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Any hope after the Rugby World Cup?

By Duncan Graham - posted Tuesday, 25 October 2011

The day after the All Blacks won the Rugby World Cup was a public holiday in New Zealand  – Labour Day. That was fortunate. The break provided a useful buffer between the fantasy of the last six weeks and returning to reality in a country that may be tops in rugby but is rapidly heading towards becoming the Ireland of the South Pacific. While preliminary games were underway the NZ economy was being kicked apart by two international credit agencies. Standard and Poors and Fitch Ratings dropped the nation’s rating from AA+ to AA.

When the news came through Prime Minister John Key was joking his way through a commercial radio chat about his family life - but didn’t mention politics and the economy.  As usual he caught the national mood correctly. There were far more important issues on the agenda than bankers’ opinions, and all were focussed on an oval ball. But as fans wake from the euphoria of winning in a tough sport they are now faced with losing position in the brutal world of fiscal credibility. The tsunami of commentaries and clichés has receded: now we remember that the event cost us NZD 40 million to stage.

Not all the wounds being suffered by NZ have been self-inflicted by the National government during its first three years in office. Last year a mine explosion killed 29 men on the west coast bringing personal anguish and a blow to coal exports. Also unforeseen was this year’s 22 February earthquake, which devastated the nation and Christchurch CBD and killed 181. The compensation and repair bill could touch NZD 30 billion – that’s more than NZD 7,000 for every citizen.


Rebuilding the South Island city will kick the economy ahead – but work hasn’t started. Tremors continue and the insurance industry is shying away from doing business. Also reluctant to return have been the holidaymakers. Tourism jostles the dairy industry for prime place as NZ’s overseas income earner. Equally unexpected was the October grounding of the Liberian registered freighter Rena in the Bay of Plenty. It continues to spew oil and tumble containers into the ocean, threatening NZ’s clean and green image.

Who’ll pay? That’s still in dispute, but be sure the taxpayers will be in the front line. The grounding on a clearly marked reef has dragged attention away from the plight of rugby players with gammy groins and knackered knees to the issue of government regulation, coastal shipping, and foreign fishers. Despite unemployment at 6.5 per cent and a youth rate of up to 25 per cent in some rural areas, foreign charter ships are allowed to employ overseas crews, process the catch in China and market it as ‘Produce of NZ’. Last year six men lost their lives when a Korean boat sank. This year almost 40 Indonesians jumped ship alleging brutality, vile conditions and late pay with rates about a quarter of the national basic wage.

Not that incomes in NZ are worth celebrating. The legal minimal rate is NZD 13 (AUD 10) an hour, which is less than two-thirds of the floor salary in Australia. With no tax holiday for the lowest paid, GST of 15 per cent on everything, and few job vacancies it’s no surprise about 3,000 Kiwis quit their homeland every month to take up work and residency in Australia. Astute managers might have predicted the collapse of several finance companies in the poorly regulated industry, including South Canterbury Finance. The government had to pay out NZD 1.7 billion to investors under the retail guarantee scheme. It’s not that the economy has been grossly mismanaged during the past three years – instead it’s been cruising along with little apparent interest in the charts or what other helmsmen have been doing. Much like the Rena.

Awash with these and other damaging experiences it would be reasonable to assume the government would be on the rocks and about to sink at the election on 26 November. But this event isn’t likely to be an edge of the seat nailbiter like the French-All Blacks final. Unless there are political upheavals of the size of the Christchurch quake (PM Key quits to work in Aussie), the Nationals will continue to lead the country through the next three years.

There are several reasons. Labour in opposition has been directionless after nine years in power under the tough disciplinarian Helen Clark, now with the United Nations in New York. Her successor Phil Goff is a pleasant but bland career politician who’s held so many portfolios in the past that he’s embedded in the governance of the nation. Meanwhile former currency trader and self-made millionaire Key comes across as the accidental politician, unshackled by ideology, unskilled in the dark arts of dissembling, overall ‘not a bad bloke’. 

Apart from being a former All Black there’s no higher accolade in the NZ pantheon. More than smiles and waves will be needed in the future as NZ continues to sail deeper into the red. The net foreign debt is now NZD 45,000 per person and rising.  No political parties have any solid policies for getting into clear water and the election looks set for a contest of meaningless slogans.


Public service cutbacks will continue, but that shouldn’t damage National as most government workers vote Labour. Key has been tinkering with the idea of selling down some state-owned assets and allowing mining in national parks. Though neither idea has been pursued with enthusiasm that might change if the Nationals win convincingly and don’t need minor party support.

In this likely situation Kiwis unsympathetic towards National, and who’ve been distracted by rugby, might now be moved to focus on another area where they’ve won international acclaim – leading the world in social justice. NZ was the first country to give women the vote, introduce the eight-hour working day and cradle-to-grave welfare. Despite the country’s huge debt it still gives all over-65s a pension without an asset test.

The Treaty of Waitangi between Maori and the British was signed in 1840 – Australia is still wrestling with the idea of something similar with its Aboriginal citizens. Kiwis got a Bill of Rights in 1990 – Aussies are still waiting. But if NZ’s best and brightest are heading across the Tasman because they despair of a decent future in their homeland, who’ll be left to lift wages, clean up the fishing industry, boost the economy and seize the moment created by winning the World Cup?

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About the Author

Duncan Graham is a Perth journalist who now lives in Indonesia in winter and New Zealand in summer. He is the author of The People Next Door (University of Western Australia Press) and Doing Business Next Door (Wordstars). He blogs atIndonesia Now.

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