Capitalism with a Human Face

  • Rt Hon Winston Peters
Deputy Prime Minister


3 MAY 2018


Just over six months ago, New Zealand First’s decision to form a coalition government with the Labour Party was announced in a post-election speech.

That speech outlined the rationale and subsequent mandate of the new Government, and it was made clear that New Zealand First’s desire was to regain “capitalism with a human face”.

That goal is one shared by our coalition partner, the Labour Party, and drives the fundamental direction of this Government.

The phrasing that was used was interpreted by some as being a wholesale criticism of capitalism – an interpretation which is not correct.

Rather, its focus was on a debased strain of economic thought which has preoccupied this country’s polity since the General Election of 1984.

For thirty-three confused years, this country suffered through an experiment.

Our financial system was deregulated to the point of chaos, and core state assets sold off - forging a society where a few opportunists came to possess a disproportionate segment of New Zealand’s wealth and power.

That experiment – of unbridled, irrational neoliberalism - has transformed what was once one of the most egalitarian societies in the world, into a case-study of acute inequity.

Most of you will know nothing of how it happened, apart from what you read in the history books.

But it is clear that we are at a bookend of the ‘neoliberal era’, just as the first Keynesian era ended as some of us entered the service in the 1970s.

Even my former colleague Jim Bolger has admitted as much.

It is important to remember that for much of the twentieth century, New Zealand was a nation of profound economic opportunity and relative unity between social strata.

Since 1984, this has been all but squandered, first by the neoliberal agenda, and then the so-called ‘third way’, which served only to mitigate neoliberalism’s more severe effects.

Our objective is to move forward from this preposterous chapter of economic experimentation, which has primarily been at the expense of the middle class.

The result of that is that New Zealand’s working poor have become even more deprived, as the middle class take their place as the economically disenfranchised.

This has occurred whilst a miniscule minority of elites have exploited the laissez-faire policies set in motion by Sir Roger Douglas, and did all they could to propagandize their destructive processes.

Our slide down the OECD and income per capita comparisons have been wantonly ignored.

Now, more than any point since 1984, it is becoming clear that this economic regime will not last in perpetuity.

In the 1980s, Ronald Reagan spoke of capitalism consigning communism to the ash heap of history.

This should happen to neoliberalism, and it should be replaced with a humanistic strain of capitalism which manages the economy in a way which benefits all New Zealanders.

This is not an insignificant task.

New Zealand’s wealthiest one per cent have now accumulated almost a third of our nation’s wealth.

What would have once been an unfathomable distribution of New Zealand’s riches, has now become an unfortunate reality.

This is a reality experienced across the breadth of this nation.

The squalid garages of parts of South Auckland, to the footpaths in our cities, all the way up to the impoverished communities of Northland, are testament to a failed economic vision.

The effects of this extend further than the material deprivation they have caused.

Core mechanisms of governance have been badly harmed by the vagaries of neoliberalism, and it will take some time for those wounds to be healed.

In 2013, economist Thomas Picketty stated as much, when he wrote:

“When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.”

Mr Picketty’s words serve to illustrate a fact: that it is vital to consider the marriage between economic opportunity and a vibrant, healthy democracy.

Perhaps it was in the previous cabal’s immediate interests to perpetuate and maintain such a sorry state of affairs.

They fostered an apathetic electorate which took a step back from social responsibility and said “I’ll be right Jack”.

That last Government, with the exception of the originating Fourth Labour Government of the 1980s, did more to exacerbate the pernicious trend of neoliberalism than any other.

The conditions that have been left by the “I’ll be right Jack” Government completely discredit their two supposed strengths - fiscal acumen, and so-called ‘compassionate conservatism’.

Rotting hospitals have emerged from the woodwork, ignored and wilfully covered-up.

Thus, a most basic element of the welfare state has been revealed to be of secondary importance to the previous Government’s unhealthy obsession with surpluses and tax-cuts for the rich.

Twenty billion dollars for the 2016 Defence White Paper were never accounted for.

That is almost double the figure of Steven Joyce’s election-time fabrication, directed at this Government’s plans when in Opposition – a perfect example of hypocrisy in action.

This not only is an embarrassment, but leaves this country’s security weakened.

Prisons are overflowing, partly thanks to that Government’s flirtations with the privatised prison model.

Under their watch, the prison population rose by over 20 per cent – a poor reflection on the opportunities granted to New Zealand’s most destitute, and the state of the justice system which holds them to account.

Those three examples of neglect - along with a myriad of others - paint a hideous picture.

And as identified by Mr Picketty, the conditions they leave this nation in have facilitated a deep political apathy, particularly on the part of the young.

This speech is perhaps preaching to the choir - you all harbour some interest in politics and that is the reason why you are in this room, learning the foundations of political science.

But too many of your peers are so disengaged by New Zealand’s political process that they have accepted a state of virtual disenfranchisement – a disturbing trend which, if unchecked, may have far-reaching detrimental effects in decades to come.

But it is also clear that your age group, many of whom were born in the 21st Century, are tired of the neglectful and short-sighted conduct of past Governments.

It is an inescapable truth that wealth has been funnelled to a certain demographic, leaving a generation of youth behind that have rightfully been labelled ‘Generation Rent’.

Some of us don’t blame the plummeting rates of home ownership on a millennial fondness for smashed avocado.

Anybody capable of viewing the current economic system, unhindered by the disabling influence of once-prevailing economic thought, can see through that obnoxious argument as clear as day.

Rather, the lack of material and professional opportunity granted to young people is a direct result of policy failures in the face of extraordinary economic and social change.

This Government – a constructive, coalition force that gets things done - is making things better, step-by-step – in spite of the opposition trying to pin their shortcomings on us.

New Zealand First and Labour are approaching this task from a number of fronts.

We will develop the regions, through our already-thriving Provincial Growth Fund.

Our programme to plant 1 billion trees over the next decade has commenced, and is a triple win for everyone involved. The environment will be better-protected, the countryside beautified, and most importantly, the forestry industry reinvigorated, while new jobs will be provided where currently there are too few.

Regional road, rail and sea connections which have been neglected in favour of the so-called ‘roads of national significance’ will be reinvigorated, allowing capital to flow in and out of the regions at a faster rate, tapping into the latent potential of regional New Zealand to be realised.

We will rectify the neglect of our predecessors, rather than siphoning capital to their cronies and offshore investors.

Critically, we have introduced legislation which will prevent overseas buyers from purchasing residential homes.

Now, the only way those investors can have a piece of New Zealand’s pie is by helping to make the pie larger.

This will help to stop the widespread, disturbing phenomenon of young children sleeping in cars whilst nearby houses remain unoccupied, as mere vessels of capital gain.

For that reason, and most importantly, we will build houses, and actively encourage the construction of even more by the private sector.

KiwiBuild is a programme which will put Kiwi families under their own roofs, and help alleviate the homelessness which has plagued this country for the last three decades.

Whilst the consequences of the previous Government’s neglect may be most dramatic in Auckland, much of New Zealand’s regions have slowly but surely atrophied.

The working men and women of the whole country will stand to benefit from this Government’s policies of reform and reconstruction.

It is also important to stress that this is not a case of redistributing pre-existing wealth to the poor.

Rather, we strive for a wholesale reformation of New Zealand’s economic system, to meet the realities of the twenty-first century and produce wealth for all to share - fairly.

New Zealand First and Labour are constructive partners in Government, and the raft of policy initiatives driven by both parties are testament to that.

This is a Government, composed of different schools of thought, which nevertheless have the same basic goal.

And we will work closely together to meet that goal – a fairer and more caring New Zealand.

Some may find this hard to comprehend, owing to the legacies of past Parliaments, where support parties were suffocated by the overbearing seniority of the National Party.

That is not the case for the 52nd Parliament.

New Zealand First has ensured that this Government’s dedication to equality extends beyond its policy initiatives, into the very legislature that makes them happen – the House of Representatives.

Only by accounting for different viewpoints can this Government hope to address the concerns of all New Zealanders, and fulfil the mandate granted by the Mixed Member Proportional system, which has not seen its full advantages on display until now.

There are indications that this Government will encounter challenges incubated by the previous government and the international economic system to which it was so subservient.

In that case, we will not subscribe to measures of austerity, despite inevitable ill-informed calls to do so.

Instead, we will encourage growth through investment in our land and people.

We will build a strengthened economy that faces forwards, rather than backwards.

For both of these goals, education is key.

The 30 year strategic plan for education agreed by both coalition parties reflect this.

New Zealanders will need to retrain to maintain skill relevance in this ever-changing global economy.

The concept for a career-for-life, for better or worse, has become a relic of the twentieth century.

Whilst this presents challenges, it also offers opportunities.

New Zealand, as a small nation, is better placed to retrain its workforce to negotiate an uncertain global system and achieve economic success without leaving the little person behind.

Hitherto, this advantage has not been fully embraced nor capitalized upon.

This is a government of change, not of a modified status quo.

We will not sit idly by as New Zealand’s most vulnerable slip into the crevasse of poverty, and this nation’s infrastructure continues to atrophy.

It is time to act, and act we will continue to do, until the job is done.