The next election or the next generation?

Way back in 1991, the National Government of the day seemed to think that, as there was little difference between the benefit and a low income, there was no incentive for those on an unemployment benefit to seek work (Barry, 2002). As a result, at a time when 10% of our population were unemployed, unemployment benefits were cuts by 25% (Barry, 2002; I have written about this before, here). The "household income of beneficiaries fell from 72 per cent of the mean equivalent disposable household income to 58 per cent in 1993" (Coughlan, 2018).

This was delivered in what became known as the "Mother of all Budgets" (Coughlan, 2018; NZ Parliament, 2020), which gained more money in the pot with user pays: for example, students having to pay for their tertiary education; hospitals being split regionally; as well paying out less due to beneficiaries due to the punitive benefit regime of the coming 9 years. Prior to the 1991 budget being announced, beneficiaries thought the Government was determined to keep them living in the lowest status in our communities (NZ Parliament, 2020). 

The orchestrator of the "Mother of all budgets", Ruth Richardson, still holds the view that this budget delivered an opportunity for those without employment to move into the employment market, rather than be supported to stay on a benefit (Dean, 2015). Successive National governments have continued to demonise those on government support through party advertising and government media campaigns. 

This was an appalling and calculated reduction in decent support, creating an underclass of our people, having quite serious effects for communities and families (Barry, 2002). It was proposed at the time that there was a real disconnect between the policy makers and the communities they were supposed to represent (NZ Parliament, 2020).

Many Kiwis were forced into poverty and some are still recovering decades later. Grant Robertson tried to right some of these wrongs in the 2021 budget (Cooke & Malpass, 2021), but this is still not enough. We continue to have New Zealand families living in poverty, over thirty years on from the "Mother of all Budgets". The term 'intergenerational' has become part of our vernacular, largely because, “When human politicians choose between the next election and the next generation, it’s clear what usually happens” (Boston, 2017, p. 5).

For politicians, the next election wins. Short-termism rules.

Sam, Kris, Abbe, and Malcolm

References:

Barry, A. (Director). (2002). In the Land of Plenty [documentary film]. Community Media Trust.

Boston, J. (2017). Governing for the Future: Designing Democratic Institutions for a Better Tomorrow. Emerald Group Publishing Limited.

Cooke, H., & Malpass, L. (2021, May 21). Revenge on the 'mother of all budgets'. Stuff. https://www.stuff.co.nz/national/politics/125190932/revenge-on-the-mother-of-all-budgets<

Coughlan, T. (2018, May 18). How not to budget. Stuff [republished from Newsroom]. https://www.stuff.co.nz/national/politics/103974420/how-not-to-budget

Dean, A. (2015). Ruth, Roger and Me: Debts and Legacies. Bridget Williams Books Limited.

NZ Parliament. (2020, November 18). Looking Back - Episode 16 [1991 Budget – the ‘Mother of all Budgets’] [video]. YouTube. https://youtu.be/43rlHnKRa-4

* Kris Porter kindly prepared much of the material for this post, with additional comments by Abbe Milne and Malcolm Hepburn

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Barriers & benefits for NZ business

I was pondering about the barriers that New Zealand businesses have, and I came up with a list of key issues, which are:

• Economies of scale. It is hard to get cost out of business here, because we simply aren't big enough to have a factory with 40,000 people in it and to cough up $1b for robotics. We don't have the investment, the infrastructure nor enough engineering nous to be able to do this.
• Remoteness. Everything has to come a long, long way. We have to fly things in - expensive - or ship it in - still expensive. And that all takes a long time. By sea we are 70 days from New York or LA, 16 days from Hong Kong, 42 days from Hamburg (check out global shipping routes here and here).
• Higher costs. We have to import goods long distances, we have to import raw materials.
• Difficult balance of payments. Though this is largely governmental, it impacts business through tax. We have few minerals here and not enough manufacturing to be able to be self-sufficient. All metals must be imported along with electronics. Then our government requires taxes and bond at the border. Check out New Zealand (NZL) Exports, Imports, and Trade Partners.

On the other hand, those issues lead to some benefits:

• Small, fairly homogeneous market. It is relatively easy to test and scale a product for world wide release here.
• Remoteness. Not too much competition, and an uncluttered place to do business.
• Higher price points. People are used to paying more, and if you are smart, you can undercut the existing - often complacent - markets and become a lead-player quite quickly.
• Global focus. Because we are so far away, we have to constantly develop relationships with global partners to get products designed, made, marketed and distributed. We are used to going off-shore for everything. It holds no fears for us.

Interesting how the first four 'barriers' probably lead to the perceived benefits. When we can't do something, we find another way, and it shapes our culture differently.


Sam

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