Wellington
Sir Tony Atkinson was a leading British economist and warden of Nuffield College, Oxford University, whose work in the field of inequality and poverty studies was groundbreaking. He visited New Zealand in 2001 and gave a series of seminars on trends in social policy in Europe and the United Kingdom. In her speech at one of these events, Helen spoke about the history of social policy in New Zealand and her views on the way forward.
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It is refreshing to have Sir Tony Atkinson in New Zealand as a social policy commentator. So often high-profile social commentators tour as guests of the business round table, preaching a dreary gospel with which we became all too familiar, over the many years of neo-liberalism’s reign in New Zealand. In those years the original vision of the New Zealand welfare state was barely visible at all, as the struggling beneficiaries of it were written off as hopeless bludgers who should go and get a job, or get well, or grow younger.
I became politically aware when Norman Kirk was Leader of the Labour Party and articulated quite a different set of values from that. He spoke of the welfare state not as something which limited or restricted people, but as something which liberated people and set them free to reach their potential. Decades earlier, Walter Nash had spoken of the first charge on the state as being the needs of the young, the old, the sick, the unemployed and the widowed. Our government today is working towards rebuilding a New Zealand which is kinder and fairer in a twenty-first-century setting.
Social democracy has always been about trying to find a balance between market and society. Too much market and the social consequences are dire, as we know from our own recent national experience. On the other hand, an excess of caring without the prosperity to fund it also leads to ruin. That is why Sir Tony Atkinson’s message about the importance of integration of economic and social goals and policies is so critical.
As a minister in the second term of the Fourth Labour Government, I could see very well that its economic and social policies were poorly aligned. For example, as fast as I, as Minister of Housing, could build new state houses in Auckland, people were crowding into the city from other parts of New Zealand, where corporatisation had wiped away jobs, and the rapid removal of subsidies on agriculture had ravished provincial economies. I am not suggesting that inefficient state companies and farm subsidies should have remained in situ, but rather that restructuring does need to be accompanied by measures which redeploy and upskill displaced workforces, and which facilitate the emergence of new industries in the place of the old. Only now is attention being given to that kind of support.
What has often struck me about neo-liberalism is how fundamentally anarchic it is. Neo-liberals relish the withering of the state, except in its coercive powers, which become so necessary to constrain the human wreckage which falls through the cracks of society as a result of their policies.
In the social democratic paradigm, however, the role of the state is critical. But it is not the role of the welfare state pioneers of New Zealand and Sweden in the 1930s, nor for those in Britain in the late 1940s. That era predates sweeping globalisation and the rapid mobility of labour and capital across borders. A nation back in those days was more like a cocoon: economies and societies were heavily regulated, and populations were largely accepting of that.
Those days have gone. Today’s social democrats operate in an environment where it is critical to maintain the confidence of business for the nation’s economic health, and critical to carve out the nation’s competitive niche in the international economy.
At the same time, the nation’s social health must be safeguarded—and, in New Zealand’s case, it cries out for considerable improvement. The new role for the state becomes one of leadership, facilitation, coordination, brokering and in the social policy area of funding and provision. There is also a role—showing through in the work of Industry New Zealand and other initiatives—for active government to support economic development.
The state can define the values which are important in the nation’s development. We also need to be not only innovative and enterprising to sustain economic prosperity in the twenty-first century, but also collaborative, compassionate and inclusive. Those values are not in conflict and, if taken together, can advance the economic and social health of the country substantially.
The challenge which lay before our new government was how to build support for a shared vision in New Zealand incorporating that broad range of values. Government changed hands in New Zealand at the last election precisely because people were looking for a better balance in our national life and for a broader shared vision. The direction we were going in was doomed—ever lower taxes, ever fewer public services, ever more crumbling infrastructure, ever less regulation, resulting, in the end, not in nirvana but in a state of misery for all but the most affluent, who could live behind the high walls they built.
We said we couldn’t change the world overnight but we would like to make a good start. The compass had to be reset in a direction more in keeping with traditional New Zealand values of fairness, security and opportunity. We spent most of the first year in government addressing some of the most immediate concerns: lifting the level of superannuation; restoring income-related rentals for state houses; improving the student-loan system; abolishing bulk funding, a system which was so divisive for education; providing extra funding for elective surgery; raising minimum wage levels; repealing the Employment Contracts Act; reinstating ACC as a social insurance scheme; and raising the top tax rate to help pay for the essential social and economic infrastructure. We defied the conventional wisdom that parties couldn’t win an election if they said they would raise taxes.
In the first nine months after the election, the government’s focus was very much on the delivery up front of those core commitments. Apart from strongly believing that they were the right policies to be implementing, there was another very important reason for carrying them through. One of the legacies of neo-liberalism in New Zealand was the rise in the level of cynicism about the political process. Few people felt that they had ever voted for the policies which formed the dominant paradigm in New Zealand in the 1980s and 1990s. And, indeed, generally they had not voted for them. Eventually, if the act of voting consistently fails to deliver what the popular will wants, indifference to the whole process results and participation declines. Yet participation in society and its processes is itself central to the social democratic vision. Cynicism is very destructive of social democracy.
There is an old saying that without hope the people perish. Our job was to bring hope that things could be different, and, while acknowledging that substantial change would take time, to show that there were things which could be done immediately and which would make the change of direction clear, restoring hope in the political process.
While the change of direction was widely applauded and the government was given full marks for keeping its word, there was a reaction to our programme. It came in the decline in business confidence and in apprehension in that sector that the policy pendulum would keep swinging left to the extreme discomfort of business. That was never our intention. The government was very clearly focused on resetting the compass at a different point, and then in carrying on in a linear direction from there. We believed that it was possible to develop a broadly shared vision around that direction about the future of New Zealand, and to avoid polarisation around extreme viewpoints. To achieve that our style had to be inclusive too, and not set out to marginalise, except at the very extreme, those who had a different perspective but who also wanted a better future for New Zealand.
The style of politics the government has been engaged in has a very clear link to the goal of enhancing participation in society’s processes. The style has seen us engage in a series of conversations with different sectors of society. The origins of those conversations vary. There are those in which we have been engaged for a very long time, for example with the labour unions. That relationship goes back to the formation of the Labour Party in 1916, and policy dialogue there is ongoing. There have also been relationships with many NGOs built up over the years. Then there is the central local government forum, which was foreshadowed before the last election and which has been successful in producing a shared vision for the future of local government.
There is a great deal of contact with Māoridom, and a real desire on the government’s part to develop a partnership model where we support initiatives which come up from the community itself, rather than forcing community initiatives into preordained programmes. Traditionally the approach of government has been to say: ‘have we got a great programme for you’. The strategies which emerge from the community’s experiences, however, have a better chance of working. This is a new way of thinking, and it has not been fully operationalised, but it is the concept the government is endeavouring to follow in its interaction with Māoridom, and it has implications for interaction with the broader NGO sector.
An innovation in the second half of our first eighteen months in government was to find a way to engage business in conversation about the future, and to do so in a way which linked ideas about economic and social progress. The business-to-government forums enabled the dialogue to be established, although a number of other factors have also helped improve the relationship.
First, there was a realisation within business that the doom and gloom talk had become a self-fulfilling prophecy, and that if confidence was talked down investment and spending dropped and nobody benefited.
Second, despite the pessimism, the economy was recovering. Competitive exchange rates fuelled exporting, further aided by good farm seasons and good commodity prices. Unemployment is at its lowest level in thirteen years. New Zealand has just had its first current account quarterly surplus in seven years. The economy continues to grow modestly while other major trading partners face considerable difficulty.
Third, directional changes in areas like accident compensation and industrial law did not result in the worst fears of the business community being realised. For accident compensation, employers are actually paying less overall with the return to the social insurance model than they were before. With the Employment Relations Act, the emphasis on relationship building, good faith and mediation has been very productive. Indeed, I was talking only two days ago to someone on the employers’ side of a dispute who had been engaged in mediation. The mediation had not as yet achieved an outcome, but he was very positive about the process.
Fourth, the credibility of the old hard-line voice of business has suffered because of its destructiveness, culminating in the underhand brain drain publicity designed to embarrass the government. Other organisations, like the New Zealand Business Council for Sustainable Development, have gained traction with their advocacy of the triple bottom line approach to business and the economy which says that economic, social and environmental considerations need to be balanced.
So where to from here? In the past eighteen months, new concepts have become established in the national debate about our future. The concept of the knowledge society conveys an inclusive vision of what New Zealand can be. The government has talked of pursuing a strategy of economic transformation, which to succeed must be augmented and go hand in hand with a social transformation strategy. The vision we have for New Zealand is not only for the nation to be more prosperous per se, but for that prosperity to be linked with fairness, and with more opportunity and security. We won’t improve overall living standards if a significant proportion of New Zealanders is left behind with poor levels of education and low health status, and is badly housed or only occasionally employed.
So, alongside our economic agenda runs a substantial social agenda. Well-housed, healthy families, for example, are more likely to be able to take advantage of educational and employment opportunities. Superannuitants able to live in dignity can make an enormous contribution to the well-being of society, as can others who are not in paid work but who are supported to live in dignity.
We are now building on the early moves in superannuation, housing and health. Having restored the level of superannuation to one able to sustain people so they can participate in society, the planning has moved on to how to sustain in the long term a universal, adequate level of superannuation. The government has developed the concept of saving now to save superannuation for the future. Legislation is before parliament to provide for the long-term financing of superannuation as the number of New Zealanders in older age groups rises. The legislation will pass and, I believe, become part of the fabric of social security provision for the long term.
In housing policy, the government’s first step was to bring back income-related rents for state houses. Now the government is looking at how to link together health and housing initiatives. There has been a very good initiative begun in Auckland suburbs with a high rate of meningococcal meningitis, an illness which thrives in conditions of overcrowded housing. A programme is under way in key suburbs such as Onehunga, Māngere and Ōtara to move families from poor-quality and overcrowded housing into better accommodation. Houses are being modified with improvements like insulation, which is critical to keeping a house warm and healthy.
The public health system is involved in the programme, and works with tenancy officers. Tenancy officers are given instruction on how to recognise illness which might be going undetected, with a particular focus on identifying meningococcal meningitis. There is a recent example of an Ōtara tenancy officer spotting a case of meningitis. The very day she had been on a course as part of the healthy-housing programme she was in a home where the baby showed signs of meningitis. She persuaded the family that a doctor should see the baby and it was soon in hospital with a case of meningitis diagnosed. Doctors told the tenancy worker that if she had turned up two hours later it would probably have been too late for the child.
It is a simple thing to have those who are in contact with the community, in a regular way like a tenancy officer, able to know enough to realise that something might be badly wrong. I thought it was a wonderful and heart-warming story.
The health system is a critical part of welfare state provision. Labour never supported the Americanisation of the New Zealand health system which began in 1991. Commercial boards were appointed to run the system and the community voice was removed from health decision-making. Our vision always was to move back to a collaborative system, with community involvement in decision-making, to set clear health status goals to improve the population’s health overall, to stress equity of access and to enable New Zealanders to live the full course of their natural lives as healthy as possible. That vision was based on the WHO’s ‘Health for All by the Year 2000’. As Minister of Health in 1990, I thought we had a reasonable chance of getting somewhere near that goal. But the year 2000 has now come and gone, without New Zealand making enough progress towards it. The WHO’s approach to primary healthcare, however, remains highly relevant. Primary healthcare cannot be fully effective in the absence of access to education, decent housing, adequate income, employment and a healthy environment, nor without peace and stability.
In the recent past in New Zealand, the conditions for effective primary healthcare were compromised, as the cost of public housing rose beyond the means of low-income households, as unemployment at the beginning of the 1990s rose to double figures in percentage terms, and as beneficiary and superannuitants’ incomes were cut. The Employment Contract Act era saw little upward movement of incomes for the low paid and low skilled, and there was little opportunity to upskill. Those were the years of cutbacks to essential social services, when teachers doubled up their responsibilities as social workers, and when poverty became more widespread, taking its toll especially on children. One particular effect was an increase of dental disease. Until 1991, the number of caries in a child’s teeth had declined very significantly nationwide to on average one at the age of twelve. The growth of poverty in the 1990s saw the rise of caries in children’s teeth. There is also a very direct link between the rise of poverty and the spread of the infectious diseases like meningococcal meningitis.
Health outcomes cannot be changed by health policy alone. We needed to make a concerted attack on those areas where the pre-conditions for effective primary healthcare had been compromised. That reinforced the need for policies like raising the level of superannuation so that it was adequate to maintain older people in good health and dignity, having an enlightened public housing policy with rents which were fair and affordable, raising the minimum wage, and changing the Employment Contracts Act so that workers have a more level playing field on which to bargain. All these policies reinforce a health policy aimed at reducing health inequity. To improve health status, socio-economic issues must be addressed on a wide front.
The first year of the government’s term saw important health legislation setting up the district health boards. Their job is to work holistically to improve the health status of their communities, to work collaboratively with stakeholders and communities, and to provide effective services. There has also been a great deal of heath strategy development. The New Zealand Health Strategy has been released, along with the primary care strategy. A Māori health strategy is out for consultation. There are new goals and objectives being set for Pacific people’s health. A sexual and reproductive health strategy is planned for release in August. The New Zealand Disabilities Strategy has been developed in full consultation with the disability sector and is now being implemented.
In the government’s first Budget, we concentrated initially on reducing waiting times for elective surgery. A very big commitment was also made to mental health. Over the next year and coming years, we are signalling that a major focus will be on primary healthcare. The proposals we have for primary health organisations envisage much more community participation in the planning and co-ordination of services at the primary care level, with the primary health organisations providing a mechanism for funding primary care services. Primary health organisations will need to have credible community input and participation.
The government is also looking at the access to primary healthcare. How could we fund primary care better? We are one of the few OECD countries where people pay significant fees for primary medical care. The public purse pays less than 40 per cent of the total cost of GP consultations over the whole country each year. Most adults pay the full cost of their consultation, and even those entitled to a subsidy are paying over a half to two-thirds of the cost on average. Costs such as these create barriers to timely access and eventually create more demand for hospital services, putting more pressure on secondary services. That is counterproductive. The challenge now is how to improve the funding. Improvements will need to be phased in, and they will be expensive, but it is clear that primary healthcare has to be the focus of much of the new spending on health in the coming years.
In Māori health, there are exciting developments underway. The government is keen to support Māori primary healthcare provision and co-ordination. There are already substantial networks of Māori health planners, strategists and providers. Many are very sophisticated. They deserve to be supported and partnered.
The role of education in the transformation of the economy and the society is obvious. The government’s education policies have a strong equity focus. For the first time, for example, equity funding is being introduced into early childhood education funding. More funding is being put into the Pacific Island early childhood education sector, which has been under resourced. Its early childhood initiatives have found it hard to get registered and thereby qualify for the subsidies that are available. There is increased support for the low-decile schools. The bulk funding reallocation has been very much weighted to those schools, as are the digital opportunity programmes underway at present.
In tertiary education, achieving greater equity of access has been a major concern. That is why we have made student loans more affordable and endeavoured to freeze fees. Also of great interest to the government is improving the quality of tertiary education. You will be hearing quite a lot more in the course of the next year as to how we can stop the destructive competition which drives low-quality rather than high-quality provision.
The government has made skills training a high priority. Industry training is now much better funded, and the new apprenticeship initiatives are popular.
In the twenty-first century our economy needs more educated and skilled people, and more activity along the spectrum of science, research, development, innovation and new ideas for products and services. To develop that spectrum the government is funding centres of excellence in tertiary institutions, has increased funding for science and research, and improved tax treatment of research and development to encourage investment in it by the private sector.
Business incubators are being linked to tertiary institutions to support the commercialisation of research in New Zealand. In a move which complements these policies, the government is co-hosting with Auckland University the Knowledge Wave Conference, which is looking at how New Zealand can become an advanced knowledge society. The Science and Innovation Advisory Council is working on a national innovation strategy and an action plan to implement it.
Our vision for New Zealand also includes the building of a distinct identity around what is unique about us: Māoridom, the substantial Pacific component to our population, and several generations of Pākehā who have made this country their home and who look on the world with eyes quite different from those of the Old World from which our forebears came. We also have many new communities which are contributing to a very diverse society.
I have emphasised today the importance of linking progressive economic and social policy to build a fairer, more prosperous society. Each three-year term in government provides an opportunity to take the steps towards that overall vision. New Zealand can’t go from misery to nirvana in one term of office, but over time we know we can build a better society.