Brooking T. The History of New Zealand

Подождите немного. Документ загружается.

164

The

History

of New Zealand

Christmas. This decisive action signaled a full-scale attack upon the wel-

fare state, which would escalate despite the howls of beneficiaries, the

unemployed, and the ragged remnant of the union movement. Like Doug-

las in 1984, the new minister of finance also engaged Treasury to paint a

very bleak picture of New Zealand's economic condition. Her reading of

the statistics suggested that the country was living far beyond its means

and drowning in debt. According to Richardson, only massive slashing

of government expenditures and an extension of Douglas's reforms could

save the day. She also argued that there was no alternative. ("There is no

alternative" soon became a slogan and earned the acronym TINA.) Even

so,

most of the electorate took this outburst as rhetorical posturing, as-

suming that National would soon return to its more pragmatic ways. Such

judgment soon proved false because few voters or commentators realized

that ideologues had seized control of this normally centrist party.

This determination to extend the reforms of Douglas became clear in

her first budget of July

1991.

Dubbed the "mother of all budgets" by Rich-

ardson

herself,

it made clear the government's determination to slash

spending. Most obviously, she reduced benefits by over a billion dollars,

supposedly to break the cycle of dependency. Instead, this withdrawal of

purchasing power hurt small businesses and fostered the growth of an

alarmingly criminal underclass, the very group New Zealand had tried

to eliminate ever since the Wakefield experiments of the

1840s.

Meantime, in May, Bolger himself and the former champion of Think

Big, Bill Birch, set out to break the already weak union movement by

passing an Employment Contracts Act. This legislation made unionism

voluntary, supposedly to enable employers greater flexibility in setting

wages. It also encouraged the negotiation of individual contracts rather

than national awards in an effort to increase productivity. In addition, it

did away with equal pay for women. Unfortunately, this rather drastic

measure proved as unsuccessful as Labor's reforms in increasing New

Zealand's lamentably low levels of productivity. Richardson also slashed

the controversial accident compensation fund introduced by Labor in 1974

on a no-fault basis. This scheme had always been dogged by abuse, but

it did free the country from the huge costs of medical litigation that have

caused so many problems in the United States. Unemployment soared to

over 200,000, or about

percent of the

workforce,

a post-Depression rec-

ord. On the positive side, the Reserve Bank Act did its job by holding

inflation to 2 percent, putting New Zealand back on level terms with its

major trading partners.

Growing public unease did not slow Richardson. Instead, in 1992 edu-

cation minister Lockwood Smith, despite claiming during the election that

Facing the Challenges of Globalization,

1984-2002

165

National would never increase university fees, introduced a new system

of up-front fees to be paid by loans provided at market rates of interest.

The Australian alternative of graduate tax after training had been consid-

ered but rejected because it would not raise funds fast enough to cover

booming enrollments. Government went farther than Labor in handing

control of these loans over to trading banks. Given that interest rates ran

at over 10 percent at this time and that debt accumulated from day one

at college, students protested in increasingly voluble ways. The govern-

ment replied that, as the Hawke Report had suggested, tertiary education

enabled individuals to make large personal gains. What was the differ-

ence,

asked Bolger and Shipley, between a young farmer or a professional

starting out? Both had to take loans and risks if they hoped to prosper.

According to this thinking, highly paid professions such as medicine and

dentistry would return the highest remuneration, so these students should

pay the highest fees. Consequently, fees for these subjects rose from La-

bor's $1,000 to $10,000 for medicine and an extraordinary $23,000 for

dentistry.

New Zealand parents were caught unawares by this drastic change and

had made no provision for such costs. Most students, therefore, had to

take the loans and live with the escalating debts. Not surprisingly, New

Zealand students largely disappeared from the dental school to have their

places taken by wealthy Asians, while medicine also became more dom-

inated by Asian students. Maori and Pacific Islanders found it harder than

ever to attend, although the central importance of treaty claims saw a

substantial increase in the number of Maori taking law. Universities them-

selves also had to become much more competitive and businesslike. Uni-

versity councils tightened their budgets, except for advertising and the

provision of much more generous packages for vice chancellors and

higher-level managers. Supposedly luxury subjects such as Russian soon

fell victim to this reorientation toward a more businesslike approach.

Outside the universities, government infuriated state house owners by

raising their rents to market levels. Special buyback deals did not make

up for the huge hike in rents. A new party calling itself the Alliance, made

up of a coalition of the remnants of New Labor, Mana Motuhake, the

Greens, and the Democrats, emerged to champion the interest of this bur-

geoning underclass. The worsening plight of Maori brought forth protests

from the minister of Maori affairs, Winston Peters, who had set up a Min-

istry of Maori Development or Te Puni Koriki in 1991 and had done away

with the Iwi Transition Agency two years ahead of schedule.

Peters's

flamboyant style and sometimes unorthodox methods proved

too much for Bolger, and he sacked Peters as minister of Maori affairs in

166

The

History

of New Zealand

October 1991. Before Peters was summarily ejected from membership in

the National Party a year later, other Maori leaders managed to secure the

Sealord Deal in 1992. Under this agreement Ngai Tahu won monopoly

over the South Island's coasts, a decision that brought forth howls of pro-

test from other Maori tribes as well as from many Pakeha fishermen. Pe-

ters responded to his dismissal by moving off to form his own New

Zealand First Party in 1993.

Asset sales continued apace, despite the diversions caused by the clash

between Bolger and Peters. The ailing Bank of New Zealand was sold to

the National Bank of Australia in 1991, handing almost total control of

New Zealand's trading bank to overseas interests. Government also sold

New Zealand Timberlands, a giant, state-backed forestry enterprise, and

Muldoon's Taranaki Petroleum to overseas interests in 1992.

The most controversial reforms of all related to the big-spending health

sector because they affected the entire population rather than particular

groups such as students or state house owners. Richardson appointed a

special task force to investigate how costs could be cut and services main-

tained, or even improved. The task force reported in 1991 and suggested

radical overhaul. In particular, it wanted much greater accountability (an-

other buzz word of this period) in the system. By dividing administration

of the system between funders (Regional Health Authorities) and provid-

ers (Crown Health Enterprises, or CHEs), taxpayers would know exactly

how much was spent on what.

Government also increased fees for doctors' visits, medicines, and hos-

pital stays in an attempt to encourage the middle classes to take out

medical insurance and receive treatment in the private system. The ap-

pointment of prominent businessmen such as Ron Trotter and Peter

Troughton as CEOs of the CHEs suggested that privatization was defi-

nitely on the government's agenda. Public spending now accounted for

77 percent of total health spending as against a high of 88 percent in 1981.

(In the United States around 40 percent of health spending comes from

government.) Unfortunately for the reforms, spending continued to es-

calate, despite the flight of many into the private sector. By 1996 New

Zealand still spent a higher percentage of its gross domestic product on

health than Sweden or the United Kingdom. On the other hand, the gov-

ernment made some provision for lower-income earners by introducing

a community services card that provided cheaper care for those

below

specified income levels.

The National government applied its health reform model to research

and development as well by abolishing the old Department of Scientific

and Industrial Research established in 1926. It was replaced with several

Facing the Challenges of Globalization, 1984-2002 167

competing Crown Research Institutes

(CRIs)

that would have to contest

funding every year. Guaranteed long-term funding became a thing of the

past as scientists diverted their energies to grant applications. Some com-

plained that they no longer had any time to do research, or any certainty

that they could commit to long-term projects. Yet another large group left

the country, and Australia benefited directly once more.

Few state assets were left to sell by 1993, but National still managed to

sell the ailing New Zealand Railway Corporation to the Wisconsin Central

Transport Company for a measly $328 million. Critics then and now con-

sider this to have been a virtual fire sale of a major strategic asset, espe-

cially in a world confronting an energy crisis. These critics find support

for their argument in the difficulty Wisconsin Central has had in turning

a profit, especially as Wisconsin Central has withdrawn to the point where

a government buyback at greatly enhanced value is almost a necessity.

Despite the extension of Labor's reforms in many areas of New Zealand

life,

National failed to change the antinuclear policy. Ministers found it

difficult, especially in terms of improving trade relations with the United

States, but any mention of modification brought forth powerful condem-

nation from the electorate. New Zealand, though, did assist in the United

Nations-led Gulf War in 1991 by supplying medics and naval support.

The celebration of a centenary of women's suffrage in 1993 caused Na-

tional some embarrassment as the government had done away with equal

pay. The party tried to win back women voters by appointing Sylvia Cart-

wright as New Zealand's first woman high court judge. Social liberals had

little else to celebrate, though, as National slashed funding for the arts.

On the other hand, the Privacy Act passed in 1993 did help protect indi-

viduals against prying media and state agencies, and lovers of the arts

took much pleasure in the success of Jane Campion's movie The Piano,

which won an Oscar for best supporting female actor.

Luckily for National, the achievement of a small budget surplus in

1993

enabled the party to persuade a doubtful electorate that the pain had

started to produce some gain. This unexpected good news and the dis-

organized state of the Labor opposition enabled the party to scrape back

into power by five seats. Significantly, the electorate signaled its dissatis-

faction with the relentless pace of reform when 53 percent voted in the

new mixed member proportional (MMP) electoral system. This West Ger-

man system did away with the old first-past-the-post system, ostensibly

to allow parties to be represented according to the percentage of the vote

they won. In the past, small parties that had often won a significant vote

were not represented. Parties with smaller votes could also be elected into

power if they won more seats.

168 The History of New Zealand

MMP ensured that tiny extremist parties could not be represented, as

representation required a 5 percent threshold, but electoral seats were now

reduced from 97 to 60, with another 60 going to list MPs, elected according

to the size of party votes. In other words, parliament would now be much

bigger than ever before, but supposedly also more representative of the

wider society because groups other than middle-aged white men had a

greater chance of winning enough votes to take their place in the House

of Representatives. This happened despite expensive media campaigns

organized against MMP by big business, which feared that political insta-

bility would result from such a drastic change in the electoral system. Big

business also feared that that the neoliberal reforms would be slowed

under MMP. This reading proved more accurate than an outbreak of in-

stability because many New Zealanders felt that only such a change

would slow the new right juggernaut.

The period 1984-1993, then, witnessed such an extraordinary burst of

reform that it constituted a veritable revolution in New Zealand history.

Critics then, now, and no doubt in the future will argue about the efficacy

of these reforms, but there is general consensus that a sea change occurred,

which meant that New Zealand would never be the same again. New

Zealand politicians rejected the comfortable welfare model, swung the

tiller of the ship of state hard to the right, and set forth on a very different

direction. The costs were high as the reforms tore large holes in the exist-

ing social fabric. Unemployment decimated many communities. In the

remote east coast of the North Island and areas like the far north, rates of

Maori unemployment climbed to Third World levels at around 80 percent

of the workforce.

Things have improved a little since, but government policy inflicted

severe damage. Both theft and violent crime flourished in these kinds of

places, as did a large-scale marijuana industry. Urban areas of cheaper

housing, especially those dominated by large Maori and Pacific Island

communities, such as Otara in South Auckland and Porirua north of Wel-

lington, also witnessed frightening leaps in criminal behavior. Families

spilt apart; health worsened; and single-parent families became ever more

common. Factory and forestry workers, just like car assembly workers,

found themselves on the scrap heap, and many never retrained or re-

gained work.

Yet this formerly tight, rather dull society also opened up and became

more tolerant and dynamic. New energy began to pulse out of the de-

prived areas in particular. Public debt also dropped significantly, only to

be replaced by a huge leap in private indebtedness. New Zealand became

technologically sophisticated, as the gap between rich and poor widened

Facing the Challenges of Globalization,

1984-2002 169

to nineteenth-century levels. Average earnings lagged behind the rate of

inflation as families continued to struggle with high interest rates and

escalating house prices. Real wages consequently fell throughout the

1990s.

1993

the old problem of low productivity had not been solved, nor had

any large-scale industries appeared to supplement agriculture, despite

huge encouragement given to businesses and entrepreneurs. It seemed

that the enterprise society could not be built over night.

Bureaucracy still remained a problem despite rolling back the state,

because it now flourished in the private rather than the public sector.

Welfare dependency had not lessened, and new government agencies

seemed to have grown as large as the old ones they replaced. Certainly,

the Ministry of Education, for example, employed less staff than the old

boards of education, but once commentators remembered to add in the

Qualifications Authority and Education Review Office, savings seem

minimal. Declining real wages for ordinary New Zealanders, meantime,

encouraged further out-migration to Australia, and, like most small coun-

tries,

New Zealand seemed to be suffering from a chronic brain drain as

its most talented left in droves. In short, the big reforms looked spectacular

and helped create a superficially more modern and sophisticated society,

but they achieved far less than architects such as Douglas, Prebble, Rich-

ardson, and Treasury economists had hoped.

THE SLOW SWING BACK TO THE CENTER,

1993-1999

Astute politician that he was, Prime Minister Jim Bolger removed the

unpopular Richardson from the finance portfolio and replaced her with

Muldoon's former lieutenant, Bill Birch. Yet, at first, it seemed that Na-

tional had taken little heed of electoral protest in the 1993 election. Edu-

cation minister Lockwood Smith increased tertiary student fees and so

incensed students that they occupied registry buildings on several cam-

puses.

Smith also brought considerable advantage to private schools by

integrating them into the state system on extremely favorable terms. He

tried to encourage schools to adopt a bulk funding system whereby boards

of trustees rather than central government controlled teachers' salaries.

Some schools accepted the terms offered by government, but the majority

of parents and teachers condemned these offers as bribes and supported

the status quo. The Postprimary Teachers' Association went farther in

condemning bulk funding as ideologically driven and struck several times

in opposition.

Jenny Shipley, as minister of health, similarly pushed on with her re-

170

The History of New Zealand

forms of health administration despite the constant protests of health pro-

fessionals. Things looked bad for the government by 1995 as economic

recovery failed to materialize and the country earned the dubious dis-

tinction of having the highest rate of suicide among young males in the

world.

Yet amid the gloom, National, under the astute direction of Douglas

Graham, managed to negotiate two major deals with large tribes. The

Tainui settlement of

1995

included a formal apology from government for

raupatu or land confiscation in addition to a cash settlement of

$187

million

as compensation for past grievances. Ngai Tahu, led by the charismatic

Tipene O'Regan, secured the same level of compensation in

1996,

won the

right to lease out large tracts of high country to runholders, and saw

passage of the Runanga o Ngai Tahu Act. This legislation established a

separate legal identity for the tribe so that it had to sink or swim under

its own control. In Maori terms, they had achieved tino rangatiratanga (big

chieftainship or control over one's destiny) at the tribal level at least.

O'Regan argued that the tribe constituted the most perfect form of collec-

tive capitalism. So far, smart investment decisions, sale of less productive

assets,

and careful management have defied the tribe's critics to the point

that it is now one of the biggest and wealthiest corporate entities in the

South Island. Green activists, however, remain skeptical of the tribe's claims

that it will manage the environment better than central government.

These two successful settlements made the direct protest actions of

Wanganui Maori at Motua Gardens and the burning of a historic school

near Kaitaia in the far north appear senseless and unjustifiably negative.

The contrast between negotiated settlement within the law and radical

action outside the law worked to the government's advantage. So too did

the success of the powerful movie version of Alan Duff's Once Were War-

riors, which suggested that Maori should now get on with the job of sort-

ing out their problems by themselves.

A small economic upturn in 1996, including a fall in unemployment to

around 7 percent of the workforce, or about the OECD average, also

helped the government's cause. The government sweetened the gains by

offering small tax cuts. New Zealand's sailors helped too by winning the

prestigious America's Cup in 1995, and the All Blacks played with great

flair despite coming in second in the 1995 Rugby World Cup.

Yet National struggled at the 1996 election because Labor's new leader,

Helen Clark, who replaced Mike Moore in a messy coup in 1993, per-

formed far above expectations at the 1996 election. Special coaching in

how to handle the media helped, but so too did the presentation of policies

Facing the Challenges of Globalization,

1984-2002

171

that distinguished Labor from National. By targeting National's failures

in education and health and talking of a more moderate third way, like

that promoted by Britain's Tony Blair, Labor saved itself from possible

oblivion. Winston

Peters's

New Zealand First Party also won a powerful

support base among an unlikely coalition of Maori and white pensioners

championed by their Gray Power pressure group. Peters whipped up fear

of rising levels of Asian migration and won a healthy 13 percent of the

vote.

Significantly, his young Maori candidates won all 5 of the Maori

seats from Labor. Under the new MMP system, this gave him 17 seats in

the new parliament. Roger Douglas's and Richard

Prebble's

new party,

known as the Association of Consumers and Taxpayers, or ACT, drew

another 8 percent of votes away from National. On the left Jim Anderton's

Alliance Party also did well, winning 10 percent of the vote and 13 seats

against Labor's 28 percent of the vote and 37 seats.

In short, the worst fears of the opponents of MMP seemed to have been

borne out because this constituted a hung parliament. Winston Peters

eventually overcame the impasse because he held the balance of power.

After three months of negotiation, he eventually decided to form a gov-

ernment with his old party, National. Labor refused to accept his sugges-

tion that he assume the new role of treasurer, a position above that of

minister of finance, which had been developed a little earlier in Australia.

As many anticipated, Peters returned to his ideological home by creating

a right-of-center coalition.

Even so, Peters tried to ring some concessions from National to benefit

his Maori and pensioner supporters. The new kingmaker won consider-

able sympathy from several elements in a very different looking parlia-

ment. Maori had won a record 15 places and were represented in all

parties, while women also achieved their highest level of representation,

rising from under a quarter to nearly a third of parliamentarians. Many

of this new group wanted cheaper health delivery and better access to

education, but National conceded little apart from making doctors' visits

free for small children from poor families and removing the surcharge on

superannuation (pensions) in 1998.

The impetuous behavior of some of

Peters's

inexperienced new minis-

ters did not help. Tau Henare's and Tuku Morgan's attempts to set up a

Maori television channel soon degenerated into scandal and farce as the

media clamored over gross overexpenditure on fashionable underpants.

Such frippery weakened

Peters's

hold on Bolger and weakened his ability

to restrict new right policies. By 1998 National had sold off $6 million

worth of state assets, including the Housing and Forestry Corporations,

172

The History of New Zealand

and ended car assembly in New Zealand. This measure put at least 1,500

Pacific Islanders out of work and hurt several related downstream in-

dustries.

Jenny Shipley replaced Bolger in a bloodless coup on December

8,1997,

to become New Zealand's first woman prime minister. She found Peters

more difficult to handle than did Bolger, and the coalition broke up in

August 1998. Shipley only stayed in power because of the support of one

maverick Alliance MP, Alamein Kopu. Peter Dunne, the sole survivor of

the United Party, which emerged in 1996, also pledged to support the

government. ACT generally also voted with National, especially when the

government moved away from the center toward the right. Tau Henare

formed his own Mauri Pacific Party in 1998, but remained minister of

Maori affairs, insisting that he could achieve more for Maori by serving

in government than by joining the opposition.

Remarkably, this rather fragile coalition government survived the se-

rious Asian financial crisis of 1997-1998. It did little more than survive,

though, as economic indicators worsened. Debt soared to over

$100

billion

as New Zealand slumped to twentieth in the OECD tables, below such

maligned interventionist states as Australia, the Netherlands, Ireland, and

all the Scandinavian countries. By early

1999

New Zealand faced a serious

balance of payments crisis as it became clear that the country continued

to live well beyond its means. The tax cuts had only encouraged consumer

expenditure on imported luxury goods and overseas holidays. They had

not enhanced savings or encouraged new enterprise. No new industries

had emerged to supplement agriculture, and growth stagnated at a dis-

appointing 2.6 percent as against the 4 percent OECD average. Produc-

tivity only increased by a paltry 1 percent per annum over this period,

when reunified Germany managed 4 or more percent annual increases.

Unemployment refused to drop below 7 percent of the workforce. Lower

government revenue also

forced

up tertiary

fees

and a growing list of user-

pays services.

Some new right excess in

1999

also damaged the government's waning

reputation, especially John Luxton's suggestion that selling electricity was

exactly the same as selling baked beans. Public condemnation of such

inanity did not stop his colleague, Max Bradford, from replacing the old

nationally organized Electricity Corporation with several new power com-

panies. These competitors would supposedly force down the cost of power

and improve services, but there is little evidence so far of either goal's

having been achieved. Indeed, the electorate greeted this change skepti-

cally because New Zealand's biggest city, Auckland, had experienced long

blackouts in 1995 and nearly ran out of clean drinking water the following

Facing the Challenges of Globalization, 1984-2002

173

year. Both the media and Labor blamed both problems on excessive de-

regulation.

A growing section of the community also became increasingly alarmed

at ongoing damage to the environment and the seeming inability of either

government or the Resource Management Act to slow development. Large-

scale protest against degradation had first emerged in opposition to the

raising of beautiful Lake Manapouri for hydroelectricity from as early as

1967.

The success of this protest led to the formation of the Values Party

in 1972, but Labor soon absorbed this group. Growing concern over such

global issues as the hole in the ozone layer, as well as an older desire to

adopt a more organic approach to food production, persuaded green ac-

tivists to form a Green Party, which joined Jim Anderton's Alliance for

the 1993 election. Tension between the somewhat domineering Jim An-

derton and the Greens' able coleaders Jenette FitzSimmons and Rod Don-

ald persuaded the Greens to spilt and go it alone for the 1999 election.

The Greens' determination to bring New Zealand's clean and green image

more into line with reality, and their opposition to unfettered global trade,

touched a chord with many younger voters. The party's fortunes rose

sufficiently in the polls during the 1999 campaign to suggest that it might

win a few seats.

Scandal erupted throughout 1999 to embarrass the government. Ap-

parent conflict of interest forced Murry McCully to resign as minister of

tourism. The decision of the new welfare department, known as Work and

Income New Zealand, or

WINZ,

to entertain its managers in grand style

at a luxury resort proved far more damaging. Both the media and Labor

condemned this as gross extravagance and a waste of taxpayers' money.

A public outcry followed, and the chief executive, Christine Rankin, was

forced to resign by the new Labor government.

Labor then had a relatively easy job in winning the 1999 election, al-

though the party had first to convince the electorate that it would offer

clear-cut alternatives to National. Some voters also wanted guarantees

that Labor could work with the Alliance and avoid the destabilizing splits

of the first MMP coalition. Clark and Anderton responded to this fear by

drawing up a carefully worded agreement and by demonstrating their

good will in attending the conferences of each other's party. Labor con-

tinued to talk of third ways and greater state assistance to industry and

regional development. The Labor candidates also made it clear that they

would reintroduce compulsory unionism after repelling the Employment

Contracts Act, and they guaranteed that they would not introduce bulk

funding in schools. Elected regional health boards would also be reestab-

lished, so ending the funder/provider system as operated by the RHA and