New right wing coalition faces economic recession

The Labour Government, led by Helen Clarke, was kicked out of office in New Zealand’s general election on 8 November. The conservative National Party, led by John Key, secured 45% of the vote while Labour won only 34%.

New Zealand (NZ) has about 3 million registered voters, out of a population of about 4.3 million. While it is compulsory to be enrolled, it is not compulsory to actually vote. Voter turnout in this election was nearly 79% - slightly down from 81% in 2005. This was perhaps because of the blandness of the campaign and the lack of genuine alternatives on offer.

Under New Zealand’s mixed member proportional (MMP) system, parties must secure either 5% of the nationwide vote or a local electorate seat to enter the 122 seat parliament. Since this system was introduced in 1996, neither the Labour Party nor the National Party have been able to secure an outright majority and have had to rely on the support of minor parties to form a coalition government.

The 2008 results give the National Party 59 seats and the hard line neo-liberal party, ACT, 5 seats. United Future, which is a Christian conservative party, adds 1 seat, making a total for the conservative coalition of 65 seats.

Labour has 43 seats, the Greens 8, and the Progressive Party have 1 seat, leaving the joint opposition with a total of 52 seats. The Maori Party holds five seats and has said it will discuss with the National Party about the possibility of a role in the Government.

An economy in recession

The main backdrop to this election was the economy. New Zealand’s economy slipped into recession earlier this year and this has meant rising inflation, rising unemployment and the collapse of the housing market. Consumers have been hit hard with soaring petrol and food prices and this has pushed spending down.

For most of its time in office Labour has overseen a growing economy fuelled by high export prices and a booming share market. The ruling class in New Zealand has been well serviced by the Labour Party, with profits up and wages stagnant.

This election was somewhat different to the previous three as it was not fought under favourable economic circumstances for the incumbents. As such, Labour struggled to portray an image of being good economic managers. With a new world economic downturn, and a recession already starting to bite in NZ, many voters were questioning Labour’s ability to see them out of bad times.

Clutching at straws Clarke decided to campaign around the issue of ‘trust’ in her leadership. Even though her personal approval ratings were high, this was not enough to stop the big swing against her party. After conceding defeat, Clark immediately announced her resignation as leader of the Labour Party, although she will stay in parliament after retaining her Auckland seat.

The new face of the National Party

While this campaign was perhaps one of the dullest on record, the dominating theme from the National Party was that it was “a time for change”. National Party leader, John Key, who is a former foreign exchange dealer with Merrill Lynch, even cited Barack Obama’s victory in the US as a mandate for a different approach to dealing with the global financial crisis.

The reality is that the National Party ran a very populist campaign with a new and fresh-faced leader. If there was any similarity to the Democrats campaign in the US it was that John Key, like Obama, was very skilful in calling for ‘change’ while not exactly explaining what that change would be. There are no real differences between the National Party and the Labour Party. They are both out and out capitalist parties and the minor differences that do exist are more about style rather than substance.

To win the National Party had to take on many of the Labour Party’s policies, including pledging not to sell the state bank and maintaining the superannuation scheme. Key also accepted Labour’s 20-year-old anti-nuclear policy and approved Labour’s decision not to send troops to Iraq.

The ACT party’s leader, Rodney Hide, dubbed the National Party ‘Labour-Lite’, saying Key was “adopting socialist policies in order to get elected and that the country needed tougher right-wing policies”. While hardly a socialist, Key did try to play to the popular mood and parroted Labour at every turn. The very fact that Hide even mentioned ‘socialism’ shows that even sections of the ruling class recognise that socialist ideas will gain ground in the coming period.

The contradiction between what Key has been forced to tell the electorate and what his coalition partners, ACT, want him to do, will be sure to come back and haunt him in the months ahead. ACT will want to push ahead with the neo-liberal agenda of slashing government spending, privatising state-owned businesses and creating “competitiveness in the health, education and welfare sectors”.

The infamous Sir Roger Douglas, now 70, who was the Labour Finance Minister and architect of the 1980s ‘Rogernomics’ free market reforms, is returning to parliament as an ACT MP! This is sure to set the cat amongst the pigeons, as ACT will want to push the National Party further to the right in the context of a recession, while Key will be under pressure from the electorate not to shift to the right.

Minor parties

The Greens were the best performers of the minor parties, gaining 6% of the vote. They were the only small party to cross 5 % threshold, increasing their number of MPs from 6 to 8.

The Maori Party added 1 seat to the 4 it held in the last Parliament. It now holds 5 of the 7 ‘Maori seats’ - a special category of electorate which gives positions to Maori representatives in parliament. The Maori Party leaders said they will discuss with their members the possibility of working with the National-led Government. These comments alone show the limits of the Maori Party, but if this comes to fruition it will severely damage their reputation amongst New Zealand’s most oppressed group.

The right wing anti-immigration party, New Zealand First, lost their presence in parliament. They received 4.3 % of the vote, below the 5 % threshold needed to win a seat. The leader of this peculiar racist party, Winston Peters, was accused of lying and corruption and this damaged the party significantly.

The results for the left

As expected, the small left parties – the Alliance party, the Residents Action Movement (RAM) and the Workers Party (WP) all received very small votes. There was a lot of pressure on voters, including from some union leaders, not to cast a vote for one of the left parties. The same arguments of ‘lesser evilism’ that are used by the union leaders in many countries (i.e. vote for social democrats as the ‘lesser evil’ and keep Tories out) were also used in NZ.

The Alliance party, which is a shadow of its former self, only slightly increased their results from 2005, gaining around 1,700 votes. This is a far stretch from the 10 % and 13 MPs that they won in 1996.

The Residents Action Movement (RAM) is a project of the Socialist Worker group. They are the New Zealand section of the International Socialist Tendency (IST). RAM is a broad reformist formation, which includes socialists, social democrats and even some small business owners. They put forward a very minimal programme, which concentrated on removing the GST from food.

While RAM claimed that they recruited 3,000 members in the months leading up to the election, they only received 400 votes! The reality is that RAM was seen as a ‘poor man’s’ Alliance and failed to win real support from working people. This result is a big set back for this project.

The Workers Party (WP) is perhaps the biggest of the left groups in NZ. They draw their origins from a fusion of pro-Mao and pro-Trotskyist groups. The WP achieved official registration at the beginning of October, an achievement in itself given they had to get the signatures of 500 paper members. This was, in fact, the first time in NZ history that an openly socialist party made it onto the party list.

Given that they had only five weeks to campaign for the party vote, they had limited resources and got very little media exposure, their 824 votes, while modest, is something to be built upon. The fact that they received double the vote of RAM shows that watering down socialist ideas does not necessarily lead to votes.

Challenges for the National Party

Against the background of a world financial crisis, the National Party will face big challenges over the next few months and years. Key now takes ownership of the most serious economic recession in decades and, just as with any capitalist government, he will have to sell the consequences to the working class.

The downturn in the economy saw big shifts take place amongst layers of working people. With no mass workers’ party in NZ, this shift, for the most part, was away from Labour and towards the National Party.

This does not mean that New Zealand society is moving to the right. On the contrary, more and more people are now opposed to privatisation, free trade and attacks on workers’ and civil rights. The problem is that with no genuine mass alternative on offer workers were forced to exchange one capitalist party for another.

While the change in government will see no fundamental change in policy, Key has vowed to move urgently to inject life back into the failing economy. He pledged to invest millions of dollars in roads, school building and broadband internet cables. He also pledged to pass legislation that will cut income taxes. To do this, he will have no choice but to take the government further into debt.

Key will also be under severe pressure from his coalition partners, ACT, not to carry out these policies and to push further to the right. The problem Key faces is that if he pushes ahead against the wishes of ACT the future of his coalition could be in doubt.

The National Party are now between a rock and a hard place. Either they stick to their election promises, thereby jeopardising their relationship with coalition partners ACT, or they move to off-load the burdens of the recession onto working people, which would see their credibility disappear very rapidly.

The one saving grace for the National Party is that the trade union movement is totally unprepared for the period ahead. Practically none of the unions have any worked out strategy to fight against cuts to jobs, wages and conditions. All this and more will be part of life in NZ as the financial crisis gets worse.

While only a few unions in NZ are officially affiliated to the Labour Party, most still mistakenly put all of their political hopes in them. The unwillingness of the unions to politically break with Labour has only served the interests of the bosses, as it means that workers are forced to fight with one arm tied behind their back.

Working people need a party

Working people in New Zealand are in desperate need of their own political representation. If there was one thing that the 2008 general election showed it was the domination of the bosses’ parties in official politics.

As the shine wears off the National Party win, more people will begin to see that exchanging one bosses party for another is not going to improve their lot. The call for the unions to politically break with Labour, and for the formation of a mass workers’ party, will become more popular in the coming years.

While some sections of the ruling class would prefer that Key moves quickly to take advantage of the weakness of the unions, others see Key’s skilful and soft approach as necessary to ensure that workers are not provoked into struggle. Either way, this makes for a somewhat unstable situation for New Zealand capitalism.

While it is inevitable that Key will enjoy something of a honeymoon in office, it is not ruled out that it could be short, considering that the effects of New Zealand’s recession are already being felt in the real economy. The volatility of the international situation can also play a big part in the direction the government is forced to take.

While New Zealand is geographically isolated from the rest of the world, it is fully integrated into the world economy and not immune from the vast political changes that are taking place. We can expect more politicisation and radicalisation to take place in New Zealand in the not to distant future.

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