"Rogering" the economy
The economic miracle that never was
In less than a decade, New Zealand went from being among the most social-democratic countries in the world, to probably the most open market economy. This change was obtained almost without resistance. Free-market consultants around the world hold New Zealand up as a model for other countries to follow. No wonder. Geof Pearce LIKE MOST OTHER DEVELOPED COUNTRIES, the New Zealand economy almost stopped growing after 1973. Real growth rates in 1973-1990 were under 0.5%. Social demo cratic methods suddenly seemed unable to revitalise the economy.
In response, New Zealand governments, massively supported by the major international accounting and consulting companies, went further than any other imperialist country in the drive to "get the economic fundamentals right."
Over 200,000 new jobs were created between 1991 and 1996. Of course, many were part time. And, at the same time, over 165,000 jobs were lost. Most of these were full time. Most of the new jobs came in the service sector. In the old days, non-essential trade was only allowed to take place Monday-Friday between 8am and 6pm, enabling most people to enjoy a normal
In 1990 the Labour Government passed the Shop Trading Hours Act Repeal Act, which lifted absolutely all restrictions on trading hours. In 1991, a National party government virtually abolished minimum and maximum work periods.
Statistics Minister Williamson considers any New Zealander who works for at least one hour every week to be "employed". In reality, of course, most New Zealanders want to work on a full time basis. The country has New Zealand has the second highest rate of involuntary part-time employment for men in the OECD, and the third highest rate for
The sad reality is that, after nine years of almost total labour market flexibility, the real unemployment rate is still higher than it was Peanut salaries
Real wages fell by over 6% between
May 1991 and December 1995: a period in which the economy grew by 19%. The true scale of this fall in living standards is masked by the small number of massive wage increases, and increased inequality. Workers have few chances to improve their situation. One survey suggests that 43% of employers have reduced overtime rates, and 42% have frozen them. Similar regression can be observed in bonuses for anti-social hours.
If you are under 20 years old, there is no minimum wage applicable for you. For older workers, the hourly minimum is about US$4, although companies increasingly employ workers as self-employed "agents," at a
With the introduction of tuition fees, university students now compete with high school students for part-time and casual jobs in the large retail and fast-food chains. Poverty
Church leaders estimate that one in five New Zealanders, and one in three children, live in poverty. Two thirds of the population live in households with a gross income of less than US$20,000. Work till you drop
The retirement age has been increased from 60 to 65, and the government tells people to save for their own retirement, since future state pensions will only cover the "bare necessities of life." Consultants from Price Waterhouse now suggest raising the retirement age to at least 70 years. The life expectancy for New Zealand men is 72. Lucky for some
New Zealand now has more millionaires per head of population than any country in the world. How did this happen? Redistribution. From 1991 to 1995 the share of wages and salaries in national income dropped by 2%, and the proportion taken up by investors revenue increased by 3%. In cash terms, this means cutting wages by $2 billion and adding $3.8 bn to investors' dividends every year. Debt and sovereignty
For the second time since 1857, the government has eliminated its foreign debt. The problem is that the private sector has borrowed much more from foreign bankers than the state has paid back. Combined public and private debt to foreign parties increased from NZ$1 bn. in 1976 to over NZ$ 70 today. "New Zealand has the world's best fiscal and monetary policies," enthuses the British magazine The Economist, before admitting, that, strangely, "it remains the developed world's most indebted country"
Most state debt was repaid with the
New Zealand * windfall profits from privatisation of airlines, banks, radio stations, railways, telecommunications, shipping companies, steel mills and forests. Many of these companies are now controlled by foreign interests. Over half the shares on the New Zealand stock exchange are foreign-owned, as is most of the real estate in the centres of most of the larger cities, and in the tourists resorts. Foreign ownership of farms and forests is also increasing.
New Zealand's open economy certainly encourages investment. But New Zealand companies now invest more overseas than offshore companies invest inside the country.
The Reserve Bank has been given draconian powers to manage money supply independently of government, in order to keep inflation within an acceptable
Unemployment band (0-2%). % of labour force But inflation rates 1n the imperialist OECD average New Zealand countries are at 1990 91 92 93 94 95 92 an all-time low anyway - New Zealand's great success is to have the 8th lowest inflation rate in the OECD, at the cost of real interest rates of 8-10% - higher than almost any other OECD country. These rates have increased mortgage repayments for the 71% of New Zealanders who have borrowed money to buy their own home.
These high interest rates have also discouraged productive investment, and pushed up the exchange rate as speculative money floods in. The New Zealand dollar has risen 26% against the US dollar since 1991. This makes it more and more difficult for exporters to find markets for New Zealand products, unless they can slash labour costs even further. The national sheep flock has declined by almost one third since 1994, to 40 million head. Four out of ten farms are now smaller than 20 acres: the size at which a family could hope to earn a reasonable Roger isn't stupid
Economic growth has stalled. Unemployment, poverty and homelessness are rising. Labour Finance Minister Roger Douglas, one of the architects of the reforms, is less popular than he once was. He entered these elections at the head of ACT In the face of dismal poll results, Douglas handed the reins over to Richard Prebble (past Labour Cabinet Minister) and Act began to climb.
The slap in the face from voters probably doesn't bother Douglas. He has to all extents and purposes now left New Zealand politics, for a much more satisfying career as an international business consultant. *
December 1996 #283 29