Life under International Capital

Anyone who has lived in New Zealand in the last decade will have experienced the effects of life under the I.M.F. The Welfare State has been systematically dismantled. In the areas of Health, Education and Social Services, the state has steadily pulled back and placed greater reliance on private medical schemes, school bottle drives, voluntary child care centres etc. More and more women have been forced into the workforce because of the drop in real family income. For the upper middle class and the rich however, life has improved. Reductions in company tax and in the upper levels of personal income tax have provided them with increased funds to speculate and profit. The government actually established a climate that was conducive to massive speculation, especially in land and housing. The rich did not suffer from the rundown in social services. A very careful subsidy scheme meant that those who had money could obtain further government support. Tremendous amounts of money were made available to private hospitals with rates of interest of less than 2%. But no worker could afford to take advantage of this. Nor could he afford to live in the suburbs where there was sufficient initial capital to earn a government subsidy for primary school libraries, pre-school centres and other educational facilities.

It took workers a long time to wake up. In 1968 the Government and employers made their first big mistake when the Arbitration Court gave its 'Nil Wage Order'. The uproar was such that the employers quickly realised that they had blundered and rushed back to the Court to hand out a palliative. But the damage had been done. Rank and file unionists demanded that their organisations reject the arbitration system and rely instead on direct action and collective bargaining. The Government had another problem. The western economic system wasn't operating too well and a series of financial crises, coupled with worldwide inflation (attributable in part to the Vietnam War), began to place pressure on New Zealand's economy. The short term benefits of the 1967 devaluation had been dissipated, while the costs, rising import prices, began to be felt. The Government found that Mini Budgets were not enough to 'stabilise' the economy and in 1970 the first round of union bashing took place with the introduction of the Stabilisation of Remuneration Act. The purpose of this Act was clear. Wages were to be held, prices were to rise, and rents were ignored. From the outset people saw that it was a farce, but the Trade Union hierarchy declined to challenge the legislation and dampened down the demands of those unions who wanted to fight.