The New Zealand economy (was Re: Kinking the list)

Bill Rosenberg w.rosenberg at cantva.canterbury.ac.nz
Thu May 14 19:27:21 PDT 1998



> >Seriously though - the Fire Commission which employs all New Zealand
> >firefighters has announced it is sacking all 1600 of them and telling
> >them to apply for the several hundred less jobs that remain.
>
> I ran into a NZer who works for the UN the other day at a party, and
> he said he was on the verge of renouncing citizenship, disgusted as
> he is by the indifference to and/or acceptance of the ravages
> imposed by successive governments on your poor country. What do the
> NZ masses make of this stuff? You're not even getting good growth
> rates out of it - the OECD says NZ has been under its potential GDP
> for the last 10 years.

For once it sounds like there will be a united trade union response to this, though it is not yet clear how militant it will be. A wide variety of unions are seeing this kind of action as threatening their members' own jobs. For once, too, the opposition parties are united in denouncing it.

It turns out that the head of the Fire Commission, installed a year ago, also works as an insurance broker, one of his duties being to advise clients on how to avoid their fire service dues (about 70% of fire service costs are met by insurance levies). His appointment was supported by the Business Roundtable, and both he and an advisor in this action have recommended similar action for senior officers in the Police! (He also went to the same school as me, where he was a very enthusastic sergeant-major in the school cadets during New Zealand's militaristic phase between WWII and the Vietnam War.)

Hence there is also considerable public disquiet outside the trade union movement.

As far as the general economic position goes, I think there is also growing disquiet, but it is stifled for two reasons.

Firstly, a muffled news media. Approximately 90% of newspaper circulation is controlled by Murdoch or Tony O'Reilly. All but two of the major city dailies are Murdoch controlled. The O'Reilly owned NZ Herald allows some variety of opinion in its columns, but the Murdoch ones very little. The state-owned TV channels have acolytes of the economic reforms in charge, and current affairs content has deteriorated markedly: for example a critical program on the Employment Contracts Act was suppressed during the 1996 general election. The growing number of private channels have little interest in serious current affairs. Radio presents a similar picture - heavily controlled also by O'Reilly - although public radio is a notable exception, which politicians detest. Hence there are few mass media channels for public opposition to be expressed.

Secondly, the main opposition party (Labour) still has an underlying neo-liberal economic model - it is critical of the way the government carries it out, rather than its principles. So principled opposition is easily marginalised.

In addition, all but a notable few academic economists have had the courage to suggest the emperor has no clothes. One, Tim Hazledine, Professor of Economics at Auckland University, has been the target of extremely nasty attacks in the business press (as has Jane Kelsey).

However, having said all that, there are growing signs of disillusion. A few essentially conservative commentators are asking pertinent questions, or bemoaning the meanness that is all too obvious in New Zealand society now (the Budget, announced last night, makes further cuts in welfare benefits, introduces a type of "workfare", and cuts all tariffs on imported cars, putting several thousand car assembly workers out of work).

Yes, growth is around or below the OECD average. Even more telling though is that the most direct indicators of international competitiveness are pointing in the wrong direction - and it was international competitiveness that all the reform was and is purportedly designed to achieve. For example, much new investment is still going into property rather than export industries, our share of exports relative to the rest of the world has fallen, and the current account deficit is now around 8% of GDP. Official unemployment is around 7% - over 50% higher than when the "experiment" started in 1984, which in turn was much higher than the near-zero post-war levels before it. The only "successes" that can be pointed to are a government budget surplus and inflation around 1-2%. But neither of these are indicators of the state of the "real" economy.

What do the "New Zealand masses" think? Enormous cynicism and disillusionment with any political process. That tends to lead to apathy and sullen tolerance rather than action. But, as I say, there are signs of change. There have been quite vociferous demos against the tariff cuts, and this firefighter (and police) issue may be a further mobilising issue. The biggest fights have actually come, not in the traditional working class areas of trade union issues, but in the areas of health and education. Over health there is universal disgust at what has been done to our efficiently run and effective state health system, resulting in demonstrations and protests in some of our smallest provincial towns right through to the largest cities. It is one of the foremost political issues. In education, the fight has recently been largely by students, at their increasingly precarious financial positions (a move towards vouchers was announced in yesterday's Budget, breaking a promise of universal student allowances) and by the primary and secondary teacher unions, the most active in the country, on pay and funding/quality/workload issues.

I've run out of lunchtime!

Bill Bill Rosenberg, w.rosenberg at csc.canterbury.ac.nz. Ph 64 3 3642801. Fax 64 3 3642332. Room 211, Ext 6801



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