Frontline Blog for stuff.co.nz
24th July 2009

They are coming thick and fast now. Act and National are finally getting into stride. Till this week National has been keeping its ideology close to the chest behind the smiling face of Prime Minister John Key. However, the build-up of bile has finally burst through the John Key façade.

This week we've seen the rollout of a string of advanced neo-liberal economic policies to complete the economic destruction begun by the 1984 Labour government. We are on to what former Labour finance minister and now ACT MP Roger Douglas describes as his "unfinished business".

With the public mesmerised with the appalling displays of narcissism by Clayton Weatherston, the Government got to work. It has the feel of 1984 all over again.

It started with National making it clear it will not keep to its promise to cap rather than cut the number of core public servants. It has slashed thousands of jobs across all parts of the public sector and made it clear it wants to extend the contracting out of these services to the private sector. Finance Minister Bill English is right when he says this is already well established practice so it's extending rather than starting this initiative. Governments claim it is more efficient and productive. It is neither. When contractors employ people to do the work for them they pay the workers much less and pocket the difference. In the case of consultants, however, the pay is far higher than public servants would receive for doing the same job. It's a win-win for the private sector at employee and taxpayer expense.

Then we've had the wretched figure of Don Brash revived courtesy of Act leader Rodney Hide to head a Government investigation into closing the wage gap with Australia. This is more pathetic than ironic because it was the very economic policies pushed by Don Brash and his colleagues which accelerated the opening of the wage gap in the first place.

The single most important factor leading to the gap, which is now a chasm, was the 1991 Employment Contracts Act, which tipped the employment balance heavily against unions and workers, drove down wages and reduced incomes for New Zealand workers. In the decade which followed, New Zealand businesses did very well, not by investing in capital development but by taking profits from the fall in wages. They had an easy ride on the backs of workers and failed to reinvest to improve productivity. New Zealand workers already work longer hours than workers in most other developed countries.

Australia never had the Employment Contracts Act. The closest they got was former Australian prime minister John Howard's so-called "work choice", proposals which Australian unions successfully opposed. Hence their unions maintained higher wages and better productivity.

With the private sector having failed so dismally (not the least in being the cause of the financial disaster the world now finds itself in), Treasury secretary John Whitehead is calling for more a "much more managerial" approach to developing and implementing policy in the public sector. This is shortcut for de-professionalising the public services and infusing them with private sector values, practices and ethos. It's certainly a way to bring private sector failure to the public sector.

Then we had a public/private investment fund announced with the National Superannuation Fund agreeing to put up $100 million of taxpayer money to start this fund "to invest in New Zealand's social infrastructure". They seem to have lost confidence in their investments in whale meat processing and military weapon development and now want to help bring the private sector in to colonise the development of public services. It's a deliberate, cunning ploy to soften the public up for the privatising agenda National and Act want to develop by their second term in government.

Having started the week attacking the public service, Bill English finished with proposals to lessen even further the restriction on foreign investment in New Zealand. Despite approving 98% of foreign investment already, Bill English wants the Overseas Investment Commission to rubber-stamp faster. The goal seems to be 99.999% approvals with perhaps just Parliament buildings remaining in public hands - for now at least. Needless to say this will worsen our current account deficit even further as more funds flow offshore. I've frequently pointed to the billions which flow back across the Tasman to Australia each year from our big four Australian-owned banks. Bill English wants to allow these foreign monopolies and cartels along with our local capitalists to continue to plunder the economy.

One might have expected a New Zealand finance minister to speak out about the failure of foreign companies to respect New Zealand law in the wake of the tax rort exposed in the High Court decision last week that the Australian-owned BNZ owes the public some $654 million from unpaid taxation. Together with the other banks we are owed a total of $2.4 billion in unpaid tax but not a word from our finance minister. Such is the blinding effect of ideology, he'd prefer to chase the minnows than confront the sharks.

The dogs are out.