Welfare State In New Zealand example essay topic

On July 6 1984, the fourth Labour government were elected into parliament after defeating the National party in a snap election. 1984 can be regarded as a major turning point in New Zealand political history in the sense that significant political changes affected the whole of the New Zealand society, economy and political structure. New Zealand government's experimented with radical Neoliberal policy programmes to achieve economic and social progress during this period. The essay shall discuss the central features of the process of policy change over the period of 1984 to 1993 in New Zealand. These reforms were among the most sweeping in scope and scale within any industrialized democracy. There are a significant number of historical and institutional similarities between Australia and New Zealand which make them a fertile ground for comparative analysis.

This essay shall compare industrial relations reform in Australia and New Zealand during the 1980's and 1990's, integrating both institutional ist and interest-based approaches. Within comparative politics there are two main approaches to the impact of economic change on national policy patterns. The first, new institutionalism has been very influential in comparative industrial relations. The second, which focuses on the role of interests, has also been significant in New Zealand and Australian politics. The concept of institutionalism is central to the analysis of the reform episode that took place in New Zealand. Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction (North, 1990: 3).

Zucker defines Institutionalism as a fundamentally cognitive process (1983: 25). In comparison, Immergut argues that the theoretical core of the new institutionalism is the view that there is a tendency for certain arrangements in social life to persist over institutions and for these institutional arrangements to affect not just strategic actions but also the preference formation of social actors (1998: 7). Immergut stresses the fundamentals of the concept of institutionalism can be problematic as there are many conflicting definitions and analysis. "Since the common research interest is in the black box between potential political demands and ultimate outcomes, it does not make sense to predefine the contents of this box. A standard definition of "institution" is not desirable; the common research agenda is the study of institutional effects wherever, or however, they occur" (1998: 25). Thus, the author suggests that "the representation of interests is shaped by collective actors and institutions that bear the shape of their own history" (Immergut 1998: 17).

It is important to analyse the role of institutional arrangements in the development of national economies in New Zealand and Australia, and assesses their reaction to the pressures brought by the processes of social and economic reforms. It presents the main theoretical traditions in comparative political study, thus, one can apply these theoretical perspectives to the study of Australasian economies. In the early 1980's, both countries elected labour governments after long periods of conservative rule (Castles, 1996: 96). In response to international economic demands, these governments introduced market-orientated reforms. Four major institutional characteristics of these two democracies shall be scrutinised further, including the various structures of the political system, the welfare state and the relationship between organised interests and the state (Castles, 1996: 97). This essay is particularly concerned with the extent, direction and causes of changes in these four institutional arrangements in the period 1984-1993, in a comparative study of New Zealand and Australia.

North identifies that institutional change took place in many cases, but it has been path-dependent and incremental (1990: 89). The level to which institutions played a fundamental role in the reform period shall be examined further, The first wave of reforms examined here are those that took place under the Labour government in New Zealand between 1984 and 1990. When Labour won the snap election, economic and social progress became paramount to directional policy (McClure, 1998: 210). The 1984 Government undertook a rapid liberalization of the New Zealand economy, with the removal of the price and freeze wage, deregulation of the labour market, devaluation and floating of the New Zealand dollar, and the removal of all foreign exchange controls. Labour had made significant changes to the role played by the state in the society and economy. Boston comments that Labour reforms were motivated by a concern to establish structures and procedures which would contribute to, rather than impede, organisational efficiency and effectiveness (1991: ?

). On December 1988, Rodger Douglas, Minister of Finance for the Labour party announced an economic and social package which provided repayment of government debt. This was to be done by the privatisation of state assets. Labour intended to corporative many government departments into privately owned enterprises, which were to be commercially profitable and have separate funding for any social objectives (Boston, 1995).

Under the new program, orchestrated by Douglas, the government devalued and then floated the New Zealand dollar. The government stripped away regulations first from the finance sector and then from many other areas (James, 1992: 2). It reduced the top income tax rate from 66 per cent to 33 per cent, and imposed an indirect goods and services tax (Easton, 1994: 80-81). The role of the government in the functioning of individual markets is of particular interest during this period. "The most conspicuous examples include the rapid abandoning of a myriad of controls in financial markets... complete abolition of price controls by tariffs, and the subsequent substantial reduction of tariff levels" (Bollard and Buckle, 1987, cited in Easton, 1994: 81). The New Zealand Treasury were instrumental in many of Labour's reforms, and indeed, in the second wave of reforms under the National government.

To forestall a move in the locus of authority, the New Zealand Treasury restructured itself in the 1980's so that it would be in alignment with a reformist advocacy coalition committed to imposing and institutionalizing a government failure paradigm. After the 1984 election, the new Labour government accepted Treasury advice that substantial reform was essential to rectify the Nations troubled economy. "Government's policy needs to move towards a comparative systems approach... [assessing] alternative institutional structures... according to the processes and outcomes they involve, utilizing generally accepted criteria for making social choices" (Treasury, 1987: 47, cited in Easton, 1994: 80). Labour lost their administration to the National party in the general election of October 1990. This was a pivotal moment in New Zealand, as the Nation soon witnessed a second wave of reform. Within the first three years of National governance, change was rapid and radical.

National adopted many of the economically liberal reform policies previously enacted by Labour. The reforms restructured the economy, Welfare State, Housing, Health and various other aspects of the public sector. As with the reforms implemented by the Labour government, they were characterised by an ideological framework of Neoliberalism. The National party were elected into government in October of 1990, and they brought with them many proposed strategies designed to improve the country's economy and society. National introduced various new policies which sought to remedy the government's fiscal crisis, the most significant policies implemented under the National government were the reforms to Welfare. One of the most prominent groups of society affected by National's new 'targeted' policy were Welfare beneficiaries.

New Zealand's central government has played a direct and active role in the Welfare state since its origin in 1936. However, it can be argued that in the history of the Welfare state there have never been such comprehensive and dramatic policy amendments, as the reforms the National party implemented. The National party were particularly concerned with New Zealand's dependence on the social welfare system. Rather than relying on welfare assistance, the government emphasised full employment. In December 1990 the newly elected National government announced its plans to cut social welfare benefits, which were to come into effect 1 April 1991. New Zealand society was divided into groups who were dismayed to learn of the proposed benefit reforms and those who supported the government's stance on reducing the welfare income rate.

The number of dependants receiving an Unemployment Benefit had reached almost 150,000 in 1990 (Boston, Dalziel, St John, 1999: 243). By April 1991, New Zealander's who were receiving the Unemployment Benefit had their benefits slashed, plunging them even further into poverty. Although the income rate was not uniform over demographic groups, the maximum benefit available to an unemployed beneficiary fell by approximately 25 per cent in April 1991 (Maloney, 1997: 21) 1. At the time of the announcement, Jenny Shipley, who was Minister of Welfare for the National Party, released a report entitled 'Welfare that Works'. This was a significant Budget document that justified reasons for social assistance abatements.

The report claimed to present an "integrated approach to social security and social assistance" (Shipley. 1991: 18). Their objective approach was "designed in such a way that people are better off earning additional income and moving from dependence to independence" (Shipley, 1991: 18). This theme 'moving from dependence to independence' proved to be central to the government's critique for welfare reform. Although the government was determined to balance New Zealand's fiscal crisis from the 1980's, cutting government spending was not the only reason for changes to welfare payments. It was claimed the state was beginning to actually create poverty by encouraging dependency.

To prevent this from occurring any longer, the state argued that lower welfare benefits and tighter targeting were necessary to push people into finding paid work (St John, Rankin, 1998: 23). The Employment Contracts Act of 1991 was a significant Act implemented by National designed to reform the labour market. National's guiding principle behind the implementation of this Act was to "replace collective institutions and agreements with individual contracts" (Easton, 1994: 87). Under that framework the Employment Contracts Act 1991 gives employers, employees and their representatives the freedom to negotiate terms and conditions of employment directly relevant to their particular circumstances, subject to certain statutory policy.

Employees also have the right under the Act to decided whether they wish to belong to a particular union. 'The Employment Contracts Act... substantially enhanced the productivity of labour and capital, output, and employment growth because it [was] an essential ingredient in the transformation of New Zealand's institutional order to greater flexibility and competitiveness' (Kasper, 1996: 51). The freedoms provided by the Employment Contracts Act have been underpinned by clear statutory protection for employees. These protections are provided by both the Employment Contracts Act and a range of supporting legislation. The protections are generally known collectively as the minimum code, and guarantee all employees various worker rights.

New Zealand in the 1980's and 1990's experienced dramatic shifts in public policy. Both Labour and National governments turned from the ideal of an interventionist state and sheltered economy to a deregulated economy, a minimal state, and a range of strategies which came to be known as the 'reluctant state' (McClure, 1998: 210). Fiscal concerns underpinned and were the catalyst for many of the reforms between 1984 and 1993. Labour was anxious to rein in public expenditure, and to ensure that resources were expanded prudently and to good effect. This was exemplified in Labour's corporati sation theory. When the reformist Labour government lost cohesion and were overthrown in the 1990 election, the reform momentum was resumed by the opposition National Party, which was then able to tackle areas that a Labour government were constrained from reforming, predominantly the labour market and welfare.

The most significant action emulated by both governments was that reform was essentially driven by the finance minister, rather than the Prime Minister. Easton (1994: 87) identifies three motives behind the reforms, particularly to the welfare state. Firstly, as mentioned, was the need to restrain the fiscal deficit. Secondly, the "view that a market between purchaser and provider of welfare services would lead to more efficient resource allocation and production". The author also argues that there was an "ideological preference for [the] individual over collective decisions in both the purchase and provision of services" (1994: 87). There is various literature examining the reform period in New Zealand in comparison with reforms taking place in Australia at the same time.

However, it can be argued that although Australia also undertook dramatic reforms to improve their economy, the reforms present numerous contrasts to the New Zealand model. As Schwartz identifies, Australia's change in the economic and social models were negotiated rather than administered as 'shock therapy', and change has been far more gradual (2000: 104-105). Schwartz argues that Australia was unable to change as dramatically as New Zealand because of the country's federal system government. "Unlike Labour in New Zealand, the ALP could not simply legislate change... instead use their control over the federal government...

". (2000: 121-122). Between New Zealand and Australia there were different collective bargaining institutions, different experiences with public policy and as a result, these divergent economies produced vastly different policy choices and direction during the 1980's and 1990's (Schwartz, 2000: 122). The New Zealand Government has changed its roles, scope and functions significantly over the past twenty years. As a result, it has affected the operation and organisation of business and market activity, social structure and political institution's in New Zealand. This essay has provided a brief overview of some of the significant events that have influenced the course of public sector reform in New Zealand since 1984.

Not only have these reforms changed the nature of political discourse, they have also altered the way in which policy issues are analysed and implemented today. This paper uses the comparison of industrial relations reform in Australia and New Zealand during the 1980's and 1990's to illustrate both the limitations of policy analysis which relies solely on an institutionalism approach and the potential benefits of an approach which integrates a role for both interests and institutions. references: Boston, J., Dalziel, P., St John, S., (1999). 'Redesigning the Welfare State in New Zealand. Problems, Policies Prospects. ' Oxford University Press: Auckland. Castles, F. (1996).

'Needs-Based Strategies of Social Protection in Australia and New Zealand' in Anderson, E (ed), 'Welfare States in Transition. ' London: Sage Easton, B. (1994). 'Economic and other ideas behind the New Zealand reforms', Oxford Review of Economic Policy, 10 (3 Immergut, E. (1998). 'The Theoretical Core of New Institutionalism' in 'Politics and Society,' 26 (1) March.

James, C. (1992) 'New Territory. ' Wellington: Bridget Williams Books. Kasper, W. (1996) 'Free to Work: The Liberalisation of New Zealand's Labour Market,' Policy Monograph 32, Centre for Independent Studies, Sydney. Maloney, T. (1997). Benefit Reform and Labour Market Behaviour in New Zealand.

' Institute of Policy Studies, Victoria University: Wellington. McClure, M. (1998). 'The Reluctant State: 1984-1998' in 'A Civilised Community: A History of Social Security in New Zealand 1898-1998'. Auckland University Press: Auckland. North, D. (1990) 'Institutions, Institutional Change and Economic Performance. ' New York: Cambridge University Press.

Rankin, S., St John, S. (1998). 'Quantifying the Welfare Mess' (Policy Discussion Paper 22) Department of Economics: University of Auckland. Schwartz, H. (2000). 'Internationalization and Two Liberal Welfare States Australia and New Zealnd' in Scharf, Fritz & Schmidt, Vivien, (eds). 'Welfare and Work in the Open Economy' (vol 2), Oxford University Press: New York. Shipley, J. (1991).

'Welfare That Works,' Minister of Social Welfare, Wellington Zucker, L. (1983) 'Organizations as Institutions', in Bacharach, S (ed). 'Research in the Sociology of Organizations,' Greenwich: JAI Press.