Ground Zero: It was the Treasury which planned, and in large measure led, the neoliberal revolution in New Zealand. In 1984, its official “briefing paper” to the incoming Labour Government – presented in book form and entitled Economic Management – became the Finance Minister’s, Roger Douglas’s, “Little Beige Book”. Step-by-step it led the new government down the most radical path of deregulation, privatisation and marketisation yet attempted in a western democracy.
JACINDA ARDERN had the Director-General of Health, Dr Ashley Bloomfield, to stand alongside her in the Beehive Theatrette. Who should Grant Robertson stand alongside? The Finance Minister tells us he is talking with Treasury’s top people. Together, he assures us, they are charting a course out of the unfolding Covid-19 Recession. In effect, Robertson is inviting us to trust Treasury. If economics were a real science, like microbiology, then trusting Treasury would be a reasonable option. But economics isn’t a science. In fact, it’s not even close.
Treasury could send out it’s top person, Chief Executive and Secretary Caralee McLiesh, to stand alongside the Finance Minister, but unless she possesses presentation skills so far undisplayed in her short career at the top of New Zealand’s most powerful government department, it just wouldn’t be the same.
That’s because it was the Treasury which planned, and in large measure led, the neoliberal revolution in New Zealand. In 1984, its official “briefing paper” to the incoming Labour Government – presented in book form and entitled “Economic Management” – became the Finance Minister’s, Roger Douglas’s, “Little Beige Book”. Step-by-step it led the new government down the most radical path of deregulation, privatisation and marketisation yet attempted in a western democracy. Three years later, a second volume, ominously entitled “Government Management”, instructed Labour and National in how to finish the job.
Nothing released by the NZ Treasury in the last 36 years has indicated that it has deviated in any significant way from the ideological position it staked-out so boldly in the early 1980s. That no government elected in the last 36 years has felt confident enough to defy Treasury advice (at least, not in any meaningful way) merely confirms how enduring its ideological and organisational victories have been.
If the Finance Minister invites Ms McLiesh to stand at the other podium on the Beehive Theatrette stage it will tell us at least two things: 1) That the co-ordinates to economic recovery have been set using a neoliberal compass. 2) That the Finance Minister is happy to steer by Treasury’s stars.
New Zealanders are confident that the advice of their Director-General of Health, grounded solidly in medical science, is sound. We can trust Ashley. But, unless there’s been another revolution in the upper echelons of Treasury, its advice will continue to be grounded in the demonstrably unsound neoliberal ideology. That being the case, Caralee can be trusted to prescribe exactly the same medicine New Zealanders have been forced to swallow since 1984. Moreover, if Grant is standing there alongside her in the Beehive theatrette, nodding sombrely as she speaks, then he can be trusted absolutely to administer it.
It is only fair to acknowledge at this point that the Finance Minister isn’t exactly spoiled for choice when it comes to alternative ways out of the economic disaster inflicted upon us by the Covid-19 virus. So crushing were Treasury’s victories of the 1980s and 90s that until very recently the opponents of neoliberalism have lacked the intellectual confidence to advance anything approaching a credible alternative to the economic status quo.
Where, we may ask, is the comprehensive recovery plan submitted to the Finance Minister by the Council of Trade Unions? Where is the progressive equivalent of the plethora of books penned by the disciples of Milton Friedman and Friedrich Hayek in the 1970s and 80s? If the French economist/historian Thomas Piketty is supposed to be the twenty-first century’s answer to that great prophet of managed capitalism, John Maynard Keynes, then the Left has been sold a very soggy croissant.
Once again, being fair to Grant Robertson, it was Labour’s “Future of Work” exercise – over which he presided in the run-up to the 2017 General Election – that equipped the Finance Minister with such heterodox ideas as he has been willing to draw on in responding to the Covid-19 Crisis.
Rather than attempt to replicate the Prime-Minister’s highly effective daily briefings with Dr Bloomfield, perhaps it would be wiser for the Finance Minister to draw upon his Future of Work’s consultative precedent. Would it not constitute an “essential service” to New Zealand’s economic wellbeing to convene (with appropriate social-distancing) a conference embracing all the significant sectors of our society: bosses, workers, farmers, bankers, bureaucrats, professors, students, artists, beneficiaries, priests and non-profiteers; to collectively chart an equitable course to national recovery?
This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 1 May 2020.
The force of the neoliberal directive from treasury in 1984 was to privatise a mass of appropriately State owned services and natural monopolies in an economy well balanced between state and private enterprise. The oil shock of the early seventies and the world wide wave of inflation that it precipitated resulted in a period of NZ balance of payments deficit and within NZ the overseas debt that was extremely modest in size by today's numbers was presented as if it were a problem peculiar to New Zealand
which was and still is a very successful misrepresentation, which was used to help sell the changes to the public.
There is nothing like that situation now for the treasury to advise on. The state run natural monopolies have been largely sold off long ago, there is no longer a publicly funded treasure trove of enormous real value to the New Zealand people that they had built over the years to plunder. It's all gone to the financial elite mostly elsewhere in the world. Neoliberalism has run it's course and has demonstrated it's false promises of riches for everyone by trickle down most spectacularly. To remain true to the theory of how private ownership and management of everything for profit must be best treasury would have to be arguing for the QE to be limited to paying for all the small businesses that still employ most people , and the people to be maintained through the lockdown and leave the banks and the financiers to sink of swim. Performing the theoretical function of the economic efficiency of the market.
We all know that is not what is going to happen . So the truth is that treasury will be advocating almost the exact opposite actions from what it advocated in 1984, the only similarity being that it will be toward the interests of the same section of society.
D J S
Rubbish Chris, there was nothing wrong with the reforms until Labour decided we needed a bigger and a diverse population. That has required an "institutionalisation" of public discourse on public radio
and thanks to the benefits of immigration fuelling private yachts in the Mediterranean we lost the private sphere also. Name one broadcaster brave enough (or able) to criticise immigration? As my elderly farmer friend sadly laments "they have changed New Zealand Forever"
The Savings Working Group blew the lid on that rubbish.
Looks like Winston on the other podium already, just not on the same day as yet.
John, couple of points. First on immigration it is fairly obvious that it is the mechanism, financed by debt to banks that keeps our economy "growing" (if you can call massive indebtedness growth). To house our record immigration we need to build a city the size of Palmerston North annually. Its a crazy scheme, so I agree that its out of control, just another Ponzi for the wealthy to impoverish us with. You contend that the reforms of the 80s were good, well this is their policy and outcome. Yet another stupid gift to the rich at everybodies expense.
Second, do you imply that we have the wrong mix of migrants? That's shakier ground, pretty much all Kiwis are recent migrants, even Maori arrived recently historically speaking. I don't see anybody here is much different, they came for much the same reason, a better life. The numbers worry me, not the ethnicities.
Trickle down seems another way to describe a 'cargo-cult' mentality. It says don't try to do anything for yourself, just wait and you will be given a place where you can do your work, and you will be fitted in to The Great Plan and receive your fair share of benefits. Sounds like a mix between the Chinese Great Leap Forward and communist principles.
There was a great belief in Roger Douglas's cohort that things would all work out for the best, sure thing, once the system got onto a better footing. But it is a very judgemental system, this neolib one, and what or who judges the results of it? Where does it get the same beating for being a bad system as our previous often faulty economic system had? Bend over and get six of the best neolib.
No, because the focus has shifted to saying things right, and making grand gestures like saying a parent can't smack their child - reason because we are too violent and should stop this behaviour which condones violence. We have stopped, and violence continues. We have stopped government initiatives and controls, and yet aren't we noticeably lacking the better conditions, and the efficiencies that we were promised, with as many rorts surely, as we had before?
If we judge it a failed experiment, how do we stop Treasury from gaily going on with their brainchildren, perhaps next grafting ears to our foreheads or something they can rationalise? How do we give these mandarins the giant foot like the one that squashes down before Monty Python gets going? Or has it actually been the longest Python skit ever - one that got away on a secret budget that has never been audited?
Incidentally, is that Alice's Garden in front of the office buildings?
Or are they actually doorways that lift or screw round leading to an underground bunker for vanishing into when the Mob rises, or the Big One comes?
Equity has suddenly become realty. $ 75 to go for our equals.
Our ideas have always been true but just the political manipulation. 36 years of such starving the neediest. Our heart.
Metaphorical hanging of all the happy-in their-selves leaders in that time. Let alone the NZers who put our ideal second. Ovations and triumphs for talkers through their economic deprivation for our ideals during that time. The people always.
Treasury has been wrong on so many things that if they were any other government department they would be due for a Treasury supervised "reorganisation".
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