by their immigration adviser
• continuing the effective settlement of migrants through a range of programmes, with 85 percent of migrants reporting satisfaction with life in New Zealand
• investigating systemic immigration fraud to expand the collection and use of fingerprint and face biometrics to address identity fraud and other risks
• continuing to participate in the Five Country Conference - a partnership of five countries that aims to promote immigration security.

To meet New Zealand's immigration-related commitments, the Department also participated in three significant international engagements during 2010/11. These were the:

• Intergovernmental Consultations on Migration, Asylum and Refugees, which met to discuss strategies, trends and challenges in migratory and refugee movements worldwide
• Bali process on People Smuggling, Trafficking in Persons and Related Transnational Crime, which met to combat these crimes
• Pacific Immigration Directors' Conference (PIDC) annual meeting and PIDC sponsored workshops, which discussed human trafficking and people smuggling and assists with border security in the Pacific.

In addition, the Department led the joint procurement of Smart passport readers with the New Zealand Customs Service. These readers have resulted in financial savings and faster transit for passengers. The Department is also leading the development of a border sector biometric policy framework and standardised border identity management training. Through expanded Advance Passenger Processing, the Department's Border Operations Centre staff were able to identify a number of high-risk people, and stop them from reaching New Zealand's border.

Table 4: Intermediate outcome 1: A more effective immigration system

Indicators of Success	Measures	Result	Baseline Trend
The delivery of immigration services is improved. Facilitation of entry for migrants, international students and tourists is improved.	The quality of immigration decision-making improves. Source: Q3 Report, Department of Labour.	2010/11 Result: 74% rated as good (March 2011). (Refer to Figure 1).	2009/10 Baseline: 54% rated as good (June 2010).
	Customer satisfaction with the overall service provided by Immigration New Zealand increases. Source: Quarterly Immigration New Zealand Customer Satisfaction Survey, Department of Labour.	2010/11 Result: 74% of customers were satisfied with overall service delivery (June 2011).	2009/10 Baseline: 80% of customers were satisfied with overall service delivery (March 2010).
	Timeliness standards for immigration decision-making are achieved. Source: Operational Data, Department of Labour.	2010/11 Result: 90% of decisions relating to work visa applications were made within 60 days. Standard achieved. 89% of decisions relating to student visa applications were made within 60 days. Standard not achieved. 96% of decisions relating to visitor visa applications were made within 60 days. Standard achieved (June 2011). Refer to Statement of Objectives and Service Performance for further information.	2009/10 Baseline: 92% of decisions relating to work visa applications were made within 60 days. 90% of decisions relating to student visa applications were made within 60 days. 96% of decisions relating to visitor visa applications were made within 60 days (June 2010).
	Consumer trust and confidence in immigration advisers increases. Source: Survey of New Zealand Visa and Permit Applicants who have used an Immigration Adviser, Immigration Advisers Authority.	2010/11 Result: 75% of customers were satisfied with the overall quality of service provided by their immigration adviser (June 2011).	2009/10 Baseline: 75% of customers were satisfied with the overall quality of service provided by their immigration adviser (June 2010).
	The perceived value of immigration adviser licensing improves for licensed immigration advisers. Source: Survey of Licensed Immigration Advisers, Immigration Advisers Authority.	2010/11 Result: 67% of respondents thought that licensing had enabled them to provide a better service to their clients (May 2011).	2009/10 Baseline: New measure.
	The economic contribution of international students[1] and tourists[2] to the New Zealand economy increases. Source: Balance of Payments, Statistics New Zealand.	2010/11 Result: $4,991 million contribution by international tourists (March 2011). $1,799 million contribution from export education (March 2011).	2009/10 Baseline: $5,539 million contribution by international tourists (March 2010). $1,735 million contribution from export education (March 2010).
Settlement of migrants is improved.	The percentage of recent permanent migrants who say they are satisfied or very satisfied with living in New Zealand is maintained. Source: Immigration Survey Monitoring Programme, Department of Labour.	2010/11 Result: 85% of respondents were satisfied or very satisfied with life in New Zealand (September 2010).	2009/10 Baseline: 89% of respondents were satisfied or very satisfied with life in New Zealand (October 2009).
	The percentage of recent permanent migrants who would recommend New Zealand to friends and family as a place to work and live increases. Source: Immigration Survey Monitoring Programme, Department of Labour.	2010/11 Result: 87% of respondents would recommend New Zealand to friends and family as a place to work and live (September 2010).	2009/10 Baseline: New measure.
	The proportion of recent permanent migrants receiving a core welfare benefit reduces. Source: Benefit Receipt by Migrants to New Zealand 2007 - 2010, Department of Labour.	2010/11 Result: 14,026 working-age migrants, or 5.2% of the working-age migrant population, received a benefit. The main driver for this pattern has been the increase in need for Unemployment Benefits as a result of the economic recession (June 2010).	2009/10 Baseline: 11,640 working-age migrants, or 4.7% of the working-age migrant population, received a benefit (June 2009).
The integrity of New Zealand's immigration system is maintained. New Zealand's international reputation is maintained.	International confidence in New Zealand's immigration security is maintained. Source: Operational Data, Department of Labour.	2010/11 Result: Officials from the Department represented New Zealand at immigration security-related events such as the Five Country Conference (FCC) and the Border Sector Governance Group (BSGG). At the FCC event, officials developed a strategic policy framework to align policy objectives between the five partner countries, and also ways to improve data sharing. At BSGG events, the focus was on increasing overall border efficiency including streamlining travel between New Zealand and Australia (June 2011).	2009/10 Baseline: Officials from the Department represented New Zealand at international immigration security-related events including the Five Country Conference (June 2010), and a number of workshops during the year.
	New Zealand meets its international commitments relating to the movement of people. Source: Operational Data, Department of Labour.	2010/11 Result: 527 mandated refugees were resettled in New Zealand. The lower level of settlement was primarily due to a shortage of adequate housing as a result of the Canterbury earthquakes (June 2011).	2009/10 Baseline: 709 mandated refugees were resettled in New Zealand (June 2010).

Intermediate outcome 2: A more effective labour market

New Zealand must improve its workplace productivity and labour force participation to improve the country's economic growth.

Productivity is slowly growing (3.7 percent increase in the year to March 2010) but is still low by international standards.

The proportion of New Zealanders working is high by international standards with the annual average labour participation rate at 68.3 percent (as at June 2011). There are pockets of disparity - especially Māori (66.1 percent), Pacific people (61.3 percent) and youth (60.7 percent).

Too many New Zealanders continue to be killed or seriously injured at work. In addition, occupational disease is estimated to lead to 700-1,000 fatalities and 17,000-20,000 new cases a year. The social and economic cost of work-related injury and disease is estimated to be about $16 billion per annum: a significant drain on productivity.

The Department's role is to provide both labour market policy leadership and regulatory services that focus on healthy and safe working environments, and fairness and flexibility for employers and employees.

The revised immediate outcomes the Department sought to achieve in 2010/11 were:

• labour market decision-makers are better informed
• employers have greater access to the skills and workers they need
• employer-employee relationships are improved
• workplaces are healthier and safer.

The Department has delivered in all four areas.

Labour market decision-makers are better informed

The labour market functions most effectively when all participants have access to the best information.

The Department is the Government's primary advisor on the labour market and human capital, providing advice on longer-term issues as well as current conditions. It also provides authoritative, credible research and evaluation to central and local government, labour market participants and other interested parties.

The Department's information and advice supported a number of initiatives as outlined below.

Planning for productivity in Auckland

The new Auckland Council's Plan for the city has a strong focus on productivity, reflecting significant input from the Department.

As part of a collaborative partnership between central government and the Auckland Council, the Department successfully championed its position that skill requirements, employment outcomes, immigration, and successful migrant settlement need to be at the forefront of work on economic growth and social development in Auckland.

The Department went on to lead work on skills development and productivity that fed into the Auckland Economic Development Strategy, which forms part of the overall plan. This strategy aims to improve the skills of the current workforce, identify current and future shortages, and minimise barriers to growth.

Supporting a work focus in welfare reform

The Welfare Working Group's focus on getting more people off the benefit and into paid work is likely to increase participation in the labour market. The Department supported the Welfare Working Group with information on labour market trends and the implications of those trends for individuals on a working-age benefit who want to move into paid work.

Following the Welfare Working Group's report, the Department is continuing to work with the Ministry of Social Development to identify sectors with a potential for employment growth and job opportunities for beneficiaries.

Improving skills to increase productivity

Increasing productivity by improving the skills of the New Zealand workforce is an ongoing focus for the Department. The Department is continuing to work with other agencies and labour market participants to improve the connection between employers, education and training providers. Work during 2010/11 is contributing to the development of a longer-term strategic approach to increasing labour market skills.

This draws on departmental research including the Skills Challenges Report: New Zealand's skill challenges over the next 10 years. This report noted that the significant employment demand for higher vocational qualifications across a wide range of occupations is likely to face supply constraints.

Improving workplace literacy

The Skills Highway Award for 2010 was won by Liddell Contracting, a West Coast engineering and infrastructure firm, in recognition of its literacy training programme that helped lift the company's annual income by 64 percent over three difficult recessionary years. This award is part of the Skills Highway Programme, a partnership between the Department, employers and other stakeholders to provide practical assistance to employers wanting to improve their employees' reading, maths and communication skills, and consequently their business outcomes (see www.skillshighway.govt.nz).

Improving participation of under-represented groups

Groups under-represented in the workforce, such as Māori, Pacific people and youth, plus those who are not in employment, education, or training, were provided with targeted information, training and employment opportunities. Initiatives in this area included pilot programmes in the Auckland Region that:

• identified entry-level opportunities in the digital industry for disengaged young Māori and Pacific people in South Auckland
• established the Futures Pilot initiative for years 7 and 8 Māori and Pacific students to provide customised career information such as the likely skills and qualifications needed for the future job market.

Employers have greater access to the skills and workers they need

A more effective labour market requires a better match between the demand for, and supply of, skills and workers. The Department works with other agencies to help firms overcome barriers to enterprise and access the skills they need to grow. Where necessary, immigration is used to supplement the domestic workforce.

Working with partners to develop skills plans and address barriers to workforce capacity

The Built Environment Skills Strategy was launched in June 2011. This is part of the work of the Building and Construction Productivity Partnership to increase the productivity of the construction sector by 20percent by 2020. The Department will continue to be involved as a member of the Skills Working Group supporting the implementation of the strategy to drive employment and develop the skills required over the coming decade.

The Department also advised on broader skills and labour demand and supply issues including:

• the skills and employment implications of the Government's broadband roll-out project
• the supply and demand of aged-care caregivers to address the issue of meeting the needs of an increasingly ageing population.

Attracting the people and skills New Zealand needs

Attracting migrants to fill the skills gaps in the labour force is critical to improving productivity.

In 2010/11, Immigration New Zealand continued to play a critical role supporting employers to access the labour they need. Over 11,500 migrants came to New Zealand under the Skilled Migrant Category, meeting demand in critical skill shortage areas.

The Silver Fern Job Search Visa attracted 300 highly skilled young migrants. This scheme was filled within 30 minutes of its opening on the internet, suggesting opportunities exist to expand the scheme further.

The Recognised Seasonal Employer Scheme has continued to flourish. This year, Immigration New Zealand facilitated the entry of 7,091 Recognised Seasonal Employer workers to meet labour shortages in the horticulture and viticulture industries. This process delivered tangible benefits to Pacific Forum Countries (see box).

Employer-employee relationships are improved

To create employment and lift productivity, the regulatory framework for employment relations needs to provide both fairness and flexibility. In 2010/11, there were changes in employment relations legislation to improve the employer-employee relationship, and provide clarity around rights and obligations in the workplace.

Improving fairness and flexibility for employers and employees

The Employment Relations Act 2000 was amended to improve the fairness and flexibility of the employment relations framework. The amendments changed labour inspectors' enforcement powers, the delivery of mediation services, and the operation of the Employment Relations Authority. The changes extend trial periods, address the balance of expectations around personal grievances, modernise the enforcement regime of minimum employment standards, and clarify the terms of union access to the workplace and communications with employees during collective bargaining.

The Employment Court Regulations 2000 were amended to give effect to the new section 178A of the Act which allows parties to challenge Employment Relations Authority determinations in respect of dismissal of frivolous or vexatious proceedings in the Employment Court. A broader review of the Regulations is continuing.

During the year, the status of film actors and production staff was clarified. Workers in the film industry are to be construed as independent contractors unless otherwise specified.

The Department ran an awareness-raising campaign on new requirements for employers to retain an up-to-date copy of an employee's employment agreement. This is designed to reduce problems in employment relationships caused by the absence of records of agreements.

The Holidays Act 2003 was amended to allow 'cashing in' of up to one week of annual holidays and extend the ability of employers and employees to negotiate the observance of public holidays. The amendments also introduced requirements to provide proof of sickness, and calculations for paying sick leave, bereavement leave, public holidays, and alternative holidays for employees with irregular hours and pay.

Improving dispute resolution

Over the last sixmonths, mediators increasingly provided early assistance mediation to employers or employees, with 136 such interventions delivered (against a standard of 100). This early intervention, outside or before a formal mediation, can help prevent the escalation or continuance of a problem.

In 2010/11, there were over 5,500 mediations in disputes, with over 4,000 mediated to settlement. This was particularly pleasing in a year when the Department received many more notices than expected of potential strikes or lockouts, demonstrating how mediation can contribute to a decrease in work stoppages during the year.

The number of work stoppages continued to decline. There were 17 work stoppages in the year to December 2010; a decrease of 14 stoppages from 2009 and the lowest number since the current time series began in 1986. There has been a corresponding decline in estimated wages and salaries lost (Figure 3).

Figure 3: Work stoppages – days, wages and salaries lost

Source: Work Stoppages: December 2010 quarter, Statistics New Zealand (2011)

Note: results for 2008 are not available from Statistics New Zealand.

Data table for Figure 3

Working towards fair international labour practices

The Department has continued to work with partners in the Asia-Pacific region and through the Asia-Pacific Economic Cooperation Human Resources Working Group and the International Labour Organisation. This year has seen ongoing negotiations on the labour aspects of the Trans-Pacific Partnership and India-New Zealand Closer Economic Partnership.

Workplaces are healthier and safer

Workplace injury and death rates are not falling fast enough in New Zealand. In 2010/11, the Department developed a new measurement tool to effectively track progress and the impact of initiatives designed to reduce the rate of death and injury in the workplace.

Reducing the work toll

The State of Workplace Health and Safety report measures not only actual rates of death, injury and occupational disease, but also provides a performance rating in these areas which will provide the Government, industry, employers and employees with an annual update of the impact of their activities.

One of the most significant initiatives designed to reduce the work toll is the National Health and Safety Action Agenda. This agenda identifies five sectors in which the Department believes substantial progress can be made using a very focused and collaborative series of sector harm reduction programmes.

The five sectors (agriculture, forestry, construction, manufacturing and fishing) all have high levels of workplace deaths and injuries and account for 37 percent of all work-related ACC claims. The Construction and Forestry Sector Action Plans have been launched; agriculture will be launched shortly and others will follow.

Specific harm reduction programmes are being implemented by the Department. These innovative programmes target key sectors with persistent health and safety problems, and involve intervention from the Department through education, engagement and enforcement.

 

Research shows that a commitment by organisational leadership to workplace health and safety has a positive impact on death and injury rates. The Business Leaders' Health and Safety Forum was launched in July 2010 to engage, encourage, and enable business leaders to develop health and safety leadership. Over 120 Chief Executives have signed up to the commitment to zero harm in the workplace.

The Department has been working closely with the adventure tourism sector to develop new regulations to improve safety in the outdoor adventure tourism sector. Regulations requiring safety audits will come into force in November this year.

Improving Māori and Pacific access to information and services

The Department's Māori Strategy 2008-2013 and the new Pacific Strategy 2010-2015 guide, prioritise, and coordinate the organisation's work to deliver improved outcomes for Māori and Pacific communities. A particular focus is on improving access to information and services, which during the year included:

• improving quad bike health and safety outcomes at the Ahuwhenua National Farmer of the Year events
• providing employment and health and safety information to young Māori at the National Kapahaka Tuarua-Rotorua 2010 and Te Matatini o Te Rā-Gisborne 2011
• preparing for an intensive radio campaign through the Pacific Media Network to highlight changes to employment legislation, as well as raising awareness of workplace health and safety among Pacific communities
• providing health and safety training directly to workplaces with large numbers of Pacific workers to raise their awareness of health and safety practices as part of the Puataunofo inter-agency project in Manukau.

Improving service delivery for the future

The Department's strategic approach to workplace activities has been updated to focus on:

• educating workplaces on their health and safety responsibilities and better practices
• engaging with workplaces to help them prevent harm
• enforcing compliance when workplaces fail to comply with their responsibilities.

This will ensure the activities undertaken by the Department achieve the desired outcome, and are provided as efficiently as possible. For example, health and safety inspectors have now been trained to perform hazardous substance inspections at the same time as their usual health and safety work. As part of this integrated approach, the Department has developed an eight-point action plan to begin delivering its Hazardous Substances and New Organisms (HSNO) Service Delivery Strategy.

Table 5: Intermediate outcome 2: A more effective labour market
Note: Table identifies outcome measures for 2010/11 ordered by 2011/12 immediate outcome statements.
Labour market decision-makers are better informed

Indicators of Success	Measures	Result	Baseline Trend
Productivity in key sectors is improved.	The understanding of key sectors about labour market constraints on growth improves. Source: Report on Survey of Stakeholder Satisfaction, Department of Labour.	2010/11 Result: Results indicate: Labour market advisory and skills planning work undertaken by the Department is viewed positively by stakeholders, with the ICT sector and the Construction Sector Productivity Working Party highly valued. Some respondents commented that the Department's work to identify skills needed in response to the Canterbury earthquakes was an example of high-quality analysis completed in a collaborative way. Respondents also commented that reports produced by the Department were useful in assisting with labour market discussions with sector representatives (June 2011).	2009/10 Baseline: New measure.
	Labour productivity increases. Source: Productivity Statistics, Statistics New Zealand.	2010/11 Result: Labour productivity increased by 3.7% in the year to March 2010 due to the fall in labour input being greater than the fall in output (March 2010).	2009/10 Baseline: Labour productivity decreased by 1.5% in the year to March 2009 due to a fall in output and labour input[4] (March 2009).
Access to work is increased.	Labour participation rates are maintained. Source: Household Labour Force Survey, Statistics New Zealand.	2010/11 Result: 68.3% annual average labour participation rate (June 2011).	2009/10 Baseline: 68.1% annual average labour participation rate (June 2010).
	Labour participation rate of under-represented groups increases. Source: Household Labour Force Survey, Statistics New Zealand.	2010/11 Result: Annual average labour participation rate for under represented groups: Youth = 60.7% Pacific = 61.3% Māori = 66.1% Female = 62.4% Older = 45.4% (June 2011)	2009/10 Baseline: Annual average labour participation rate for under represented groups: Youth = 60.9% Pacific = 61.5% Māori = 66.6% Female = 62.1% Older = 44.1% (June 2010)
	Rehabilitation and return to work rates following injury improves. Source: Australia and New Zealand Return to Work Monitor, Campbell Research & Consulting.	2010/11 Result: 78% Durable Return to Work Rate[5] (June 2011).	2009/10 Baseline: 77% Durable Return to Work Rate (July 2010).
People have the right skills to improve their employment opportunities.	Access to information about the skills that are needed by employers improves. Source: Operational data, Department of Labour[6].	2010/11 Result: 43,697 visits to online skills-related information by the public over 10 months, with the Quarterly Employment and Unemployment Reports and Monthly Jobs Online being the two most accessed information sources[7] (June 2011).	2009/10 Baseline: 11,997 visits to online skills-related information by the public (May and June 2010)[8].

Supplementary measure

Indicators of Success	Measures	Result	Baseline Trend
Labour market decision-makers are better informed.	Provision to Ministers of authoritative, strategic and integrated advice on improving the labour market and its contribution to the economy. Source: Discussions with Vote Ministers as reported in the Department of Labour's Annual Reports (2009/10 and 2010/11), and the New Zealand Institute of Economic Research's Review of the Quality of Policy Advice Provided by the Department of Labour.	2010/11 Result: The Minister of Labour, the Minister of Immigration and the Minister for Social Development and Employment's ratings of 'Good' and the New Zealand Institute of Economic Research's assessment of 7.5 out of 9 (note: 7.5 represents the averaged score for quality policy advice for Votes Labour, Immigration and Employment) (June 2011).	2009/10 Baseline: The Minister of Labour and the Minister of Immigration's ratings of 'satisfied' and the Minister for Social Development and Employment's rating of 'partly satisfied', and the New Zealand Institute of Economic Research's assessment of 7.6 out of 10 (note: 7.6 represents the averaged score for quality policy advice for Votes Labour, Immigration and Employment) (June 2010).

Employers have greater access to the skills and workers they need

Indicators of Success	Measures	Result	Baseline Trend
Employers' access to the skills they need is increased. Employers' access to the workers they need is increased.	Key agencies' awareness of skill gaps and shortages improves. Source: Brand Health Survey, (May 2011), and the Report of Survey of Stakeholder Satisfaction (June 2011), Department of Labour.	2010/11 Result: Results indicate: Two thirds of employers' are aware of labour market information provided by the Department and this has been broadly consistent across the last two years[9]. Agencies are increasingly using the Likely Areas of Growth in Employment Opportunities quarterly reports. Respondents commented on the value of the Department's work with Ngāi Tahu in using the Tū Mai Iwi Tool to provide information on the labour market needs of Māori in Christchurch after the Canterbury earthquakes. Respondents also indicated that the Jobs Online report provides useful employment data (June 2011).	2009/10 Baseline: Revised measure.
	Percentage of businesses that identify difficulty in recruiting workers reduces. Source: Quarterly Survey of Business Opinion data, New Zealand Institute of Economic Research.	2010/11 Result: For the quarter to 30 June 2011, a greater proportion of employers surveyed reported difficulty sourcing skilled workers when compared to the same period last year. The net percent[10] of firms reporting it 'being easier to find skilled labour today when compared to three months ago' was -15%. This compares with a net -2% of firms reporting the same for the quarter to 30 June 2010. For the quarter to 30 June 2011, a greater proportion of employers surveyed reported difficulty sourcing unskilled workers when compared to the same period last year. In the quarter to 30 June 2011, the net percent of firms reporting it 'being easier to find unskilled labour today when compared to three months ago' was 11%. This compares with a net 23% of firms reporting the same for the quarter to 30 June 2010.	2009/10 Baseline: Businesses found it more difficult to find skilled and unskilled workers over the course of 2009/10 (June 2010).
	The percentage of skilled migrants whose occupation in New Zealand is a match with their skills improves. Source: Immigration Survey Monitoring Programme, Department of Labour.	2010/11 Result: 81% of employed skilled principal migrants report their current job matches their skills and qualifications (September 2010).	2009/10 Baseline: 82% of employed skilled principal migrants report their current job matches their skills and qualifications (October 2009).
	The percentage of employers satisfied with the overall quality of service provided by Immigration New Zealand improves. Source: Employers of Migrants Survey, Department of Labour.	2010/11 Result: 94% of employers were satisfied or very satisfied with the overall quality of service (June 2010).	2009/10 Baseline: 70% of employers were satisfied with the Department's assistance provided to facilitate them in recruiting skilled migrants (June 2009).
	Employers' satisfaction with the migrants they hire improves. Source: Immigration Survey Monitoring Programme, Department of Labour.	2010/11 Result: 99% of employers said they rated their migrant employees as good or very good (October 2010)[11].	2009/10 Baseline: 87% of employers rated their migrant employees as good or very good (June 2009).

Employer-employee relationships are improved

Indicators of Success	Measures	Result	Baseline Trend
Adoption of high- performance workplace practices by New Zealand workplaces is increased. Employer-employee relationships are more effectively managed.	Rate of work stoppages decreases. Source: Work Stoppages, Statistics New Zealand.	2010/11 Result: 17 work stoppages (December 2010)[12].	2009/10 Baseline: 31 work stoppages (December 2009).
	Proportion of employment relations problems resolved without referral to Employment Relations Authority or Employment Court increases. Source: Operational Data, Department of Labour.	2010/11 Result: 96% of all mediations were resolved without referral to the Employment Relations Authority or the Employment Court (June 2011).	2009/10 Baseline: 92% of all mediations were resolved without referral to the Employment Relations Authority or the Employment Court (June 2010).
Productivity in workplaces is improved.	Employers and other stakeholders report improved ability to comply with Holidays Act. Source: Operational Data, Department of Labour.	2010/11 Result: Implementation of legislative changes occurred on 1 April 2011. A post-implementation evaluation has been completed, with findings indicating key objectives were significantly achieved. An outcome evaluation is scheduled for completion in October 2012 (June 2011).	2009/10 Baseline: New measure.
	Workplace productivity improvements are determined through evaluation of specific workplace productivity demonstration projects. Source: Operational Data, Department of Labour.	2010/11 Result: A Workplace Productivity Agenda Project was evaluated. Two other projects are to be evaluated in 2011/12 (June 2011).	2009/10 Baseline: New measure.
Quality work in New Zealand continues to be supported by fair international labour practices.	New Zealand's participation in international labour forums is recognised and respected. Source: Operational Data, Department of Labour.	2010/11 Result: All reporting obligations arising from New Zealand's International Labour Organisation membership or ratification of international labour standards were met within agreed timeframes. The Department led the New Zealand delegation to the 2011 International Labour Conference. The New Zealand delegation at the 2011 International Labour Conference was invited to lead two committees: the Committee on Domestic Workers and the Committee on Social Protection. A departmental official was invited to represent the Asia Pacific Government Group on the Drafting Committee for Labour Inspection and Administration (June 2011).	2009/10 Baseline: All reporting obligations arising from New Zealand's International Labour Organisation membership or ratification of international labour standards were met within agreed timeframes. 20 Vote Labour international reports and questionnaires submitted within agreed timeframes (June 2010).
	Settled trade labour agreement obligations are met within agreed timeframes. Source: Operational Data, Department of Labour.	2010/11 Result: All obligations regarding settled trade labour agreements were met within agreed timeframes and are consistent with the Government's mandate (June 2011).	2009/10 Baseline: All obligations regarding settled trade labour agreements were met within agreed timeframes and are consistent with the Government's mandate (June 2010).

Workplaces are healthier and safer

Indicators of Success	Measures	Result	Baseline Trend
Workplaces provide healthier and safer environments. Adoption of high-performance workplace practices by New Zealand workplaces is increased.	Rate of serious workplace injuries reduces. Source: The State of Workplace Health and Safety in New Zealand, Department of Labour.	2010/11 Result: 20 work-related serious non-fatal injuries per 100,000 workers (2009).	2009/10 Baseline: 23 work-related serious non-fatal injuries per 100,000 workers (2008).
	A new surveillance framework for occupational disease is implemented and operational in the period 2010-2013. Source: Operational Data, Department of Labour.	2010/11 Result: A model for the surveillance of occupational cancer, respiratory diseases and dermatitis is being developed and will be piloted by December 2011 (June 2011).	2009/10 Baseline: New measure.

Supplementary measures

Indicators of Success	Measures	Result	Baseline Trend
Workplaces are healthier and safer.	Healthy and safe workplaces, as measured by the rate of workplace fatalities per 100,000 workers. Source: The State of Workplace Health and Safety in New Zealand, Department of Labour.	2010/11 Result: 3.4 work-related fatalities per 100,000 workers (2008).	2009/10 Baseline: 3.5 work-related fatalities per 100,000 workers (2007).
	Healthy and safe workplaces, as measured by the rate of serious workplace injuries in priority sectors. Source: Work Related Claims, Injury Statistics, Statistics New Zealand.	2010/11 Result: Incidence rate for claims involving entitlement payments for work-related injuries in priority sectors: 27 claims per 1,000 workers in the agriculture and forestry sector (includes serious workplace injuries in the fishing industry) 24 claims per 1,000 workers in the manufacturing sector 24 claims per 1,000 workers in the construction sector (Provisional Data, 2009).	2009/10 Baseline: Incidence rate for claims involving entitlement payments for work-related injuries in priority sectors: 33 claims per 1,000 workers in the agriculture and forestry sector (includes serious workplace injuries in fishing industry) 30 claims per 1,000 workers in the manufacturing sector 31 claims per 1,000 workers in the construction sector (Actual Data, 2008).
	Healthy and safe workplaces, as measured by the percentage of workplaces that, within six months have satisfactorily addressed compliance or enforcement requirement(s) for health and safety and/or hazardous substances and new organisms. Source: Operational Data, Department of Labour.	2010/11 Result: 95% of workplaces addressed compliance or enforcement requirements for health and safety within six months. 74% of workplaces addressed compliance or enforcement requirements for hazardous substances and new organisms within six months. (June 2011).	2009/10 Baseline: 92% of workplaces addressed compliance or enforcement requirements within six months (June 2010).

Intermediate outcome 3: A better performing accident compensation system

The Department is responsible for advising the Government on the effective design and administration of the accident compensation system.

The accident compensation scheme is administered by the Accident Compensation Corporation (ACC).

The objective is to continue to have comprehensive, 24/7, no-fault coverage that is accessible and affordable for all New Zealanders, and to ensure the system delivers rapid and sustainable rehabilitation so people return to work after injury where possible. Returning to work at an appropriate point is better for the individual and better for the economy.

The revised immediate outcomes the Department sought to achieve in 2010/11 were:

• a comprehensive 24/7, no-fault coverage system, designed to support:
  • injury prevention
  • effective rehabilitation
  • appropriate compensation.
• the system is administered in a way that is sustainable and represents value for money.

Improving the performance of the accident compensation system

The Department's advice and analysis during 2010/11 focused on the recent history of increasing costs and deteriorating rehabilitation rates and how to address this situation.

This has included monitoring and providing advice to the Government on the scheme's financial sustainability and ACC's performance. It has focused on how to mitigate cost increases for individuals, businesses, and the Government, and ensure better value for money.

ACC has already achieved improved results. The number of ACC claims has stabilised and rehabilitation rates have improved. The Return to Work Rate^[13] and Durable Return to Work Rate^[14] improved onepercentage point in 2010/11 on the previous year (which equates to an approximate reduction in liabilities of $500 million for long term claims).^[15] Improved rehabilitation has resulted in a continued reduction in the number of people on long-term compensation, which is ACC's biggest cost.

ACC achieved a significant surplus for 2010/11 - much higher than ACC's budget projection.^[16] This turnaround comes from improved rehabilitation, stabilised claim numbers, investment returns and better cost management. The net ACC debt has fallen from $10.3billion in 2009/10 to $6.7 billion in 2010/11. This provides scope to hold or reduce levies.

Investigating choice in the Work Account

The Department advised the Government on options for introducing choice into the Work Account. The proposal would give employers a choice of purchasing work-related personal injury insurance from ACC or a private insurer. In June 2011, Cabinet released the discussion document Increasing Choice in Workplace Accident Compensation for consultation. Further advice and decisions are due in the 2011/12 year.

Introducing experience rating

The Department advised the Government on the development and implementation of experience rating, which was introduced in April 2011. This is a system of modifying the Work Account levy a business pays based on its claims history.

Experience rating provides stronger incentives for employers to improve workplace safety by rewarding those with good safety records. It also provides incentives for businesses to engage with health professionals on worker rehabilitation.

Responding to the Canterbury earthquakes

Under the Accident Compensation (Experience Rating) Regulations 2011, where levy rates are adjusted to take account of past ACC claims history, employers who had staff injured or killed in their workplace in the February earthquake could have been unjustly penalised for having a poor health and safety record. To remedy this anomaly, the Government declared the Canterbury earthquake an adverse event.The Department assisted in this regulatory change process to ensure that employers would not receive levy penalties arising from this adverse event.

In addition, the Government passed urgent regulations, under the Canterbury Earthquake Response and Recovery Act 2010, to enable ACC to promptly pay the first week's compensation to workers injured as a direct result of the February earthquake. The Department assisted in this process.

Extending the Accredited Employers' Programme

The Department also advised the Government on options for extending the Accredited Employers' Programme. Accredited employers enter an agreement with ACC to manage claims and pay the costs of claims for an agreed period and in return they pay lower levies.

Public consultation on extending the Accredited Employers' Programme started in June 2011, with decisions expected during 2011/12.

Improving dispute resolution within the accident compensation scheme

The Government decided in April 2011 to separate Dispute Resolution Services Ltd (DRSL) from ACC. This was supported by the Department providing advice that this would increase the independence of the existing accident compensation dispute resolution system.

The Department also advised on establishing DRSL as an independent Crown company from July 2011.

Ensuring good governance

The Department advised the Government on the appointment of a new ACC deputy chair, two new board members, and renewing the term of another board member during 2010/11. This ensures a diverse and strong range of skills is available for governing ACC.

Table 6: Intermediate outcome 3: A better performing accident compensation system

Indicators of Success	Measures	Result	Baseline Trend
Rehabilitation and return to work rates meet relevantnational and international best practice.	Benchmarks are introduced and used in monitoring performance. Source: Australia and New Zealand Return to Work Monitor, Campbell Research & Consulting.	2010/11 Result: New Zealand 87% Return to Work Rate 78% Durable Return to Work Rate Australia[17] 86% Return to Work Rate 77% Durable Return to Work Rate (June 2011).	2009/10 Baseline: New Zealand 86% Return to Work Rate 77% Durable Return to Work Rate Australia[17] 85% Return to Work Rate 75% Durable Return to Work Rate (June 2010).
The rate of increase in new injury claims on the accident compensation system is reduced.	Return on investment of injury prevention activities is monitored. Source: Fourth Quarter Performance Report, Accident Compensation Corporation.	2010/11 Result: Accident Compensation Corporation (ACC) reported an increase of 4.9% for high cost workplace claims. This compares with an original forecast of a 2% reduction. Although ACC's key performance indicator was not achieved, claims against priority areas in workplaces declined by 15.1% which can be partly attributed to ACC's injury prevention activities (June 2011).	2009/10 Baseline: New measure.
The cost of the scheme and levy prices are calculatedand set in a more consistent and transparent way.	A new monitoring framework is implemented and operates effectively in the period 2010/11 to 2012/13. Source: Operational Data, Department of Labour.	2010/11 Result: The Department has responded to the recommendations of reviews and has strengthened and broadened its scrutiny of scheme costs and prices to ensure more consistency and transparency in its analysis and reporting on ACC performance, pricing and funding. The Department's monitoring framework is being re-evaluated in anticipation of possible changes to management of the scheme (June 2011).	2009/10 Baseline: New measure.
Demonstrated accountability for performance of the accident compensation scheme is improved.	Advice on levies will explicitly explain how the proposals are consistent with the funding policies agreed by Cabinet. Source: Policy Advice, Department of Labour.	2010/11 Result: The Department draws on a wide range of data to assess levy proposals. Analysis includes consideration of ACC's funding targets, the appropriateness of ACC's levy-setting methodology, implications for levy stability, and impacts on levy payers. This is consistently reflected in all of the Department's advice to the Minister and Cabinet (June 2011).	2009/10 Baseline: New measure.
Cover and entitlement settings within the accident compensation scheme are more affordable and sustainable.	Advice on any cover and entitlement changes will, in addition to cost estimates, contain explicit advice on the likely impact on levies required to maintain the scheme's overall funding position. Source: Policy Advice, Department of Labour.	2010/11 Result: The Department's policy work incorporates careful consideration of the likely financial impact of ACC's proposed changes. During 2010/11, this specifically occurred in relation to hearing loss proposals and entitlement changes in response to the Canterbury earthquake of 22 February 2011 (June 2011).	2009/10 Baseline: New measure.

Supplementary measure

Indicators of Success	Measures	Result	Baseline Trend
The system is administered in a way that is sustainable and represents value for money.	System performance, as measured by: progress to full funding of Accident Compensation Corporation accounts the rate of change in levy rates the rate of change in the Government's direct investment the number and cost distribution of claims to Accident Compensation Corporation (workplace injuries). Source: Operational Data, Accident Compensation Corporation.	2010/11 Result: Full funding: progress has been made with the Earners' and Work Accounts achieving 100% solvency in 2010/11. The levy rates were: for employers and self-employed people in the Work Account $1.47 per $100 liable earnings (GST excl). the combined average motor vehicle levy in the Motor Vehicle Account is $334.52. the combined earners' levy in the Earners Account is $1.78 per $100 liable earnings (GST excl). Direct investment: Non-departmental output expenses totalled $1,247 million (budget). The number and cost distribution of claims was: 76% of claims for workplace injuries cost a maximum of $500. approximately 21% of claims were in a cost range of $501 to $20,000. a 2% increase in the number of claims costing more than $20,000 (June 2011).	2009/10 Baseline: Full funding: progress has been made. The levy rates were: for employers and self-employed people in the Work Account $1.31 per $100 liable earnings (GST excl). the combined average motor vehicle levy in the Motor Vehicle Account is $287. the combined earners' levy in the Earners Account is $1.70 per $100 liable earnings (GST excl). Direct investment: Non-departmental output expenses totalled $1,263 million (actual). The number and cost distribution of claims was: 78% of claims for workplace injuries cost a maximum of $500. approximately 21% of claims were in a cost range of $501 to $20,000. a small number of claims costing more than $20,000 (June 2010).

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Footnotes

^[1] New Zealand's earnings from educational tourism are referred to as 'exports of travel education services' in the Balance of Payments. This represents expenditure on tuition fees and living costs by foreign students in New Zealand.

^[2] New Zealand's earnings from tourism are referred to as ‘exports of travel services’ in the Balance of Payments. This represents expenditure by international visitors while in New Zealand, but excludes earnings from educational tourism and earnings from transportation for travel to and from New Zealand.

^[3] D McKenzie and J Gibson, The Development Impact of a Best Practice Seasonal Worker Policy, Policy Research Working Paper 5488, The World Bank, November 2010.

^[4] 2009/10 measure relating to workplace productivity described as “Percentage growth of labour productivity”

^[5] The Durable Return to Work Rate is the proportion of injured workers who had returned to work and were still working seven to nine months after making their claim.

^[6] The Department plans to complete the Google Analytics analysis every two months throughout 2011/12. The first year of full data is, therefore, expected to be available at the end of 2011/12.

^[7] Google Analytics completed for 10 months only in 2010/11. Due to technical issues data was not available between September and October 2010.

^[8] Google Analytics completed for two months only in 2009/10.

^[9] Labour market information includes information on skill gaps and shortages. Employers’ awareness of labour market information was last evaluated in November 2010.

^[10] The net percent of respondents is obtained by subtracting the percentage of respondents saying "down" from those saying "up" and dividing the value by a corrective factor (100 - percent of "N/A" responses).

^[11] The 2010/11 results are based on survey responses that have been adjusted to better reflect the target population (weighted), while responses to the 2009/10 survey were not adjusted (unweighted).

^[12] From January 2011 Statistics New Zealand will collect data on a calendar year basis rather than a financial year.

^[13] The Return to Work Rate is the proportion of injured workers who had returned to work after making their claim.

^[14] The Durable Return to Work Rate is the proportion of injured workers who had returned to work and were still working seven to nine months after making their claim.

^[15] Annual Report 2010, Accident Compensation Corporation, page 106.

^[16] Refer to the Accident Compensation Corporation Annual Report 2011

^[17] The figures provided for Australia’s Return to Work Rate and Durable Return to Work Rate are an average over the Australian jurisdictions.

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