Will New Zealand reform any further?

by on August 16, 2005 at 4:01 am in Political Science | Permalink

The core outlines of the New Zealand story are well-known: in 1980 the country was arguably the most socialized OECD country and stood on the verge of bankruptcy.  By the early 1990s New Zealand was one of the freest economies and had produced a solid if not spectacular economic performance.  The reforms included near free trade, substantial privatization, elimination of agricultural subsidies, free labor markets based on contract, free capital markets, 0-2 percent inflation as a formal regime, a relatively flat tax, and greater transparency in policymaking.  But the New Zealand economy has not seen major reforms in over a decade and in a few areas, such as labor markets, there has been backsliding.  Will reforms return?  I see a few hypotheses:

1. New Zealand reformed everything short of social welfare spending, education, and health care, which few voters wish or wished to reform.  In fact the point of previous reforms was to preserve (and perhaps extend) previous levels of social welfare spending.

2. Further reforms were thwarted by a move to proportional representation in the early 1990s, which gave minority parties undue influence and weakened threads of accountability.

3. Asset privatizations in particular were oversold — remember the Auckland blackout? — and New Zealanders lost their appetite for further changes.

4. New Zealand policymakers were well ahead of public attitudes, and managed so many reforms only because the country’s (previous) Parliamentary system had few checks and balances.  It is taking public opinion an entire generation to catch up to where policy stands.  Only then might current reforms continue.

5. New Zealanders can once again sit content, since they are no longer in danger of being blown out of the water by Australia.  If they start falling behind again, reforms will resume.

6. Donald Brash will be elected Prime Minister in September, and reforms will resume then.

I’ll give the greatest weight to #1 and #4, and say no to #6, comments are open, Kiwi commentators are especially welcome.

1 Kiwi Dean August 16, 2005 at 12:15 pm

On #1: Actually there were significant attempts to reform social welfare spending, education and health care. Benefit levels for the unemployed were cut substantially in the 1991 Mother of All Budgets (after which protesters burned effigies of the social welfare minister in the street).

The Labour government introduced significant reforms in governance in the education sector, with locally-elected, parent-dominated Boards of Trustees given some governing power instead of the prior centralized approach. Some Boards adopted the so-called bulk funding option which gave them greater flexibility over salaries they paid to teachers. (The policy of bulk funding was strenuously opposed by teacher unions and was never made compulsory.) At tertiary level (ie, universities and other post-secondary education) major cuts were made to state subsidies. (Woodfield and Gunby have a paper in the Journal of Economic Literature in 2003 about these and other changes in education policy in New Zealand.)

In health there were also reforms, though I am less familiar with these. It was the National government that devolved management to local hospitals in a manner similar to the devolution of decision making authority in the education sector. I believe there has been a retreat from some of the 1990s policies since the current Labour government came to power in 1999.

One thing these policies (and others) show is the dissatisfaction (among reformers at least) with the quality of decisions being made by public sector institutions. Much of the reform effort was aimed at giving people incentives to make good decisions, through market discipline or clearer accountability to the political realm.

On #’s 2 and 4: it’s hard to tell how much the move to proportional representation affected things. To some extent it has made what used to be intra-party disputes into inter-party disputes. So it isn’t clear that the level of disagreement between parliamentarians changed. However, it may be that environmentalists (Greens), nationalists (NZ First), classical liberals (ACT) and nutcases (Alliance) were not powerful enough within their own parties to be elected to parliament prior to the implementation of the MMP electoral system.

#3 is similar to the reform fatigue hypothesis. Many sectors were reformed and everyone got tired of it and so voted for a relatively conservative government in 1999 that emphasized stability. (Reform oversell, by contrast, would predict reform roll-back.) I think there is some merit to both these ideas.

On the overall aims of the reforms, recently deceased David Lange (prime minister from 1984 to 1989) once said something like “you can’t have social justice if you don’t have an economy”.

2 wkwillis August 16, 2005 at 2:42 pm

New Zealand exported large numbers of highschool educated graduates to Australia over the last generation at the same time as it imported large numbers of nonhighschool educated Pacific Islanders. It traded a better educated group for a lower educated group as a byproduct of it’s economic policies sort of the way that California did, but because Australia was a relatively desirable destination the wage gap widening was not a great as in California because Australia soaked up so much New Zealand population.
The exporting of population that was New Zealand’s policy or consequence of policy had the effect of lessening competition for New Zealand real estate. The Pacific Islanders were able to come in to New Zealand without crowding because New Zealanders made way for them by moving to Australia. California had a significant population increase because California did not have a desirable location to export it’s population to in the way that New Zealand did.
Now that Australia will no longer allow unlimited immigration of New Zealanders this strategy is no longer low cost to New Zealand in that the only New Zealanders that will be moving to Australia will be the educated ones that Australia will accept. Wage gap increases are to be expected as the less educated New Zealanders will be trapped in New Zealand.
There is another consequence of this over the long term. Some adventurous people make trouble if they are restricted in movement. These troublemakers could just move to Australia if they didn’t like the way that New Zealand was being run. They may become politically active if they aren’t allowed to blow off steam by moving to Australia or some other desirable location.
But this is a long term problem for New Zealand.

3 MichaelH August 16, 2005 at 5:41 pm

As a NZ voter, I think the most unsettling thing is how hard it is to identify which reforms would really matter (and hence would be worth anyone spending much political capital on). This is especially so when one does a comparative analysis with Australia (the most similar economy/society there is) and one with much higher GDP per head than our own. Research results suggests that under-investment is much of the explanation, but why has investment been so low? Real interest rates here are higher (consistently) and domestic savings scarcer (which may mean household credit demand has crowded out business investment), but what policy measures would realistically be likely to change that picture very much? One can play around with tax rates at the margin, but nothing suggests that NZ’s tax or expenditure ratios are particularly high by world standards. Maybe there is something in welfare reform, but that would presumably only further skew growth towards labour-intensive forms

4 Eric Crampton August 16, 2005 at 5:59 pm

I agree with KiwiDean that it’s difficult to tell how much the shift to MMP has affected things. However, it isn’t as simple as moving intraparty disputes into interparty ones. Strict party discipline under FPP means that the nutjobs are sent to the backbenches and don’t have much effect on policy. Under MMP, they have to be bought off. Anderton got Kiwibank as payoff for bringing his Progressive Alliance into coalition with Labour; this would not have happened under FPP. Persson and Tabellini’s empirics seem to suggest real policy effects with the shift in electoral system; the threat of the government falling on a non-confidence vote gives the minor parties inordinate sway.

5 icehawk August 16, 2005 at 8:31 pm

Hahahaha!

Your claim that the education sector was “not reformed” is really very, very funny.

Consider tertiary education.

1980: approx 100% govt funded, with strict central control of courses and student numbers. Strict central control of courses proving to be a problem.

2005: approx 70% govt funding, with basically a voucher system (ie students pick courses, very little central control of courses or cours numbers). Lack of any central control of courses proving to be a problem.

Lets look in more detail at one example of tertiary education: teacher training.

1980: No fees. Students considered employees of Dept Ed and paid salaries to attend teacher’s college (lousy salaries, but still…). Student guaranteed 2 years teaching work if they passed. Student numbers set annually for each Teachers College by Dept Ed to ensure the number of graduates will approximate the number of teaching jobs.

2005: Fees of $3000+. A minority of students eligible for student allowances. Over 30% of primary teaching graduates from teacher’s college last year failed to find a teaching job for their first year.

Wanna another example of radical educational reform? Look at apprenticeships. Or polytechs. Or ECE. Or administration of schools. Or… the list goes on, and on.

We’ve reformed the tertiary education sector to hell and back. What we need to do is back off from some of these reforms and get a bit more central control in place (to stop funding so many scuba diving courses, etc).

6 Tiberias August 16, 2005 at 9:59 pm

Hmmm, good point Icehawk.

I guess the big question for me is when does _change_ get to be counted as _reform_? Is it a question of ideology, so reform is when something goes the way you think it should, or is it a question of results, where if something suceeds it was a reform and if it doesn’t then it was a booboo?

My opinion? You can’t really claim to be a reformer unless you can reasonably claim that the thing you are changing is currently broken.

Essentially under Muldoon we had too much of a command economy and it was very broken. But we know that economies that focus too much on market-based solutions also break. So Labour, having moved to a point somewhere in the middle that has given us an average 4% growth over the last 6 years while the OECD average was 2.5%, and allowed us to pay off a pile of debt while still putting some aside for the superann problem, seems to be doing well. There are little problems that they make little solutions for. But on the big stuff, its going sweet. I simply don’t think there’s _room_ for a lot of reform, because unless you belong to the “tax is evil by definition” crowd, there’s not a lot that’s really broken, and arguably, outperforming the OECD economic growth average by an average of 1.5% for 6 years is evidence that we are sitting in a sweetspot that is serving us very nicely right now.

7 Idiot/Savant August 16, 2005 at 10:20 pm

I think that the human and social cost of the reforms cannot be overstated. We went from a society with a high degree of equality to one with skyrocketing inequality, homelessness, beggars on the streets, and where pawnshops and foodbanks became growth industries. We went from a society where the government assisted those in need to one where it abandoned them. We had people living in garages because they could not afford to pay the new market rents on state housing, and third world diseases in the poorer areas because people could not afford user fees on doctor’s visits and prescriptions. We had a government which deliberately and knowingly cut benefits to below starvation levels (yes, really; they did a study on the cost of living, took the amount where people could barely afford to stay alive, and cut it by 10%) – at the same time as the government pursued strategic unemployment to keep wages down. And then, having put the boot in to those on benefits, the Employment Contracts Act did the same to workers, leading to pay cuts of up to 30%. And all of this was done over people’s heads, with policies rammed through sometimes overnight to prevent public opposition from forming.

This was justified in terms of “no pain, no gain”. But strangely, the pain always seemed to be suffered by those on the bottom, and the gain seemed to go to those on the top. And no, it didn’t “trickle down”. For a society with a deep-seated sense of egalitarianism, this was anathema.

You can argue that the reforms were necessary. But the fact is that we didn’t like them, and we don’t want to go through anything like that again. We hated it so much, we changed our political system to ensure permanant minority government, so that no-one could ever blitzkrieg us again. The upshot is that any future reform will be much slower and more cautious. Radical reform (in either direction) is impossible under MMP.

As for Brash, IMHO he is a radical reformer at heart – but he will find it impossible to actually implement his dreams. In order to govern, his National party will have to rely on New Zealand First, a party deeply hostile to the reforms, and led by a man who left National because of them. He might get some moderate tax cuts, but further privatisations, opening of markets, or even budget cuts in key areas are likely to be stymied. You may call this “undue influence”, but I call it democracy in action. If 60% of voters support parties opposing reform, then there simply is no mandate for change.

8 Idiot/Savant August 17, 2005 at 7:49 am

FM: Also a lot of subsidies from the EU. New Zealand doesn’t have that sort of sugardaddy.

9 fm August 17, 2005 at 9:32 pm

True enough, but then NZ does also enjoy some advantages due to its proximity to Asia and access to the Australian market with no tariff barriers. One has to ask, why exactly doesn’t New Zealand enjoy the same standard of living as say, Tasmania? I just think it’s foolish to keep thinking up ways to write-off NZ’s prospects simply because NZ does not enjoy the same comparative advantages as other countries.

10 fm August 17, 2005 at 11:46 pm

Great. So NZ possibly has comparative advantages to Tasmania. Next stop, South Australia (and what reforms could achieve that?). That’s really the question, isn’t it? It’s either that or continually watch great swathes of the NZ population get up and leave. It shouldn’t need to come to that.

11 Tiberias August 18, 2005 at 9:47 am

*lot* faster than the OECD average (4% vs 2.5%) over the last 6 years. We seem to have the right recipie for excellent growth *already*, or since the recipie always requires a bit of tweaking each year, at least the right stewards in charge. Essentially, it’s pretty difficult to argue with results.

I think “standard of living” is an interesting one. Who gets to define this? Arguably we have a much better median-point in our standard of living than say, the USA, so why should we “reform” our policies to be more like the Americans?

12 when circle roll corner con May 15, 2006 at 8:43 pm

Your site is a very nice source of info. when slot make boy destroy standard cards is always superb game, round can anticipate gnome central plane play or not, cards can loose circle pair will girl unconditionally, white is feature of curious table standard cards is always superb game, beautiful is feature of memorizing corner game can percieve plane, when mistery is cosmos it will expect chips game can percieve plane, standard cards is always superb game

13 Bruce June 7, 2007 at 3:46 am

bbw sex videos
big breasts sex
big cocks 4 men
big cocks porn
biggest tits online
big tit queens
big tits sex movies
bisexuals hardcore
black booty lounge
black pay per view
blowjob pay per view
blowjobs babes
bobby eden
bondage pay per view
boob pay per view
briana banks
brittany blu
brittany o neil
brittney skye
broadband pay per view
brothers do blondes
busty amateur boobs
butt hunger
candi moore
charmane star
chick auditions
chubby freaks
club august
club stormy
cris taliana
cum on jugs
cumshot scenes
cumshots n facials
cum squad
damn hotties
desi papa
desktop strip
dirty lesbo
dirty rotten filthy whores
dirty travel
dixon boes
dp freaks
drunk sex orgy
ebony empire
enormouse babes
ero maxx
escorts on call
eva latina
evil genius cash
extreme bisexual
facials 4 sluts
facials fever
fetish hits
fisting central
foot fetish porn
freak spankings
freaky cumshots
freaky granny
freaky midgets
freaky milfs
freaky tranny
fresh teen porn
fucking drunks
fully clothed pissing
fully clothed sex
funky town fuckers
gang banged babes
gay bears hardcore
gay group sex videos
gays and cocks
gay sex sins
ginger lynn
ginna lynn
girls after school
girls with cigarettes
grannies fucked
group sex frenzy
group sex gays
gunz blazing
hairy boyz
hairy pussies sex
hairy pussy porno
hannah harper
hardcore blonde sluts
hardcore fatties
hardcore matures
hardcore redheaded sluts
home town escorts
hood hardcore
hot amatuer bitches
hot asian gays
hot bikini sluts
i love bisexuals
insane coeds
interracial addicts
interracial sex house
jenna heart
jerk off queens
jessica drake
just black gays
just ebony sex
just gay hardcore
just lesbian sex
just real
just us boys
kobe tai
krystal steal
latina exposed
latina sex studio
latin sex lovers
lesbian firsts
lesbian movie planet
lezley zen
life uncut
lingerie queens
live voyeur porn
lola latina
long movie downloads
love that booty
lust and lingerie
m2 vod
madison teen hottie
maidens of mask tv
make over milf
male movie club
mamas little whore house
man station
man zone
mari possa
mask tv
masscha fetish
massive bukkake facials
mature gone wild
meet my secretary
mega porn
mesm erotic
messy female ejaculations
milfs bang
model cash
monica mayhem
monica sweetheart
monique alexander
monster cock madness
my fetish
new nymphos
nici sterling
nicole sheridan
night invasion
nikki benz
nikki nova
nine teen
no dicks just chicks
old n fat
old n fat movies
online pussy
only huge cocks
orgy factory
party hardcore
pee squad
perfection girls
pink cherries
pink taco bandits
pipers playpen
pissing in action
porno fetish
pornstar house
pornstar stop
porn video station
pregnant freaks
project teen sex
queen size
racquel darrian
radical cash
raw gay bears
raw kink
raw pornstar movies
raw xxx movies
real sex world
rectal freaks
renee larue
ron jeremy
rookie romp
sadistic bondage
sandiego latinas
schoolgirls first time
self videos
sex brat
sex gaymes
sex machine
sex movies network
sex slave
sex toys porno
sexy foot fantasies
sexy petite
seymour butts
shaved and horny
shay sweet
shemale sex zone
shemales movie world
shemale thrills
shyla foxxx
silky milkys
silvia saint
sinful gay
sinful gay teens
sinful interracial
sinful lesbian
sinful mature sex
sinful panty sex
skinny bitches
small boobs rule
small tits girls
soccer mammas
sonyas hot site
spa cash
spy addicts
stacy valentine
stockings babes
stricky cinema
studio cash
supreme anal
sweet kinky girl
sydney moon
sydney teen cutie
tabitha stevens
tanline patrol
tawny roberts
teanna kai
teen bad girls
teen buster
teen fun zone
teen gay club
teen gay hardcore
teens love to fuck
the nasty bus
the rear stable
tokyo bitches
toon gasm
torbe fucks whores
tranny pleasure
tran slove
transsexuals porno
trey stop tips
ts cum
u boys
unlimited pass
val from brazil
vicky paris
video box
videosz
vivid
vivid amateurs
vivid girl
vivid man
vivid stickled pink
vivi latina
warm sex orgy
wave hos
wendi knight
wet dreams
wet teen panty
x crib
x gape
x movie
xobile
xxx asian desire
xxx asian hardcore
xxx houston
1st lesbian experience
1st pill
2 big to be true
acme porn
adult alchemy
adult date link
adult doorway
adult mega cams
adult mega cash
adult movie time
affair match
all naked review
all porn access
amateur date link
amateurs of porn
amateur upskirts
amazing brunettes
angie savage
angie xxx
anna marie anderson
any webcam
asian date link
asian video whores
asian x archive
ass lick
babes fight
bangin becky
bare feet babes
bbw date link
bdsm date link
bear pay per view
beaver shots
bedroom sports
big boob date link
big dick girls
big dick pay per view
bio hazard bitches
bisexual pay per view
bisexual university
black cherrys
black date link
blonde beaver
blonde date link
bond anime
boy pay per view
brazilian bitches
broadband blowjobs
brs cash
brutal dildos
bubble butt bonanza
busty classics
busty cute babes
busty devia
butt naked in the streets
candi from the block
candy black ass
candy films
catalina cruz
catfighting pay per view
chub pay per view
classic pay per view
college invasion
college teen creamers
corporate fantasy
cream filled models
cum and ass
cum drunk sluts
cum on big boobs
cum on candi
cute latina
cyber movie station
dirty club
dirty damsels
dominatrix pay per view
do my mom
drunken 18
drunken bi
drunken gay
dude ranch pay per view
duke dollars
earn coin
ebony cum dumps
ejaculating babes
euro bang babes
euro boy pay per view
euro soft babes
extreme clits
facial abuse
facial mvp
facial spray
fantasy girl revenue
fantasy girl store
fat joes cafe
females domination
fetish pay pay view
foot kink
foot pay per view
free live cams
fucking hookers
gangbang pay per view
gay amateurs pay per view
gay bondage pay per view
gay date link
gay fetish pay per view
gay like girl
gays gloryholes
gay stales
georgia adair
georgia cash
ghetto gaggers
gogo auditions
group sex date link
gush busters
handjob porno
hardcore date link
hard xxx fuck vids
hentai boss
hentai pay per view
herbal america
hirsute worldindex.htl
ho dough
horny shemen
hot pornstar central
hot sandy
hush pass
ia cash
i love to squirt
innocent or evil
interracial pay per view
interracial xxx movies
itvn cash
jackoff pay per view
jay man cash
jizzed sluts
jizz jerk
jock pay per view
josie junior
kiss my crack
kristinas world
kristina wood
lactalia
lady boy crush
large females
latent gay
latina hood rats
latina movie fiesta
latin date link
latino pay per view
latin party girls
latin pay pay view
leather pay per view
leg pay per view
leroys girls
lesbian affairs
lesbian lust flicks
lesbian pay per view
les tai
little wet panties
live hottie cams
live teen
made in porn
major ass
major ass bangers
major cock suckers
major milfs
major pass
major pay
major wife bangers
male pay per view
male rentals
martina warren
massive cock madness
mature date link
mature pay per view
mega cock slingers
michelle lynn
michelles playpen
midget pay per view
milf movie madness
milf pay per view
milf porn pass
military pay per view
mob bucks
mom loves cum
mommy loves pussy
monster cock house
muscle pay per view
my daughters fucking a black dude
my moms fucking black zilla
my porn interview
nasty adam eve
navy pay per view
niched sites pass
niche money
niche pay
niche sites
nude africa
old bride
old freaks
oriental orgies
overstuffed sluts
pantyhose amateurs
pantyhose pay per view
party hard whores
pearl pussy
petite angels
phat bucks
piercing sand tattoos
pimp pay per view
pissing pay per view
plaster her
porn different
porn dvd direct
porn pay per view
pornstar classics
pornstar pay per view
porn video
premier pornstar flicks
puma swede
punished gay
raven riley
raver pay per view
real hung
real milf sex
red hot latina girls
rent adult
rx pride
senior sexxx
serious anal
serious asians
serious blowjobs
serious hardcore
serious teen
serious whores
sex cam club
sex effects
sex match
sex pay per view
sex toy cinema
sexxx drive
sexy lesbian affairs
sexy teens big cocks
shanes world
shemale pay per view
slut lickers
smack that slut
smash bucks
smashcom hardcore
smoking pay per view
smut network
solo desires
spanking pay per view
sperm suckers
stiffy cash
straight boy pay per view
stripping angels
sucking the big one
sugar daddy pay per view
sweet asian cams
sweet ebony cams
sweet georgia
sweet latina cams
swinger date link
sydney moon
teen creampies
teen cum dumpsters
teen pay per view
teens behaving badly
teen tryouts
the cum slut
thug pay per view
tiffany lee fisher
tiffany tease
tit anime
titty paradise
top shelf amateurs
totally tranny
tranny paradise
twink pay per view
ultimate fantasy girls
ultimate hardcore flicks
ultimate nipples
vampire pay per view
vanessa rae
varsity teens
vintage pay per view
vip members
voyeur pay per view
wacky insertions
white trash pay per view
wild girls pay per view
wild hairy girls
xtreme pay
xtv
xxx inari
xxx of india
xxx teen pussy
young xxx babes
your date link
you wish news
247 booty call
abosolute jenna haze
absolute hardcore flixxx
adam eve steve
addicitive asses
adult anime
adult movie station
adult video planet
all about boobs
all american sweethearts
all petite
all star asians
almost all blondes
amateur 1st fuck flicks
amateur porn movies
amateur porn videos
american hardcore
americas next pornstar
anal babes
anal expansion
anal ranch
anal rush
anal sex masters
anal video planet
animated hardcore
anime dreams
anime porn
anime porn studio
anime porn zone
asian amateur movies
asian babes
asian bedroom
asian delights
asian deluxe
asian fuck faces
asian gays
asian nymph
asian princesses
asian secrets
asian sex cinema
asian sluts
asian to go
ass fuck clits
ass xxx lovers
banged holes
bang my tight ass
bear naked fellows
best of briana banks
bi bangers
big awesome tits
big beautiful whores
big bra busters
big dicks lil chicks
big is beautiful
big tit fucking
bisexual movies
bitch gaggers
black booty
black busty
black sex land
black teen movies
black video planet
blast my face
blonde bombshells
blowjob sandwich
blowjobs are great
blowjob university
bonecas
buddy fucks
busty asian angels
busty beauties
busty lovers
butt fuckers
butt penetration
cartoon sex world
centerfolds smut
chicks with dicks
chocolate boobs
chocolate ebony hunnies
chunky party
cigarette girls
classy milfs
cock hungry moms

Comments on this entry are closed.

Previous post:

Next post: