Denied the state’s leadership and resources, New Zealand’s economy has been hollowed out and taken over. More importantly, so has its democracy

By Chris Trotter*

What's wrong with National?

New Zealand’s “natural party of government” (since its formation in 1936 the National Party has won 17 out of 28 general elections) has long been recognised as a moderate and pragmatic political force. Not only that, but when hardline individuals and factions have taken control of the party, it has demonstrated an admirable willingness to step away from its extremists and re-engage with the political mainstream. From Sid Holland to Keith Holyoake, Ruth Richardson to Bill English, Don Brash to John Key, National has never been slow to recognise an ideological losing streak – and do something about it.

What happened?

Given the party’s mainstream status, it should come as no surprise that what happened to National bears close comparison to what happened to Labour. By embracing the essentially anti-political objectives of the “more market” reforms of the late-1980s and early-1990s, both major parties gave away most of the New Zealand state’s hitherto extensive powers of economic intervention. In doing so they reduced significantly the role and purpose of New Zealand’s elected leadership. National and Labour politicians are still working out what that means, not only for themselves, but also for the parties they represent.

New Zealand has always suffered from the disadvantages associated with a small population and the large distances separating the country from its principal markets. To offset these disadvantages, the New Zealand state was forced to play a central role in funding the sort of infrastructure which, in other countries, was paid for by the private sector. It’s not that New Zealand lacked capitalists, it’s just that the repeated failure of their undercapitalised private enterprises very swiftly reconciled them to the inescapable fact of their economic lives. That, when it came to laying down the building blocks of a working national economy: banks, insurance companies, railways, roads and bridges, schools and hospitals; the state was the only player with anything like deep enough pockets.

The economic necessity of state intervention catapulted New Zealand’s politicians into what can only be described as an heroic role. Where Great Britain had its Isambard Kingdom Brunel, New Zealand had Julius Vogel. Against the Empire’s Cecil Rhodes, New Zealand set its own Richard ‘King Dick’ Seddon.

The burgeoning wealth of the United States may have been created by its capitalist ‘bobber barons’, but the generally comfortable condition of most New Zealanders at the turn of the Nineteenth Century was the legacy of their hero politicians and their activist state. Not for nothing was this tiny country hailed as “the social laboratory of the world”.

As the Great Depression of the 1930s sent New Zealanders reeling economically, their political response was entirely consistent with the history of “God’s own country”. Almost instinctively, the victims of the worldwide economic catastrophe turned to the state – not only for short-term relief, but also for reassurance that, in the long term, they and their children would have a future worth living in. The First Labour Government’s success in meeting both of these expectations transformed its leader, Michael Joseph Savage, into something considerably more than a hero. It made him a saint.

A tough act to follow. Forced to watch the Left’s steady expansion of state power, and alarmed by the growing power of the compulsorily unionised working-class which, for 13 long years, had kept Labour in government and National cooling its heels on the Opposition Benches, Sid Holland became National’s first prime minister with one over-riding purpose: to make New Zealand safe for farmers and businessmen, and their wives, by turfing out the trade unionists and public servants who had somehow contrived to park their impertinent posteriors in the big leather chairs. Smashing the bolshie wharfies’ union and its allies certainly hastened this restoration of the ‘right people’, and their interests. National would never lose its aura as the country’s prime defender of law and order.

The 1951 Waterfront Dispute was not, however, the first step towards breaking the New Zealand state’s grip on the New Zealand economy. Subsidies and import licences survived the angry eight year reign of Sid Holland and his cronies. His successor, Keith Holyoake, tended the “stabilised”, state-guided, New Zealand economy with the same care that he tended his beloved roses. Unconvinced of the need for major change, “Kiwi Keith” stretched National’s political dominance over the entire 1960s with all the smug propriety of a pampered family cat.

This was the achievement that Rob Muldoon spent the whole nine years of his prime ministership attempting to replicate. Though presented to young New Zealanders as a cross between Darth Vader and Voldemort, National’s fourth prime minister’s boast that he was the last finance minister to truly understand the New Zealand economy was by no means a vain one.

One has only to survey his “Think Big” programme of state-sponsored growth, to see how thoroughly he had absorbed the central truth of New Zealand’s economic history. That, stripped of the state’s resources, the nation’s economy would, in short order, be hollowed out and taken over. More importantly, so would its democracy. New Zealand’s politicians would cease to be heroes, and become villains.

Mastering the complicated alchemy of turning villains into heroes pretty much describes the politics of the last 40 years. After burning down Labour’s inclusive economy with the ‘Rogernomics’ flame-thrower; after promising voters the ‘Decent Society’, and delivering the ‘Mother of All Budgets’; where were the politicians charged with protecting Neoliberalism’s low-tax, deregulated and privatised economy supposed to go? How can a party convince voters that it will do something, when it knows full well that, since 1984, New Zealand governments aren’t allowed to do anything?

The answer devised by Labour’s Helen Clark and Michael Cullen, and perfected by National’s John Key and Bill English, was to smile and wave and hope that their political careers came to an end before the nation’s infrastructure collapsed. Between them, National and Labour kept up this charade for 18 years. The obvious weakness of the strategy, that it would only work for as long as the infrastructure remained upright, left the next generation of Labour and National leaders facing something bearing a frightening resemblance to the Gotterdammerung.

Small wonder, then, that having been returned to the Opposition benches, first Labour’s and then National’s caucuses, went bonkers. Electing and/or ejecting a leader every other year becomes inevitable when the people are crying out for effective policy, and all the major political parties are able to offer them are ineffective personalities.

Jacinda Ardern’s and Grant Robertson’s accidental 2017 victory, plagued by indecision and ineptitude, received, unaccountably, the dubious benediction of the Covid pandemic which, at least temporarily, allowed the state to resume its old role of New Zealand’s prime defender. How devastating it must have been for Labour to once again be required to surrender the state’s interventionist powers to their Treasury and Reserve Bank jailers.

With nothing useful left to offer New Zealand economically, Labour’s lurch towards cultural revolution was entirely predictable. Where else do left-wing middle-class Gen-Xers go when all other roads are blocked – except the road leading them back to the student union?

By the same token, where does the National Party go when the nation’s infrastructure is visibly crumbling, and the cost of fixing it cannot be met (without incurring the wrath of the neoliberal priesthood) by raising taxes, or taking advantage of the state’s ability to borrow capital more cheaply than the private sector? The answer would appear to be that it either starts venturing down the dark alleys of crony capitalism, or hanging-out with the counter-revolutionary culture-warriors of the Weirdo Right. Or both.

*Chris Trotter has been writing and commenting professionally about New Zealand politics for more than 30 years. He writes a weekly column for interest.co.nz. His work may also be found at http://bowalleyroad.blogspot.com.