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3.4 Neoliberalism

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Assorted statements by Ministers of the Crown have confirmed Māori suspicions about the Crown’s limited commitment to power-sharing based biculturalism.

Correspondence from the then Minister of State Services (as cited in Fleras &

Spoonley, 1999, p. 126) confirms:

...the government retains ultimate responsibility in respect to the welfare and development of the people, to the machinery of Government, and indeed the expenditure of public funds.

Former Minister of Treaty Settlements Hon. Doug Graham (1997, p. 41) concedes:

...that ultimately it is the government who must set limits and establish agendas...Maori-Crown relations can only be considered to be like a partnership, rather than a partnership per se, since a real partnership would imply some kind of joint sovereignty, with veto rights vested in each party as a matter of course.

A fundamental limitation of biculturalism to date lies in the unwillingness of the Crown to recognise Māori sovereignty. Likewise the “meanness’ of resource distribution remains problematic with the Crown retaining substantial

“...resources that lawfully belong to Tangata Whenua but which the government unlawfully usurped” (Fleras, 1991, pp. 186-187). Biculturalism also appears to have failed to address the substantive disparities between Māori and Pākehā revealed in the Hunn Report of the 1960s, which remain a reality into the twenty first century (Robson & Harris, 2007).

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a safety net for vulnerable peoples. Neoliberal reforms often include privatisation and corporatisation of government departments, deregulation of markets, contracting out of services and introducing private sector management and accountancy practices (Fleras, 1991, p. 172). Justifications for reform are often grounded in the belief that the private sector is more efficient that the public sector.

Underlying neoliberal faith in the market is the belief that society is a meritocracy, if you work hard, you will succeed; it is merely a question of the strength of your character, your individual tenacity. Underlying this further is the colour-blind assumption that everybody operates from, a [mythological] level playing field with everyone having a fair chance to thrive (McCreanor, 2009). Giroux (2003, p.

194) argues this phenomenon is a kind of collective denial of history and structural discrimination. Critical theorist, Wilson (2007) purports in this ideological environment, social problems become problems of self-care. He explains this discourse in the context of Hurricane Katrina:

Those left behind lack proper conduct - a “welfare state mentality” that erodes self-reliance, inducing them to wait for government help instead of saving themselves... It is the market that determines the rules of the game, waiting for the rising tide of economic prosperity to lift all boats.

A United Nations report, State of the World’s Indigenous Peoples (Department of Economic and Social Affairs, 2009, p. 20) identifies neoliberalism as a threat to indigenous wellbeing. The authors argue that neoliberalism as a policy framework/ideology has been frequently imposed on indigenous peoples without their consent. They explain:

...under structural adjustment programmes, multinational corporations have extracted resources from indigenous territories without the free, prior and informed consent of the indigenous peoples involved, providing little or no compensation for the communities with adverse impacts on their livelihood and cultural/spiritual life (p. 20).

Aotearoa has been at the forefront of neoliberal reforms (particularly from 1984 through to the mid-1990s) in what Kelsey (1995) calls the ‘New Zealand Experiment’. Much of this timeframe covered is overlapping and intertwined with the bicultural reforms already outlined.

‘The New Zealand Experiment’

The zealous pursuit of neoliberal reform by successive governments shone international attention on New Zealand. Jesson (1999, p. 19) makes a disturbing comparison: “...New Zealand could be considered a freak among nations, the

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Kampuchea of the free market, and 1984 could be considered Year Zero”.49 The blitzkrieg approach taken by the Labour government immediately after their election in 1984 saw multiple major reforms undertaken simultaneously, allowing limited public engagement and resistance.50 Kelsey (1995, p. 2) notes:

In rapid succession, the finance market was deregulated, exchange controls removed and the New Zealand dollar put on a free float. Controls on prices, wages, interest rates, rents and credit were replaced by a monetarist anti-inflationary regime, operating through a policy of high interest and exchange rates.

Bargh (2007, p. 1) contends that there are three main elements to the neoliberal policy as manifest within Aotearoa, free trade, free mobility of capital and reducing the size of government. The free trade elements of the reforms included the systematic reduction of trade barriers particularly within the manufacturing and agricultural sectors to open Aotearoa up to the global market. Free capital was about attracting foreign investment and the selling of State Owned enterprises such as the Bank of New Zealand, Telecom and Air New Zealand. Reducing the size of government was achieved through a combination of devolving traditionally core government services, streamlining what was left of the public service, and introducing increased managerial accountability (Fleras & Spoonley, 1999, p.


The architects of the reforms expected to curb public debt and expenditure and achieve economic growth. These aspirations were unfulfilled. Rather as former New Zealand Prime Minister Right Hon. Helen Clark (2007, p. 1) now acknowledges neo-liberalism left New Zealand a “divided society where many had little hope of success”. The economic position of Aotearoa was decidedly weakened by the mid-1990s with no economic growth for six years (Conway, 2002, September, p. 27). Between 1985 and 1992, the economy in fact shrank by one percent while other Organisation Economic Co-operation and Development (OECD) economies grew by an average of twenty percent (Kelsey, 1996). During the reform period foreign debt, quadrupled and New Zealand’s credit rating was downgraded twice.

The impacts of the reforms on Māori were complex and contradictory. Political commentators, MacDonald and Muldoon (2006, p. 212) explain the “...changes released global forces that devastated the social and economic worlds of Māori, but, paradoxically, released a myriad of political possibilities that Māori grasped

49 Similarly Bargh (2007, p. 25) maintains commentators have likened New Zealand’s engagement with neoliberal reforms as “Chile without a gun’.

50 Minister of Finance, Hon. Roger Douglas who spearheaded the initial phase of the reforms explains (paraphrased in Asp, 2001, p. 9): “the fundamental idea was that the reforms be carried out as swiftly and drastically as possible, thus leaving no time for a response or opposition from any interested parties, his argument being that a fast moving target is more difficult to hit with any degree of precision”.

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with both hands”. The following sections examine the implications of free trade and globalisation and explore the opportunities of devolution and the social impacts of the reforms in detail.

Pursuit of Free Trade and Overseas Investment

International trade has long been a part of economic life, but with new technology and the emergence of multi-national and trans-national corporations, the modern business-operating environment has been transformed. For instance, some corporations are now so vast that they have budgets and infrastructure larger than some countries (see De Grauwe & Camerman, 2003) and they can select where they operate from to maximise profit and minimise nation state interference.

Trade negotiations between nations held under the auspices of the General Agreement on Trade and Tariffs (formed in 1947) and more recently led by the World Trade Organisation (WTO) (formed in 1995) are international mechanisms used to facilitate the free flow of trade between nations.51

At the heart of free trade philosophy is the removing of obstacles to the open flow of capital, goods and services. Domestic legislation around minimum employment conditions, protecting the environment and indigenous land claims are seen as potential barriers and can be considered negotiable terms within trade agreements.

In Aotearoa, such agreements52 are negotiated by the government, approved by Cabinet, and then endorsed. This process is then formalised by being tabled in Parliament and referred to a select committee and if necessary enabling legislation implemented (Ministry of Foreign Affairs and Trade, 2009). Agreements are not generally amended because of subsequent public or Select Committee input (Crown official, personal correspondence, January 29, 2010).

Attempts by the Crown to sell public assets to foreign companies or individuals during the reforms both in part to minimise debt and attract overseas investment were actively resisted by many Māori. This resistance emerged from the realisation that these assets would form the basis of resources the Crown would later need to honour treaty settlement claims (Bargh, 2007, p. 30). Māori advocacy led to the inclusion of a clause in the State Owned Enterprise Act 1986 prohibiting any actions that were contrary to the principles of the Treaty of

51 The ambitions of WTO to create a global marketplace are transparent, during the unsuccessful negotiations of the Multilateral Agreement on Trade, General Ruggiero, WTO Director was quoted as saying “we are writing the constitution of a single global economy” (as cited in Kelsey, 2004, p. 24). The WTO in particular Kelsey contends is dominated by superpowers that economically coerce and political bully member governments to aggressive pursue capitalist expansion. She cites Mike Moore “...asking one Southern delegate at the Doha ministerial whether he wanted to be ‘consulted or terminated’” and a senior US trade official asking “ Why shouldn’t we use trade policy to reward our friends and hurt those who don’t support us?”.

52 New Zealand has completed four trade agreements: Australia (1983), Singapore (2001), Thailand (2005) and Trans-Pacific–Brunei/Chile/Singapore (2006). Negotiations are also currently underway with China, Malaysia, Hong Kong, Bharain, Kuwait, Oman, Quatar, Saudi Arabia, India and United Arab Emirates (Ministry of Foreign Affairs and Trade, 2009).

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Waitangi (Patete, 2008). Māori initiated multiple judicial actions in the decades that followed attempting to retain public assets in local control.

Free trade provides business opportunities for entrepreneurs, especially for those with the benefits of capital and education behind them. Bargh (2007, p. 36) contends Māori ‘corporate warriors’ believe that: “...Māori involvement in business can support social ends, without being solely about profit... a fusion of the social back into business ethics... providing a new perspective”. These opportunities are mediated by the risk that free trade/globalisation poses to domestic commerce that often have a commitment to investing profits locally and providing employment. Kelsey (2004, p. 54) explains the impact of European and American subsidies to northern agribusiness: “...allows them to export food at below the real cost of production. Local food producers can’t compete with that”.

Combined Trade Union economist, Conway (2002, September, p. 16) notes through this period that overseas ownership in the New Zealand stock market rose from 19% (in 1989) to 61% (in 1997). By the end of the 1990s Kelsey (2004, p.

26) contends most Aotearoa infrastructure was in foreign ownership and the profits were going offshore. This included almost:

...all our transport, communication, energy, media and financial sectors and many of our [New Zealand’s] natural resources are controlled by foreign investors. These investors have a history of siphoning off short term profits with minimal reinvestment, leaving behind a fragile infrastructure and a chronic deficit in the balance of payments (p. 26).

When the New Zealand government enters into free trade, agreements it values the prospect of making profit and economic growth over the protection of indigenous rights, employment conditions and environmental concerns. For Māori when the government diminishes its sovereignty with such pursuits it reduces its capability to honour its Te Tiriti o Waitangi obligations. Furthermore, Māori as sovereign treaty partners are not party to free trade negotiations yet are bound to these, as are all New Zealanders.

‘Boutique Autonomy’: Opportunities and Risks of Devolution Central to the New Zealand experiment was the reinvention and downsizing of the public service, through corporatisation, privatisation and the contracting out of services. These neoliberal policy aspirations to transfer responsibilities into the community as a means to cut costs dovetailed neatly with Crown bicultural policy platforms around enhancing Māori autonomy. Given the Crown’s complex and problematic historical relationship with Māori, iwi, hapū and whānau control was seen as a viable means of providing a range of services within Māori communities (Spoonley, 1993, p. 96).

Devolution also matched Māori aspirations as articulated at Hui Taumata (a government hosted Māori summit in 1984) at which participants advocated for the

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redirection of negative social spending on Māori into positive development outcomes (Fleras, 1991, p. 176). Participants were interested in, full and active Māori participation in decision-making processes and agenda setting, the development of ‘by Māori for Māori” service provision and Māori being responsible for resource allocation (Patete, 2008, p. 8).

Over the next fifteen years a plethora of Māori providers were developed within the health, education and social service sectors, with over 300 operating within the health sector. Fleras (1991, p. 179) describe these Māori providers as

“...functionally independent of government yet answerable to the centre for the use of public resources and funds”. The MANA Enterprise Development and Māori Access programme(s) are among a number of successful programmes of this time delivered to Māori whānau (Te Puni Kōkiri, 2000b).

MacDonald and Muldoon (2006, p. 213) describe this period of devolution as

‘boutique autonomy’ in that Crown agents’ retained control over decision-making and only the appearance of autonomy was transferred. Thus, devolution as a strategy allowed the Crown to delegate responsibility, accountability and cost to the community but retain substantive control. Similarly Patete (2008, p. 1) holds devolution was more a case of decentralisation rather than power-sharing with treaty partners, and echoes of earlier critique of biculturalism.

Alongside the opportunities of choosing to accept government contracts, most obviously the injection of resources, the employment opportunities, the development experience and the opportunity to deliver effective programmes to Māori whānau were/are mitigating risks. Accepting the imposition of strict accountability procedures and ‘eligibility criterion’ in exchange for resources is seen by some to minimise the autonomy of Māori organisations (Fleras, 1991, p.

188). Patete (2008, p. 29) maintains the need to retain official relationships with Crown funders can affect how you choose to exercise rangatiratanga. Durie (1994a, p. 68) notes that the devolution process threatened kotahitanga among iwi through the creation of intensive competition between iwi for meagre resources, a rivalry, he suggests, “was more intensive and divisive than in the days of muskets”.

Ethnic Disparities: Social Impact of the Reforms

Many individuals and families endured a decade of unrelenting hardship during the reforms (Kelsey, 1996, p. 2). The gap between rich and poor in Aotearoa grew exponentially with the top ten percent having a gross income level seventeen times higher than the poorest ten percent (Asp, 2001, p. 17). E. Pōmare et al.

(1995) contend Māori were the ‘shock absorbers’ of the reforms due to the concentration of Māori in industries hardest hit with lay-offs and cut backs.

Certainly Māori unemployment rates grew from 10.8% (in 1986) to 27% (in 1992) which in turn resulted in Māori disproportionately experiencing the impact of the 1991 benefit cuts (MacDonald & Muldoon, 2006). The ability of workers to

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organise and respond to the changes was restricted by the Employment Contracts Act 1991, which abolished the legal privileges of trade unions. Conway (2002, September, p. 12) suggests this legislation altered the balance of power between employees and employers to such a degree it directly contravened several International Labour Organisation Conventions.

In what some called an “assault on the poor” social welfare benefits (excluding the old age pension) were reduced by up to twenty-seven percent during the reforms with eligibility criteria simultaneously tightened (Asp, 2001, p. 4). On the back of these changes market rates were introduced to state housing and user part charges initiated within the health, childcare, old age care and education sectors.

State housing rentals for low-income earners and beneficiaries increased by 94%

from 1991 to 1996 (Asp, 2001, p. 19). This led to overcrowding as families shared costs and transient families moved in search of lower housing and transport costs.

Not unexpectedly, food bank usage rose dramatically with approximately seventy-five new food banks established in 1994 alone, in an attempt to address this crisis (Wynd, 2005).

Blakely, Tobias, Atkinson, Yeh and Huang (2007) observe that the life expectancy gap between Māori and non-Māori was closing from the 1950s through to the mid-1980s, but this trend abruptly reversed between 1980s and 2000. They suggest that this change in life expectancy was due to the structural changes in Aotearoa at this time. Robson (2007, p. 45) argues there is not enough evidence to describe it as a definite causal link but it needs to be considered at least as an exacerbating factor.