Twenty Years Ago: How Things Changed over Two Decades

Listener 13 December, 1997.

Keywords: Political Economy & History;

Twenty years ago, in 1977, the main concerns in the newspapers included international terrorism, abortion and sex education, inflation, unemployment, and recession, and a mutiny in the National government. The pharmaceutical companies complained that the government was repressing drug prices, but otherwise there was almost silence on health policy and education. The Listener’s December editorials were on social ills, sport, Middle East peace, and social welfare at Christmas. The current account deficit of the balance of payments was a worry, while economists promised that next year the economy would be better. The papers I looked at made hardly any reference to the Maori (except in a context of crime) or the “Treedee”, as C.K. Stead calls it in a recent poem. Women were less evident too, except in women’s things. (There were but four in parliament – two in each party – 33 today.)

There has been considerable social change over the 20 years: the numbers who said they were Maori almost doubled between the 1976 and 1996 census, Pacific Islanders more than trebled, and Asians more than quintupled, although the whole population increased by only a sixth. However the absolute number of those of European or Pakeha ethnicity increased by more than all other groups combined. In 1976, more said they were born in Britain than they were Maori. (We dont have earlier figures, but in 1996 over 450,000 New Zealanders said they were fluent in a language other than English).

Twenty years ago, annual production (GDP) measured in today’s prices was $22,000 a New Zealander. Today it is $26,000, an annual per capita growth rate of 0.85 percent, compounding to 18.5 percent over the twenty years. Average weekly earnings were $129.16 in April 1977, able to purchase $644 of consumer goods in today’s prices. In April 1997, on a slightly different measure, average weekly earnings were $650. Single workers would have paid 21.2 percent of the average wage in income taxes in 1977, if they had been contributing to life insurance and charities. (There were other tax breaks too.) Today the workers would be paying 22.5 percent (and possibly more if they were repaying their student loans). Almost certainly today’s worker would be less satisfied with the government services, such as for education and health, than two decades ago. The adult unemployment benefit was $38.40, or $191.50 in today’s prices. In April 1997 the net benefit was $146. The rise in output has not been shared with workers and beneficiaries because the return on investment (i.e. the profit rate) has increased, while top income earners have had substantial reductions in their tax rates. The modest output increase has almost all accrued to the rich.

In the twenty years consumer prices have risen almost five times, or 8.4 percent a year on average. (In the first decade they averaged 13.4 percent p.a., in the second it was 3.5 percent.) Note that today’s consumers have a choice of products – often of higher quality – not available then (such as computers and CDs). On the other hand many may regret the reduction in the quantity and quality of some services (such as public transport and public television.) Access to alcohol has become easier, but consumption has been falling – from 9.3 litres of absolute alcohol per person in 1977 to less than 7.0 litres today. In 1976 34.4 percent of adults said they smoked: in 1996 it was 21.9 percent.

Twenty years ago the unemployment rate would have been below 3 percent (we do not have an official measure before 1986). Today it is over 6.5 percent. Male participation rates (proportion of the age group in the labour force) are lower than two decades ago, female ones are higher.

Twenty years ago the Minister of Finance (now Treasurer) was Rob Muldoon, who reigned for a further seven years. Since then there has been Roger Douglas, David Caygill, Ruth Richardson, Bill Birch, and Winston Peters. (There have been four Secretaries of the Treasury, four Governors of the Reserve Bank, and five Prime Ministers excluding the new incumbent.) Only one current party leader was in parliament in 1977: Richard Prebble, whose 1977 address-in-reply speech included a criticism of the “get quick rich boys” for “most of the people in Auckland who are wealthy have made their money out of land speculation. … People are not wealthy because they are not getting a fair share of the country’s total wealth.” He said interest rates were too high. (The average on new mortgages was 9.5 percent p.a., with consumer inflation at 15.1 percent for the 1977 year.) In office “we would reduce them by a stroke of a pen.” The other current parliamentarians there twenty years ago were Jim Bolger, Bill Birch, Jon Hunt, and Derek Quigley.

Twenty years ago a professor of economics wrote “statistics never disprove an economic argument.” He could have extended his view to say contradictory evidence does not seem to matter either. My local paper devoted about a third of the space it does today to business news, and was no less turgid. But there was a lively economic debate, with an active relevant research program, and numerous economists offering diverse points of view, and – despite Muldoon – a tolerance of dissent.

Twenty years ago the undersigned contributed his first column to The Listener.