Sunday 31 October 2010

Malpass on New Zealand

Luke Malpass writes in The American that New Zealand's reforms of the 1980s were an aberration from Kiwi pragmatism and conservatism (of the "don't change things" sort). The speed of reforms fueled the push for proportional representation which has made it harder to enact any radical changes but made creeping growth of government more likely. Labour ramped spending up post 2005; National's done little to claw things back.
Government in New Zealand is ticking along in very much the same way it always has—as a managerial government. The only substantive difference between this government and previous ones is who manages government better, rather than what ideology it holds. Across the political spectrum, it is accepted that government should provide health, education, welfare, risk insurance, and economic development agencies. It should also own airlines, railways, banks, and telecommunications.

Despite all of this, there are positive signs in the May 2010 budget in the form of tax cuts and a freeze on most government spending, which point to an overall reduction in core government spending (not counting trading entities, or state-owned enterprises, which are supposed to be run like private, profit-making businesses and return dividends to the taxpayer) from around 35 percent to 29 percent of GDP over the next decade. A reduction such as this would be a massive boost for New Zealand’s moribund economy, and have a real effect of unshackling New Zealand from the creeping socialism of the last decade. A reduction would not only see much more of the economy returned to the discretion of those who created the wealth and who can spend it best, but also would signal a substantial reduction in the relative resources government can use to design frivolous and harmful new interventions in the economy. Whether this happens, we shall wait and see.

In the meantime, New Zealand continues in its holding pattern — happily drifting toward genteel poverty and a lifestyle that the rest of the world envies — even if it only exists in tourist brochures.
I'd quibble that Malpass is no longer right about there only being managerial differences between National and Labour. National hasn't changed, but Labour has been pushing harder to the populist left. But I'd expect that the last Labour Party conference happened subsequent to Luke's filing deadline for this piece.

HT: Roger Kerr.

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