By Steve Painter
Unemployment of 14.7% and rising, the dole abolished, all pensions and welfare benefits slashed, unions stripped of legal recognition, a per capita national debt several times larger than Australia's, Gross Domestic Product going backwards ... New Zealand is living a nightmare, and the biggest problem is there's no waking up. In a recent Television NZ poll on the two major parties, 75% said they didn't want the ruling Nationals, elected only last October, and 70% said they didn't want the Labour opposition.
"Our economic forecasters are predicting 300,000 unemployed by December and 350,000-400,000 next year, which will be 25-30% of the workforce", the worst figures since the Great Depression, New Labour Party leader Jim Anderton told the recent Socialist Scholars Conference in Melbourne.
A former president of the Labour Party, Anderton was a leader of a large breakaway from Labour in 1989. Around 6000 disgusted members walked out to form New Labour. At the 1990 elections, Anderton became the first New Zealand MP ever to hold his seat after resigning from an existing parliamentary party. It's very difficult for minor parties to get the 40-50% of the vote necessary for election under New Zealand's first-past-the-post system.
Labour Party
While it's a National Party government that's running amok at the moment, Anderton blames the Labour Party for New Zealand's nightmare: "What is surprising to most New Zealanders is not the right-wing National government's prejudice against workers, unions and beneficiaries. What is astonishing is that this is merely the culmination of a process begun by a Labour government — a government, what's more, which achieved some international recognition for its visionary anti-nuclear initiatives in the mid-1980s."
Axe-wielding National Party treasurer Ruth Richardson "is a Labour Party creation", says Anderton. Labour's move to the right while in government during the '80s freed the Nationals to move even farther right. Even though Labour rarely won elections in the '50s, '60s and '70s, its very existence affected the Nationals and helped to guarantee civilised rather than brutal government. When Labour was left, National was centre. Now that Labour is far-right, National is Neanderthal right.
In the past seven years, six of them under a Labour government, New Zealand has experienced "a revolution of the libertarian right", which is now culminating in an onslaught on the trade union movement and the welfare state by the National Party
government.
As a result of changes to industrial law, the trade union movement has lost any statutory recognition whatever. "In the long term it will be very difficult for unions to function at all in some industries. Wages are already threatened by a new individual contract bill."
But the unions were already under siege prior to the election of the Nationals because of a dramatic rise in unemployment under Labour. On its election in 1984, Labour promised to make unemployment a top priority. A year later there were 70,000 unemployed, and by the time the voters tossed it out in 1990, there were 200,000 jobless. "It had certainly made unemployment a priority", said Anderton.
Now the Nationals have pensioners in their sights. "In the forthcoming budget, our pension system will be altered." Instead of being universal and available to all at 60 regardless of income, it will be means-tested, and the age of entitlement will be raised. At a recent conference on superannuation, the government proposed raising the age to 70, which means most people would die before they got the pension.
Anderton traces the present situation back to 1984, when Labour came to office. "A laissez faire and monetarist economic agenda has been running since then. Labour deregulated first the finance sector, then as much as possible of the rest of the economy."
After 1984, economic management became a dirty word, unless it applied to private business. In its six years in office, Labour's sole economic goal was to reduce inflation, and to this end it ran a high-interest monetary policy to push the exchange rate up and import prices down. It introduced a consumption tax and halved the top rate of taxation on investment from 66 cents to 33 cents in the dollar. Since there are no capital gains or speculation taxes, "New Zealand has been the best place in the world for millionaires". Labour also corporatised and then commercialised public services.
How did it happen that the New Zealand Labour Party, which created the welfare state, brought about its destruction? One of the driving forces was a long-term economic decline, scarcely interrupted since the mid-1950s. The National Party's response was an authoritarian style of government, which over time resulted in Labour's growth to a party of nearly 100,000 members from a base of 12,000. Today, after its six years in government, the party is rumoured to have around 5000, probably less than New Labour.
More Market
Under the slogan Think Big, the National Party attempted to
encourage industrial development, and a side effect of this was the growth of an economic current called More Market, which favoured economic deregulation. "Its most vocal advocates were in the finance sector, which had flourished in New Zealand following a limited deregulation in the 1970s."
Within one or two university economic departments, the monetarist Chicago School had some influence, and Chicago School influence also took hold in the New Zealand Treasury. Keynesian and other points of view were culled by a process of intellectual attrition. By the time Labour came to office in 1984, Treasury advice to the government was uniformly monetarist.
"Treasury had, and still has, a fetish about the marketplace. It believes in the level playing field theory: if any restrictions exist, they should be abolished. It also has a fetish about private ownership. It believes that public assets and functions should be transferred to private business interests, and anything that remains publicly owned should be run on commercial lines."
Under this philosophy, public service comes a bad last and monopoly profits are in. Electric Corp, a state enterprise, last year made a profit of $400 million, and now "they want to put up electricity prices in this year of the nil wage order and 25% cuts in beneficiaries' incomes". During its first year of commercial operation, Electric Corp froze the wages of its workers while awarding senior management bonuses of $100,000.
Labour's finance minister, Roger Douglas, presided over these policies, and while some Labour traditionalists tried to resist, it quickly became clear that the real decisions were made by an inner group in the cabinet. "Their approach was consciously undemocratic, basically a blitzkrieg approach to political action. They used their control of key cabinet positions to suddenly and without warning commit cabinet and the government to measures that had not been debated.
"Before anyone had time to properly formulate an alternative, they would introduce another measure, equally radical, to distract attention from the first one. Those of us who lived through this time recognise that it was a very creative time for them and a hellish time for anyone seriously concerned about the future of the country. They floated the dollar, removed exchange controls, introduced a flat rate goods and services tax, deregulated the finance industry, dismantled import controls, pursued a free-market, user-pays approach to education and health, halved the marginal tax rate for the rich, and so on.
"Labour's message was that the people of New Zealand had to be tricked into accepting what was good for them. Members and supporters of the Labour Party were treated with contempt."
Prime Minister David Lange was at least honest about it. He openly said the government had a secret agenda different from the one Labour had announced prior to the elections. He added that the party members weren't told because they wouldn't have liked it, and the election manifesto wasn't worth the paper it was written on.
Labour's arrogance became legendary. When told that 97% of New Zealanders opposed the sale of Telecom to two United States corporations, minister Richard Prebble said the people were lucky they had a government with the courage to stand up to that sort of pressure.
Meanwhile, Labour Party members resigned in droves, but most of the MPs didn't raise a squeak. "In some cases, their motive was simply careerism. In others it was a lack of understanding or interest in economics", and some were bribed not to oppose the economic measures in return for a hands-off agreement on other matters, including the nuclear-free policy. "It was an eerie feeling to be in a parliament in which the Labour Party was implementing all of the policies the National Party had ever wanted but hadn't had the courage to implement."
Boom and bust
Under Labour's slogan of economic globalisation, international capital flowed into New Zealand, attracted by high interest rates. The resulting property and share market boom engulfed most traditional New Zealand companies, whether rural, commercial or industrial.
Then, with the collapse of several big raiders after the stock market crash of 1987, something like $20,000 million was wiped off the value of the market in three months. It was the largest collapse anywhere, and marked the definitive failure of Rogernomics, as Douglas' policies were known.
The most lasting effect of globalisation was that a huge swathe of New Zealand business passed into overseas ownership. Far from competing successfully in the global marketplace to become the Switzerland of the South Pacific as Douglas had boasted, New Zealand was in danger of becoming a new Argentina or Ireland. Labour's privatisation program also contributed to this trend: Telecom, Air New Zealand and the shipping corporation were all sold to overseas owners. Globalisation also led to the collapse of most New Zealand manufacturing, with a loss of 100,000 jobs over five years.
New Labour
Not surprisingly, although the Nationals are widely hated, there's little enthusiasm for a return to Labour, and Jim Anderton thinks New Labour has a real chance to become a national electoral force,
though this won't be easy.
While New Labour is the only parliamentary party that really supports the mass protests and reflects the mood of popular opposition to the Nationals and Labour, it gets little media coverage. Despite this, its support is running at about 7% nationally. In some electorates it won around 14% in the 1990 elections, as well as the 49% necessary to elect Anderton in his Christchurch-based electorate.
With a strong base among trade unionists (including 50-70 union organisers) and other activists, New Labour may be better placed than most small parties to crash the two-party game. But even if short-term electoral success doesn't come its way, Anderton is convinced the party must persevere: "We want to show people that we are now playing the civilising role that used to be played by the Labour Party. Whether we get 5%, 50% or only 1% of the vote, the NLP has to keep the idea alive until New Zealand realises what it has lost.
"You wouldn't be human if you didn't think sometimes the odds are too great. But I know how public opinion is formed. I know that polls are a measure of exposure, and we'll keep working on that.
"If you don't represent the views of intelligent, concerned, liberal humanity, what gap is left by not doing it? We give people some hope, and that's a powerful thing to do."