THE New Zealand transition from an intensely protectionist, socialized state to one of the freest economies in the world is not without negatives. Some New Zealanders
criticize changes"The rich get richer and the poor get poorer" is a comment my wife and I heard often when we asked for reactions during an 11-day visit last month. Ask Simon Collins, news editor of the City Voice, a weekly paper in Wellington, if things are better and you will get a clear "No."
The reforms begun in 1984 hit everybodywith a new 12.5 percent retail goods and services tax (GST) that jacked up prices. At the same time personal income and corporate taxes were lowered to create investment incentives.
Unemployment soared. It had been only 1 percent for many years, then went to the 4 percent range after the 1975 worldwide oil shock. It moved near to 11 percent after 1984. Now it is about 6.
Collins sees unemployment as a greater evil than inflation. He is unimpressed that inflation has been brought down to 2 percent so long as unemployment remains over 16 percent for Maoris and Pacific Islanders. He sees a continuing culture of despair due to unemployment.
Business and government leaders cite the fact that since a new right-to-work law was enacted in 1991 jobs have increased by 220,000, which is more than were previously unemployed. Maori and Pacific Islanders, whose unemployment was above 20 percent, have gained a somewhat bigger portion of the new jobs than the population in general. The law broke union labor monopolies in both the government and the private sector.
Bringing the Maori and Pacific Islanders to parity with whites (called pakehas) is a stated goal for government.
Even Collins agreed something had to be done in 1984 because of the country's financial crisis. So did everyone else I talked to.
Donald Brash, governor of the Reserve Bank of New Zealand, said in a speech last June that he and other leaders who believe the reforms long-term will prove good for all have not conveyed their message sufficiently.
Polls show, he said, that most New Zealanders believe the union reform act of 1991 has been beneficial to the economy yet many consider it gave employers an unfair advantage over employees. There is also considerable concern, he said, that foreign investment, while helpful, represents a loss of sovereignty and is a threat to future prosperity.
Brash said his hunch is that New Zealanders, in common with citizens of other Western countries, accept the fact that socialism doesn't work but still want a welfare state. Many feel that unemployment benefits, which have been cut back moderately, should continue to equal pay for working.
MORE but moderate co-payment requirements for health and education are similarly resisted by many.
Brash holds that further reforms can continue to encourage more growth and employment. They also will provide increasing opportunities for the unskilled and those on low incomes to increase both their skills and their income, he said. But to maintain public support for continuing reform, he said, will require actual growth and prosperity, not theoretical ideas.
People committed to the reforms stayed in power after the national election last October. They must face the voters again in 1999.
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