Restructuring - the New Zealand experience from an Australian perspective

Abstract

New Zealand's program of economic and public sector restructuring since 1984 is assessed in comparison with that of the Australian Commonwealth government. New Zealand's reputation as more radical in its approach to restructuring is confirmed, though with a number of qualifications, including the observation that its approach to public sector reform has been more evolutionary and pragmatic than sometimes depicted. The reasons for New Zealand's former radicalism are partly economic and constitutional but mostly political, deriving from the greater electoral recklessness of its leaders. The economic benefits of restructuring are disputed, depending on the weight given to distributive issues and the growth in inequality. The political effects are more unambiguous. Radical restructuring was imposed without an electoral mandate and in breach of clear electoral commitments, precipitating electoral reform and coalition government. The result has been an end to major reform and the imposition of a new status quo. Radical change has also been made more difficult by the introduction of fiscal responsibility legislation which reduces the likelihood of the post-election fiscal crises necessary to justify unpopular expenditure cuts.