Kōtuitui
New Zealand Journal of Social Sciences Online
Business political activity in New Zealand from 1990 to 2005
Brian Roper
Political Studies
University of Otago
PO Box 56
Dunedin 9054, New Zealand
brian.roper@stonebow.otago.ac.nz
Abstract This article describes the political activity of New
Zealand’s major business associations from 1990 to 2005. Two major
themes are clearly evident in the political activity of business during
this period. On one side, business vigorously opposed any perceived
“rolling back” of the neoliberal policy reforms of 1984–93. On the
other, business just as vigorously promoted further reforms that it
considered to be in its interests, which it equated with those of the
nation as a whole. Government performance in economic management and
policy-making was consistently assessed in terms of whether or not, and
the extent to which, government was maintaining, advancing, or rolling
back key elements of neoliberal policy reform. Two features of business
political activity from 1990 to 2005 stand out: first, the extent of
the neoliberal consensus over all major policy issues; and second, the
marked continuity in advocating the retention and extension of the
neoliberal policy regime for the entire period under review. On the
basis of this investigation, the article concludes that the widespread
scholarly neglect within political science in New Zealand of Marxist
and neopluralist analyses of the role played by business in promoting
neoliberal policy reform is unjustified.
Keywords business associations; business politics; interest
groups; lobbying; Marxism; neoliberalism; pluralism; policy change
INTRODUCTION
This article investigates the political activity of New Zealand’s
major business associations during the period from the election of the
Fourth National Government in 1990 to the re--election of the Fifth
Labour Government in 2005. It draws upon an extensive survey of
business publications, policy submissions, speeches and media releases
in order to describe the neoliberal policy agenda that business has
promoted in New Zealand during this period. It also describes the major
shifts in business perceptions of government performance in economic
management and policy-making. In this respect, the article updates and
extends empirical research that I have been conducting for some time on
business politics in New Zealand (Roper 1990, 1991, 1992, 1993, 2005).
This largely empirical investigation is worth doing because, as
neopluralists and Marxists have shown, business associations are
capable of exercising more influence over government policy-making than
any other set of interest groups (Roper 1993: 148–155, 2005: 88–90).1
Empirical research in the social sciences always rests on analytical
assumptions, whether or not these assumptions are made explicit, that
establish a criteria of relevance in the collection and analysis of
factual information, define the spatial and temporal scope of the
research, conceptualise relationships between cause and effect, and
provide a logically rigorous foundation for evaluation and critique.
This article articulates a theoretical framework derived from Marxism
and neopluralism. This framework contends that antagonistic class
interests propel the activities of class-based interest groups, such as
business associations and trade unions, generating industrial and
political conflict. It outlines why business is generally, but not
always, able to exert more political influence than organisations and
campaigns based in the working class, while recognising that the power
and influence of business associations is always contingent and
contested. These analytical insights are useful in investigating the
extent to which the lobbying activity of business in promoting
neoliberal policies from 1990 to 2005 was propelled by capitalist class
interests and shaped in response to the real or perceived
counter-veiling power of interest groups, movements, and political
parties based in the working class. Finally, this theoretical approach
contends that the shifting balance of power between business and
employer associations, on one side, and trade unions and social
movements, on the other, has an ongoing and frequently decisive impact
upon the direction of government policy-making.
The article is divided into four sections. Section 1 locates the
current study within the context of a wider research programme
investigating the historic shift in politics and policy-making from
social democratic Keynesianism to neoliberalism and the Third Way. It
draws upon the Marxist tradition and neopluralism to articulate a
theoretical framework for studying the political activity of business.
Section 2 provides a brief overview of business political activity from
1945 to 1990 in order to place business political activity from 1990 to
2005 within its wider historical context. Business political activity
during the 1990s is described in Section 3. In Section 4, I provide an
account of the political responses of business associations to the
major policy initiatives of the Fifth Labour Government from 1999 to
2005. The implications of this study for interest group research are
discussed by way of a conclusion.
1. CAPITALISM, CLASS, BUSINESS POLITICS AND THE STATE
This study of business political activity is part of my long running
programme
of research investigating the historical shift in New Zealand politics
and
policy-making from social democratic Keynesianism to neoliberalism and
the
Third Way (Roper 1990, 1991, 2005). My analysis of this shift focuses
on the
highly complex and dynamic relationships between the capitalist
economic system
and social structure, class struggle and the wider patterns of social
conflict
(including business lobbying activity), political parties, the change
in the
prevailing economic orthodoxy from Keynesianism to neoliberalism, the
media
representation, popularisation and justification of neoliberal
“structural adjustment”, and the state.
In order to lay the conceptual foundations of this analysis, I have
drawn upon the classical Marxist tradition, more recent developments in
Marxist economic and state theory, critical realist interpretations of
Marxian methodology, Marxist analyses of white settler colonialism and
labour migration, as well as socialist-feminism, neopluralism, and
neo-Weberian state theory. In addition, I have engaged with the various
economic theories that have been used by successive governments and
their official advisors for economic management and policy-making since
the election of the First Labour Government in 1935. Clearly, it is not
possible to discuss such a wide range of theoretical approaches in the
limited confines of this article. Accordingly, this section focuses on
the key analytical insights developed by Marxists and neopluralists
that are particularly useful in investigating the political activity of
business.
Exploitation and class formation
Capitalism centrally involves the production of surplus-value by
workers and
its appropriation by capitalists (Shaikh 1990). This process of
exploitation
generates a highly unequal distribution of income and wealth, and
propels the
historical formation of a specifically capitalist class structure
(Hayes 2002;
Roper 2005: 33–54). In New Zealand, as in other advanced capitalist
societies, the emergence of the capitalist and working classes led to
the formation of distinctive and conflicting sets of class-based
interest groups, most significantly but not exclusively business and
employer associations on one side, and trade unions on the other. From
this perspective, business associations and trade unions are propelled
by divergent and antagonistic sets of class interests.
Class interests, class conflict and interest group activity
A class interest is a particular course of action or state of
affairs that
is most likely to enable the members of that class to achieve their
common
wants (Giddens 1979: 187). As Giddens argues:
To attribute interests to an actor or actors logically implies
the imputation of wants to them also. Wants (or ‘wanting’) are the
‘basis’ of interests: to say that A has an interest in a given course
of action, occurrence or state of affairs, is to say that the course of
action, etc. facilitates the possibility of A achieving his or her
wants. To be aware of one’s interests, therefore, is more than to be
aware of a want or wants; it is to know how one can set about realizing
them. (Giddens 1979: 189)
This definition enables us to speak of “objective interests”, “for
interests would only be ‘subjective’ … if interests were equated with
wants. Interests presume wants, but the concept of interest concerns
not the wants as such, but the possible modes of their realization in
given sets of circumstances; and these can be determined as
‘objectively’ as anything else in social science” (Giddens 1979). This
is important because, as Callinicos (1987: 129) observes:
these modes of realization will depend crucially on agents’
structural capacities, that is, on the powers they derive from their
position in the relations of production. A worker and a capitalist will
have very different ways open to them of realizing their respective
wants. Determining a person’s interests is thus not, on this
definition, a merely technical exercise… It depends on a rational
assessment of the power that [a] person has to realize his or her
wants, and this power will largely turn on his or her position in the
class structure.
Although collective entities such as classes may not themselves have
interests,
since only persons can have wants, “nonetheless actors have interests
by virtue of their membership of particular groups, communities,
classes” (Giddens 1979: 189). Thus, terms like “capitalist class
interests” and “working class interests” are used here as shorthand for
the interests of members of the capitalist and working classes,
respectively.
Capitalist and working class interests generate conflict for a
number of reasons (Roper 2005: 92–93). Capitalist firms seek to
maximise profits in conditions of market competition by minimising
costs. Thus, employers generally oppose real wage increases,
improvements in working conditions, and the enhancement of employment
security. In contrast, workers generally desire higher wages, better
conditions, and enhanced employment security. Within the sphere of
production, it is incumbent upon management to ensure that the
potential capacity to work for a specified period of time (labour
power), which is what employers actually purchase in the so-called
“labour market”, is actualised in the form of the expenditure of labour
on productive tasks. The exercise of the managerial prerogative that
this requires can generate conflict, especially when it is exercised in
a manner that is perceived by workers to be arbitrary, unfair and
unjustified (e.g., in cases involving unfair dismissal, oppressive
management practices or sexual harassment).
Historically, workers have developed collective forms of
organisation, particularly trade unions, to overcome their
vulnerability as individuals in relation to the collective organisation
of employers in firms, thereby enhancing their capacity to promote
their interests (Hyman & Fryer 1978: 152–156; Offe 1985: 178).
Capitalists have tended to oppose the collective organisation of
workers in trade unions, although during periods of heightened worker
militancy they have favoured more extensive but also more moderate
forms of union organisation over forms of union organisation that are
less extensive but more militant (Roper 2005: 98, 208–209). Thus,
capitalists and workers often have conflicting interests, desires and
concerns with respect to the promotion of, and resistance to,
legislative change in the area of industrial relations.
This is also the case, for different but related reasons, with
respect to other areas of government policy-making such as taxation and
social policy. Major policy changes in these areas are often the
subject of conflict between capitalists and workers because increases
in the government provision of income support to unemployed workers,
solo parents, the sick, disabled and elderly weakens the overall
socio-economic compulsion of the working class majority of the
population to sell their capacity to work for a specified period of
time to an employer in order to obtain a wage or salary. This can,
depending on a range of other contingent historical factors, such as
the rate of unemployment, have the overall effect of strengthening the
bargaining power of workers relative to employers in the labour market.
In addition, workers desire extensive government provision of housing,
health, education, welfare and superannuation because it enhances their
living standards. In contrast, capitalists want government spending in
these areas to be as low as possible in order to undermine workers’
bargaining power in the labour market, and also because it constitutes
a drain on aggregate surplus-value, thus depressing the observed rate
of profit (Chernomas 1983: 3; Roper 1990: 280–281). More obviously,
capitalists want company tax and the top marginal rate of income tax to
be as low as possible in order to maximise net profits and executives’
disposable salaries. This explains the ongoing capitalist desire for
extensive tax cuts to be funded by substantial reductions in social
spending. Finally, a shift toward the privatised provision of social
services such as health and education would open up new opportunities
for profitable capital accumulation.
This is not to argue that capitalist class interests are simple,
static or homogeneous. In reality, these class interests are complex,
dynamic and heterogeneous, although there are significant limits to the
extent of this heterogeneity (Pilj 1984: 1–8). Capitalist class
interests are multidimensional and arise from a number of different
processes.
First, all capitalists share common interests as employers of labour
in relation
to the process of surplus-extraction in the labour process because this
is
the ultimate source of profit in a capitalist economy. Second, various
fractions
of capital emerge from the process of circulation (industrial capital,
commercial
capital, and financial capital), which have distinct and often
conflicting
interests. Third, individual capitalists have distinct interests that
arise
from the processes of market competition and profit distribution. The
differentiation
of the capitalist class that arises from the processes of circulation
and profit
distribution explains why business is often divided over particular
policy
issues. The common interests that all capitalists share as employers of
labour,
and their shared strong commitment to the maintenance of the “free
enterprise” or capitalist system, explains why, despite these
differences, capitalists are capable of acting in a relatively unified
manner during periods of heightened class struggle and/or when
revolutionary challenges to capitalism emerge. (Roper 2005: 90)
Furthermore, the political representation and promotion of these
interests
is also complex because it is highly dynamic, being shaped, among other
things,
by the long-term tendencies and recurrent crises of capitalist
development,
recurrent struggles with workers’ organisations, relationships with
state actors and agencies involved in policy-making, the party
political composition of government, and the impact of global forces in
these areas (Jessop 1983a: 144–149).
As the foregoing analysis suggests, class conflict is a recurring
but by no means constant feature of advanced capitalist societies. The
major overt forms of class conflict are the struggles between workers
and employers over wages and conditions of employment, referred to here
as “industrial class struggle”, and so-called “interest group activity”
in which class-based interests groups such as business associations and
trade unions attempt to exert influence over government policy-making.
Capitalist power versus workers’ power
The growing centralisation of capital ownership through merger and
take-over
activity, which is a central aspect of capitalist development in the
historical
long-term, concentrates a growing proportion of economic resources and
power
in a declining proportion of the total population (Callinicos &
Harman 1987: 30–31; Wright 2000: 44–46; Hayes 2002: 25–27, 202–211).
This, together with the highly unequal distribution of income and
wealth that capitalist exploitation generates, ensures that the
business associations which represent capitalist interests are
generally, but not always, able to exert considerably more influence
over government than any other set of class-based interest groups
(Miliband 1968: 131–160; Lindblom 1977: 170–200; Roper 1993; Mulgan
2004: 315–319). Governments are likely to be receptive to this
influence because the state is fiscally dependent upon the taxation of
profits and incomes generated in the process of capital accumulation
and also because, in the context of increasingly deregulated and
internationally integrated financial and capital markets, governments
that fail to heed the concerns of business may face the prospect of
capital flight (Jessop 1983b: 93).
Not only are these associations better funded, with more
organisational resources and staff than trade unions, they also have
more extensive connections with policy-making agencies (Brosnan et al.
1990: 118–121). In addition, business associations are supported in
their lobbying activity by wider patterns of capitalist influence over
politics and policy-making. Most obviously, this includes regular
corporate donations to political parties. As a former long-standing
Chairman of the Business Roundtable, Douglas Myers, puts it, “cheque
books are always open for political parties, as long as they get things
right” (statement in Barry 2002). Business people also participate
directly in political parties and parliamentary politics, are co-opted
onto official policy-making bodies, and have far greater opportunities
to interact in social settings with politicians than working class
citizens. They can use their wealth to fund advertising campaigns
prompting pro-business policies and the publication of books, policy
documents, pamphlets, and academic research with a pro-business
neoliberal ideological orientation. The extensive and centralised
pattern of capitalist ownership of the electronic and print media, the
reliance of state-owned media organisations upon private sector
advertising for a significant share of their revenue, the capacity of
business associations to produce an endless stream of polished press
releases, and the real threat of legal and/or political flak if a media
organisation is perceived to be anti-business, combine to ensure that
the media functions in ways that maintain the ideological hegemony of
the dominant capitalist class (Carey 1987; Herman & Chomsky 1994:
1–35).
For reasons such as these, the neopluralist Lindblom (1980: 77–78)
is correct to argue that:
Although business modifies its demands somewhat to avoid
collision with electoral demands on government, the principal
reconciliation between the two control systems [business controls
versus electoral controls] comes about by adjusting electoral controls
to make them consistent with those of business. Businesspeople bend or
bring electoral controls into line by themselves entering into
interest-group, party, and other electoral activities and achieving
disproportionate influence on them.
However, the power and influence that capitalists are able to
exercise with
respect to government policy-making is always contingent and frequently
contested
by organisations and movements based in the working class. The Marxist
conception
of class struggle precisely implies a clash between classes with
distinctive
interests, powers, and collective capacities (Roper 2004: 23–27, 2005:
91). Hence, sophisticated neopluralists like Mulgan (2004: 320–322) are
right to stress the fact that, although business is generally able to
exert a disproportionate influence over government policy-making, other
interest groups and the mass of voters in liberal democracies are able
to exert a degree of counter-veiling power. This is because the working
class constitutes a substantial majority of the population in advanced
capitalist societies, which means that governments are constrained,
albeit to a limited degree, by the need to retain the support of at
least a significant minority of the working class electorate (Hayes
2002: 207). The numerical size of the working class means that the
interest groups and movements based in this class generally have much
larger memberships than those of business associations. Thus, for
example, unions had 354,058 members in December 2004, vastly
outnumbering the combined membership of New Zealand’s business
associations (Blackwood et al. 2005: 80). Furthermore, workers are
strategically located in capitalist economic systems, providing the
labour that is an essential prerequisite of production, distribution
and exchange, which means that when workers undertake mass strike
action they can exert tremendous pressure on employers and/or
governments. Finally, the size of the working class means that this
class provides a potential basis for the mass mobilisation of its
members in street protests, such as those involving between 300,000 and
500,000 people who opposed the introduction of the Employment Contracts
Act in 1991 or the mass protests across France in 2006 that
successfully defeated the French Government’s attempt to introduce
Contract of Initial Employment (CPE) legislation aimed at reducing
young workers’ employment rights (Dannin 1997: 146; Coupe & Perrin
2006: 23–54).
The shifting balance of class forces and government policy-making
In an insightful consideration of the relationship between business
and government,
Deeks (1992: 4) argues that the neopluralist conception of business
influence
on government falsely assumes that “the power of business is relatively
stable”, whereas in reality “the political power of business can and
does vary”. In this respect, it can be argued that the classical
Marxist conception of the relationship between business and government
is stronger than the neopluralist conception, because Marxists
emphasise that the outcomes of class struggle, and class-based
political lobbying and mobilisations directed towards the state, are
always historically contingent, being determined by a wide range of
circumstances that, in addition to “the economic situation”, may
include “political forms of class struggle”, “the reflections of all of
these real struggles in the brains of the participants”, juridical
forms and decisions, “political, legal, philosophical theories”, and
“religious views”, in which there is a complex “interaction of all
these elements” (Engels 1975: 394). Furthermore, because Marx (1967:
20) “regards every historically developed social form as in fluid
movement” and therefore was concerned with its “transient nature no
less than its momentary existence”, the Marxist tradition assumes that
social and political arrangements are constantly changing, even if
there is also a considerable degree of continuity with respect to the
institutional structure of the state (Ollman 1990: 32).
From this perspective, explaining major political and policy change
necessitates an empirically and historically grounded analysis of
employers’ organisations and business associations, on one side, trade
unions and social movements on the other, as well as the shifting
relationships between class-based interest groups and social movements
with the key actors and agencies operating within the institutional
ensemble of the state. The changing balance of class forces determines
whether governments adopt reformist policies that incorporate the
demands and aspirations of workers and/or social movements, or
alternatively adopt policies that benefit the dominant capitalist class
and its allies in the middle classes (such as farmers and members of
the higher professions) while simultaneously disadvantaging the working
class majority. In this respect, Marxists and pluralists share a
kindred interest in the empirical study of interest groups because,
despite all of the other substantial differences between these
traditions, both consider that interest group activity profoundly
influences government decision and policy making.
2. AN OVERVIEW OF BUSINESS POLITICS 1945–90
New Zealand’s major business associations, including the Federated
Farmers (FF), New Zealand Manufacturers’ Federation (NZMF), and the New
Zealand Employers’ Federation (NZEF), broadly supported the Keynesian
policy regime that dominated politics and policy-making throughout the
1950s and 1960s. They did so because they enjoyed high levels of
profitability in the conditions of historically unprecedented economic
prosperity from 1945 to 1974.
When the long boom collapsed in the context of the deep world
recession in
1974 and the New Zealand economy entered a long period of stagnation,
the Keynesian
policy regime was increasingly challenged by business leaders. Indeed,
the
lobbying activity of New Zealand’s business associations in the period
from 1975 to 1984 can be viewed as centrally involving a series of
political responses to the prolonged economic crisis, intensified
industrial conflict, and faltering attempts of the Third National
Government to manage that crisis using Keynesian policy instruments.
…These responses centrally involved an ideological shift from
Keynesianism to neoliberalism that culminated in widespread support for
‘free market’ policies during the first half of the 1980s. (Roper 2005:
106–107)
This shift towards advocating free market or neoliberal policy
prescriptions
was a feature of the lobbying activity of general policy-oriented
business
associations (such as the Chambers of Commerce, New Zealand Business
Roundtable
(NZBR), and the Top Tier Group), and also of the NZEF and all the major
sectoral
business associations (with the important but only partial exception of
the
NZMF). Business advocacy of the rapid and comprehensive implementation
of neoliberal
policies had a major impact on the adoption and implementation of
neoliberal
policies by the Fourth Labour Government from 1984 to 1990 (Roper 1990:
ch.
5, 1991, 1992, 1993, 2005). Above all else, business promoted
neoliberal policies
because it considered that these policies would weaken the bargaining
power
of trade unions, placing downward pressure on wages, eventually
generate a
general increase in profitability and create conditions conducive to a
higher
rate of economic growth.
3. BUSINESS POLITICS DURING THE 1990S: PUSHING FOR THE EXTENSION
AND RETENTION OF THE NEOLIBERAL POLICY REGIME
Throughout the 1990s, all of the major business associations
strongly supported
the extension and retention of the neoliberal policy regime. Although
there
is insufficient space to provide a comprehensive survey here, it is
possible
to provide a representative sample of business sentiment as it evolved
through
the 1990s, focusing on the stated policy preferences of the NZMF, NZEF,
NZBR,
FF, and BusinessNZ which was formed out of a merger of the NZMF and the
NZEF
in 2001.2 I will provide an initial
summary of the key components of the neoliberal
policy regime that business wanted the Fifth National Government to
extend
and retain. This will be followed by a more detailed account of
business policy
preferences during the 1990s.
The key areas of the neoliberal policy regime that business wanted
the incoming National Government to extend in the early 1990s were
those pertaining to industrial relations and social spending (health,
education, housing and welfare): “The things left undone by the
previous government were essentially the labour and social welfare
reforms, and the failure to check and reverse the upward spiral of
government spending and taxation” (NZBR 1992a: 50). Business vigorously
advocated anti-union industrial relations reform in order to create
more “labour market flexibility”, and major reductions in state
spending on health, education, housing, and especially welfare.
Following the implementation of the Employment Contracts Act (ECA) and
National’s “redesign” of the welfare state, business began to push for
further neoliberal reform in other areas. This included support for:
the Fiscal Responsibility Act 1994; further reduction of import
protection through the lowering of tariffs; further tax cuts for
companies and high income earners to be funded by a general reduction
in social spending; elimination of the Employment Court with labour
disputes to be dealt with in the civil courts; further privatisation of
state and local body owned enterprises; increasing fees for tertiary
students; the introduction of market rents for tenants in state houses;
and the privatisation of state housing.
Key features of the regime that business wanted to be retained
included: the monetarist macroeconomic strategy, legislatively
entrenched in the Reserve Bank Act 1989 and the Fiscal Responsibility
Act 1994, in which tight monetary policy is supported with fiscal
austerity in order to maintain low inflation; deregulation of the
financial sector; liberalisation of foreign trade; removal of direct
assistance to industry and agriculture; the reduction of tax on profit
and the top marginal rate of income tax for high income earners to 33%;
the introduction of GST (10% in 1986, 12.5% in 1989); and public sector
reform involving the corporatisation and privatisation of state trading
activities, “down-sizing” of the core public service, “user-pays” in
health and education, and financial management reform with emphasis on
financial accountability and performance assessment.
The early 1990s: finishing the previously “unfinished business”
The NZEF successfully advocated the repeal of the Employment Equity
Act by
the incoming National Government only months after it had been enacted
on 1
October 1990. It then led the campaign for the ECA, with the extensive
support
of the business community (including the NZBR, NZMF, and FF), against
the growing
resistance of the working class, in the months leading up to its
enactment.
Along with the NZBR, it also pushed for tax cuts to be funded by
reductions
in social spending and hence actively supported the benefit cuts made
in the
1991 Budget. The National Government obliged by bringing in the ECA on
3 May
1991 and initiating a major “redesign” of the welfare state, including
substantial cuts to welfare benefit rates and a savage tightening of
eligibility criteria. The NZEF considered the ECA to be “one of the
most progressive and effective developments possible for New Zealand
business and industry” (The Employer (TE) Feb 1993: 9).
Furthermore, it stated that the Fourth National Government’s reduction
of social spending
… is positive and represents a major break from the rampant
increases in expenditure in the mid–late 1980s. It is crucial that the
Government continues its review of all spending with the objective of
achieving further significant reductions in overall expenditure, making
those projections a reality. The need to lower the total tax burden, to
a level in line with, or preferably lower than our trading partners, is
essential if New Zealand is to attract foreign investment (TE
Dec 1992: 6).3
The NZEF’s main publication—The Employer—contains innumerable
statements supporting the neoliberal policy regime. For example, “the
structural reforms undertaken have shown that New Zealand will be able
to reach a new level of international competitiveness and performance
based on solid ground. U-turns, deviations and back-tracking will
immediately put into jeopardy the progress New Zealand has made and
will continue to make in the future” (TE Dec 1992: 8).
Federated Farmers also strongly supported the ECA and the cuts to
benefit rates and tightening of eligibility criteria in the 1991
Budget. In the wake of the introduction of the ECA and Ruth
Richardson’s “Mother of All Budgets”, the National President of
Federated Farmers, Owen Jennings, argued that “New Zealand’s economic
restructuring that has occurred and is still needed, is about
export-led growth and recovery, international competitiveness,
balancing accounts, living within means, the incentive to strive and
achieve and agriculture having a fair, low cost environment to
[encourage] a rural-led recovery” (Straight Furrow (SF) 24 Jul
1991: 1). In a similar vein, he argued that “we need realism with low,
locked-in inflation, single digit interest rates for all, a truly
market-dictated exchange rate that reflects the fragility of the
tradable sector, monetary and fiscal policies that enhance price
stability, efficiency through flow of resources towards exporting, a
macro and micro policy thrust that restores international
competitiveness” (SF 24 Jul 1991: 1).
The NZMF considered that the ECA created employment conditions
containing “flexibility that promises a much better base for
productivity growth than anything the nation has had for 50 years” and
“substantial benefits in terms of increased competitiveness and
improved workplace communication” (NZMF Annual Report 1991: 1; Annual
Report 1992: 5). Furthermore, it “supported the general thrust of
the economic restructuring. The need has been and is for fiscal
responsibility, increased productivity, to add value, for inflation to
be below the average of our trading partners, and for increased
exports” (NZMF Annual Report 1991: 1).
The NZBR was the most extreme in advocating anti-union industrial
relations reform and reduced social spending to fund tax cuts for
business and high-income earners (“wealth creators”). It generated a
large number of publications, speeches and submissions in favour of
both, so many in fact that it is hard to cite any particular
publication. From Recession to Recovery, published in September
1992, brings together a representative sample of speeches and
submissions from the early 1990s. Chairman Douglas Myers, who was New
Zealand’s richest individual at the time with estimated minimum wealth
of $700 million (National Business Review 21 Aug 1992: 2),
stated:
By the time the present government came into office in October 1990,
the intellectual
battle was over, the business community was strongly behind radical
change,
the government was clear in its thinking about what needed to be done,
and
had won a clear-cut mandate for labour market reform. Despite this, we
endured
many weeks of fear-mongering and overblown rhetoric from vested
interests and
the chattering classes as the bill moved through Parliament. (NZBR
1992a: 79)
Whereas the “previous [Labour] government had started out boldly,
accomplished a lot, but never got a coherent programme together and
ended up by throwing in the towel”, “the present [National] government
has had the courage to tackle the main outstanding issues, and its
policy framework is now fundamentally sound” (NZBR 1992a: 89). Fellow
Roundtable member, wealthy merchant banker David Richwhite, observed
that “decentralised wage bargaining and competition between unions as
bargaining agents, in combination with [the] substantial reduction in
unemployment benefits and tightening of criteria for benefit
eligibility, are creating a pool of unemployed and discouraged job
seekers. Through this mechanism the pool of unemployed is gradually
exerting a stronger influence on wage-setting behaviour” (NZBR 1992a:
18).
Lobbying for the extension of the neoliberal policy regime
As mentioned above, the focus of lobbying activity shifted after 1991.
First,
all of the major business associations vigorously defended the major
features
of the neoliberal policy regime that were put in place from 1984 to
1991. Second,
the focus of lobbying shifted towards advocating the further
implementation
of the neoliberal policy agenda in a number of areas, the most
important being
taxation, local and central government spending and charges, trade
liberalisation,
ACC, transportation and freight costs, the Holidays Act, privatisation
and
education. These issues were central to the lobbying activity of
business associations
throughout the period from 1990 to 1999 and so are worth investigating
in a
little more depth here. The performance of government in policy-making
during
this period was assessed in terms of whether government was perceived
to be
advancing or retreating with respect to the implementation of
neoliberal policies
in each of these areas.
As the above statements suggest, all of the major business
associations were united, throughout the 1990s, in pushing for tax cuts
for businesses and high-income earners to be funded by cuts in social
spending. Federated Farmers considered that the 1991 benefit cuts did
not go far enough in reducing social spending: “the Government should
again look closely at further reducing the State’s appetite for more of
the nation’s wealth” (Straight Furrow 12 Jun 1991: 2). At the
time of the 1996 election, FF wanted “less government intervention,
that is, less spending and regulation and lower taxes” (SF 2 Sep
1996: 2), and before the 1999 election it urged, “reduce government
expenditure as a percentage of GDP” (SF 18 May 1999: 10).
The NZMF also wanted government “to continue a tight fiscal policy
and to repay debt” (NZ Manufacturer (NZM) Mar 1995: 10). In
1996, it argued, “ongoing government surpluses, the debt reduction
programme and further tax cuts are essential” (NZM Jun 1995: 4).
By the late 1990s, the NZMF was advocating a “3-pronged attack on
government spending and taxes”, arguing that “New Zealanders who earn a
decent wage should be looking after themselves, not relying upon the
government”, and suggesting a $800 million reduction in welfare
spending to fund tax cuts (NZM Feb 1998: 11). Before the 1999
election, it called for “comprehensive tax reform, including tax cuts”
and considered that “both central and local government costs must be
reduced” (NZM May/Jun 1999: 1).
The position of the NZEF on this issue has already been outlined
above: “New Zealand’s total tax burden needs to be slashed by between
one-third and one-half. This necessarily requires a re-examination of
the role of government in society and greater targeting of expenditure”
(The Employer Aug 1998: 7). As with the other associations, the
NZEF became increasingly vociferous on this issue during the second
half of the 1990s. As the CEO Steve Marshall put it, “New Zealand can
not continue upon its path of high taxation and increased government
expenditure” (TE Nov 1998: 4). Before the 1999 election, it
produced a pamphlet entitled Taxes We All Love To Hate Them, in
which it supported the introduction of a flat tax on income at a rate
of 20%, the retention of GST at 12.5%, and opposed progressive
taxation, capital gains, land, financial transactions and wealth taxes
(NZEF 1999).
The NZBR was consistently the most extreme of any of New Zealand’s
business associations in arguing for large reductions in taxation to be
funded by radically reduced public funding for health, housing,
education and welfare (it produced dozens of publications making this
case during the 1990s). In Budgetary Stress published in April
of 1992, it argues that “the share of government expenditure in
national income should be reduced to between 25 and 30 percent by 2000”
(NZBR 1992b: i). This was to be achieved by “significant expenditure
savings in welfare spending”, greater reliance on “private insurance
markets to manage the risk of income losses and additional costs from
retirement, sickness, accidents and natural disasters”, increasing fees
for tertiary education, cutting wages and salaries of state sector
workers, and reactivating the privatisation programme “to realise
efficiency gains and reduce debt” (NZBR 1992b: ii). Reviewing
government performance at the end of the 1990s, it argued that “the
greatest single fiscal problem facing New Zealand is the rise in
government expenditure” and consequently advocated “a medium-term
programme of reducing government spending to below 20 percent of GDP
[to] enable a resumption of the programme of debt and tax reductions”
(NZBR 1999a: 49–50; Harris & Twiname 1998: 96–120).
Most business associations advocated the continued liberalisation of
foreign trade through the reduction of import protection in the form of
tariffs. They also enthusiastically supported successive New Zealand
governments in their efforts to promote free trade through the
negotiation of bilateral free trade agreements, such as CER, and as a
member of bodies such as the World Trade Organisation and Asia Pacific
Economic Cooperation. They actively supported free trade agreements
such as the General Agreement on Tariffs and Trade (GATT) and the
General Agreement on Trade in Services (GATS). Because all of New
Zealand’s business associations are highly supportive of foreign
investment, they also supported the Multilateral Agreement on
Investment (MAI).
The liberalisation of trade was an especially important issue for FF
throughout the decade. It wanted the reduction of tariffs on imports
and especially those that are inputs for agricultural production
(fencing wire, farm bikes, etc.); it advocated “the complete removal of
tariff protection, as soon as practical” (Straight Furrow 12
Jun 1991: 3, Oct 1991: 1). The NZEF and NZBR were equally strident in
advocating trade liberalisation. The NZEF expressed “strong support for
the Government’s efforts to liberalise world trade through GATT” and
stated, “a broad reduction of tariff and non-tariff barriers to trade
in goods is essential” (The Employer Dec 1991: 6). “Both
domestically and internationally”, the NZEF “campaigned strongly
against a proposal that a social clause be applied to GATT”, believing
that social justice “is better addressed through education and
assistance, rather than punitive trade sanctions” (NZEF Annual
Report 1994: 3). “New Zealand will benefit from removal of its
tariff barriers even if other countries do not reciprocate”, argued the
NZBR. Furthermore, “remaining tariffs should be removed rapidly to
capture the earliest possible benefits of improved resource allocation
and efficiency to economic growth” (NZBR 2002: 157). In contrast to the
other business associations, the NZMF provided only qualified support
for trade liberalisation: “We are too small an economy to have the
luxury to ignore what our trading partners are doing to assist their
productive sectors” (NZMF Annual Report 1992: 1). Throughout
the 1990s, it was concerned that “many of our competing trading nations
are reducing tariffs but applying more and more non-tariff assistance”,
meaning that the New Zealand Government’s “low tariff/no industry
assistance policy” has “tilted the playing field against New Zealand
manufacturers” (NZMF 1990: 12). Consequently, it argued for industry
assistance with respect to research and development and export market
development, as well as the continued implementation of neoliberal
policies in order to compensate manufacturers for the declining level
of import protection (Straight Furrow 19 Sep 1994: 15).
The rising cost to employers and the self-employed of the ACC scheme
was a major concern for all the associations surveyed here. They
lobbied successive governments to keep the ACC levies that employers
had to pay to an absolute minimum. Federated Farmers considered that a
“first principles review of ACC is needed”, that ACC should be opened
up to competition from private sector insurers, and that “farmers’
levies are far too high” (Straight Furrow 16 Sep 1996: 4).
Although the NZMF initially supported “the retention of a sustainable
ACC scheme and the no-fault principle”, manufacturers were not willing
“to contribute towards an ACC that is gobbling up increasing amounts of
money”. ACC should be focused “on getting people back to work, not just
giving them compensation”, and “employers need choice over who provides
their insurance, rather than being forced to use a single government
organisation” (NZ Manufacturer Dec 1994/Jan 1995: 1). From the
late 1980s onwards, the NZBR argued with respect to occupational health
and safety that the government’s role should be a “facilitative rather
than direct one; as one of providing ground rules for voluntary,
cooperative solutions to health and safety problems rather than
dictating the solution to these problems” (NZBR 1989: 90). The ACC
scheme should be scrapped, and workplace insurance fully privatised
(NZBR 1992a: 267). The NZEF “in early 1996 joined with eight affiliated
lobby groups, including Federated Farmers, the Insurance Council,
Manufacturers’ Federation and Meat Industry Association, to launch a
campaign for Choice in Accident Compensation” (The Employer Dec
1996: 11). The aim was the privatisation of workplace accident
insurance, enabling employers to “self-insure” with private insurance
companies rather than ACC. In 1998, the National Government obliged by
introducing the Accident Insurance Act that privatised accident
compensation.
With respect to industrial relations, the NZEF and NZBR, with the
support of all the other associations, urged the Government to make
further progress in implementing neoliberal policy in order to increase
“labour market flexibility”. In the years following the introduction of
the ECA, the NZEF became “increasingly concerned at the number of
[Employment Court] rulings that take little or no account of the
realities of the labour market created by the ECA” (NZEF Annual
Report 1994: 12). By 1996, the NZEF joined with the NZBR to
actively campaign for the abolition of the Employment Court (NZBR &
NZEF 1996). NZEF President Simon Holdsworth was “keen to see the gains
made by the Employment Contracts Act continue” and wanted “a review of
the need for the Employment Court. The intentions of the act are being
chipped away by outdated precedent, and many employers believe that
there is a strong element of social engineering in the decisions. This
in turn is having an impact on the Employment tribunal, which is bound
to follow the decisions made in the court” (The Employer Mar
1996: 5).
The NZEF also wanted the Holidays Act to be replaced with
legislation that “is enabling in character rather than the present
highly restrictive statute” (NZEF Annual Report 1994: 12).
“Because it is impossible to make proper statutory provision for the
varying contractual arrangements which exist, an effective Holidays Act
would recognise necessary statutory minima only, leaving the parties
themselves to decide when the holidays provided for would be taken and
how they would be paid” (NZEF Annual Report 1994: 12).
Another major area of concern, arising because of the importance of
transportation and freight costs to all businesses involved in
commodity production, was reform of the waterfront, union strength and
“restrictive work practices” on the Cook Strait ferries, the
unionisation of crews and lack of competition on trans-Tasman shipping,
and the state ownership and inefficiency of railways. For example, FF
was “a leading advocate for significant reform” with respect to the
Cook Strait ferries, waterfront and coastal shipping, in order to
“increase efficiencies and lower costs” (Straight Furrow 7 Aug
1991: 3). The NZMF considered that “reduced freight rates” were needed
across the Tasman, but these could be achieved “only if the union
accord is abolished and the Tasman opened to cross-Traders” (NZMF Annual
Report 1992: 11). The NZEF urged the National Government to
deregulate coastal shipping because “freeing up the coastal trade would
improve New Zealand’s business efficiency” (The Employer Mar
1994: 2) and strongly supported the efforts of Wisconsin Central and
the Government to “smash” the Seafarers Union and de-unionise the Cook
Strait ferries in 1994.
The neoliberal reform of all levels of education by governments from
1984 onwards was strongly supported by business. For example, the NZEF
supported the introduction of bulk funding in secondary schools and
considered that “central determination of contracts and the high level
of unionisation of teachers place constraints on the ability of
[school] boards to be innovative and responsive in terms of managing
staff performance” (The Employer Jul 1995: 5). It also
considered, and still does, that a neoliberal voucher system should be
introduced whereby there is “an individual entitlement to a government
tuition subsidy” (TE May 1995: 14). This means of delivering the
tuition subsidy “better reflects the demand side of the sector, gives
greater responsibility for choice to the consumer, ensures that there
is a competing system of public and private providers in place, and
shows real participation levels” (Ibid). With respect to the governance
of tertiary educational institutions, it rejects “the representation
model”, considers that university councils should “allow for the
inclusion of the CEO but not staff or student representatives”, and
would like to see much greater input from “stakeholders”, that is,
employers, into the management of tertiary educational institutions (TE
May 1995: 15). The NZMF adopted an essentially similar position,
criticising “the extent to which the Government still negotiates wages
and conditions; the teacher unions, rather than the customers, dictate
what is best; and the high level of investment in salaries and wages
compared with modern teaching technologies” (NZ Manufacturer
Dec/Jan 1998: 5). The NZBR was the most extreme, lobbying for fully
privatised and commodified provision of education services that are
purchased by “consumers” (students), with minimal state funding, in
competitive markets (Harris & Twiname 1998: 110–120).
Finally, the privatisation programme, started by the Fourth Labour
Government and continued by the National Government in the early 1990s,
is strongly supported. The NZBR, for example, consistently argued for
the continued sale of state assets because of “the general advantages
which attach to private ownership” (NZBR 1992c: iv). In 1997, the NZMF
was pleased that “Government is revitalising its privatisation
programme” and “reckons it should sell more assets too, to get a higher
tax return for better performing assets as private ownership lifts
their performance” (NZ Manufacturer Jun 1997: 5). Similar
sentiments can be found in the publications and submissions of the FF
and NZEF during the 1990s.
Business perceptions of government performance
Having outlined the major areas where business wanted government to
further
implement neoliberal policies, it is now possible to provide a brief
account
of how business perceptions of government changed during the 1990s.
Shifts
in business perceptions are clearly evident in the publications and
submissions
of the main business associations, and also from the surveys of the
policies
of the political parties conducted by the NZMF and FF before the 1993,
1996
and 1999 elections, in which party policy is assessed on the extent to
which
it is likely to advance, stall or roll back neoliberal reform. In
essence,
business was generally very supportive of the performance of the
National Government
during its first term in office from 1990 to 1993, started to develop
some
reservations during its second term from 1993 to 1996, became
increasingly
alarmed at the stalling of neoliberal reform during the reign of the NZ
First
and National Coalition Government from 1996 until the break-up of the
Coalition
in August 1998, took heart from National’s right-ward turn under Jenny
Shipley during its last year in office, and expressed mounting concern
about the looming installation of a Labour-Alliance coalition
government at the 1999 election.
Several points are worth emphasising here. First, all of these
associations repeatedly defended the neoliberal policy regime against
any softening, let alone substantive amendment, and vigorously attacked
any perceived sources of resistance. For example, in the midst of the
mid-1990s economic recovery, the NZEF acknowledged that opposition to
the neoliberal policy regime existed, “Political parties, trade unions
and other vested interest groups are actively promoting change to some
degree to the Reserve Bank Act, the Fiscal Responsibility Act, the
State Sector reforms and the Employment Contracts Act”, but adopted a
largely dismissive attitude towards it, “Fortunately these various
groups are pretty intransigent in their approaches to most of these
areas with little prospect of agreeing sufficiently to do too much
damage. The one exception to this would be the ECA” (The Employer
Jul 1995: 2). In the same issue it states, “With significant benefits
now being realised from a decade of reform, it is crucial that the
fiscal and economic policies responsible for benefits are maintained” (TE
Jul 1995: 9). The NZEF’s strident support for neoliberal policies
culminated in its “Let’s Not Go Back” advertising campaign in the
run-up to the 1996 election, directed against “major steps backwards or
significant lurches to the left” (NZEF President, The Employer
Dec 1996: 8). A similar stance was taken in its “Growth Campaign” of
1998 (TE Dec 1998: 8). By the late 1990s, the NZEF was just as
vigorously defending the central features of the neoliberal policy
regime as it had in the early 1990s, arguing against “policy u-turns,
uncertainty of policy outcomes and policy paralysis” (TE May
1998: 8).
Second, although business as a whole did not oppose the adoption of
MMP before the 1996 election, by the late 1990s it was increasingly
being viewed as an impediment to further progress being made in
implementing neoliberal policies. Third, business associations perform
an important role in maintaining the ideological hegemony of the
dominant capitalist class, repeatedly presenting the interests of
business as being equivalent to the “public” or “national” interest:
what’s good for business is good for all New Zealanders. Furthermore,
underpinning all of their lobbying activity is the conviction that
business deserves “a clear recognition from the Government that the
private sector is the creator of wealth and the Government’s role is to
create a policy framework in which New Zealand businesses can compete
internationally” (The Employer Jun 1998: 6).
4. BUSINESS RESPONSES TO THE FIFTH LABOUR GOVERNMENT, 1999–2005
Having enjoyed the service provided by pro-business governments from
1984 to
1999, the business community fervently opposed any attempt by the
incoming
Labour-Alliance Government to roll back the neoliberal agenda. This led
to
a series of grossly inflated claims about the extent to which this
government
was returning to the ideas and policies of social democratic
Keynesianism.
Hence, in its editorial reception of the Labour-Alliance Government’s
first budget, the National Business Review heralded the budget
as “a return to old Labour”: “Budget 2000 was a statement of Labour
philosophy, far more in keeping with that of the Savage Labour
government than Kirk or Lange” (NBR 16 Jun 2000:1). Cullen used
his budget speech to espouse “classic Old Labour rhetoric, namely
closing the gap between rich and poor, between wealthy urban New
Zealand and the ‘neglected’ provinces” (Ibid). The NBR notes
that a key stated objective of the budget is to achieve “a fair and
sustainable social and economic order” and considers, overall, that it
constitutes a revival of “the tried-and-failed policies of Kirk and
Muldoon…” (NBR 16 Jun 2000: 1).
Business opposition to the incoming government’s policies focused on
the increase in the marginal rate of income tax for those earning over
$60,000 from 33 to 39%, the repeal of the ECA and introduction of the
Employment Relations Act, the re-nationalisation of the ACC scheme, and
the introduction of paid parental leave.
For example, according to NZEF President, Simon Holdsworth, “The
clear message and opinion from the business sector was that three key
areas of policy initiatives would dramatically impact on growth, namely
industrial relations and the proposed repeal of the ECA, the threatened
reversal of the accident insurance reforms, and taxation. In all these
areas the policies and ideas of the [Alliance and Labour] parties
threaten to roll back all the progress of recent years” (The
Employer Dec 1999: 2). NZEF CEO, Anne Knowles, argued, “Paid
Parental Leave: a big handout for a small group. The proposal that all
employers should pay into a central fund so that a woman could receive
12 weeks paid maternity leave … is yet another example of parliament’s
complete disregard for business” (TE Oct 1998: 1). The Federated
Farmers President voiced farmers’ opposition to the Government’s small
increase in the top marginal tax rate for those earning more than
$60,000: “The marginal rate has increased and new taxes have been
introduced. To encourage productive investment from within New Zealand
and most importantly to attract international investment, we must have
competitive tax rates. Taxes must be reduced not new taxes added”
(speech to FF National Conference, 2002). Furthermore, FF “has serious
and ongoing concerns with Labour and Alliance plans to alter New
Zealand’s industrial relations law and to reverse the ACC reforms” (Straight
Furrow 7 Dec 1999: 19). “Federated Farmers has vehemently opposed
the Employment Relations Act” (SF 22 Aug 2000: 16). Similar
sentiments were expressed by the NZMF:
A significant cut in the rate of business tax is needed—now! …Manfed
believes firmly that low taxes are essential in the creation of an
economic environment that will give New Zealand a clear advantage over
our overseas competitors… A lower business tax rate would create the
right environment for business to flourish… The next goal must be to
reduce the top rate of personal tax to no higher than 25c in the
dollar. Decreases in personal tax provide a real incentive to work
harder, to expand business activities and encourage employment. A
flatter personal regime is also needed. (NZ Manufacturer Sep/Oct
1999: 5)
Furthermore, “Retention of the [ECA] is essential if a flexible
labour market is to be maintained that encourages growth in employment,
and enhances New Zealand’s competitiveness” (Ibid). “A recent survey of
Manfed members shows 100% support for the ACC reforms because of the
opportunity to reduce the cost of workplace insurance” (NZ
Manufacturer Nov/Dec 2000: 11). The NZBR’s response to the
Government’s slight softening of the neoliberal policy regime was
predictably hostile. It considered that “the ERA 2000 was a backward
step” and that “we are also going backwards with tax policies and
welfare” (NZBR 2002: 10–11). New Zealand should establish a minimalist
welfare state based on “US welfare reforms” in which the amount of time
that anyone can draw a benefit is limited and reduce expenditure on
superannuation through the introduction of tighter “income and asset
tests” (NZBR 2002).
Perhaps surprisingly, in light of the vehemence of these statements,
once Labour had implemented these policies and clearly remained
committed to retaining the central features of the neoliberal policy
regime, relations between business and the government warmed
considerably while still remaining strained. As Simon Carlaw, CEO of
BusinessNZ, a new association formed by the merger of the NZMF and NZEF
in 2001, revealingly observes, “Governments want economic growth for
economic prosperity and for their own political prosperity. Businesses
want an environment that’s conducive to economic growth. The exchange
of ideas between government and business is a key feature of the
democracy New Zealanders too often take for granted. … Governments must
act in the knowledge that it is business that delivers economic growth
and pays the bills for the policies they deliver” (In Business
Dec 2002: 3).
NZBR Chairman, Rob McLeod, in a speech delivered in the aftermath of
the 2005 election that is highly critical of the Fifth Labour
Government’s policy-making performance, acknowledged, “to its credit,
it has not fundamentally reversed the post-1984 reforms—indeed its main
legacy may be to have advanced a consensus around them”. Nonetheless,
“it has done little to build on the earlier achievements” (NZBR 2005b:
3). This neatly summarises the broad thrust of business political
activity from 2001 to 2005. All of the major business associations
lobbied the Government intensively to retain the central features of
the neoliberal policy regime constructed from 1984 to 1999, while also
pushing it to reactivate and extend neoliberal policy reform: “Economic
progress doesn’t pause for breath, and nor should the economic reform
process” (NZBR 2005c: 3). Indeed, one of the remarkable features of
business lobbying during this period is the strong continuity of
business lobbying from the 1990s into the 2000s and, as this suggests,
the continuing prevalence of a neoliberal policy consensus amongst
business associations and leaders.
Before the 2005 election, BusinessNZ, which claims to be “New
Zealand’s largest business advocacy body” representing “56 national
industry associations, with a combined membership of some 76,000
employers in the private sector”, together employing around 80% of
private sector employees, released a pamphlet entitled The Seven
Pillars of Growth (BusinessNZ 2005). This publication neatly
summarises the broad business policy agenda, with most of its key
points being shared with the other major business associations. At the
core of this agenda is a desire for the Government to substantially
reduce government “spending (including Super Fund assets) to less than
30% of GDP by 2010” in order to enable it to reduce direct taxes on
high income earners and the rate of company tax “to 30% immediately and
to 20% over time” (BusinessNZ 2005: 10; see also BusinessNZ 2002: 5).
Echoed in multiple submissions and publications by the Chambers of
Commerce (2003, 2005), FF (2003: 2), and the NZBR (2002, 2005a,d,
2006), this point was further reiterated in a joint press release of
these three organisations on 5 April 2006 where they advocated “a
lower, flatter tax structure”. Tax cuts for the rich and for business
are justified in standard neoliberal terms; they “would benefit
investment, employment, productivity and economic growth in New
Zealand; improve the international competitiveness of New Zealand’s tax
structure; and be fiscally responsible” (NZBR 2006). “To minimise the
inefficient impacts of taxation it is crucial that the overall level of
taxation is low”, as FF (2003: 5) puts it. The drastic scale of the
cuts to social spending that would be required to fund these tax cuts
is consistently downplayed.
As could be expected given their fervent opposition to the passage
of the ERA in 2000, all major business associations opposed the
Government’s Employment Relations Amendment Act 2004 (ERAA). For
example, BusinessNZ opposed amendments aimed to address the issue of
employers passing on union negotiated improvements in wages and
conditions to non-unionised employees (ERA 2004 sections 59A–C and 63A,
Part 6B), insisting that the “ERA be amended to allow freedom to choose
either individual or collective bargaining” and that the “union
monopoly over collective bargaining”, “imbalance of power”, and
free-riding clauses be removed from the ERA (BusinessNZ 2006: 3). It
also wanted the “Holidays Act simplified, and ‘relevant daily pay’
replaced by ‘ordinary pay’” (BusinessNZ 2006). The Health and Safety in
Employment Act should be modified to remove the “employer guilty until
proven innocent” bias of the Act and the Act’s ban on employers
insuring themselves against fines for safety breaches (BusinessNZ
2006).
The New Zealand Retailers Association (NZRA) expressed similar
sentiments in its substantial submission on the ERAA (2004), as did the
Chambers of Commerce and Industry, FF and the NZBR in their press
releases, speeches, and publications. The NZRA was particularly
concerned about restrictions on fixed term employment and increases to
the minimum wage (NZRA 2004: 2, 2005). Although BusinessNZ and the NZRA
continued to oppose the Government’s paid parental leave scheme, they
were supportive of the extension of paid parental leave to the
self-employed proposed in the Parental Leave & Employment
Protection Amendment Bill (NZRA 2006). All of the above-mentioned
associations opposed employment equity with respect to gender being
addressed by anything other than a scheme for employers that would be
voluntary and self-directed.
Tax cuts and pro-employer “labour market reform” form part of what
BusinessNZ refers to as the “business friendly environment” it
considers the Government should be trying to create. Such an
environment can be created if the Government also amends the Resource
Management Act (RMA) to prevent “trivial and ideological claimants”
from stopping “legitimate development” and to reduce compliance costs
for business, abandon carbon taxes, restore “choice … to ACC
legislation, so businesses are free to choose private accident cover
[for their employees] if they wish”, maintain wherever possible
“voluntary industry-led (self) regulation of industry”, and introduce
“a Regulatory Responsibility Act to complement [the] Reserve Bank Act
and Fiscal Responsibility Act” (BusinessNZ 2006: 4). The latter would
guard against “regulatory policies that … unnecessarily increase costs
for businesses or harm their ability to respond rapidly to changing
market circumstances” (BusinessNZ 2006).
New Zealand’s business associations have become increasingly
concerned, especially in the wake of the 1998 power outage in Auckland,
about underinvestment in the economic infrastructure. Far from
acknowledging the role that extensive privatisation has played in this
regard, BusinessNZ (2005: 4) advocates “privatisation of more state
owned generators, to get more competition and lower electricity
prices”. In common with the other associations, it also advocates
reduced emphasis on rail and public transportation and increased
“expenditure on roading as a percentage of GDP” (BusinessNZ 2005). RMA
consent processes should be “streamlined to reduce delays in building
infrastructure” (Ibid). The Government should ensure “faster upgrading
of the Transpower grid to improve certainty of power supply” (Ibid).
As well as the policy changes mentioned above, business considers
that “the Government [should] sell-off its remaining commercially run
enterprises”; withdraw from the Kyoto Protocol on climate change,
described by the FF as “another plague on the farming community” (FF
2003: 5, 2002: 4, press release 17 Jun 2006); and continue to pursue
bilateral and multilateral free trade deals in order to increase
external trade as a percentage of GDP (BusinessNZ 2005: 16). In this
vein, the Government should also push for general free trade agreements
in the WTO, commit itself “to policies that would enable a free trade
agreement with the US”, and encourage increased foreign direct
investment (BusinessNZ 2005). It should introduce “greater [tax]
deductibility for R&D [research and development] and capital
investment”, increase industry training, spend less money on tertiary
education “courses with low relevance and value to the economy”, and
ensure that there are “enough immigrants with relevant skills and good
English to meet business needs” (BusinessNZ 2005: 12–14).
The NZBR considers that the MMP electoral system is preventing
government from introducing further neoliberal reform: “By its very
nature, MMP is a system that produces weak and paralysed governments
and thwarts necessary reforms” (NZBR 2005b: 5). Furthermore, it
contributes to higher government expenditure (“proportional voting
systems tend to increase government spending by about 5% of GDP”) and
inhibits investment: “The spectacle of a New Zealand government having
to be supported by four or five smaller parties hardly gives
investors—domestic or foreign—confidence in the country’s directions”
(NZBR 2005a: 8, 2005b: 5). Thus, MMP is “condemning [New Zealand] to
economic mediocrity” and a fundamental review of it is called for (NZBR
2005c: 7).
CONCLUSION
Business political activity, including lobbying, public campaigning
and proselytising,
funding policy research with a pro-business ideological orientation,
participation
in political parties and official policy-making bodies, exchanging
ideas with
Treasury and Reserve Bank officials, and exerting influence over the
media,
played a key role in the historic shift in policy-making from
Keynesianism
to neoliberalism. The Fourth Labour Government rapidly and
comprehensively
implemented neoliberal policies from 1984 to 1990 but it left two key
areas
of the neoliberal policy agenda unimplemented: it had failed to
“redesign” and “downsize” the welfare state and introduce industrial
relations reform that would increase so-called “labour market
flexibility”. When the Fourth National Government was elected in 1990
with strong business backing, it proceeded to make major policy changes
in these areas via the 1991 “Mother of All Budgets” and the Employment
Contracts Act (ECA). These initiatives, both of which had been actively
promoted by all of New Zealand’s major business associations before the
election, were strongly supported by them, against mass opposition to
the benefit and superannuation cuts and the ECA, throughout the early
1990s. Business was generally very happy with the National Government’s
performance from 1990 to 1993.
Once the key elements of neoliberal “structural adjustment” had been
implemented, two major themes became evident in the political activity
of business. On one side, business -vigorously opposed any perceived
“rolling back” of the neoliberal policy reforms of 1984–93. On the
other, business just as vigorously promoted further reforms that it
considered to be in its interests, which it equated with those of the
nation as a whole.
Government performance in economic management and policy-making was
consistently assessed in terms of whether or not, and the extent to
which, government was maintaining, advancing or rolling back key
elements of neoliberal policy reform. This helps to explain why
business was concerned about, and critical of, the performance of the
National-NZ First Coalition Government from 1996 to 1998, pleased to
see the coalition collapse and Jenny Shipley takeover as Prime Minister
from 1998 to 1999, horrified at the prospect of a Labour-Alliance
victory, fervently opposed to Labour’s very minor roll back of aspects
of neoliberal policy reform in 2000–01, and strongly advocated further
neoliberal policy reform from 2001 to 2005. However, despite some small
shifts in business thinking about policy issues, and the existence of
differences of opinion and emphasis with regard to some policy issues
within the business community, two features stand out above all others:
first, the extent of the neoliberal consensus over all major policy
issues; and second, the marked continuity in advocating the retention
and extension of the neoliberal policy regime for the entire period
under review.
As this article shows, business vigorously lobbied government in all
major areas of public policy. In view of this, one could expect those
undertaking research into interest group activity to seriously address
the issue of business influence over government policy-making. However,
much writing on interest groups and interest group influence on public
policy in New Zealand continues to be doggedly committed to a broadly
classical pluralist theoretical and ideological orientation, with the
notable exception of Mulgan’s (1993, 2004) sophisticated and valuable
neopluralist analysis. Thus, Tenbensel (2006), in a chapter which
appears in the most widely used New Zealand politics textbook, blithely
assumes that a wide range of “sectional” and “promotional” interest
groups can exert effective influence on government policy-making.
Although there is a brief reference to Lindblom’s argument that
business is able to exert a disproportionate influence on
policy-making, this insight is in no way integrated into Tenbensel’s
(2006: 529) analysis. Rather, he draws upon the arguments of
neo-Weberian state theorists to argue that government “may choose to
involve interest groups when and where it suits, but the choice to
include or exclude is more a reflection of government’s power rather
than a reflection of the power of the interest groups concerned”
(Tenbensel 2006). In this vein, he argues that “New Zealand’s political
institutions also make it possible for governments to marginalise
interest groups from the political and policy process” and further that
“between 1984 and 1999, New Zealand’s political elite took on board the
view that the role of interest groups in the political process should
be minimised” (Tenbensel 2006: 530, 532).
This argument ignores completely Mulgan’s (2004: 212) point that,
although governments from 1984 to 1999 deployed rhetoric derived from
the neoliberal view that the duty of government is “to resist all
interest-group pressure and to stick to implementing the market liberal
view of the public interest”, governments actually only resisted the
influence of the interest groups that opposed neoliberal policy reform.
This means that
… in practice [the neoliberal view] leads to even greater
political inequality. It does not remove interest group activity
altogether but simply displaces it. It gives even greater power to
those sections of society … most able to identify their particular
sectional interests with the particular view of the public interest
favoured by international financial markets. (Mulgan 2004: 231)
Far from diminishing, as Tenbensel falsely implies, the activity of
interest
groups actually intensified greatly. As this article demonstrates, and
Mulgan
(2004: 222) also observes, “throughout the restructuring process, the
vigorous public support of sympathetic interest groups, such as the
Business Roundtable, the Employers’ Federation and the Chambers of
Commerce, was an important factor in sustaining the governments
momentum”.
Although placing greater emphasis on business influence on
government policy-making, Shaw & Eichbaum (2005: 181–182) and Wood
& Rudd (2004: 166–167) also largely ignore the important body of
work that highlights the crucial role played by New Zealand’s major
business associations in promoting and then defending neoliberal policy
reform from 1984 to 1999.4 Of course,
these authors are perfectly entitled to disagree with the broad thrust
of this research, providing as it does both theoretical and empirical
support for neopluralist and Marxist interpretations of
business-government relations and business influence over
policy-making. To simply ignore it, however, is indefensible. In
opposition to the blinkered state of much New Zealand writing on
interest groups, the third and final aim of this article has been to
encourage more intellectually honest and open-minded research into
business associations and the extent of their influence over government
policy-making.
ACKNOWLEDGMENTS
I thank the two anonymous referees for providing useful comments on
an earlier
draft, and also those who commented on this paper at the NZPSA 2006
conference.
An Otago University Research Grant in 2003 enabled me to employ Lynda
Cullen
as a research assistant. She collected a large amount of primary
material,
only a small fraction of which is discussed here. I thank Lynda for her
efforts
and the university for the grant. Finally, my appreciation goes to
Rebecca
Stringer for providing a rigorous and constructively critical reading
of the
penultimate draft.
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1 However, it is important to note that
a rigorous assessment of the extent of business influence over
government policy-making is beyond the limited scope of this article,
as is a detailed consideration of government-business relations. I have
done the former in a recent more substantial publication and do not
want to repeat that discussion here (Roper 2005: xix–xxii, 87–116,
239–241).
2 An anonymous referee suggested that
the article should be reworked to include a consideration of New
Zealand Businesses for Social Responsibility, established by Auckland
businessman Dick Hubbard in 1998, which merged with the Auckland
Environmental Business Network to form the Sustainable Business Network
in 2003. In my view, these groups have not had a sufficiently
significant impact on government policy-making to warrant a detailed
consideration here. For a brief discussion of the NZBSR, see Harris
& Twiname (1998: 146–168).
3 For ease of reference, wherever I
refer to the magazines produced by the major business associations, I
follow the following convention: the full title is given when it
appears for the first time in a paragraph, an abbreviated version
follows thereafter in the same paragraph.
4 This includes: Cronin (2001:
370–418), Deeks (1992, 1997), Fraser (2006), Jesson (1987: 116–134,
1999: 11–16), Harris & Twiname (1998), Hope (1991: 298–382), Murray
(1989), Roper (1990, 1992, 1993, 2005: 87–118).
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