From Pavlova Paradise Revisted by Austin Mitchell.

Based on TV program to be shown on TV1: 5, 12, 19 August 2002. Excerpts from book, in which Brian Easton responds to Mitchell interviews. p. 156, 157-8, 160, 163, 164, 165, 167-8.

Keywords: Political Economy & History

Rogernomics is a reference to Reaganomics and Thatchernomics. It’s the ideology of the new right that says monetary control is all you need worry about. Don ‘t worry about the export sector or whatever.

It was a very extreme policy, and probably New Zealand’s gift to the world in the eighties and nineties was to show how disastrous those policies were. One has to say that at one stage people used to come along to New Zealand to admire our policies. When it became increasingly clear they were a disaster they didn ‘t bother: Now they look elsewhere.


New Zealand has a very thin constitution. We don’t even have a House of Lords. And, of course, Britain has a whole series of informal constitutional arrangements, which hardly exist in New Zealand. Our caucuses were remarkably quiet. We didn’t even have those sorts of protections. So it was for extremists to take over the country. You can think of New Zealand as a fort, which was designed to protect New Zealanders against the rest of the world. When the terrorists actually get inside the fort th could just mow everybody down and that’s what happened. The fort worked on the basis that it was our side that was running it.


The National Party is, fundamentally, a party of conservatism, but it also got seized by ideologues and, for a while, those ideologues drove the party, particularly in 1990 and 1991/92. You had the National Party doing all the measures that Labour couldn’t quite get its heart round, like totally liberalising the labour market, virtually reducing all protections, driving down work, pay conditions, and pay rates for low-paid workers incidentally with no benefit, of course. Eventually, the National Party began to drift back to its more conservative level but it always had these wild ideologues who would sell off anything.


Monetarist theory just didn’t include an export sector: The model was of a closed economy which didn’t have an export sector. Ideologues were thinking of America, and America’s such a big economy that, on the whole, it can largely ignore its export sector Whereas it for instance, you look at Britain you know that it’s very important that the export sector is functioning well, otherwise the economy screws up. That’s what happened in New Zealand, too.

That situation, with various modifications, continued right through the 1990s. So look at the New Zealand export record and we have one of the poorest in the O E CD. They were promising us better economic performance but not in exports. We were superb importers, though. Outstanding import performance.


Telecom was a major mistake over the actual regulatory environment. So we’ve had ten years of litigation in which competing companies have tried to get involved in the Telecom market and have been blocked off because we have such inadequate laws in the industry. At one stage the courts decided that if a competitor against Telecom was successful then they had to pay the profit loss that Telecom would have received from the superior service. That actually went to the British Privy Council in London and the decision was that that was the law. If I out-competed you then I had to compensate you for your loss of profit. It’s Mickey Mouse stuff.

They sold off the electricity system and what we are now doing is trying to untangle the shambles that’s been caused. Even this year we had a lack of capacity to produce electricity, simply because we didn’t have any planning behind it, (and because people were playing market games and wasting water and not having the amount of generation. A couple of years’ ago we actually closed down the central city of Auckland by having no power because the cables overheated. There’d been no planning and no thinking through of those sorts of issues. So this ideology went on right to the end. Some of the National politicians tried to control it but the extremism existed right through to 1999.


It was a curious view that businessmen could run politics better than politicians. They said politicians couldn’t do business, but business could do politics. The record is that in area after area businessmen had a lot of trouble even running their own businesses. Lots of big New Zealand companies have fallen over. We have a single airline, Air New Zealand. It was sold off at a relatively low price to Brierleys. Then later that was taken over by a Singapore company and they virtually ran it into the ground. Earlier this year the New Zealand government had to re-nationalise it and made a big profit on the re-nationalisation because the company had been so badly run. There’s a joke going round, ‘How does a New Zealand businessman get into small business? He starts with a big business.’


Since 1985 we have one of the Worst economic records in the OECD, excluding, of course, the Communist countries. On any measure of economic welfare, like jobs or the standard of living, we’ve done very badly. The Australians did much better than us. That was a bit surprising because they actually faced a worse external environment. Their prices for their exports fell more than ours. Nevertheless, Australia’s done roughly as well as the OECD average, and it’s grown a lot better.

Whereas once we used think of ourselves as having roughly the same standard of living as the Australians, we’re now about twenty percent lower. What was interesting was that the Australians actually had the same mad ideologues and they regularly came over to New Zealand and said, ‘Look at all these clever things New Zealand are doing. We should do them.’

Their political processes were such that they couldn’t actually implement extremist policies because there were mechanisms to stop the extremism. It was said at one stage that New Zealand had a cunning plan to catch up with the Australians. We were going to get them to adopt our policies and then really slow them down.

What I’d like to say to the rest of the world is that it’s been a disaster for New Zealand. But you can learn. We’ve run an experiment. We can show you how not to do it. I guess that’s not a very great achievement, but at least it is a contribution.