Jacinda's Biggest Challenge: Redefining "Economic Orthodoxy".

Economics Matters: The jubilation of Election Night 1984 was soon overtaken by the economic and social blitzkrieg that was Rogernomics. So, the two questions voters preparing to elect another popular Labour leader in 2017 need to ask themselves are: Does Jacinda's caucus contain the same number of radical change agents as David Lange's? And, if it doesn't, exactly how far will cautious economic orthodoxy carry Labour towards its goals of social equality and economic justice?

LET’S BEGIN with the assumption that Jacinda Ardern is about to become New Zealand’s next prime minister. And that, after nine very difficult years, Labour is poised to re-take the Treasury Benches. The next step, then, is to ask: “What happens now? What sort of Labour-led Government should we expect?”

More than one political observer has noted the similarities between this year’s general election and that of 1984. They have pointed out that Labour entered both campaigns with a new (or, relatively new) and inspiring leader. They also draw our attention to what they claim is a very similar sense of public frustration with the status quo. Socially, economically and politically, they allege, New Zealand finds itself stalled down a dead-end street. The dramatic response to Jacinda Ardern’s elevation, they say, has revealed the same hunger for bold new solutions to intractable old problems that made the 1984 election such an historical watershed.

The crucial factor in the 1984 equation, however, was the presence in Labour’s caucus of a critical mass of radical change agents. Even more critically, these change agents knew that their radical plans would be instantly endorsed and rapidly expedited by like-minded change agents strategically located in the Reserve Bank and Treasury. They were further reassured by the knowledge that important figures in the upper echelons of both the business community and the news media were sympathetic to their proposed “reforms”. Knowing this, Roger Douglas, Richard Prebble, David Caygill and Michael Bassett were supremely confident that the process of fundamentally changing New Zealand would begin the moment they made it into the Beehive.

In this respect, the contrast between the governments-in-waiting of 1984 and 2017 could hardly be greater. As evidenced by their self-imposed “Budget Responsibility Rules”, the leading figures of a Labour/Green/NZ First government pose no threat whatsoever to the underlying assumptions of the economic and social status-quo. Even the usually hostile right-wing newspaper columnist, John Roughan, seems relaxed about the prospect of electoral change, observing smugly that: “[T]oday’s economic orthodoxy, or ‘neoliberalism’ if you don’t like it, is well entrenched in the public service and there is little risk we will lose it.”

Certainly, as the acknowledged protégé of the former Labour Finance Minister, Sir Michael Cullen, Labour’s current finance spokesperson, Grant Robertson, has repeatedly reaffirmed his support for the standard political operating procedures of the Helen Clark-led Labour Government of 1999-2008.

At the heart of those procedures lies an unshakeable commitment to “responsible” (or, as Mr Roughan would put it, “orthodox”) economic management. No less than his mentor, Sir Michael, Mr Robertson has absorbed the lessons of the infamous “Winter of Discontent” of 2000, during which the New Zealand business community provided the Prime Minister and her Finance Minister with a short but effective demonstration of the sort of reaction any government foolhardy enough to stray from the paths of economic righteousness should expect.

It is difficult to imagine that, over the course of the past month, Mr Robertson has not reiterated those lessons to Ms Ardern. Certainly, her own public commitment to uphold the Labour/Green Budget Responsibility Rules points in that direction.

All of which presents Ms Ardern with a dilemma. On the one hand, her slogan, “Let’s Do This.”, suggests to voters that hers will be a government of action and achievement. On the other, her commitment to uphold the Budget Responsibility Rules speaks to the business community of a government committed to not rocking the boat – or, at least, to not rocking it very vigorously.

But, building “more homes” and delivering “better health and education” will require New Zealand’s social and economic boats to be rocked very vigorously indeed. Every bit as vigorously, in fact, as they were rocked by the “Rogernomes” of the 1980s.

Unfortunately, support for such radical rock-n-rolling will be extremely hard to find among the orthodox defenders of the status-quo populating the upper-reaches of the public service, news media and business community. As in 2000, their response to the merest hint that Labour is getting ready to embrace a genuinely progressive programme will be swift and brutal.

Ms Ardern’s response to their response should be guided by the political strategy of the First Labour Government. Take the people into your confidence. Explain what you want to do for them and identify the forces standing in their way. Reassure them that, with their support, the long-delayed changes in housing, health and education – the changes they voted for – will happen. And, finally, remind them that, in a democracy, crucial decisions about the future of their country must be made by – and for – the many, not the few.

Because the truly astonishing thing about all genuinely radical programmes for change – including those of 1935 and 1984 – is how quickly the utterly impossible of yesterday becomes the entirely doable of today.

This essay was originally published in The Press of Tuesday, 5 September 2017.