This is Part 1 of a 3 Part series that looks at the New Zealand experience with Neoliberalism. In this part I look at the onset of neoliberalism under the David Lange Government and its deregulation of key institutions in New Zealand in the 1990’s.
When the Government of David Lange took office, his Minister of Finance Roger Douglas, who would give rise to “Rogernomics” philosophy of a free, deregulated market in New Zealand moved quickly. Over the time that he was in office, Mr Douglas and his associate Finance Ministers Richard Prebble and David Caygill oversaw the slashing of tariffs; introduction of the G.S.T.; sales of various State Owned Enterprises (S.O.E.’s), deregulating labour markets. It is true that many of the commodities currently available in New Zealand were made possible by trade agreements that have been negotiated with other nations; that restrictions on the free movement of people so that we can tap into skilled labour and give our own citizens a chance to go abroad.
It would be totally remiss though to not acknowledge the consequences that this period of deregulation has had on New Zealand. An estimated 100,000 people across manufacturing, various government departments, critical infrastructure such as railways and electricity would wind up losing their jobs. A common symptom of market economics has been to purchase companies, gut them of the valuable components and then flog them off – the privatization New Zealand Rail being a case in point.
It was not just a case of deregulation of public utilities and various industrial sectors, but also public services. In 1989 Tomorrow’s Schools was established. It enabled the deregulation of the education sector, with some benefits such greater involvement of school trustees and a wider range of school types. Ultimately, it too introduced another common problem with market economics in that the partnership with tangata whenua in accordance with the Treaty of Waitangi appears to have been forgotten or deliberately erased from thinking – Kura Kaupapa Maori schools in the intervening 34 years have risen in significant part because of a lack of focus on the educational needs of Maori.
Crown Health Enterprises which existed in the 1990’s are another example of market ideology infiltrating a public service. The Area Health were disbanded and replaced with 23 C.H.E.’s that had to return a profit, which gave rise to allegations of corner cutting in health care. The four Regional Health Authorities had purchasing responsibilities that prevented public providers having priority in terms of purchasing resources.
But perhaps the most radical attack on the public services New Zealanders had come to know were made by former Finance Minister Ruth Richardson, whose legacy includes the “Mother of All Budgets” in 1991.”Ruthenasia” as the critics of the Fiscal Budget that year called the reforms was basically a declaration of war on the working class and the poor, with across the board cuts in social welfare, changes in employment law that blunted the power of the unions and – by Ms Richardson’s own admission, a very rapid very significant drop in wages.
During the 1990’s steps were taken to privatize the energy sector. Until 1998, when the then Minister of Energy Max Bradford announced he was breaking it up, Electricity Corporation New Zealand had been entrusted with the management of our electricity supply including the power stations, associated infrastructure such as canals, reservoirs surge chambers and so forth. It was also responsible for the electricity grid. Because of this it was able to turn off/on certain generators – coal, oil, hydropower depending on shortages to minimize the risk of power outages.
Under Mr Bradford’s direction, the power generating assets were sold off, and the electricity grid was entrusted to companies like Trustpower. With the assets being used for generating profits, the socio-economic wellbeing that E.C.N.Z. had had for New Zealanders began to evaporate; accountability began to become an issue as people in central Otago found out when sediment build up behind Clyde and Roxburgh dams contributed to prolonged flooding in October 1999 by forcing the dams to spill water that they should have been able to store.
Leftist Kiwi Writes 