Neoliberal policies implemented in New Zealand since the 1980s, particularly under the leadership of Roger Douglas and Ruth Richardson, have significantly contributed to the country’s deindustrialization and exacerbated social inequality. Prior to the 1980s, New Zealand’s economy was heavily reliant on traditional industries such as agriculture, manufacturing, and mining. However, the country faced economic challenges, including high inflation and a growing budget deficit. In response, the Labour Party under Roger Douglas implemented a series of neoliberal reforms known as Rogernomics. These reforms aimed to deregulate the economy, reduce government intervention, and promote free-market principles. Key aspects of Rogernomics included the floating of the New Zealand dollar, corporatization of state-owned enterprises, removal of subsidies, reduction of tariff protections, and the introduction of a Goods and Services Tax (GST). Additionally, there was a significant focus on the selling of state-owned assets, with many enterprises being privatized, including telecommunications, airlines, and banks.
Proponents of Rogernomics argue that it helped reduce inflation and modernize the economy. They argue that the privatization of state-owned enterprises led to greater efficiency and innovation. However, critics point to increased social inequality and unemployment as negative outcomes. They argue that the deregulation of industries led to job losses and the decline of traditional sectors, particularly manufacturing. Ruth Richardson, who served as Minister of Finance from 1990 to 1993, continued the neoliberal trajectory set by her predecessors. Her tenure was marked by Ruthanasia, a term coined to describe her aggressive economic policies aimed at reducing government spending and welfare benefits. Richardson’s 1991 budget, known as the “Mother of All Budgets,” included substantial cuts to social welfare, reductions in government spending, and measures to promote labor market flexibility. These policies were designed to address New Zealand’s fiscal problems and stimulate economic growth. However, they also led to increased child poverty and wealth inequality, drawing criticism from social advocates.
The neoliberal reforms implemented by Roger Douglas and Ruth Richardson in the 1980s and 1990s profoundly reshaped New Zealand’s economy, leaving a lasting legacy that continues to influence economic debates and policy decisions today. While proponents argue that these reforms, collectively known as Rogernomics, modernized the economy and reduced inflation, critics point to their negative consequences, including the decline of traditional industries, increased social inequality, and unemployment.
This legacy of neoliberal policies was further cemented with the founding of the ACT Party in 1994. Roger Douglas, a key architect of Rogernomics, co-founded the Association of Consumers and Taxpayers (ACT) in 1993, believing that his reforms were incomplete and further steps were necessary to fully realize the benefits of a free-market economy. The following year, ACT transformed into a political party, dedicated to promoting deregulation, privatization, and reducing government intervention in the economy.
The ACT Party has since become a prominent voice for free-market principles in New Zealand politics, consistently advocating for policies that align with Douglas’s vision of a market-driven economy. While facing criticism and controversy, the party has remained a powerful force in shaping New Zealand’s economic and political landscape.
The impact of Rogernomics on New Zealand’s industrial landscape is undeniable. Since the 1980s, several prominent companies have closed their doors or significantly scaled back operations, reflecting a broader trend of industrial decline and restructuring. The closure of the Glenbrook steel mill in 1988 marked a significant blow to New Zealand Steel and the country’s steel industry as a whole. Fonterra, while not completely shutting down, has also experienced significant restructuring, closing several plants over the years. The New Zealand Wool Board faced similar challenges, undergoing restructuring and closing many of its operations.
The energy sector has also seen closures, with the partial closure of the Huntly Power Station being a notable event. The closure of the Tinwald Dairy Factory impacted the local economy and employment in the region, while the Whakatane Paper Mill’s closure in 2013 marked the end of an era for the paper industry in New Zealand. More recently, Pacific Steel’s Otahuhu plant closed in 2015, and the Marsden Point refinery shut down in 2020, highlighting the ongoing challenges facing the steel and refining sectors. These closures underscore the significant impact of Rogernomics on New Zealand’s industrial landscape, leading to a period of restructuring and, in some cases, decline.
The ACT Party’s neoliberal policies, while presented as promoting economic growth and individual freedom, have a significant impact on the distribution of wealth and contribute to deindustrialization in New Zealand. Rooted in the legacy of Rogernomics, their policies inadvertently benefit the wealthy elite at the expense of workers and traditional industries.
Deregulation and privatization, key tenets of ACT’s ideology, often result in job losses and the decline of industries. Deregulation can weaken worker protections and environmental regulations, allowing companies to cut costs by reducing wages and increasing pollution. Privatization, while promising efficiency, can lead to the dismantling of public services and the transfer of assets to private entities, often owned by wealthy individuals and corporations. This shift of power from the public to the private sector can lead to a concentration of wealth and influence in the hands of a select few.
The ACT Party’s advocacy for tax cuts, while presented as a way to stimulate the economy, often disproportionately benefits the wealthy. Lower taxes on corporations and high-income earners mean less revenue for government programs that support workers, education, healthcare, and infrastructure. This can lead to a widening wealth gap and a decline in the social safety net, further disadvantaging those who are already struggling.
Neoliberal policies often weaken unions, which historically have played a crucial role in protecting worker rights and negotiating fair wages. A weakened labor movement can lead to lower wages, fewer benefits, and less bargaining power for workers, further contributing to income inequality.
While promoting individual responsibility is a noble goal, the ACT Party’s focus on this principle can be used to justify a lack of government support for struggling individuals and communities. This can lead to a decline in social services and a rise in poverty, further marginalizing those already struggling.
The combination of these policies creates a system where the wealthy elite, with their access to capital and influence, are able to benefit from deregulation, tax cuts, and weakened labor protections. Meanwhile, workers in traditional industries face job losses, declining wages, and a shrinking social safety net. This dynamic contributes to deindustrialization, as companies are incentivized to move operations overseas or automate jobs, further reducing employment opportunities for New Zealanders.
While the ACT Party’s policies are not inherently designed to exploit workers or promote inequality, the unintended consequences of their policies, combined with their focus on market-driven solutions, have a significant impact on the distribution of wealth and contribute to the decline of traditional industries. This creates a system where the wealthy elite thrive while workers and communities struggle, exacerbating existing inequalities and contributing to a less equitable society.
Neoliberal policies, which emphasize minimal government intervention and the privatization of public assets, could undermine the potential benefits of the Fast Track Approval Bill. This bill aims to expedite infrastructure projects by streamlining approval processes, but the neoliberal approach could lead to several issues.
Firstly, neoliberal policies often prioritize short-term financial gains over long-term public benefits. This means that any infrastructure developed under the Fast Track Approval Bill could be quickly sold off to private investors. The focus on privatization could result in essential public assets being transferred to private ownership, potentially leading to higher costs for the public and reduced access to these services.
Secondly, the emphasis on deregulation and reducing bureaucratic hurdles could compromise the quality and sustainability of the infrastructure projects. Neoliberal policies might push for fewer restrictions and oversight, which could lead to substandard construction and maintenance. This could result in higher long-term costs and the need for frequent repairs or replacements, negating the initial gains from the fast-tracked projects.
Moreover, the neoliberal focus on market-driven solutions could lead to a lack of accountability and transparency in the approval and implementation of infrastructure projects. Without robust oversight, there is a risk of corruption and mismanagement, which could further erode public trust and the effectiveness of the Fast Track Approval Bill.
Aotearoa New Zealand has the potential to shift away from its neoliberal economic model and revitalize its industrial economy. However, this transition would be a complex and multifaceted process, requiring a comprehensive approach across multiple sectors.
Reviving the industrial economy would require diversifying the economic base, moving beyond traditional industries and investing in sectors such as manufacturing, technology, and renewable energy. Encouraging innovation and supporting small and medium-sized enterprises (SMEs) would be crucial to creating a resilient and dynamic industrial sector.
A skilled workforce is essential for a thriving industrial economy. New Zealand would need to invest in education and vocational training programs to equip workers with the skills needed for modern industries. This could involve partnerships between the government, educational institutions, and private sector companies.
Any move towards reindustrialization must balance economic growth with environmental sustainability. Policies that promote green technologies and sustainable practices would be essential to ensure that industrial growth does not come at the expense of the environment.
A significant shift away from neoliberal policies would require strong political leadership and public support. This means building a consensus among policymakers, businesses, and the public about the benefits of reindustrialization and the need for a more interventionist economic approach.
New Zealand operates in a globalized economy, and any shift in economic policy would need to consider international trade agreements and relationships. Balancing protectionist measures with the need to remain competitive in the global market would be a key challenge. While it is possible for New Zealand to move away from neoliberal policies and work towards reindustrializing its economy, it would require a comprehensive and coordinated effort across multiple sectors and levels of government. The success of such a transition would depend on careful planning, investment, and the ability to adapt to changing economic and environmental conditions.
