The New Zealand Experiment: A World Model for Structural Adjustment?
Hostile to the reforms but the fullest record of what was actually done and in what order.
Summary
Jane Kelsey, a law professor at the University of Auckland, wrote the principal critical account of New Zealand's structural adjustment programme between 1984 and the mid-1990s.
Her analysis covers the whole programme: financial deregulation and the floating of the dollar, removal of agricultural subsidies and import protection, corporatisation and privatisation of state trading enterprises including telecommunications, rail, forestry and banking, the Reserve Bank Act establishing a single inflation target, the Employment Contracts Act of 1991 that ended national awards and collective bargaining, the State Sector and Public Finance Acts restructuring the public service, and benefit cuts in 1991.
Kelsey's argument is that the programme was imposed by a small group of officials and ministers without electoral mandate, that it was driven by a coherent ideology rather than by pragmatic problem-solving, that it transferred public assets at low prices to buyers including former officials, and that its social costs, measured in unemployment, inequality, child poverty and Maori outcomes, were severe and have been excluded from the standard assessments. She is a critic and the book is an argument, not a balanced assessment. It should be read against Boston and colleagues on public management and against the reform advocates. Its documentation of the privatisation transactions and of the distributional outcomes is the material other accounts omit.
Key takeaways 7
- New Zealand's reform programme was designed and implemented by a small group of officials without any electoral mandate for its content.
- State assets were transferred at prices Kelsey argues were far below their value, in several cases to buyers connected to the officials involved.
- The Employment Contracts Act ended national awards and collective bargaining, which shifted bargaining power decisively toward employers.
- Unemployment, inequality and child poverty rose substantially during the reform period and are excluded from most assessments.
- Kelsey argues that the programme was driven by coherent ideology rather than by pragmatic response to specific problems.
- Maori economic and social outcomes deteriorated relative to the rest of the population during the period.
- The book is advocacy from a critic and should be read against the reform advocates and the public management literature.
Who should read it
Readers assessing the New Zealand reforms who need the critical account and the distributional evidence that the standard assessments omit.
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