Political and economic direction

The Fourth Labour government between 1984 and 1990 undertook a series of policy decisions and introduced a range of policy measures that changed the nature of New Zealand economy dramatically. The details and substantial discussion around this are not necessary for our current purposes. (Readers interested in a more extensive discussion of these and related issues should consult James, 1986; Jesson, 1987; Jesson et al, 1988; Jesson, 1989; Walker, 1989; Holland and Boston, 1990a; James, 1992; O’Brien and Wilkes, 1993; Roper and Rudd, 1993; Sharp, 1994; Kelsey, 1995; Kelsey and O’Brien, 1995; Easton, 1997a, 1997c; Jesson, 1999; Roper, 2005.) However, the broad parameters are important in that they establish the globalising economic dimensions and directions.

The economic changes included extensive privatisation of public utilities (telephone, postal services and electricity generation and distribution), sale of a wide range of publicly owned assets (forests, New Zealand post, railways, for example), removal of subsidies and tariffs for a wide range of consumer products (with important consequential effects on local manufacturing and employment), the introduction of an expenditure tax (Goods and Services Tax – GST), devaluation of the currency and floating of the Kiwi dollar on the international exchange markets, abolition of subsidies for farmers, significant reductions in taxation for middle- and high-income earners, introduction of supply-side approaches to unemployment and abolition of a range of employment subsidy schemes.

As commentators have noted, these were changes that were both extensive and rapid. They were also changes that were fundamentally different from those that shaped the ‘historic compromise’ (Jesson, 1989), the term used to characterise the origins, development and history of the New Zealand welfare structure and social security framework. While extensive analysis of the factors that generated this change are not needed for the purposes of this discussion (the sources above traverse this ground quite extensively), a brief overview will help identify the key influences. James, Jesson and Easton approach the examination and explanation of the changes quite differently. All three are agreed, however, that significant pressure for both social and economic change had developed during the previous years.