In brief , the policies introduced by Minister of Finance Sir Roger Douglas in the 1980s included the rapid elimination of import tariffs that protected New Zealand agricultural producers and manufacturers, rapid privatization of state owned industries, which for the most part ended up under foreign ownership;  stringent anti-union legislation, similar to the American National Labor Relations Act; and substantial cuts in the public service social welfare benefits. With the abolition of import controls New Zealand companies struggled to compete against lower cost imported goods, resulting in multiple plant closures – mainly meat and dairy processing plants and clothing, footwear and textiles factories. This resulted in massive layoffs and a decade of unrelenting hardship for communities that relied on these industries, as well as a loss of the skilled labor force that staffed them. The 1984 reforms also heralded in seven years of continuous economic stagnation, during which the New Zealand economy shrank by 1% in contrast with an average 20% growth in other OECD countries.

The Mass Exodus of Generations X and Y

The most enduring harm stemming from the 1984 reforms is the staggering loss of human capital that continues to this day. At present approximately one million native New Zealanders – representing one quarter New Zealand’s current population of four million – live overseas.

As I wrote previously, the massive sell-off of both state owned and private Kiwi companies to foreign owners has translated into a chronic accounts deficit (negative balance of trade), as foreign owners collect their profits and dividends. To compensate for this steady loss of wealth, New Zealand, under pressure to increase exports, eagerly entered into “free trade” agreements with larger countries. Under these agreements, they agreed to reduce tariffs and quotas even more and to export unprocessed raw materials. This, in turn, led to the shut down of even more “value added” industries (for example, those involved in converting logs into timber), which had no hope of competing with overseas companies that paid sweat shop wages to third world workers.

These “free trade” agreements, which opened New Zealand markets to cheap imported consumer goods, continued the downward spiral. More manufacturers shut down, owing to their inability to compete with overseas companies, leading to more lay-offs and more young Kiwis departing New Zealand in search of well-paying jobs.

The Student Loan Debacle

In my view, the most damaging neoliberal reform of the 1980s was the decision to replace government subsidized tertiary education (which until recently was standard in most European countries, including Britain) with a student loan scheme. While lumbering young people with student loan debt, can pose major problems for large, broad based economies like US and Britain, the policy has proved absolutely disastrous for New Zealand – both in terms of wealth creation and the long term health of our hospitals, schools and other major institutions. I believe this continual hemorrhage of human capital is the number one reason New Zealand remains near the bottom of OECD countries for both economic growth and wages and salaries.

At present approximately one-third of medical students leave New Zealand following graduation. (See http://www.nzma.org.nz/journal/123-1318/4212/ and http://www.nzmsa.org.nz/wp-content/uploads/2010/04/190410-pr-on-student-debt-final2.pdf). Many really have no choice, strapped with large student loan repayments, just at the point they are looking to buy a home and start a family. Their only hope of managing this massive financial stress is to seek work in Australia or the UK, where they can command a salary 20-30% higher than in New Zealand. And once they buy a home and their kids start school, they very rarely return.

A recent study estimated 37% of new NZ teachers left teaching within the first three years (seehttp://www.nzcer.org.nz/default.php?products_id=2446). In addition to doctors and teachers, New Zealand also loses a large proportion of the nurses, physiotherapists, social workers, audiologists and other health professionals they train – as well as engineers, urban planners and veterinarians, who are also on New Zealand Immigration’s critical skills shortage list.

New Zealand’s Neoliberal Transportation Policy

In my view, the other really destructive neoliberal policies New Zealand enacted relate to public transportation: 1) the privatization of New Zealand railways (which led to the immediate shut down of all but four routes, owing to their failure to turn a profit) and 2) the dismantling of local public transportation systems. Both have resulted in extreme reliance on private automobiles and foreign oil, the second biggest culprit in this country’s accounts deficit. New Zealand, which still has a predominantly rural population (only 1/3 of Kiwis live in major cities), has also been extremely slow in implementing rational growth management strategies. For all these reasons, it holds the embarrassing honor of the highest rate of car ownership in the world.