New Zealand Is Tired Of Its Fiscal Crash Diet
WELLINGTON, NEW ZEALAND — Late last year, John Woods, New Zealand's ambassador to the United States, was pleasantly surprised to receive a fan letter - from Speaker of the House Newt Gingrich.
"As we attempt the changes that we believe are best for the US," Mr. Gingrich enthused, "it is encouraging to hear that these kind of changes can be done and succeed in their objectives." New Zealand's economic story, he said, was "a shining example of the scale of change" that the budget-slashing GOP hoped to usher into Washington.
Well, maybe not. If the political pollsters are to be believed, this story may have a different ending when a new government is elected this Saturday.
At issue are the policies of the past 12 years, which have transformed one of the developed world's most-regulated economies into one of its most-open and competitive. Those policies have included reducing trade tariffs, scrapping government subsidies, financial-market deregulation, privatization, and tax reform. Inflation is kept on a tight leash by the central Reserve Bank.
The choice facing voters is mostly seen as a referendum on all or some of the above. Earlier this year, it looked as if the election might center on race relations - between the native Maoris and the majority Europeans - but even that perennial issue has taken a back seat to the question of the economic future.
Not everyone in this South Pacific nation of 3.7 million appears to be as gung-ho as Gingrich about it.
Contesting the election is a smorgasbord of 23 parties, of which four are considered serious contenders, with the governing conservative National Party being the single-most popular. Under a new proportional-representation system, a single party is unlikely to gain a clear majority, and the next government will rule through a coalition. In that event, the next prime minister could be Labor Party leader Helen Clark.
Fiscal conservatives worry that any change of course - even if it is toward the center, as is widely supposed - will be at the expense of the reforms.
"Don't risk throwing it all away," implores Prime Minister James Bolger, leader of the governing National Party, who has spent much of the current campaign reminding voters that "the best social policy is a strong economy." But his opponents accuse him of getting it backward: The best economic policy is a strong social policy, they argue.
Opposition parties are promising more public spending on education, social welfare, and health. "If you believe the economy is about people, not money - then so do we," claims the opposition.
"People want a new, moderate course," declares Jim Anderton, leader of the center-left Alliance. "For too long, the 'center' has been a dirty word."
To be sure, moderation is not a word that has often been associated with New Zealand since 1984, when voters rejected the borrow-and-hope policies of the late Robert Muldoon, under whose watch inflation soared, the national debt mushroomed, and foreign-exchange earnings slumped. Small wonder, then, that the ostensibly left-wing Labor government in 1984 chose the free market.
New Zealand was not unique in choosing such policies - Australia, Turkey, Sweden, and even the US have all been thrust on to reformist paths through longstanding fiscal difficulties. What distinguished New Zealand's experience, experts say, was the pace and extent of its reform.
Most of the painful cuts were made by the two Labor administrations from 1984 to 1990. But their main beneficiary has been the current conservative National Party government, which has been in office since 1990.
After many years in which the economy grew less than those of its trading partners, it has been expanding by an average of more than 3 percent since 1992. Unemployment hovers near 6 percent, inflation is trifling, and, most dramatically, the government continues to post hefty budget surpluses.
Another recent report suggests New Zealand's standard of living will overtake that of the US in the next 15 years.
YET at a time when much of the difficulties would appear to be a thing of the past, people here appear to be saying enough is enough.
"Politicians are a bunch of ... criminals," says Linda, a woman who called into a local talk radio show. "I say, vote for the the guy who you want to see in jail for the least amount of time!"
Sensing the public mood, even the Labor Party, which can take much credit for much of today's bright statistics, has been voicing its regret for traveling "too far, too fast" down the reform road.
"If you talk to most New Zealanders about politics, they will tell you two things," observes Mark Blumsky, the mayor of Wellington, the nation's capital. "They will tell you the economy is doing very well. And they'll tell you they have yet to personally experience its well-being. So they want a break."
Mr. Blumsky should know. Only a few years ago, Wellington's streets teemed with government employees. Today they have all but vanished, cast off into running cafes and operating lawn-cutting services - changes memorably satirized this year in a play, "Market Forces." It's these middle-class voters who now have an opportunity, through the new proportional- representation system, of creating their own piece of political theater Oct. 12. Whether Gingrich will applaud their casting remains to be seen.