Category Archives: NZ Politics

NZ Budget 2017. A Government trying to make up for past neglect – Max Rashbrooke. 

In it’s 2017 Budget the NZ Government seems to be playing the role of a parent who, after years of providing minimal support, turns up at their child’s birthday party bearing presents and hoping to be showered with praise.

There is, admittedly, much to commend in the Budget, for what it does to support New Zealanders and to increase fairness: the $321 million package for “social investment”, focused on mental health; the major boost to Working for Families that will raise payments by up to $26 a week per child; the lift in the accommodation supplement that gives low-income people $25-$75 extra a week to offset housing costs; and so on.

And the Government did last year increase benefits for those with children by $25 a week.

But this has to be set against the overall neglect of past years. Working for Families may get an extra $1.1 billion between now and 2021, but it has, according to Auckland University assistant professor Susan St John, been cut by $2.8 billion since 2010. Those cuts have been made stealthily, by clawing back more of the payments as people’s incomes rise and by not adjusting payments for inflation.

The low- and middle-income families who rely on those payments to make ends meet are still worse off in the bigger picture.

Health, meanwhile, gets a little under $900 million in the coming year, but analysis by the CTU shows that it needed nearly $1.1 billion just to keep up with health sector inflation – the increased costs of medicines and equipment – and the equal-pay settlement for aged-care workers.

So despite the headlines, and some genuine giveaways, this Budget often falls short of what is needed just to maintain current services, adding to the shortfalls that have occurred throughout the past eight years.

That parsimony has been a choice, not a necessity: ministers could have maintained vital services by adding a little to our extremely low government debt, an investment that would have more than paid itself off over the long run.

The Government may say that it is spending more, in pure cash terms, than it did on taking office.

But the true value of its spending can be seen only when it is adjusted for inflation, which eats away at the worth of each dollar, and for population growth, since each extra person – as a patient, a pupil, or whatever – needs extra funding.

Calculations by Victoria University and the New Zealand Institute for Economic Research show that, from 2009 to 2016, core government spending actually fell on an inflation-adjusted, per-person basis – only by 0.7 per cent, hardly the slash-and-burn some on the Left would claim, but a cut nonetheless, at a time when the  global financial crisis has been hammering families and problems like climate change have loomed ever larger.

It’s no wonder that schools, for instance, are struggling, when their funding has, on this measure, fallen in the past seven years.

Separately, Forest & Bird calculates that spending on core native species protection has dropped 21 per cent since 2009 – a cumulative shortfall of $230 million.

And the damage done by these funding shortfalls is clear to see, in the thousands of New Zealanders who are homeless, in the tens of thousands of children living in poverty, or in the over-subscribed mental health services having to turn people away.

The Budget will, of course, get plaudits for lifting disposable incomes through its tax threshold changes, something that makes the biggest difference, proportionately, to low- and middle-income earners.

But people on six-figure salaries will also be made more than $30 a week better off by the tax cuts, even though they are hardly struggling now.

And bear in mind that, even though more people have been moving into higher tax brackets (a process known as fiscal drag), New Zealand still takes less in income tax from typical wage earners than any other developed country, according to the OECD.

The consequence of the latest tax cuts, especially those that benefit the already well-off, is that there is relatively little to spend on the collective goods needed for the country to function: protecting endangered species from extinction, educating our children for a fulfilling and active life, making sure everyone has a warm and safe house, and so on.

Finance Minister Steven Joyce says the families package will lift 50,000 children out of poverty. That would be fantastic news. But presumably it relies on the extra money really going into families’ pockets, as opposed to being swept up by landlords who may now think they can charge more.

And with little in the Budget to help build houses and create more competition among landlords, the latter scenario looks quite likely.

The Budget may still be an electoral success. Governments often aim not to solve problems but to stop their softest voters deserting them on specific issues, and this Budget may do just that for compassionate National supporters. It really depends on how much voters feel inclined to punish ministers for their past neglect.

***

Max Rashbrooke is the author of Wealth and New Zealand and a research associate at the Institute for Governance and Policy Studies.

Stuff.co.nz

NZ Election 2017: Voter silence means we’re destroying our democracy – Richard Shaw. 

On Saturday, September 23, New Zealanders will go to the polls and vote for the 52nd Parliament. Well, some of us will. Probably fewer than did three years ago.

Declining voter turnout has become the canary in the political coalmine: an indication that something is wrong with our democracy. Once upon a golden age turnout was routinely in the 80 to 90 per cent range.

That began to change in the 1970s when the emergence of new social movements, disaffection with governments’ inability to tackle gnarly economic and social issues, and the erosion of traditional ties to the two major parties began to chip away at turnout.

By the time of the last general election we had reached the point where nearly 23 per cent of registered voters did not vote, and a further 252,581 eligible voters did not even enrol.

Turnout in 2014 was the lowest of any election held under the universal franchise except for the the one we had three years earlier, at which only 74 per cent of enrolled voters made it to the booths. And it’s not looking that flash this year, either: the registration data show that just over 349,000 eligible voters have yet to enrol.

Broadly speaking, those who are quietly shuffling away from electoral politics tend to be Maori, people without work or on low incomes, and members of some recent migrant communities (especially those from nations without long-standing democratic norms and conventions).

Crucially – because age cuts right across every socio-cultural category – the trend is perhaps most pronounced amongst young people. In 2014 only 75 per cent of eligible voters aged 18 to 24 enrolled, and one third of those who did enrol did not vote at all. (So far, 65 per cent of eligible voters in this cohort have registered for this year’s election.) Roughly the same figures applied for those between the ages of 25 to 29 and they weren’t that much better for people aged between 30 to 34.

The turnout at the last election amongst those aged 18 to 29 was less than 50 per cent.

In short, an entire generation is at risk of being lost to politics. If this trend continues, shortly the only people standing outside polling booths will be elderly.

Why might someone choose not to exercise this most fundamental of citizenship rights? The standard explanation explains non-voting as an individual deficit: too lazy, too apathetic, too busy on Facebook. Conveniently, this approach ignores some of the compelling and entirely rational reasons people might opt out of the electoral game.

Above all, if you live a life of poverty, ill health or marginalisation as a result of successive governments’ policies, might you not at some point be tempted not to vote? If your interests, your wellbeing and your aspirations are routinely ignored in public policy decisions, might it not at some point make a sort of sense to simply step away?

Possibly, and yet declining turnout matters. At the most obvious level, political disengagement does not stop politics: governments continue to make decisions that affect lives whether or not people vote. It also matters because we achieve more informed, more just, and more durable decisions when all voices are heard in the public conversation.

Imagine what sort of policy course we might chart as a nation were those who are most affected by housing unaffordability and current superannuation policy were to make their views felt through the electoral process. Instead, many of those people will not vote on September 23, and policy inequities that disproportionately affect the young and the impoverished will likely endure.

Perhaps most concerning of all, there is the risk that over time political disengagement erodes the legitimacy of the entire political system such that, when the populist stars align, we find ourselves caught up in the sorts of intolerant, bigoted and anti-democratic politics we see being played out in parts of Europe and North America. When that happens, some of the voices that are silent now may be making a very great deal of noise indeed.

***

Richard Shaw is a Professor of Politics and the Director – Bachelor of Arts (External Connections) at Massey University.

Stuff.co.nz

The Mother of all Blunders – Bryan Gould. 

“Neoliberal economic policies have failed, and an important aspect of that failure has been that most of such new wealth as has been created has gone to the richest people in society.”

Jim Blogger, former NZ Prime Minister

Jim Bolger headed a government that set about cutting taxes and therefore public services, and weakening trade unions, policies often seen as the hallmarks of neo-liberalism, and that is to say nothing of Ruth Richardson and her boast of delivering “the mother of all budgets”.

It is beyond dispute that the countries which have enjoyed the best economic outcomes have been those – like the Scandinavian countries – which have at the same time most stoutly resisted the growth of inequality.  As for the rest, the application of neo-liberal policies has meant a poorer economic performance, accompanied by greater social division.

We do not have to choose, in other words and as is so often asserted, between social justice and economic success.  The former is an essential element in producing the latter and is not just a “luxury” we can do without.

Or, to put it in another way, the failure of neo-liberal policies is largely attributable to their inevitable tendency to exacerbate inequality and to foster a lack of concern for the less fortunate.

And a moment’s reflection will tell us why that is so.  An economy will always be more successful if it engages with and uses all of its productive capacity – and that means its human resources – rather than leaving some of them under-used and undervalued.

The loss and damage we sustain, if we fail to take account of the interests of the whole of society, creates not only a weaker economy, but a more divided and unhappier society.

In today’s politics, it is the right that is ideologically driven while it is the left that constantly seeks merely pragmatic solutions to pressing problems.  The left’s difficulties in attracting majority public support suggest that solutions to problems will stand a better chance of being accepted if they are seen to be grounded in a coherent analysis of what has gone wrong.

It may be that, in their anxiety to gain support from the “middle ground”, the left has too easily been frightened away from developing such an analysis.  Surprisingly, they seem reluctant to engage in an ideological debate and prefer to leave the territory uncontested.

If Jim Bolger can do it, and link outcomes to policy frameworks, why not the left?  But, if there were to be a next time, Jim, could you please see the light and find the road to Damascus a little sooner?

Bryan Gould

New Zealand’s Voting Reality? Hopeless! – The Opportunities Party. 

Little has changed.

We just commissioned market research to determine what makes New Zealand voters tick and the answers are depressing.

One of the line of questions asked of a poll of 1,000 voters was designed to determine the factors that contribute to their views on policy. It went like this;

  • Respondents were presented with three electoral options and asked to choose their preferred option (or none of these.)
  • Each option includes a party banner, a policy, a statement of ‘where the money comes from’ and an underlying description of the tax system being promoted: how fair is it?
  • Respondents do the exercise 10 times – each time being presented with different alternatives. They might be a diehard National supporter, but even then, some policies or tax schemes may prove untenable. In other words tax may trump party allegiance.

By studying the collective choices made, 10,000 of them, we can determine the decision architecture of the voter – and also compare the attractiveness of the competing policies, parties, etc.

This is how it turned out:

…  TOP

When it comes down to it, self-interest predominates – and we wonder why our politicians focus mainly on delivering us candy, and never tell us which taxpayers specifically will be paying for it.

Are we really such children?

New Zealand – Labour and the Greens commit political HariKari, nail their flags to the Neoliberal flagpole. 

Middle and Lower income NZ betrayed and abandoned. Labour and Greens are no longer relevant in 2017 election.

My pick is there will be a massive swing to the Maori Party and NZ First. My votes will be going to The Opportunities Party, they are the only party making economic sense. 

Does New Zealand still have political parties on the left in parliamentary politics? No

Do the poor and working classes have anyone to vote for this year? No

These are some of the key questions being asked in the wake of the Labour-Green announcement that they will restrain themselves in government from any significant deviation from the economic status quo.

“The Greens have completely sold out on where they started from in my generation of MPs in 1999.

The new rules adopted by the left parties is a ‘totally business-friendly’ policy and will constrain them in being able to depart from the National Government’s main economic settings.

So what you see here is the Green Party deciding to go after votes on the centre and the right of the New Zealand political spectrum. It wants business in its corner. It wants your National blue-green voters in its corner. And completely abandoning the huge number of people who are in desperate need in the areas of housing, welfare, jobs, and education”.

It’s about political opportunism by the Greens, in order to get into government.

At what price power, if you sell out everything that your party was originally set out to achieve?

I mean, this Green Party here is following the same trail as green parties all over the world, some of who have ended up in coalitions and alliance with really rightwing governments.

Some Green Party supporters are going to end up like some of us already, who have no one to vote for this year. The Greens was perhaps the last hope. This is the death knell for the Greens as a left party in any way, shape or form. They are a party of capitalism. They’re a party that Business New Zealand now loves.” Sue Bradford

“We support higher levels of Government activity and investment than these rules permit. There is an urgent need. Many countries who are more successful than us socially and economically have much greater government activity. If an incoming Labour/Green Government is serious about fixing the problems we have in our education, health, housing and other public services, if it’s going to correct the imbalances we have in terms of pay equity, if we are going to really tackle income inequality and our environmental challenges together as a nation, then it will need to be prepared to invest significantly. That will test these rules as they stand.” Richard Wagstaff, CTU

“Who says voters won’t buy into tax increases on high incomes? I’m sad that our redeemers are capitulating to that rather than making the case for it. Elections are an opportunity to win support for ideas. Not just frame ideas around putative support.” Laila Harre

NZ Herald

The Opportunities Party – UBI and Thriving Families. 

The Opportunities Party is starting along the road to an Unconditional Basic Income (UBI) by ensuring two groups are the first to get it.

As covered in the book, The Big Kahuna, a UBI:

  • empowers people through giving them more choices on how to spend their time, invest their means;
  • recognises the contribution of the 1 million people who work but are not paid, and without whom our society would collapse;
  • provides a cushion to lessen the impact of the casualisation of work;
  • eliminates the poverty trap, the disincentive to work accompanying targeted benefits; and
  • winds back the dehumanisation and stigmatisation of benefit targeting.

The major constraints on how high that a UBI can be set includes its cost to the taxpayer and its relativity to the rewards for paid work. If fiscal overload is to be avoided then the taxpayer cannot be expected to foot the bill for whatever level of UBI proponents dream of. Likewise, the incentive to seek paid work cannot be undermined by the level of the UBI otherwise the resultant lack of labour available and the rising costs of production faced by New Zealand firms, would impart serious consequences to our economy.

A full UBI is our firm objective but requires first that integrity be restored to the income tax regime as per Policy #1 and then we will introduce further taxation reform to fund this aspiration. It is unlikely that a UBI will ever totally replace targeted social assistance but it certainly will markedly reduce our reliance on targeting, with its stigma-laden selection criteria and its perverse impact on behaviour.

A UBI can relieve poverty without creating poverty traps. This will be increasingly important as the job market becomes more and more disrupted. The key difference between the UBI concept of social assistance and the targeted approach of the current regime is the absence of work testing. There may be broad criteria for certain types of UBI – age, income, family type for example – but those delineations will be nowhere near as granular and onerous as the poverty traps that targeted, work-tested benefits entail. In time there will be an underlying UBI for everybody – it must be modest of course and not compromise the incentive to take paid work.

The Policy … 

The Opportunities Party UBI Policy

New Zealand’s Neoliberal Drift – Branko Marcetic. 

In New Zealand, neoliberal reforms have widened inequality and undermined the country’s self-image as an egalitarian paradise.

A few years ago, when the 2008 global financial crisis was just one or two years old, a coworker and I were talking about the increasingly common sight of homeless people in Auckland, New Zealand. While homelessness in Auckland was nothing new, we agreed that we were seeing more and more men and women curled up in doorways, draped in layers of old clothes and blankets, and holding up tattered signs asking passers-by for money on Queen Street, the city’s main commercial hub.

It was sad, I remarked, that while the problem seemed to be getting worse, the government seemed to be doing very little to help these people escape poverty. She too expressed sympathy for the poor and stressed the importance of giving them a leg up, but confessed she found it difficult to feel bad for homeless people. After all, New Zealand had a generous welfare state that made sure no one was left behind.

“I mean, if you can’t make it in New Zealand,” she said, “then there must be something really wrong with you.”

Her attitude is not particularly unusual — millions of New Zealanders share it. The image of New Zealand as a kind-hearted social democracy, a Scandinavia of the South Pacific, is deeply engrained in its culture.

In fact, this view extends far beyond the country’s borders. A Kiwi in the United States is likely to field three common queries: questions about the country’s natural beauty, about The Flight of the Conchords, and about how much more progressive New Zealand is than America. (There’s an occasional fourth that has something to do with Lord of the Rings.)

To be clear, New Zealand has earned this reputation. Its quality of life is consistently ranked among the highest in the world. In metric after metric — whether examining corruption or life expectancy — it rates well above average. Perhaps most significantly, New Zealanders themselves report extreme satisfaction with their lives.

All of these accolades cover up another truth, however: New Zealand hasn’t been a social-democratic paradise for a long time now. Often considered a “social laboratory,” New Zealand eagerly adopted radical neoliberal reforms in the 1980s like few countries before or since. Nevertheless, its kindly image persists, in and out of the country.

A Social-Democratic Laboratory

All countries have narratives. In United States, it’s the “American Dream,” the idea that hard work makes millionaires. In New Zealand, it’s the idea that a benevolent, liberal state will look after its people.

This self-image can be traced back to the period between 1890 and 1920, when the country became known as the “social laboratory of the world.” By then, New Zealand already had a long egalitarian streak: it established government life insurance in 1869 to help those who couldn’t afford private plans, assisted new immigrants, and embarked on an expensive public works scheme to lay roads and railway lines. But in 1879, a severe depression dented New Zealanders’ widespread belief in the free market and individualism.

The Liberal governments of Richard Seddon and then Joseph Ward, which first took power in 1893, passed a flurry of social welfare reforms, including distributing free textbooks, improving workplace conditions, establishing food and drug standards, and breaking up large estates to provide land for settlers. The Industrial Conciliation and Arbitration Act of 1894 instituted a guaranteed minimum wage and a system of compulsory arbitration for settling industrial disputes. The 1898 Old Age Pensions Act created one of the world’s earliest public pension schemes, even if it was small, means-tested, and only applied to “persons of good character.” (Much of this came at the expense of the indigenous Maori, who were dispossessed of more and more of their land to make way for English settlers and railroad lines).

Foreign visitors returned with tales of an egalitarian paradise and “a country without strikes”. American Progressives drew on New Zealand’s example to push for similar changes back home.

New Zealand’s reputation for progressive enlightenment continued into the twentieth century, even as consistent labor agitation undermined its popular image. The benefits of its burgeoning welfare state expanded over the years, particularly during World War I, when it began covering widows, the blind, influenza victims, and consumption-stricken miners.

Then, like the rest of the world, the Great Depression devastated New Zealand’s economy. The downturn hobbled the country’s labor movement. Widespread economic suffering — exacerbated by the country’s lack of unemployment relief — swept the Labour Party to power in 1935. Its leader, Michael Joseph Savage, promised New Zealanders a “reasonable standard of living in the days when they are unable to look after themselves.”

The country’s first Labour government gave unemployed workers an immediate Christmas bonus, launched a state housing program, established compulsory union membership, and started a Keynesian scheme of guaranteed prices for exports. The centerpiece of its stimulus package was the 1938 Social Security Act, which established universal superannuation for those sixty-five or older, universal free health care (at least in theory), and welfare payments for the poor and unemployed. Savage died trying to enact this bill, putting off cancer surgery to help get it passed and win that year’s election. (Once again, Maori were left out — the law’s language gave officials wiggle room to discriminate and pay them reduced benefits).

Perhaps most importantly, however, the government’s commitment to full employment would endure for decades to come. Successive Labour governments paired this policy with a gradually increasing family allowance, culminating in 1946, when a universal benefit for all families with children passed.

By 1949, the International Labor Organization (ILO) claimed the Social Security Act had “deeply influenced the course of legislation in other countries.” English prime-minister-to-be Clement Atlee praised New Zealand as “a laboratory of social experiment.” In 1944, Labour prime minister Walter Nash wrote that the country offered a “practical example” of what “may well become typical of most democracies tomorrow.”

While Labour’s time in power ended in 1949, its policies of government intervention New Zealand endured. The country remained a highly controlled economy with an extensive welfare state and widespread state ownership in various sectors through the 1970s. Government-guaranteed full employment enjoyed bipartisan support. Even Robert Muldoon, who served as the right-wing National Party’s prime minister from 1975 to 1984, once joked that he knew all seventy unemployed New Zealanders by name.

Weird Science

This all changed in the mid-1980s. As in the Depression years, a crisis sparked a political sea change. New Zealand lost a major trading partner with the United Kingdom’s turn to Europe in 1973, while a series of oil shocks through the 1970s plunged the country into recession. In 1965, New Zealand ranked as the sixth wealthiest country per capita; fifteen years later, it fell to nineteenth.

Again like in the 1930s, the Labour Party implemented a major political transformation, making New Zealand once again a “laboratory of social experiment.” But this time, Labour responded to the crisis by deregulating, selling off public assets, and slashing state investment.

The reforms came to be known, somewhat derisively, as “Rogernomics,” after the finance minister Roger Douglas, who would go on to found ACT, a radical free-market party that has recently embraced US Republican-style law-and-order policies. Prime Minister David Lange acted as an affable and charming salesman for the reforms but had little interest in either economics or policy more generally. For the most part, he allowed his team to experiment with the economy however they liked.

Through the 1980s and 1990s — first under Labour, then under National Party rule — New Zealand ushered in neoliberal reform on an unprecedented scale. Controls on wages, prices, rents, interest rates, and more were scrapped. Finance markets were deregulated, and restrictions on foreign investment were removed or relaxed. Based on the belief that welfare helped create unemployment by encouraging dependency, the system was overhauled in ways that the government’s own official encyclopaedia describes as “particularly swift and severe.”

In 1986, Labour slashed the tax rate for high-income earners and introduced a goods-and-services tax. This change effectively hiked taxes on low- and middle-income earners, given that they spend a larger proportion of their earnings on consumption. (Douglas even tried to institute a flat tax, which turned out to be a step too far for Labour.) Legislation in 1991 eliminated hard-fought reforms like compulsory union membership, compulsory employer-employee bargaining, and unions’ special place in this process.

Most state-owned assets were fully or partially sold off, including three banks, the Tower insurance company, shipping companies, the national airline and the country’s main airport, and various energy companies, among many others. In some cases, the results were disastrous, as when National sold off the country’s national rail network to a consortium of financial companies, who soon ran it into the ground forcing a government buyback. It wasn’t the only privatized asset the government later had to rescue. 

Government disinvestment from public services abandoned the most vulnerable citizens. Nearly all psychiatric hospitals closed down by the 1990s, their responsibilities passing on to nongovernmental organizations. University tuition fees shot up by nearly 1,000 percent in 1990 and have climbed steadily ever since. The price of attending college in New Zealand now ranks as the industrial world’s fourth highest. The abrupt end of farm subsidies and protectionist policies hit farmers hard, plunging them into debt and leading to a spate of suicides. One prominent Kiwi recalled seeing a beggar on the streets of New Zealand for the first time in his mid-fifties, an experience he described as “like being kicked in the stomach.”

All of this happened at a dizzying pace. And it had to because the reforms were hugely unpopular.

“It is uncertainty, not speed, that endangers the success of structural reform programs,” wrote Roger Douglas in 1993. “Speed is an essential ingredient in keeping uncertainty down to the lowest possible level.” Douglas would later reportedly advise foreign leaders to keep their equivalent programs hidden from the public and to implement them as quickly as possible to bypass opposition.

New Zealand once again became a global poster child for policy innovation, as Jane Kelsey outlines in The New Zealand Experiment. The New York Times gushed that a “heavily protected, over-regulated, high inflation economy” had been turned into “one of the most open in the world.” The Financial Times claimed New Zealand offered a “blueprint for a shrinking state.” The Wall Street Journal applauded that “this little Prometheus unchained itself from a rock of high taxes, high tariffs, heavy welfare burdens, and pro-union labor laws,” and celebrated that “anybody can follow New Zealand’s example to prosperity.” None praised New Zealand more than the Economist, however, which ran story after story on what it called a “free market experiment in socialist sheep’s clothing” that was “out-Thatchering Mrs Thatcher.”

New Zealand’s neoliberal employment reforms attracted policymakers’ attention internationally. In 1996, Newt Gingrich — then House Majority Leader — sent a congressional delegation to study the country as a “model” for industrial relations deregulation. Powerful neoliberal institutions like the IMF, the Asian Development Bank, and the World Bank exported New Zealand’s grand “experiment,” organizing and funding study trips, speaking tours, seminars, and reports that promoted the program.

Partly thanks to this, countries like Mongolia and Thailand copied New Zealand in their own reforms and worked closely with prominent architects of the experiment. In 1998, New Zealand’s minister of international trade boasted that the “success of New Zealand’s economic reforms” was now as internationally well known as its sheep, its rugby team, and its milk brand.

If you look narrowly at metrics like inflation and government debt, the reforms worked. If you look at more fundamental economic measures like employment, income levels, and economic growth — all of which free-market policies are supposed to boost — they were a miserable failure.

The economy shrank by 1 percent between 1985 and 1992, while other countries in the OECD saw 20 percent growth. Poverty skyrocketed, with one in six falling below the poverty line by 1992. Unemployment jumped, too, and even when it later fell, much of the recovery was in part-time work. Income inequality widened sharpley, with the bulk of income gains going to the country’s wealthiest citizens.

Binging on Neoliberalism

While these reforms profoundly shifted New Zealand’s politics, citizens’ self-image hasn’t kept pace. There remains a prevailing view that their country is an idyllic paradise apart from the rest of the world’s ills that, if anything, is too generous to its less advantaged citizens.

Surprisingly, many business leaders believe that New Zealand is an over-regulated, antibusiness economy hostile to economic success. Complaints that companies are mired in “red tape” never seem to end. CEOs regularly report that fear of regulations keeps them up at night.

These beliefs stand at odds with reality. Three times since 2005, New Zealand has topped the World Bank’s annual “Ease of Doing Business” report, which measures regulations that, at least according to the World Bank, enhance and constrain business activity. Every other year, it’s come third or, more often, second. It ranked first twice during Helen Clark’s Labour government, which often faced accusations that its legislation was making it impossible for businesses to succeed.

Furthermore, Forbes has listed New Zealand in the top three “best countries for business” each year since 2010. It ranked first in 2012. Two years later, Forbes called it best in the world when it came to “red tape.”

Every year since 2009, the conservative Heritage Foundation has put New Zealand in the top five countries for its “Index of Economic Freedom.” Investment banker and right-wing commentator Peter Schiff said he would like to live in New Zealand because of its lack of governmental interference.

Resistance to “the nanny state,” a paternalistic government unreasonably worming its way into every little of detail of individuals’ lives, has also become widespread. This belief most commonly finds its expression in complaints about the welfare program, which many think discourages hard work and desperately needs to be cut back. This narrative took center stage from 1999 to 2008, when Clark’s Labour government went some way toward slowing, though not ultimately reversing, the march of neoliberalism.

New Zealanders would be shocked to find that since 2001 and throughout all of the Labour years, social spending as a percentage of GDP has been on or below the OECD average. New Zealand has consistently appeared in the lower half of OECD social spending, closer to the United States than to countries like Finland, Denmark, Sweden, and even France and Germany, which rank far above it.

Nonetheless, popular myths about New Zealand’s safety net persist. Tales abound of unscrupulous beneficiaries gaming the system and ripping off taxpayers, or of apparently sociopathic parents churning out children just to receive more paltry benefits. Much of this is based on anecdotal evidence and high-profile yet rare incidents that receive heavy publicity. As per usual, it is also heavily racialized — the “dole bludger” that exists in popular imagination is usually Polynesian — even though 44 percent of working-class welfare recipients are Pakeha, or white.

The dramatic changes to the welfare system made by John Key’s National Government, which took power in 2008, are founded on these myths. As of 2012, single parents who wanted to keep their benefits had to start looking for work as soon as their child turned five (previously, they could wait until the child was eighteen); parents who had children while on welfare had to start job-hunting after one year. These changes enjoyed wide approval, even among voters who identified as left-leaning. Two years later the government promised to cut welfare rolls by a further 25 percent.

Meanwhile, charities like the Salvation Army reported a massive strain on their resources as overwhelming demand for food and other assistance outstripped their ability to provide it. Poverty, a normalized, structural feature of the New Zealand economy since the 1980s, has reached shameful levels: a third of the country’s children now live in poverty, and an increasing number of families live out of their cars as rents in cities go up.

Meanwhile, attitudes have hardened. A 2013 bill that would have provided free breakfasts and lunches at schools in low-income neighborhoods failed after the opposition called it “an abdication of responsibility of parenting.” One influential right-wing blogger and pollster mocked the bill as a plan to “replace parents”:

[I]f a family is so incompetent that [it] can’t arrange breakfast or lunch for their kids, then surely we can’t trust them to do dinner also . . . So I think we also need huge state owned dining places where kids can get their dinners for free.

After businessman and one-time Trump prototype Bob Jones said beggars were “fat Maoris” and “a bloody disgrace,” an online poll found that 72 percent of the nearly forty thousand respondents thought begging should be outlawed.

Such views also spurred a recent crackdown on welfare fraud, which saw as many as one thousand people a year being prosecuted for costing the country around $30 million annually. By contrast, less than a tenth of that number are prosecuted for tax evasion, despite the fact that this problem cheats taxpayers of $1 billion annually.

Public services have been further hollowed out over the past nine years. In its quest for budget surpluses, no matter how small and meaningless, the Key government slashed health funding, relentlessly defunded the Department of Conservation, and cut support for education at all levels. It has ramped up privatization over public objections, ignoring the fact that selling profitable state-owned assets for a one-time payment makes little economic sense.

Workers’ rights have also been steadily undermined — a stunning fact for a country once viewed as an international model for its labor laws.

Shortly after coming to office, the National Party introduced a three-month probationary period for all new employees, during which they could be fired for any reason without appeal. A 2010 Department of Labor survey and a 2016 Treasury report found this extra flexibility had done nothing to help employment, but had simply cut “dismissal costs for firms” while creating uncertainty for workers, a fifth of whom had been fired under the provision.

In 2010, the government passed legislation that excluded film workers from the definition of employees. Warner Brothers had threatened to move the production of The Hobbit to Ireland if the change wasn’t made, and the measure had been both publicly urged and privately promoted to top policymakers by the film’s director, national treasure Peter Jackson.

Anti-union sentiment became so bad that a group of global unions issued a joint statement in 2012 calling for “an immediate end to concerted attacks on workers in New Zealand” and “an end to the union-busting measures.” More recently, the government narrowly succeeded in revoking workers’ long-held right to rest and meal breaks.

While the benefits once afforded to workers and the poor are slowly being eroded, it’s never been a better time to be wealthy. Inequality may not be as extreme as in other countries, but as journalist Max Rashbrooke notes, the wealth gap has widened more quickly than anywhere else in the developed world.

Certainly, the National Party’s tax policies have helped: in 2010, the Key government embarked on a series of reforms that gave the biggest cuts to high earners and further raised the goods-and-services tax — a stealthily regressive tax regime that undermined any gains for lower-paid workers.

While New Zealand has been hesitant to welcome Syrian refugees, its doors are open wide if the price is right. It offers the global rich two separate residency visas, one of which — the Investor Plus, introduced in 2009 — has only two conditions: émigrés must invest $10 million over three years and spend at least eighty-eight days in the country in the final two years.

Since then, there has been an uptick in ultra-wealthy individuals gaining residency. As Peter Thiel recently showed, citizenship appears to be easily available to those with a high enough net worth.

Indeed, a recent New Yorker article revealed that New Zealand has become a popular refuge for billionaires preparing for the breakdown of society. But this has been known for years, at least since Robert Johnson told  the Davos World Economic Forum in 2015 that hedge-fund managers were buying farms as “boltholes” to escape increasing unrest over inequality. New Zealand’s absurdly loose rules around foreign property ownership make this strategy possible: buyers don’t need visas and pay no stamp duty. Until recently, it was one of the few developed countries to have no capital gains tax. (Even now, it only applies to houses sold within two years of their purchase.)

New Zealand’s laws benefit the rich in other ways. For years, it operated as a tax haven, allowing foreigners to stash income in anonymous trusts and pay no tax on it. John Key expressly requested this rule, which a top law firm said would put New Zealand on even footing with the Cayman Islands, Luxembourg, and Ireland — all world-famous tax havens. While some have denied this label, the Panama Papers heavily implicated New Zealand and showed that these trusts more than quintupled from two to eleven thousand over a decade.

Ironically, the politicians behind this continued neoliberal rollback all directly benefited from the programs they are now dismantling. The social development minister who cracked down on single parents on welfare was once a single parent on welfare. Former prime minister John Key, whose government sold off thousands of state houses, grew up in a state house. Virtually everyone involved in the reforms that have burdened generations of young people with student debt enjoyed the right of free education.

But a significant part of the population has long since internalized the idea that this is simply the way it has to be. Just prior to Donald Trump’s victory, the New Zealand Listener (the country’s equivalent to Time magazine) criticized Trump and Bernie Sanders for “their unimplementable and often mendacious policy prescriptions.” Some of Sanders’s signature policies included a public health-care system and free college — both of which once existed in New Zealand (and one of which, public health care, still does, albeit in a modified form).

The First Step

Despite adulation from people like Peter Schiff, New Zealand is hardly the libertarian promised land. It continues to have a robust government involved in many aspects of its citizens’ lives.

But neither is New Zealand the progressive paradise that foreign travelers once breathlessly described — or that many of its citizens still believe it is. Perhaps it never was, given that ideas about self-reliance and individualism have always been central to its culture and self-conceptions.

Still, decades of neoliberal reforms have not only hardened social attitudes and eroded some of the country’s greatest legislative accomplishments, but also rolled back many of the elements central to its self-image. A country once proud of its egalitarianism now has higher income inequality than much of the developed world. A country once known for its prosperity now suffers with shameful levels of poverty. A country that markets itself as “clean and green” now must face the reality of its environmental degradation.

For the vast majority of the population, much of this remains invisible, which explains why Kiwis continue to view their country through social-democratic-tinted glasses. Perhaps if they looked more honestly, they could start to solve these problems.

Jacobin Magazine