The Neo-liberal legacy in New Zealand. Dr Bruce Cronin University of Greenwich Business School, London.

Transcription

1 The Neo-liberal legacy in New Zealand Dr Bruce Cronin University of Greenwich Business School, London.

2 New Zealand Population 4.04 million population 80% päkeha 15% mäori 6.5% pacific peoples 6.6% asian 32% resident in Auckland NZ Ministry of Social Development 2004

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4 Neoliberalism in NZ Neoliberal economic institutionalisation Punitive economic policy Neoliberal public sector institutionalisation Punitive social policy Social consequences

5 Phases of Neoliberalism The New Zealand Experiment Instituting competitive mechanisms alongside attempts to preserve or extend social democratic welfarism Punitive neoliberalism Neoconservative authoritarianism institutionalisation Partnering ethos Labour-Alliance coalition Labour-PC-UFP coalition (Larner 2004)

6 Economic Policy Framework Free Trade and Investment Established as a principle Capital Controls lifted 95% of imports duty free. Average weighted tariff 0.7% (Conway 2002) Privatisation 40 state enterprises sold for $19 billion, 80% to overseas investors (Goulter 2002) Reserve Bank Act (1989) Reserve Bank Independence Priority to price stability in public contract Fiscal Responsibility Act (1993) Government publishes long-term fiscal objectives eg. levels of public debt, spending, taxes, debt. Sets a policy norm of fiscal restraint. Employment Contracts Act (1991) abolished compulsory conciliation & arbitration abolished guaranteed bargaining role for unions.

7 Labour s Modifications Reserve Bank negotiations Did not reappoint neo-liberal governor Renegotiated Policy Targets Agreement: In pursuing its price stability objective shall seek to avoid unnecessary instability in output, interest rates and the exchange rate" Renationalisation Air New Zealand tourism lifeline. Accident compensation Auckland metropolitan rail network $200m (cf. $328m from sale of whole rail system) Ministry of Economic Development Small venture capital fund aimed at regional development Employment Relations Act 2000 No significant change to legislation but increased union confidence. recognises need for good faith behaviour promotes mediation but little use has made - 4,802 cases in 2002/03 (Lafferty & May 2004) Further amendment in progress to encourage collective bargaining Holidays Act 2003 providing penalty payments for work on public holidays and 4 weeks annual leave from 2007

8 Economic changes under neoliberalism Share of GDP 60% % 40% 30% 20% Wages & Salaries Investment Govt Spending Foreign Income 10% 0% Source: Statistics NZ

9 New Public Management Reforms Theoretical origins: Public choice theory, agency theory, transaction cost economics, institutional economics Public servants assumed to be self-interested and prone to rent-seeking because of absence of market. Prescription: monitoring and contractual incentives to align their interests with state goals. Policy/funder operations/provider separation and competition.

10 Problems from the New Public Management Reforms Fragmentation & proliferation of agencies. eg. high risk families can be involved with 23 separate agencies Coordination problems and costs. Reduced trust & cooperation between agencies. Reduced public servants capacity to collaborate. (Walker 2004) Policy/funders isolated from direct accountability to users. Weakened public service ethic corruption.

11 Labour s Modifications Priority to inter-agency coordination and collaboration. Theme of many separate agency reports (Walker 2004) This predates Labour (eg Strengthening Families Strategy ) Consistent with neo-liberal model as funder-provider separation is maintained. May add a further coordination layer between funder and user. Creation of a Department of Social Development 2001 aggregating: New Zealand Employment Service (NZES) Department of Social Welfare (DSW) Ministry of Social Policy (MSP) Department of Work and Income (DWI) New Zealand Income Support Services (NZISS) Superannuation Fund - $4 bn June /65 married 65% average net earnings at 65.

12 Tax Cuts Social Policy Top marginal tax rate cut from 66% to 30% (Darwell 2003) One third of the tax reductions went to those on highest income quintile (Goulter 2001) Welfare Payments 1990 Social welfare income entitlements cut 1.7% GDP (Goulter 2001) Employment Relations (from ECA) Union membership fell from 56% of wage & salary earners to 21% (Lafferty & May 2004) Workplace coverage by collective bargaining halved. (Goulter 2001) Significant reductions in penal and overtime rates, maximum hours of work, service and other allowances. (Goulter 2001)

13 Tax Social Policy Labour s modifications Top marginal tax rate increased from 33% to 39% (applies at 3 rd income quintile). (Darwell 2003) Transfers Reduced state housing rents from market rates Reduced interest rate on student loans from market rates (Goulter 2001) Labour Market Increased minimum wage

14 Employment and Incomes Unemployment % (Mäori 10.7%) % (Mäori 25.4%) % % (Mäori 10.2%) Real per capita national disposable income ($1996) 1988 $22, $21, $27,237 Average Earnings from Wages and Salaries ($2003) 1980 $ $ $ $17.82 mäori $15.44 Men $19.02 Women $16.57 Youth (15-25) medium incomes 1986 $14, $8,100 (Conway 2002)

15 Income Inequality Living Standards Lower for 90% of NZers in 1996 than in 1981 (O Dea 2000) Income Inequality (top quintile/bottom quintile disposable income) times times Families with Low incomes (less than 60% of median income) % % % % Foodbanks in Auckland (Conway 2002) * 29.1 per cent of all children. * 32 per cent of all families with a Maori adult. * 40 per cent of all families with a Pacific adult. * 66.3 per cent of all children in sole-parent families.

16 Social Policy - Health Independent life expectancy Women years Unchanged for men at 64.8 years Mäori men at 58 years Mäori women at 59 years Infant mortality / /1000 Age standardised suicide rate /100k 1986 Youth suicide 14/100k /100k 2000 Youth suicide 28.7/100k Worst youth male suicide rate in 12 OECD countries and second to Norway in youth female rates. Child abuse /1000 (Päkeha) 12.0/1000 Mäori /1000 (Päkeha) 11.9/1000 Mäori. 1.2 deaths/100k amongst worst in OECD cf. 0.6/100k median. Avoidable Admissions 1982: All 72/10k Pneumonia 140/100k 1997: All 96/10k Pneumonia 252/100k Infectious Diseases 2003: TB 21/100k, Meningitis 261/100k

17 Social Policy - Education School leavers with 6 th form certificate or higher % % % 68.4% Päkeha 38.9% Mäori 45% decile 1-3 schools Population with tertiary qualifications % (8.4% Päkeha, 1.3% Mäori) % (14.6% Päkeha, 6.0% Mäori) Student Debt $7 billion 2002 (5.6% GDP) 1992 Average $ Average $12, years to repay on average

18 Economic Structure Foreign Ownership FDI increased 400% from $9.7 billion in 1989 to $52.5 billion in % shares on share-market 50% of 30 largest companies Norske Skög owns NZ s largest pulp & paper plant. Chronic Payments Deficit 7% of GDP ($9.4 billion) is paid annually to foreign investors. Only 23% reinvested National Debt In 1984 total private and public foreign debt stood at $16 billion 46% of GDP. In March 2004 it was $141 billion - more than 100% GDP. Industrial Structure Agriculture, Forestry Fishing: 7.8% to 9.5% GDP Finance & Business Services: 14.9% to 18.7% GDP Combined: 22.7% to 28.2% GDP (CAFCA 2004, Statistics NZ)

19 Relative GDP per capita Ratio of NZ GDP per capita divided by OECD GDP per capita 110% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% (Easton 2003)

20 New Zealand vs Australia (Dalziel 2002)

21 Cost of the NZ-Australia Gap Cumulatively: $215 billion ($1995) 225% GDP At prevailing tax rates: $11 billion government revenue Sufficient to halve government debt or double health and education spending Conway 2002

22 References Campaign Against Foreign Control of Aotearoa {CAFCA] (2004). Foreign Control Key facts. Conway, P. (2002) The New Zealand Experiment , GPN Asia Pacific Regional Meeting, 2-4 September, Bangkok. Dalziel, P. (2002). New Zealand's Economic Reforms: an assessment. Review of Political Economy 14(1), Darwall, A. (2003 ) Market Reform: Lessons from New Zealand. Policy Review, 118. Easton B. (2003). Transforming New Zealand Goulter, P. (2001) The New Zealand Experiment NZCTU 10 September. Lafferty, G. and May, R. (2004). Legislation, mediation and unions: New Zealand s Employment Relations Act Larner, W.(2004). Neoliberalism? Guest Editorial, Environment and Planning D: Society and Space, 0Space3.pdf NZ Ministry of Social Development (2004). The social report, Wellington. O Dea, D. (2000). Disparity in New Zealand. NZ Treasury Working Paper 13/00. Smith, J. (2000). The Changing Geography of Income Inequality in New Zealand. NZ Association of Economists Conference, 12 July, Wellington. Waldegrave, T., Anderson, D., and Wong, K. (2003). Evaluation of the Short-Term Impacts of the Employment Relations Act 2000, Wellington, Department of Labour. Walker, A. (2004). Overcoming the Neoliberal Legacy: The importance of trust for improved interagency collaborative working in New Zealand. Research Report 11, Auckland, Local Partnerships and Governance Research Group, University of Auckland. Wilson, R. (2004) Social Report Highlights Social Deficit Entrenched in 1990s, NZCTU Press Release, 23 August 2004.