Opinion: NZ politics’ soft neoliberal underbelly

By Dr Toby Boraman

Labour leader Jacinda Ardern has asserted that ‘neoliberalism has failed’. Instead, she claims, government intervention is necessary so the market will not dictate matters. 

While such a claim signals the beginning of an important shift in parliamentary politics, in almost the same breath she supported the free trade Trans-Pacific Partnership agreement, keeping government spending within limits, and maintaining government surpluses. All are examples of neoliberal policies. Ardern’s comments highlight how virtually all political parties – and not just Labour – have yet to fully break with the strong neoliberal consensus that has dominated New Zealand parliamentary politics since 1984. This is despite a groundswell of disquiet about the effects of neoliberalism. These effects are highlighted by the following statistics:

• The richest two New Zealanders, according to Oxfam in 2016, own as much wealth as 30 per cent of the population. Correspondingly, the bottom 50 per cent of New Zealanders own only three per cent of the country’s wealth, according to Statistics New Zealand in 2014-2015.
• 28 per cent of children live in poverty, according to the Child Poverty Monitor.
• As Max Rashbrooke notes, the share of national income going to people who rely on salaries and wages has fallen sharply since the 1980s. At the same time, according to Bill Rosenberg, the share of income going to corporate profits has risen to its highest levels since the 1940s (and that was under wartime conditions).
• Housing – including renting – is now rated by the government’s own measure as being unaffordable for the vast majority of the population: 66 per cent of renters and 80 per cent of potential first-time home-buyers.
• Work has become not only more low-paid, but also increasingly insecure, with at least 30 per cent of the workforce casualised, according to the Council of Trade Unions in 2013. The levels of unemployment and under-employment remain high at around 13 per cent, according to economist Bill Mitchell.

Although the causes of growing inequality, the housing crisis, poverty, low wages, casualisation and unemployment are multi-faceted and complex, neoliberal policies and economic restructuring have undoubtedly played a major role in exacerbating these problems since the 1980s. Neoliberalism has not led to a trickling down of wealth to the poor, but instead a torrent upwards.

Yet New Zealand parliamentary politics, it appears, is still dominated by an incredible shift to the ‘centre’. This ‘neoliberal extreme centre’, as Tariq Ali calls it, is so clogged it is virtually impossible to see any fundamental differences between almost all parties.

Practically every party subscribes to neoliberal policies of:

• keeping inflation low and unemployment high
• keeping government expenditure within fiscal limits (witness the ‘fiscal responsibility deal’ between Labour and the Greens)
• keeping business and financial speculation largely free from regulatory control;
• free trade (with a few exceptions)
• low taxes (especially on the wealthy and companies, and no significant taxes on property speculation)

Ingrained neoliberalism? – just ask Metiria

It has become extremely hard for parties to break with this consensus largely due to the remarkable concentration of wealth that has occurred globally since the 1980s. Yet the political consensus is also maintained by a deeply-ingrained ideology that makes any alternatives seem otherworldly and impractical. Witness the attempts by the Greens to distance themselves from the neoliberal centre, and to talk about poverty, inequality and the way beneficiaries have been treated and scapegoated under neoliberalism. This resulted in co-leader Metiria Turei’s resignation.

There is a remarkable absence of political parties in New Zealand talking about having a ‘government for the many, and not the few’, as popularised by Bernie Sanders in the US and Jeremy Corbyn in the UK in the last few years. No one party has really tapped into the widespread discontent with housing, inequality and low wages that exists in this country.

Leadership changes and ‘neoliberal-lite’ pragmatic politics

This political consensus also helps explain, to some extent, the change in Labour Party leadership. Arguably, because Labour has difficulty in distinguishing itself from National, it has seemingly turned towards ‘personality politics’, and on marketing the media image of Jacinda Ardern to gain votes. As politics becomes more of a carefully manufactured and manipulated spectacle from above, it becomes increasingly distant from ordinary voters.

However, we don’t now live in the neoliberal ‘shock doctrine’ era of the 1980s and 1990s. This was when business and government – both Labour and National – imposed violent neoliberal cutbacks and economic restructuring on society. Today most parties have pulled back from those extremes of neoliberalism – including National and Labour – and now subscribe to a mild ‘pragmatic’ neoliberal politics. This involves a limited degree of government intervention in the economy, and of government spending (talk of the election involving a genuine ‘lolly scramble’ is misplaced). For many, this now means the neoliberal era is over. However, I think it is mistaken to conflate the moderation of neoliberalism with its abandonment. Its core still remains firmly in place.

And granted, Labour does generally want more government intervention in things like housing and transport than National. As shown by Ardern’s comments, Labour is moving beyond some aspects of neoliberalism. A good example is its pledge to legislate to set a child poverty reduction target and to amend the Public Finance Act. Yet its reluctance to increase taxes on the wealthy and on corporations, and place a capital gains tax on property speculation, highlights how it is still stuck deep in the free market neoliberal mire. Overall the differences between the parties remain minor: the choice is between soft neoliberalism (National) and softer neoliberalism (Labour).

This current soft neoliberal – or ‘neoliberal lite’ or ‘third way’ – consensus shared by almost all parties contends that all that is required to deal with fundamental issues like housing is some tinkering around the edges, such as building thousands of state houses or offering subsidies for better insulation. These policies will take some heat out of the housing crisis, and will help many people.

Yet they will not, however, solve that crisis when tens of thousands of homes owned by speculators remain empty, and the economy has become increasingly reliant on property and financial speculation for economic growth, as Jane Kelsey explores in her book The FIRE Economy (2015). Lifting the levels of the minimum wage, working for families’ tax credits (which is effectively a government subsidy for the low wages paid by employers) and the accommodation supplement (effectively a government subsidy for private landlords) will not reverse the historically high levels of income and wealth inequality, and will not address the interrelated issues of low wages, insecure work, and high underemployment and unemployment.  

Time to move beyond tinkering

This gets to the nub of why pragmatic centrist politics don’t work: while ‘pragmatism’ is often seen as a virtue in New Zealand, such tinkering around the edges of problems will not solve deep-seated issues such as inequality, housing, low wages, casualisation, unemployment and climate change. These are all systematic problems that require creative, systematic and far-reaching solutions.

Overseas we have seen the rise of various social and protest movements against the increasing concentration of wealth under globalised capitalism today – indeed the late 2000s to the early 2010s witnessed, according to some academics, the largest popular protest wave in human history so far.

It eventually reached our shores with the large-scale mobilisations against the Trans Pacific Partnership Agreement during 2014-16, which rivalled in size some of the nationwide ‘mobes’ against the Vietnam War in the early 1970s. I think it is from this extraordinary upsurge in popular discontent that solutions to the fundamental problems in society we face can be found. And I don’t think it will require a revival of Jeremy Corbyn-style social democracy, or nationalism, but instead needs to venture into territory not often discussed today: questioning the nature of capitalism.

At the very least it will – of necessity – involve breaking from the shackles of the neoliberal straightjacket, instead of gnawing around its edges. It will mean we stop pandering towards a mythical ‘centre’ in an era of extreme inequality, and start to talk openly about the incredible concentration of wealth in the hands of the few, and loudly about the needs of the many.

Dr Toby Boraman is a lecturer in politics at Massey University