New Zealand: Labour offers promise — but is it enough?

New Zealand Prime Minister Jacinda Ardern (centre) with Labour Party supporters during the election campaign last year.

The Labour-led coalition government in New Zealand was formed in October after the welcome usurping of nine years of rule by the neoliberal National Party.

However, Labour was only able to form government with the help of two minor players — the populist, anti-immigration New Zealand First and the Greens.  

This curious but potentially workable alliance has made 37-year-old Jacinda Ardern prime minister. Pitching to the left, including publicly criticising capitalism, Ardern had become Labour leader just eight weeks out from election day.

The unions have welcomed the change in government, which was largely due to a leftward tack from Labour.

There are great opportunities for the new government to make progress: under the National Party, New Zealand experienced large-scale loss in economic growth due to rising inequality.

The incomes of the top 10% of New Zealanders in mid-2017 were nearly 10 times of the bottom 10%. The concentration of 53% of wealth in the hands of that elite group is greater than the OECD average.

As National’s third term wore on, the huge cost of housing forced many families to live in garages, cars or other poor alternatives to proper accommodation. Meanwhile, child poverty reached obscene levels.

National’s refusal to recognise the housing crisis and placing child poverty into the too-hard-basket eventually backfired. In late October, Ardern formed a coalition with the two minor parties.

The three coalition parties gained 50.4% of the vote in the September election, with a further 2-3% for progressive parties that failed to make it into parliament. The National Party and its tiny rabidly right-wing support partner ACT finished on 45%.

Perhaps this government may never have been formed but for the continued efforts of one of the heavyweights of the Labour left, Jim Anderton, who died this month aged 79. Anderton was pivotal in hauling Labour leftwards after decades of a love-in with big business that paved the way for National’s unique brand of “I’m All Right, Jack” capitalism.

Like Jeremy Corbyn in Britain, Anderton never supported Labour’s rightward shift. Ostracised for his refusal to kowtow to the great betrayers, Anderton was suspended from the party.

Anderton then formed the New Labour Party, which subsequently formed the Alliance with the Greens, a Maori-based party and two centrist parties. The Alliance won nearly 20% of the vote in 1993. The Alliance later became part of a coalition government headed by Labour’s Helen Clark.

Reforms

So far, the new government has raised the minimum wage by NZ$0.75 cents, extended paid parental leave from 18 to 22 weeks (with a further extension to 26 weeks promised), cancelled National’s proposed tax cuts that would have benefitted the rich and raised the amount students get through loans and allowances by $50 a week.

It has also pledged to reverse the harsh sanctions scheme imposed on beneficiaries and expand and raise the Working for Families tax credits.

That rise is part of a $5.5 billion package Labour says will halve New Zealand's child poverty statistics in four years. Initiatives to this end include giving parents of newborns $65 extra a week for a year (three years for those on the lowest incomes), and pensioners and beneficiaries getting extra to help pay for heating over the winter.

In the coalition government, the Greens have been given the crucial climate change and conservation portfolios, as well as the transport and women’s ministries. The Greens are seen as being to the left of Labour on issues such as poverty, equality and housing, so could potentially provide a leftward anchor should Labour’s right and NZ First attempt to block more progressive policies.

NZ First has backtracked on its demand for the seven Maori seats to be axed. However, that does not mean it will stop its attacks on what it mistakenly sees as “preferential treatment” for New Zealand’s first peoples.

It will also pressure Labour to put the brakes on immigration, though Labour does not appear to need much persuading.

Of Ardern, few knew much about her before she took over the party leadership due to plummeting poll ratings. Ardern has been described by some as a Blairite, and actually worked in former British PM Tony Blair’s office while living in London in the aftermath of Britain’s illegal invasion of Iraq. She has since tried to backtrack on the decision.

Tacking left before and after becoming PM, Ardern has said that neoliberalism has failed, but has not pinpointed exactly why.

Limits

Worryingly, Ardern’s government has said it will sign up to the Trans-Pacific Partnership Agreement, a huge corporate power grab that is being revived after the United States pulled out.

New Zealand has gained a concession on medicines, but the facility for multinational companies to sue member countries for alleged discriminatory practices remains.

The government’s first action in trying to cool down rising house prices was to stop foreign investors — except Australians — buying Kiwi properties. The government is also stopping sales of state houses.

However, to solve the housing crisis, it will need to build more houses, seek to restrict landlords’ powers and act to stop local investors from pricing out first-time buyers.

Ardern has no intention of nationalising any industries sold under the National Party, including the ailing train network, and will instead invest in a rapid rail network connecting Auckland, Hamilton and Tauranga.

A working group given the job of looking at tax reform has already been filled with well-off business leaders.

The new government is in honeymoon mode at the moment. Its real tests will come in how well it tackles inequality, lifts children out of poverty and makes housing affordable again.

But without a will to take on powerful sectors, it is hard to see Labour and its allies standing up to the corporate bullies responsible for these problems.

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