weakened by the ending of the closed shop and
centralised wage bargaining; trade union protest in
1992 was faced down by Bolger’s government.
Publicly owned industries were privatised or
turned into corporations, and the financial sector
was deregulated. Protected markets of farmers and
manufacturers were opened to the winds of com-
petition. State spending was slashed. The break
with an almost century-old tradition of state regu-
lation and welfare was a radical one. Instead of pro-
gressive taxation, which transfers income from the
rich to the poor, high rates of income tax, typical
of the welfare state, were slashed. The shortfall in
revenue was made up by an indirect tax on services
and on everything sold, even food, which hit the
poor hardest.
What endured were the democratic parliamen-
tary traditions and the legal framework of the state,
with the ideal of equal justice for all its inhabitants
of whatever race, religion or ethnic background.
New Zealand had grown from a population of less
than 1 million at the turn of the century to close on
3.5 million in 1992, and enjoyed one of the high-
est standards of living in Asia.
The hardships, deregulation of employer trade
union relations and budget tightening reduced
support for Bolger. In the 1993 elections his
majority was reduced to two. But Bolger’s eco-
nomic policies paved the way for years of strong
economic growth from 1993 to 1996. After the
1996 elections he formed a new coalition admin-
istration with the centrist New Zealand First
Party. In the following year while Bolger was
abroad, Jenny Shipley organised a demonstration
coup that ousted Bolger from the party leader-
ship. She then headed a minority government
in December 1999 as New Zealand’s first woman
prime minister. Economic growth continued
despite the Asian crisis, but the coalition was
steadily losing popularity as it entered the
November 1999 general election. Labour won
the election handsomely and a former university
lecturer, Helen Clark, became prime minister. She
was pragmatic in her approach to traditional
labour policies and described her policies as
seeking a better balance between policies of the
‘head’ such as economic deregulation and of
the ‘heart’, providing targeted welfare that the
country could afford. She expresses her views
robustly and has reasserted some of New
Zealand’s distinctive foreign policy, moving away
from close identification with the US. She
opposed Britain’s and America’s leadership to
wage war in Iraq in 2002 and renewed New
Zealand’s nuclear-free policy. Forthright and
plain-spoken she impressed the electorate which,
in the general election in 2002, gave her party a
large majority (41 per cent) over the National
Party (21 per cent). At home Helen Clark did
not avoid some controversial legislation such as
legalising prostitution for the sake of protecting
the welfare of the women concerned. Though
regarding the link with the Crown outdated,
Clark recognised that the time for making New
Zealand a republic had not yet come. There were
at any rate more important issues to handle.
Immigration is also causing some popular anxiety
and Helen Clark has to be careful in following a
non-racist ‘skills’ approach. A quota system is in
place limiting immigration annually. As long as
the New Zealand economy continues to do well
and adapt to conditions in the new millennium,
becoming less dependent on the export of primary
commodities, the Labour Party will continue
to receive strong support. Important for New
Zealand is the removal of European Union and
American trade barriers. Clark presses New
Zealand’s interests in this respect. New Zealand
is a country that can look with confidence into
the future of the twenty-first century.678 TWO FACES OF ASIA: AFTER 1949
Australia and New Zealand, 2000Population GDP (US$) GDP per head GDP per head, Purchasing
(millions) (US$) Power Parity (US$)Australia 19.1 389,000,000 20,340 25,000
New Zealand 3.8 49,900,000 13,030 13,130