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Being kind to the Fourth Labour Government

Published in Insights, The New Zealand Initiative’s newsletter, 1 February 2019

During her tour of Europe last month, Prime Minister Jacinda Ardern wrote a piece in the Financial Times.

As it was published behind the London newspaper’s paywall, most New Zealanders probably missed it (though a copy is available on the Beehive’s website). That is a shame because the opinion piece offers a concise insight into her Government’s philosophy.

Commentators such as Michael Reddell and Rodney Hide criticised the Prime Minister’s piece. However, Ardern makes a few good points about common aspirations and widely shared positions.

Ardern argues for substantial improvements in mental wellbeing, particularly for young people. She underlines the importance of the international rules-based order. And she denounces the false promises of protectionism and isolation.

The Prime Minister’s approach can be summed up in one word: kindness. Something no one in their right mind would oppose.

Sadly, she fails to show such kindness to the Governments before her, especially the Fourth Labour Government.

In her opening paragraphs, the Prime Minister describes the reforms that started in 1984 as a “neo-liberal economic experiment”. Phrasing it that way would also require pointing out that the experiment succeeded – and in a spectacular way.

In 1984, New Zealand had an uncompetitive economy. Unemployment was high, young people were leaving the country in droves, and the foreign exchange crisis had escalated to where New Zealand was about to call in the IMF.

Ardern is right that the medicine prescribed to the country in the form of tough reforms was also a bitter one. But it was also the correct one.

The reforms were as courageous as they were necessary. They created today’s prosperous New Zealand with its enviable global rankings for competitiveness, ease of doing business and quality of life.

Contrary to this perspective, the Prime Minister insinuates that the 1980s reforms laid the foundations for a lightly taxed and unequal country.

Neither is true. Our tax burden is considerably higher than, say, in Switzerland or the US. Meanwhile, measured for consumption, inequality in New Zealand is now lower than in 1984.

Surely, despite her criticism, the Prime Minister is not implying that New Zealand ought to revert to fixed exchange rates, import controls, nationalised industries or agricultural subsidies.

Kindness is a virtue. Let us extend it to those brave political leaders of the 1980s and 1990s.

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