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All hail Queen Jacinda



Sometimes I wonder when Australia will pack it all up and federate with New Zealand.

Morgan GodferyThat treaty you're planning on signing with Indigenous Australians? We signed ours 178 years ago. The Manus Island refugees your federal government kept in lock up? We were ready to roll out the welcome mat, only Peter Dutton wouldn't let them come. And how about that prime minister of yours? Ours is Jacinda Ardern, so you might forgive us for feeling a little smug. After all, we're all aunties and uncles now.

This is the weird thing about New Zealand: it's everything to everyone. The country's either paradise or the pits. Progressives celebrate it as home to 'the very hero the global left needs right now'. Conservatives adore it too, as the easiest place in the world to do business. American progressives are moving here to escape Donald Trump, and American billionaires are moving here to escape the end of the world. For some local progressives New Zealand is a neoliberal inferno. For some local conservatives it's a socialist shithole, overrun with virtue signalling 20 and 30-somethings.

Exhibit A: Jacinda Ardern, the prime minister who's gone from head of government to mother of the nation. Jacinda — everyone in New Zealand is on a first name basis with their prime minister, by the way — is a self-described socialist who admits that capitalism cannot provide housing for the poor, denouncing it as a 'blatant failure'. Under her watch the Labour government will build 100,000 new homes, invest billions more in public health and public transport, and phase in free post-high school education. It's a full-throated commitment to social democracy, and a program unseen in this country for almost 40 years.

But it's also a program that's falling apart. New Zealand is unusual, at least for a developed country, in that the state sector plays an outsize role in the national economy. Our largest listed companies are either partially publicly-owned (like Z Energy), mostly publicly-owned (like Air New Zealand) or derive a good chunk of their profit from public contracts (like Fletcher Construction). This means 'business interests' and 'state interests' are sometimes considered one and the same. Advocates for former prime minister John Key would insist that if he could run a bank he could run a country.

No one makes the same argument for Ardern, a political staffer in her pre-parliamentary career. Instead the business sector insists her Labour government must 'prove' it can run the economy. It's an odd demand — the economy is nothing more than the sum of the decisions we make about production, consumption, and exchange — but for the business sector 'the economy' is shorthand for 'our interests'. The Labour government must prove it isn't a threat to those interests. Building 100,000 homes is fine — it's a profit opportunity — but lifting taxes to pay for those homes isn't.

In another time and another place, a Labour government might've told the business sector where to go. If only. In the run-up to last year's election Labour fell in line, promising no new taxes in the first term. Some people understood it as a sensible compromise — in a country where productivity is remarkably low, increasing private sector investment is the best means for improving efficiency and deepening the capital stock, so the government must keep the business sector onside — but others saw it as a self-defeating compromise. Instead of lifting income taxes on top earners, the government is turning to regressive taxes, from a regional fuel tax in Auckland to a 'tourist tax' at the border, to pay for its program.


"Jacinda might be the very hero the global left needs right now, but there's a long way to go."


Is this the future liberals want?

Still, after decades of defeats, we take what we can get. 100,000 new homes, billions more for public health and public transport, and free post-high school education are worth fighting for. And a prime minister taking parental leave — sharing every high and low with the country — is worth celebrating. Jacinda is making history. On Sunday she went live from her couch explaining that the Labour government's 'families package' will put $5.5 billion back in the pockets of parents and their children (including a weekly $60 payment to parents with newborns). The package is part of Jacinda's plan to lift a quarter of a million children out of poverty.

It's huge. Yet the Labour government's second compromise — a series of 'Budget Responsibility Rules' — is putting that plan at risk. Under the self-imposed rules the government must run an operating surplus while reducing core Crown debt (i.e. government debt) to 20 per cent of GDP. It's performative austerity. In April Jacinda told media the Budget Responsibility Rules mean the government cannot afford to expand the families package. Instead of lifting taxes and spending to match, the Labour government is backing policies that shift costs 'off the books', like public-private partnerships.

Twenty years ago all of this might've made sense. Under the last Labour government (1999-2008) real interest rates were high, meaning the fiscal arithmetic worked against government borrowing. Even modest deficits would've meant an ever-rising debt to GDP ratio. But post-2008 interest rates remain relatively low, meaning the fiscal arithmetic is in favour of government borrowing. The last National government understood this, borrowing billions to maintain social and infrastructure spending. Outsiders might find it hard to pick who the social democrats are — Labour or the conservative National Party.

But maybe the commitment to no new taxes and the Budget Responsibility Rules are nothing more than a sop — a promise no one plans on keeping. Except the usual suspects are copping it. In May the government cut more than ten per cent from the Ministry of Maori Development's budget, a move at odds with Jacinda's genuine commitment to Maori. Public servants are also preparing to strike as squeezed budgets means there is very little room for wage increases. (Somehow, though, there is money for a new prison.) Jacinda might be the very hero the global left needs right now, but there's a long way to go.



Morgan GodferyMorgan Godfery is a writer and trade unionist. His writing appears in The Spinoff, Overland Journal, VICE and the Guardian. Morgan also regularly appears on New Zealand radio and television as a political commentator, has authored numerous academic chapters and peer-reviewed journal articles, and works as an associate at The Workshop, a public policy thinktank.

Topic tags: Morgan Godfery, Jacinda Ardern, New Zealand



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Existing comments

A great article and great read. Yes, the kiwis are my cup of tea. A country I’ve admired since they banned visiting nuclear warships. How impressive. They just keep getting better, and they don’t try to destroy their opponents. Look at the respect they have for their female PM’s. They just go for scores on the board. Play the game and not the person. If only we could do so instead of trying to draw blood. I think I’m too old to move from Au but I’ll have chat to my grandchildren.

David | 03 July 2018  

Social democracies need a balance of entrepreneurship and reasonably unfettered capitalism to create wealth, but that wealth also need to be redistributed for the sustainability of a balanced, equitable, civilised and caring community. Many countries including Australia lurch from emphasis on one to the other with passing of elections and polarised governments. If Ms Ardern can get the Goldilocks settings just right, then good luck to her and indeed to dear NZ.

Eugene | 03 July 2018  

An interesting perspective. I just hope that New Zealanders are more forgiving when things fail to meet the over-inflated expectations. I watch with much interest as she is just so refreshing.

Genevieve O'Reilly | 08 July 2018  

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