Comment

Will we get the overdue reforms history promises?

If Labour can throw off the shackles of NZ First it can follow its instincts to be the party initiating the next wave of major economic and social reforms, which history tells us are overdue. But the constraints imposed by Covid-19 may stymie that aspiration, writes Peter Dunne

Over the past 120 years or so, there has been a clear pattern in New Zealand politics, regardless of the individual political parties or politicians. Approximately every 30 years, a major period of reform occurs, followed by a time of consolidation before the cycle starts to repeat itself.

Invariably, the reform process is initiated by left-leaning governments and entrenched by centre right governments which have followed, after having railed against most of the major reforms they then confirm as part of the national tapestry. Overall, that pattern has been a strong contributor to New Zealand’s remarkable political stability.

The advent of party government and the rise of Seddon's Liberals in the 1890s began the process with more progressive labour laws, land reform, universal adult suffrage and old age pensions – reforms that led to New Zealand being described as the social laboratory of the world at the time. Massey's conservative Reform government that followed from 1912 kept this structure, its vicious response to the 1913 Waihi strikes notwithstanding.

Following the Great Depression of the 1930s Savage's first Labour Government took Seddon's reforms further with universal old age pensions, the advent of Social Security and State Housing. Again, aside from its punitive approach to the Waterfront Dispute in 1951, the Holland National Government which took office in 1949 kept the broad thrust of Labour's reforms in place, despite having fought them all bitterly while in opposition. In government, its commitment was that it could run things better than Labour.

The short-lived Nash Labour government is today remembered mainly for the 1958 “Black” Budget, which paved the way for the decade-long Holyoake National administration and its unswerving commitment to “steady as she goes” policies, even after the collapse of the international wool market plunged the economy into deep and prolonged recession after 1967.

By 1972 it was clearly time for a change and the election of the Kirk Labour government suggested another period of vigorous reform lay ahead. Kirk's untimely death and the rapid decline in the world economy after the 1974 Oil Shock sealed Labour's defeat in 1975, but not before it had laid three important future markers in the ground – opposition at the World Court to atmospheric nuclear testing, opposition to apartheid in South Africa, and the establishment of the Waitangi Tribunal.

Now, we are at the historical point where another period of major reforms appears overdue, and once again we have a Labour-led Government in office.

While the 1975-84 Muldoon National government back-pedalled on the nuclear and apartheid issues, it retained the Waitangi Tribunal. But overall, it merely delayed, rather than overturned, the cyclical reform process. Its poor economic performance paved the way for the reformist Lange Labour government. Not only were the anti-nuclear and anti-apartheid policies revived and the Waitangi Tribunal empowered to investigate historical breaches of the Treaty of Waitangi, paving the way for the Treaty settlement process National was to introduce in the 1990s, but also in what became known as Rogernomics the government undertook the most radical economic transformation in the country's history.

New Zealand was transformed in Lange's famous words from a 1980s "Polish shipyard" into a competitive, modern open market economy. Again, consistent with the historical pattern, the incoming National government after 1990 maintained Labour's key reforms to public sector management, the autonomy of the Reserve Bank, and eventually, even the anti-nuclear legislation. In turn, its 1991 Employment Contracts Act, which it saw as the missing piece of Labour's economic jigsaw, that was so vigorously opposed by Labour and the trade unions at the time, was modified only slightly by Labour when it returned to office in 1999.

Now, we are at the historical point where another period of major reforms appears overdue, and once again we have a Labour-led Government in office. As with the Depression of the 1930s or the economic crisis of 1984, we face a time of major upheaval and uncertainty, this time with the impact and consequences of the Covid-19 coronavirus. But while the mantra for economic and social change in the wake of Covid-19 is strong, it is not yet clear whether it will in fact amount to much.

Those obligations will all be massive of themselves, leaving little likely scope for any more widespread social and economic transformation. Like it or not, for the next few years, government will be very much about maintenance and restoration

Despite the Prime Minister’s pledge at the time of assuming office that her government would be “transformational”, there was little substantial transformation of New Zealand’s society or economy in the two and a half years before Covid-19 struck. In part, this is because of the constraints imposed by the dynamic of the current three-party governing arrangement, where New Zealand First has been able to operate an effective veto on anything modern or progressive being implemented. But it is also a factor of the government’s recurring inability to implement major changes – as the failure of its flagship KiwiBuild programme, and the delays in the development of Auckland’s promised light rail system highlight.

Some argue that because of the changes induced by Covid-19, a re-elected Labour-led Government later this year, especially one without the shackle of New Zealand First, will have the mandate to move more boldly down the path of economic and social transformation it talked about. However, unless there are major changes in the make-up of the Cabinet – which seem unlikely given the current crop of backbenchers – the same level of incompetence that has bedevilled the implementation of most of the government’s initiatives to date will continue, reducing the credibility of claims about the scope of changes that might be considered.

Moreover, the significant long-term fiscal constraints imposed by the response to the Covid-19 crisis so far will leave the Government severely financially incapacitated for some years to come. Reducing the public debt levels built up to fund the Covid-19 response will become a major priority. At the same time, wider government policies are likely to be necessarily centred around the recovery of the New Zealand economy, the restoration of jobs and opportunity, and above all, future proofing the country to the best extent possible against a similar pandemic in the future. Those obligations will all be massive of themselves, leaving little likely scope for any more widespread social and economic transformation. Like it or not, for the next few years, government will be very much about maintenance and restoration, and people whose lives and careers have already been upended by Covid-19 are unlikely to take kindly to any priorities beyond those.

In the Budget, the Minister of Finance invoked the memory of the 1935 Labour government. Although not stated specifically, the clear implication was that the current Government saw itself following in that government’s footsteps. After all, both were in office at a time of abnormal international upheaval, with a mandate for rebuilding society in its wake. But there the similarity stops. Whereas the Covid-19 crisis is very much ongoing and developing, with so many unknowns yet to be fully understood let alone resolved, the Great Depression was past its peak by 1935, with the international focus by then very much on recovery.

Nevertheless, Labour’s instincts to be the party that initiates the next wave of major economic and social reforms is consistent with the country’s historical pattern, so the Minister of Finance’s wistful aspirations may not be entirely misplaced.

It is more that they will now take longer to come to fruition than originally intended. The next three years are going to be very grim ones for the Government and the country, with deep unemployment, and massive household and government debt to be repaid. And, at the end of them, a different government could well come to power, leaving Labour’s dreams of transformational change deferred for another day.

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