Social Democracy to Social Discipline.

OP-EDITORIAL - ISSUE 3: MAY - JULY 2025

Understanding New Zealand’s history of corporate-biased legislation and what it means for us.

We live in difficult times. With growing unemployment, an apparently insurmountable housing crisis, and an ever-increasing cost-of-living that shows no sign of slowing down, it seems that many young, working class, and other marginalised groups are facing a bleak and uninspiring future. Why is it that in Aotearoa me Te Waipounamu, known for our highly productive agricultural industry, regular folk can’t afford to buy basic domestically produced items, when they are being made just down the road? What happened to the manufacturing industry in this country, and the workers that sustained it? How come, at a point in history when we are endlessly confronted with displays of extreme wealth and prosperity from some sectors of society, are others struggling more than ever? And how can it be, that in a country that once boasted some of the highest standards of living in the developed world, it feels as though regular people have been all but forgotten about by the governments that they elected to represent them?

In the current climate it is almost impossible to imagine a time when a university education, affordable housing, fair pay and access to effective healthcare were seen as rights and not privileges. To understand how we got here, and how we could possibly attempt to rectify some of these societal imbalances, we first need to understand the legislative steps and changes that have put us on our current trajectory. Without a firm understanding of certain decisions that have been made by successive governments from either side of the political duopoly, we are only left with poverty, resentment, and a sense of doom in an ever-rising tide of cognitive dissonance. 

It is, in fact, no accident that we have ended up here. Our current circumstances are the direct result of inegalitarian attitudes and neoliberal corporate propaganda imported from overseas and then implemented with a callousness that should sicken anyone with a conscience. It is the aim of this article to shed some light on this process, and to hopefully stimulate discussions about how to remedy this morally decrepit philosophy which now threatens to suffocate us all.

This is, of course, not the first time that we have faced economic and social challenges in Aotearoa. Māori encountered (and actively opposed) challenges including land theft, New Zealand Wars and the disenfranchisement for Māori that gripped New Zealand from the 1860s onwards. In the 1930s, during the Great Depression, there was general widespread unemployment and poverty. Many were unable to honour their loans to banks, which led to an increased number of unhoused throughout the country. Without a social safety net, newly unemployed people were put to work in slave-like conditions building railways and other public projects for little to no pay. To combat this the first Labour government, under Michael Joseph Savage, enacted many of the socially conscious policies that we still have the glimmer of today. 

They formed our social security system, which provided a safety net for people who were (through no fault of their own) out of work. Savage’s government also moved to nationalise various industries, including transport, broadcasting and The Bank of New Zealand. This then enabled more extensive government control of these industries, instead of making cuts to balance the books they were able to stimulate key industries as needed. These changes have been referred to as “socialising the means of production, distribution and exchange” by economist Dr. Bryce Wilkinson. 

This was followed by import tariffs and increased domestic manufacturing, creating jobs. With this shift towards a more socially democratic model we saw an upward shift in the living standards for many through increased employment, housing availability and general prosperity. It should be noted that when elected in 1949, the National government maintained most of the protectionist import policies and taxation rates introduced by Labour, as well as the new social security framework. While it is true that numerous factors contributed to these improved conditions for many in the country, it is impossible to ignore the direct approach taken by the government. These policy changes sought to establish a baseline of fair treatment for all citizens, regardless of class or social standing. The necessary criteria to live healthy lives began to be seen as rights, with equal access for all.

These socially democratic policies were left largely intact throughout the middle of the 20th Century, a period that is now seen as somewhat of a “golden age” in our country’s history (although it must be acknowledged that there has always been struggle, in numerous forms, throughout the history of Aotearoa). It wasn’t until the 1980s under the Fourth Labour government, and in the 1990s under National, that these policies began to be dismantled. These were again times of economic difficulty, not the least due to the global demand for wool rapidly decreasing with the introduction of cheaply produced alternatives. The price of oil had increased substantially, and there was an ever-growing national fiscal deficit. Governments were again presented with a need for drastic measures to avoid what was, predicted by some, to be an economic catastrophe.

The measures chosen, beginning under the direction of then Finance Minister Roger Douglas and his associates, were ones of radical neoliberal overhaul. Simply put, they sought to move New Zealand’s economy from one that is controlled by the democratically elected government to one controlled by global markets, with minimal government intervention. This paradigm shift has come to be referred to as Rogernomics, in the same vein as Reaganomics in the United States or Thatcherism in the United Kingdom. 

This ideology, born from the theories of economists such as Milton Friedman and his colleagues at the University of Chicago’s economics department, promoted “economic liberty” as a means to attaining personal liberty. A “free” economy will manage itself and will lead to increased prosperity for the citizens of a country by way of concepts such as “trickle-down economics”, i.e. the more money generated by corporations free of “red tape” and burdensome tax obligations, the more money that will filter down to everybody else. It is now evident to all that trickle-down has been a complete failure (fallacy). The ‘free economy’ (sic) did not bring about the economic relief predicted, and in fact directly led to economic stagnation that lasted for the best part of 10 years – the first time that the New Zealand economy had experienced stagnation without the direct cause being outside of our own borders according to economist Brian Easton.  I should also point out that it was this very same economic ideology that influenced the regimes of violent dictators such as Augusto Pinochet in Chile. In fact, Pinochet’s economic advisors were specifically educated in neoliberal thinking by Milton Friedman et al. at the Chicago School of Economics. Such is the company we keep. It is important to note that Roger Douglas ultimately went on to form the Act Party.

The economic restructuring of the 1980s represented a shift from a socially minded people-focussed approach to government, to an approach where governments relentlessly promote the interests of corporations. However, it was the actions of the National government in the early 1990s, and ‘the mother of all budgets’ which moved to demolish any remnants of the progressive policies that had benefitted regular people since the Great Depression. There were two key aspects to this: one being a crippling change to labour laws and workers’ rights, and the other being a direct attack on beneficiaries. 

Prior to 1991, there was near-compulsory union membership for working people in Aotearoa. This meant that the relationship between employers and employees (i.e. wages and conditions) were negotiated collectively, and through this widespread solidarity working class people held significant bargaining power. This was obviously contrary to corporate interests, and under the influence of then Finance Minister Ruth Richardson, the Employment Contracts Act 1991 was passed. This Act did away with the “national rewards” system whereby people in the same industry working the same job would have equal wages and introduced the system of individual employment contracts that we are familiar with today. It goes without saying that negotiating an employment contract individually is far less beneficial to the worker, people in desperate need of employment generally aren’t in a position to negotiate terms with their prospective employer when the alternative is not feeding their family. Unionist Ken Douglas pointed out in 1996 that the goal of these changes was clear, to “…achieve a dramatic lowering of wages, very, very quickly”.

As mentioned, these changes to employment relations were not the only significant outcomes of this budget, aptly referred to as “Ruthanasia” by commentators. Beneficiaries were also in the firing line. Ruth Richardson worked with Social Welfare Minister Jenny Shipley to cut unemployment benefits, sickness benefits and universal benefits for families. Beneficiaries were labelled as responsible for the struggling economy. Gone were the days of government policy striving to ensure the basic needs for struggling people in this country. The government line was now one of farcical notions of individual economic freedom, and the persecution of those most needy. Child poverty skyrocketed under these social welfare reforms, almost doubling from 15% in 1990 to 29% in 1994. The Employment Contracts Act was replaced with the Employment Relations Act in 2000, decimating the unions which have never bounced back to where they were, continuing a pattern of drastic change followed by mediocre roll backs that fall short of rectifying the harm already caused by previous Parliamentary Acts. 

These attitudes towards beneficiaries are clearly shared by our current government. Christopher Luxon’s recent comments about “bottom feeders”, coupled with increasingly punitive measures such as the traffic light system only highlight the stance of the National-led coalition. Despite basic needs becoming unaffordable for many, it seems as though bashing beneficiaries and blaming struggling families for their difficulties is once again on the rise. When did our leaders become so callous and cold in their attitudes? It is no coincidence that this change in attitude mirrors a change in the stock of many of our leaders themselves. When assessing the actions of politicians with backgrounds in finance and business (i.e. Luxon, Willis, Seymour), it is perhaps not surprising that they then want to govern our country as though it were a cold and clinical exercise in capitalism rather than an obligation to promote the betterment of everyday people. For further evidence of this, we only need to look to the Regulatory Standards Bill to see the true intent of certain politicians seeking to complete the corporate stranglehold on our country. Compassion and empathetic policy for all citizens are now needed more than ever as we look to the future. Sadly, without these values at the political forefront, the future we face is one of increased poverty, growing desperation, and an exponentially widening gap between those who have and those who have not.

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Micaiah Derrett