This is Part 2 of a 3 Part series that looks at the New Zealand experience with Neoliberalism. Part 1 examined neoliberalism in N.Z. from 1985 to the election of former Prime Minister Helen Clark in 1999. In this part I look at the Helen Clark years, and those of the John Key Government.
Prime Minister Helen Clark assumed office in December 1999. Her campaign had focussed on lifting the minimum wage, overhauling the education system with a change to National Certitficate of Educational Achievement, as well as developing the District Health Board system.
Despite her reputation as a socialist, Labour Prime Minister Helen Clark oversaw the N.Z.-China Free Trade Agreement in 2008; initial negotiations. Ms Clark also did not attempt a buy back of the former Electricity Corporation New Zealand assets that had been sold when E.C.N.Z. was broken up, causing a 100% increase in power prices across 10-15 years. The break up has also led to a lack of co-ordination between generators to ensure that New Zealand does not have black outs, which was exposed in 2021 when parts of Waikato endured black outs on what turned out to be the coldest night of that years winter.
In 2002 the price of housing began to increase in New Zealand. A property that might have been worth $150,000 in 2001 would increase to $550,000. Investors, realizing the potential for meltdowns overseas were starting to become interested in having a rainy day solution in New Zealand. A property to quickly move to if their existing situation became untenable along with opportunities to invest some of their money and get a return through renters was suddenly not a bad thing to have. At the same time no serious effort was made to support the trades by helping with solutions such as fully funded apprenticeship schemes.
In November 2008, the Helen Clark Government was voted out and replaced by John Key. Mr Key, who worked for Merrill Lynch in foreign exchange, entered Parliament on a centre-right ticket for National. In 2013 against the results of a public referendum, he promoted asset sales. Goods and Services Tax (G.S.T.) was increased to 15%, whilst the top tax rate was cut to 33% and smaller cuts to lower income tax rates (e.g. 21% down to 17.5%). Despite claiming to have a rock star economy, there was no significant improvement in productivity. Living expenses rose so that a block of cheese was $20; no significant investment happened in social welfare. Boot camps were considered to be an answer to violent crime despite being widely demonstrated to not work with high reoffending rates, perhaps partially fuelled by a for-profit model of corrections, which took liberties with prisoner welfare.
Along with a failure to invest in water infrastructure for storm water, sewerage and waste water, a heavy emphasis on farming led to sheep faeces being found in drinking water in Hawkes Bay. Various district and city councils found themselves struggling to guarantee as a result of prolonged under investment that their water supplies met health and regional council water quality guidelines.
Combined with a failure to address the socio-economic impacts of the economic revolution of the late 1980’s and early 1990’s, the housing boom would sow the first seeds of anti-neoliberal discontent in New Zealand. During the 2010’s, the further privatization of the housing stock and failure to replace any of it; the failure to invest significantly in our railways; the denial of the housing crisis that brewed right under a Prime Minister who had his old primary school closed and turned into a housing development; a non-investment in health and the pursuit of trade agreements that threatened Pharmac (Comprehensive and Progressive Trans Pacific Partnership (2016)).
The asset sales may have played a role in convincing New Zealand First Leader Winston Peters, who held the balance of power in 2017 following the election that year, to go with Labour. I look at the Jacinda Ardern years in Part 3.
Leftist Kiwi Writes 