New Zealand’s Welfare System.doc

New Zealand’s Welfare System Many governments in Europe are grappling with the huge task of reforming their economies, which economists say are burdened with high welfare costs. On the other side of the world, in New Zealand, a radical decision was taken 20 years ago to slash those costs by dismantling the countrys welfare state which had been in existence for half a century. The New Zealand experience has been seen as a test case by other governments wanting to introduce reform. So what was the impact of this decision -- and did it deliver the changes hoped for at the time? Wayne Brittenden reports from New Zealand. REP: In the days when The Internationale was sung at gatherings of democratic socialist parties, New Zealands Labour Party was a star. It had introduced -- arguably -- democracys first cradle-to-grave welfare state during the 1930s, in response to the Depressions legacy of mass unemployment and huge social inequalities. It was to prove a role model for welfare states. But In 1984, the newly-elected New Zealand Labour administration began scrapping the very structures of universal welfare that the party ancestors had established. Public spending and tariffs were cut, civil servants put on performance contracts, farm supports and social benefits slashed, public services contracted out, union rights seriously curbed, the Central Bank given operational autonomy; and the New Zealand dollar was floated. Even the Prime Minister at the time, David Lange, later admitted that he hadnt understood the economic earthquakes that the free-market enthusiasts in the Treasury and his own Finance Minister were pressing ahead with. But a certain level of economic reform had become essential. The oil shock caused economic jitters, and Britains commitment to the EU meant that New Zealand lost a large part of its guaranteed UK market for farm produce; and farm subsidies were removed too. Sociologist Dr Malcolm Voyce: MALCOLM VOYCE: There is of course the p