NZ’s Experience with Deregulation & Privatisation
October 16, 2017 9:43 PM Subscribe
The US had Reagonomics, the UK had Thatcherism, while New Zealand had Rogernomics and Ruthanasia....
Former New Zealand Prime Minister Jim Bolger, who presided over the acceleration of ‘neo-liberal’ policies in the 1990s, recently repudiated them saying that “The world has sat silent as they have pursued what’s called neo-liberal economic policies, and in fact they have failed.” This spurred some heated debate on twitter amongst the pundits, he drew criticism from the left and the right, but found support from new Labour Party leader Jacinda Ardern.
John Carlaw's documentary series Revolution (1996) mapped the social and economic changes in New Zealand society in the 1980s and early 1990s.
Former New Zealand Prime Minister Jim Bolger, who presided over the acceleration of ‘neo-liberal’ policies in the 1990s, recently repudiated them saying that “The world has sat silent as they have pursued what’s called neo-liberal economic policies, and in fact they have failed.” This spurred some heated debate on twitter amongst the pundits, he drew criticism from the left and the right, but found support from new Labour Party leader Jacinda Ardern.
John Carlaw's documentary series Revolution (1996) mapped the social and economic changes in New Zealand society in the 1980s and early 1990s.
- Part 1 - Fortress New Zealand (55’17) [Youtube] This first episode focuses on NZ's radical transformation from a heavily regulated welfare state to a petri dish for free market ideology. It includes interviews with key political and business figures of the day, who reveal how the dire economic situation by the end of Robert Muldoon's reign made it relatively easy for Roger Douglas to implement extreme reform.
- Part 2 - The Grand Illusion (55’35) [Youtube] This second episode argues that in its first term in office, the Labour Government promoted neoliberal reform via illusory ideas of consensus and fairness, while PM David Lange mined goodwill from its indie anti-nuclear policy (famously in an Oxford Union debate). The interviews include key figures in politics, the public service and business: an age of easy lending and yuppie excess is recalled, while those in rural areas recount the downside of job losses.
- Part 3 - The Great Divide (55’40) [Youtube] This third episode looks at the lurch of the Kiwi stock market from boom to bust in 1987, and the growing philosophical divide between the “head boys”: PM David Lange and finance minister Roger 'Rogernomics' Douglas. Within two months of the October 1987 stock market crash, $21 billion was lost from the value of NZ shares. Lange and Douglas give accounts of how their differing views on steering the NZ economy eventually resulted in both their resignations.
- Part 4 - The New Country (56’19) [Youtube] This final episode sums things up, after examining "the second wave" of neoliberal reform when National took power in 1990, shortly after Telecom was sold to American interests. Incoming finance minister Ruth "mother of all budgets" Richardson oversaw a reduction of welfare payments, a shake-up of the health system, and a curbing of union powers. Richardson: "in a human sense I understood that [community outrage], but that wasn't going to deflect me".
- Someone Else's Country (1996) (1'47'11) [Youtube] looks critically at the radical economic changes implemented by the 1984 Labour Government - where privatisation of state assets was part of a wider agenda that sought to remake New Zealand as a model free market state. The trickle-down ‘Rogernomics’ rhetoric warned of no gain without pain, and here the theory is counterpointed by the social effects.
- In a Land of Plenty - the Story of Unemployment in New Zealand (2002) (1’47’18) [Youtube] From the 1930s to the mid 1980s, successive New Zealand Governments regarded full employment as the first objective of economic policy. With the election of the fourth Labour government in 1984, the policies and institutions which had sustained full employment were abandoned or modified, and unemployment became an instrument of economic management.
- A Civilised Society (2006) (1'38'34) [Youtube] This documentary looks at the new right ideology that transformed public education in the 80s and 90s and the schism it caused with teachers. Interviews with parents, teachers and unionists are cut together with archive footage of treasury officials and politicians advocating that schools be run as businesses. There are vexed board of trustees' meetings, an infamous deal between Avondale College and Pepsi, and teachers take their opposition from the classroom to the streets.
- Inside Child Poverty (2011) (45’08) [Youtube]
- Mind the Gap (2013) (46’24) [Youtube]
- World Class? (2016) (44’49) [Youtube]
- Who Owns New Zealand Now? (2017) (44’46) [Youtube]
- Privatization: New Zealand Swimming Against the Tide [Roger Kerr, Business Round Table.]
- Downsizing Government - the case for privatisation [Chris Edwards, The Cato Institute]
- Treasury paper (PDF) outlining NZ’s experience of privatisation. [John Wilson, NZ Treasury]
- Leaky Homes: The myth of deregulated building [Peter Cresswell]
- Issues In Privatisation – Costs and Benefits [Bill Rosenberg, New Zealand Council of Trade Unions]
- Deregulation's unfortunate experiment [Colin Espiner, Sunday-Star Times]
- 28 replies to a ‘neo-neoliberal’ think tank’s 28-point plan for the future of New Zealand. [Simon Wilson, The Spinoff]
- New Zealand's Neoliberal Drift [Branko Marcetic, Jacobin Magazine]
Oh wow. I don't have time tonight, so I'll have to spend tomorrow going down this rabbit hole!
As an Australian, both the content & the contents of this post raise some interesting thoughts. First of all we tend to think of New Zealand as our younger cousin, toddling along after us & repeating our mistakes 10~20 years after us, when in fact they were going through the same thing at the same time - but choosing a path that lay half-way between the Australian response and the UK response.
And secondly, it really highlights the paucity of Australian introspection. The English are good at this - I'm a big fan of the BBC's social history docos, which they seem to churn out endlessly about any subject - but you'd be flat-out finding a single Australian doco from the last ~20 years that critically examines our economic, political, & social behaviour & responses during this time. And right here, in this post, there's 11 from NZ…
posted by Pinback at 2:07 AM on October 17, 2017 [6 favorites]
As an Australian, both the content & the contents of this post raise some interesting thoughts. First of all we tend to think of New Zealand as our younger cousin, toddling along after us & repeating our mistakes 10~20 years after us, when in fact they were going through the same thing at the same time - but choosing a path that lay half-way between the Australian response and the UK response.
And secondly, it really highlights the paucity of Australian introspection. The English are good at this - I'm a big fan of the BBC's social history docos, which they seem to churn out endlessly about any subject - but you'd be flat-out finding a single Australian doco from the last ~20 years that critically examines our economic, political, & social behaviour & responses during this time. And right here, in this post, there's 11 from NZ…
posted by Pinback at 2:07 AM on October 17, 2017 [6 favorites]
New Zealand had Rogernomics and Ruthanasia...
I think right now we're headed for Winstonia...
posted by arzakh at 5:17 AM on October 17, 2017
I think right now we're headed for Winstonia...
posted by arzakh at 5:17 AM on October 17, 2017
Are there any NZ folks here who would like to give their perspective? Would be useful to have that information while watching the documentaries.
posted by Triplanetary at 6:56 AM on October 17, 2017 [1 favorite]
posted by Triplanetary at 6:56 AM on October 17, 2017 [1 favorite]
OK. I'll have a go.
1996 in New Zealand was a weird time, one that in many ways feels much like the present moment. There was a sense that the political right had completely run out of ideas, but they nevertheless had managed to cling to power via a coalition with NZ First in NZ's first MMP election. Twelve years of extreme neoliberalism, meanwhile, had pretty much eliminated all forms of opposition. The health system, universities, and civil service were crumbling due to lack of funding and constant restructuring. A symbol of this was the Auckland Hospital building, whose local health board was so starved of government funding that it had to rent out its signage space for commercial advertising. The only bit of the economy that seemed to be thriving in 1996 was change management consultancy. Every other sector was on its knees.
But there seemed to be nothing in any of the broadcast media (or even print media) acknowledging any of this. The main TV channels refused to broadcast Barry's Someone Else's Country, even though it had (IIRC) received NZ On Air funding and contained a lot of footage from the TVNZ archives. Too niche, the broadcast chief executives said. No one would be interested. Instead, it circulated as a VHS videotape, shown at small-group screenings organised by unions and community groups and work associations. It was at one of these (organised via my workplace) that I saw it. It eventually screened a year or so later on Auckland's Triangle TV, the chaotic local community access TV station. Revolution, meanwhile, was widely seen as an exercise in apologetics for the local flavour of neoliberalism. I've never seen it.
posted by Sonny Jim at 10:14 AM on October 17, 2017 [2 favorites]
1996 in New Zealand was a weird time, one that in many ways feels much like the present moment. There was a sense that the political right had completely run out of ideas, but they nevertheless had managed to cling to power via a coalition with NZ First in NZ's first MMP election. Twelve years of extreme neoliberalism, meanwhile, had pretty much eliminated all forms of opposition. The health system, universities, and civil service were crumbling due to lack of funding and constant restructuring. A symbol of this was the Auckland Hospital building, whose local health board was so starved of government funding that it had to rent out its signage space for commercial advertising. The only bit of the economy that seemed to be thriving in 1996 was change management consultancy. Every other sector was on its knees.
But there seemed to be nothing in any of the broadcast media (or even print media) acknowledging any of this. The main TV channels refused to broadcast Barry's Someone Else's Country, even though it had (IIRC) received NZ On Air funding and contained a lot of footage from the TVNZ archives. Too niche, the broadcast chief executives said. No one would be interested. Instead, it circulated as a VHS videotape, shown at small-group screenings organised by unions and community groups and work associations. It was at one of these (organised via my workplace) that I saw it. It eventually screened a year or so later on Auckland's Triangle TV, the chaotic local community access TV station. Revolution, meanwhile, was widely seen as an exercise in apologetics for the local flavour of neoliberalism. I've never seen it.
posted by Sonny Jim at 10:14 AM on October 17, 2017 [2 favorites]
Three years later, in 1999, the centre-left Labour Party under Helen Clark (which stood in an uneasy and unresolved relationship to its hard-neoliberal, 1984-1990 incarnation) came to power in coalition with the left-wing Alliance party. And that was great for about 18 months until 9/11 happened and the left decided to rip itself apart over the question of sending troops to Afghanistan. From the vantage point of 2017, that brief interlude of hope seems very long ago and far away.
posted by Sonny Jim at 10:23 AM on October 17, 2017 [1 favorite]
posted by Sonny Jim at 10:23 AM on October 17, 2017 [1 favorite]
I gotta say, this post started out small and became a behemoth. It really does cover too much ground. Over 15 hours of documentary and this still doesn’t even scratch the surface of the effects of the neoliberal revolution.
Many of the people I’ve talked to about it say that the country was in crisis and needed a correction, but that the sheer scale and speed of the changes caused a lot of unnecessary pain. The removal of subsidies and tariffs forced the farming sector into becoming efficient and competitive players on the international market. Economic performance is solid and New Zealand often tops rankings for ease of doing business.
What hasn’t been generally appreciated or acknowledged was many of the longer term consequences deregulation and privatisation have wrought:
How the privatisation of the rail network was ballsed up so badly, it had to be renationalised and tracks repurchased for $1 in order to reinvest in the infrastructure.
How Air NZ was privatised but when a subsequent buyout of Ansett Australia turned pear-shaped, the Government was forced to renationalise it.
How the building industry used substandard materials that led to the ongoing leaky homes crisis.
The electricity department was divested into a state-owned enterprise (SOE) (ECNZ) in 1987, this corporation was subsequently broken up into three competing SOEs in 1999. Dilapidated infrastructure led to embarrassing blackouts in Central Auckland. Currently structured as a wholesale electricity market, high electricity prices have plagued NZers and market abuse is seen as the culprit.
In the financial sector, under-regulation led a series of finance company collapses in the late 2000s where thousands lost their life savings.
In the banking sector, Australian banks and others took advantage, fees rose and profits disappeared overseas.
The deregulation of the mining sector was a central contributing factor in the Pike River Mine disaster of 2010.
Private prison operator Serco was scoring "exceptional" performance marks when it had too few guards to detect or stop organised fight clubs at Mt Eden remand jail.
NZ’s unilateral removal of subsidies and tariffs led to a loss of bargaining power when negotiating trade internationally. When we have no subsidy or tariff removal concessions to make, it can be hard to convince other countries to do the same. There is no need for reciprocity as we have already given away potential concessions.
And there’s been a return of privatisation under PM John Key. While a housing affordability crisis menaced the country, the National Government continued to sell off social housing.
Using privatisation to drive down costs in the social services sector has caused disability support contractors to walk away from contracts due to underfunding.
And the list goes on and on…
Looking to the future, I’ll just leave this here too: 2017 Quaker Lecture with Jane Kelsey titled Transcending Neoliberalism (2017) (1'04'36)[Youtube]
posted by Start with Dessert at 4:01 PM on October 17, 2017 [7 favorites]
Many of the people I’ve talked to about it say that the country was in crisis and needed a correction, but that the sheer scale and speed of the changes caused a lot of unnecessary pain. The removal of subsidies and tariffs forced the farming sector into becoming efficient and competitive players on the international market. Economic performance is solid and New Zealand often tops rankings for ease of doing business.
What hasn’t been generally appreciated or acknowledged was many of the longer term consequences deregulation and privatisation have wrought:
How the privatisation of the rail network was ballsed up so badly, it had to be renationalised and tracks repurchased for $1 in order to reinvest in the infrastructure.
How Air NZ was privatised but when a subsequent buyout of Ansett Australia turned pear-shaped, the Government was forced to renationalise it.
How the building industry used substandard materials that led to the ongoing leaky homes crisis.
The electricity department was divested into a state-owned enterprise (SOE) (ECNZ) in 1987, this corporation was subsequently broken up into three competing SOEs in 1999. Dilapidated infrastructure led to embarrassing blackouts in Central Auckland. Currently structured as a wholesale electricity market, high electricity prices have plagued NZers and market abuse is seen as the culprit.
In the financial sector, under-regulation led a series of finance company collapses in the late 2000s where thousands lost their life savings.
In the banking sector, Australian banks and others took advantage, fees rose and profits disappeared overseas.
The deregulation of the mining sector was a central contributing factor in the Pike River Mine disaster of 2010.
Private prison operator Serco was scoring "exceptional" performance marks when it had too few guards to detect or stop organised fight clubs at Mt Eden remand jail.
NZ’s unilateral removal of subsidies and tariffs led to a loss of bargaining power when negotiating trade internationally. When we have no subsidy or tariff removal concessions to make, it can be hard to convince other countries to do the same. There is no need for reciprocity as we have already given away potential concessions.
And there’s been a return of privatisation under PM John Key. While a housing affordability crisis menaced the country, the National Government continued to sell off social housing.
Using privatisation to drive down costs in the social services sector has caused disability support contractors to walk away from contracts due to underfunding.
And the list goes on and on…
Looking to the future, I’ll just leave this here too: 2017 Quaker Lecture with Jane Kelsey titled Transcending Neoliberalism (2017) (1'04'36)[Youtube]
posted by Start with Dessert at 4:01 PM on October 17, 2017 [7 favorites]
From the Civilised Society documentary, I was surprised just how much David Lange drove the intial changes to the education sector. For some reason my childhood experience attached that to Lockwood Smith and the bulk funding debacle, but in fact it began much earlier.
posted by Paragon at 4:36 PM on October 17, 2017
posted by Paragon at 4:36 PM on October 17, 2017
That's as may be, but at least they're managing to stamp out the supply of pain relieving medication to terminally ill people, and that's what's really important!
posted by HiroProtagonist at 9:52 PM on October 17, 2017
posted by HiroProtagonist at 9:52 PM on October 17, 2017
Correction: Someone Else's Country was part-funded by a Screen Innovation Grant from the NZ Arts Council and screened on Max TV, the Auckland music video station. Which of course TVNZ killed off a couple of years later by setting up their own MTV-based music channel in competition with it. As soon as Max went bust, TVNZ pulled the plug on its own music channel. Mission accomplished, you see. Lovely operation, TVNZ. Although they did eventually screen Someone Else's Country, but that was in 2003 and a full seven years after the documentary was made.
posted by Sonny Jim at 12:16 AM on October 18, 2017
posted by Sonny Jim at 12:16 AM on October 18, 2017
More background from Alister Barry on Someone Else's Country via NZ On Screen.
posted by Sonny Jim at 12:23 AM on October 18, 2017
posted by Sonny Jim at 12:23 AM on October 18, 2017
Seeing as the election thread has closed up, this is a good a place as any to mention that NZ First leader Winston Peters has just announced he will go into coalition with the Labour Party and the Greens for a left Government. Jacinda Ardern to be the second youngest PM in NZ history.
In his announcement speech, Winston Peters suggested that Capitalism in it's current form was not the direction the country should be taking and that we were headed in the wrong direction. What this means for the legacy of neoliberalism is yet to be seen.
posted by Start with Dessert at 11:08 PM on October 18, 2017
In his announcement speech, Winston Peters suggested that Capitalism in it's current form was not the direction the country should be taking and that we were headed in the wrong direction. What this means for the legacy of neoliberalism is yet to be seen.
posted by Start with Dessert at 11:08 PM on October 18, 2017
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posted by maupuia at 10:08 PM on October 16, 2017 [4 favorites]