Chris Trotter argues if Jacinda Ardern is able to successfully lead New Zealand through the coronavirus pandemic the Labour Party might finally be able to shake-off the neoliberal monkey on its back

Chris Trotter argues if Jacinda Ardern is able to successfully lead New Zealand through the coronavirus pandemic the Labour Party might finally be able to shake-off the neoliberal monkey on its back
Jacinda Ardern by Jacky Carpenter.

By Chris Trotter*

Watching Jacinda Ardern interacting with Labour Party conference delegates always riled me. Her easy manner, self-deprecating humour and uncanny knack for pitching herself perfectly to her audience’s mood, always struck me as too unclever by half. The fault was mine, of course, I was looking constantly for evidence that Labour had attracted an effective politician who hadn’t yet swallowed – and had no intention of swallowing – the neoliberal Kool-Aid. To my ears, at least, Jacinda wasn’t the one. “Yeah, yeah, yeah,” I’d acknowledge wryly, “she sure can talk. But what does she actually say?”

Watching the live broadcast of the Prime Minister’s press conference on Saturday afternoon (14/3/20) showed me, yet again, how seriously I had misjudged Jacinda Ardern. There, again, was the easy manner and the self-deprecating humour, More importantly, there was that same uncanny knack for pitching herself perfectly to her audience’s mood. This time, however, the audience was the whole nation, and its mood was one of anxiety – bordering on naked fear. Seldom has New Zealand had more need of a leader who “sure can talk”. Moreover, no one listening could dispute that the things she was saying were important. Really important.

The unfolding Covid-19 Pandemic represents the most serious threat to New Zealand since the very real possibility of Japanese invasion in 1942. That threat was averted by the intervention of the United States Navy; first in the Battle of the Coral Sea, and then over the tiny Pacific island of Midway, in May and June of 1942. No such assistance can be expected from the United States on this occasion. Indeed, watching President Donald Trump’s press conference on Saturday morning inspired only feelings of dread and intense sympathy for the American people. Uncle Sam is not about to sail to New Zealand’s rescue in 2020. This time we are going to have to save ourselves.

For the first time in 80 years, this country is going to have to put itself on something very close to a war footing. The decision to effectively shut down the New Zealand tourist industry will dam-up one of the economy’s most lucrative income streams and cut off the flow of dollars to a host of other sectors. If tens-of-thousands of New Zealanders are not to lose their jobs, a truly massive injection of public funds – initially in the form of wage subsidies – will be required. How long this solution will remain fiscally sustainable, however, is a question that must be testing the conventional wisdom of Grant Robertson and his advisers. Holding up close to a quarter of the economy will cost a huge amount of money.

The wartime governments of Mickey Savage and Peter Fraser paid for the Dominion’s soldiers, sailors and airmen by raising taxes and selling (very aggressively) war bonds. The eye-watering cost of raising and maintaining an army, navy and air-force was, however, greatly assisted by the United Kingdom’s insatiable demand for meat, dairy products and wool. Guaranteed income: from taxes, bond-sales and agricultural exports; made the ongoing and massive expenditures of World War II feasible. Are these same options available to us in 2020?

The short answer is: they must be. As a nation, New Zealand simply will not get through this crisis in one piece if it fails to answer the urgent need for an immediate and massive redistribution of wealth from those whose financial position is reasonably secure to those whose position is not. This is more than a matter of straightforward social justice. Covid-19’s effects will be made much more severe by placing a significant portion of the population under acute financial stress. The virus kills those whose immune system is compromised: increased stress equals increased death.

There is one fiscal measure that could free-up tens-of-billions of funds to help carry New Zealanders through the crisis. Rather appropriately, it involves the Accident Compensation Corporation.

At present, ACC is a fully-funded scheme. It did not start out that way. Originally, ACC was a pay-as-you-go scheme, which collected “only enough levies during the year to cover the cost of claims for that particular year”. It was transformed into a fully-funded scheme in 1999 to accommodate the National Government’s plans to privatise accident compensation.

I have it from the mouth of no less an authority than the scheme’s architect, Sir Owen Woodhouse, who confirmed for me at a function in 2012, that returning ACC to pay-as-you-go would free up the tens-of-billions of dollars amassed over 20 years to satisfy the ideology-driven requirement to fully-fund the scheme. When I asked what use he would make of such a vast sum, he suggested refilling the coffers of the EQC – emptied out by the Christchurch earthquakes. Covid-19 is not an earthquake, but its deadly consequences will test New Zealand no less severely.

Getting us through the Covid-19 crisis will require the Ardern-led Coalition Government to step away from the conventional neoliberal “wisdom” that has dictated the policies of successive New Zealand governments since 1984. The Finance Minister, Grant Robertson, will have to overcome his innate caution and reach well outside the Treasury box for innovative solutions to the crisis.


The world is changing fast and we now need your support more than ever. Quality journalism is expensive and in these very troubled times our ad revenues are becoming very uncertain. We provide our coverage free to readers, and if you value that, we ask that you Become a Supporter. To do that, either click on the Red button below, or on the Black button at the top of this page. The level of your support is up to you. Thank you. (If you are already a Supporter, you're a hero.)


If it is wise, the National Party Opposition will also step out of its comfort zone: setting aside all political negativity and offering its full co-operation to the Government. A shrewd Simon Bridges would remind the Prime Minister that the last time New Zealand faced such an existential threat, Labour and National joined forces in a wartime coalition. Surely, the scale of the threat posed by Covid-19 requires no less? Politicians of every stripe should set aside their differences for the good of the country. Naturally, many in National would be fearful that such a gesture would leave them invisible in Jacinda’s shadow. But not co-operating with the Government leaves National facing an even bigger threat. Being seen as a bunch of opportunistic and unpatriotic wreckers.

Regardless of whether the Government and the Opposition rise to the occasion, the Covid-19 Pandemic will leave in its wake a profoundly changed New Zealand. The central fact of this country’s history, that only the New Zealand state is large enough to guarantee the welfare and safety of its citizens, will have been demonstrated beyond rational refutation. The social solidarity called forth by the crisis will lay bare the narcissistic sociopathy at the core of neoliberal thought. Employers and workers will once again acknowledge the symbiotic nature of their relationship. And, the direct personal experience of being caught up in vast historical events beyond their control will give younger New Zealanders a new perspective on what it means to be human and vulnerable.

Finally, the carefully nurtured belief that the state is not only the enemy of efficiency and effectiveness, but also of individual freedom and initiative, will be laid to rest. Far from being exposed as the people’s enemy, the present crisis will cause the state to be recognised for what, historically, it has always been: the institutional expression of human interdependence: the place where everybody comes together and nobody gets left behind.

This is the shift which Jacinda Ardern, with her undisputed empathy, and her uncanny sense for the needs of the moment, has the opportunity to both inspire and oversee. If she is able to lead the New Zealand people successfully through the dark valley of the Covid-19 Pandemic and out the other side, then her party will at last be in a position to shake-off the neoliberal monkey on its back.

As the Federal Government intervened decisively in the financial crisis of 2008-09 to rescue the commanding heights of American capitalism, the cover of Newsweek magazine itself made headlines all around the world. Seeing the head of the Auckland Chamber of Commerce make common cause with a representative from the First Union, to secure massive state support for Covid-19 afflicted businesses and their workers, I couldn’t help recalling the words emblazoned on Newsweek’s front page:

“We are all socialists now.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

38 Comments

Which one is better? government controlled economy Vs private sector controlled economy (knowing that in practice you will never get a pure government controlled or private sector controlled economy but a hybrid which may lean more this or that way)? why?

Believer you have in the past argued strongly for capitalism. What are you arguing for now? The Government's role is to regulate to prevent individual excesses. as we know an overenthusiastic Government going too far is just as dangerous. Finding the middle ground should be the goal - unrestrained capitalism doesn't work just as much as too much socialism. Middle ground balance is required.

I agree with balance. However, I lean more towards personal freedom. I come from a background that a government could have decided what I could read, what I needed to wear, what I could eat and drink etc. My personal experience have resulted in me being vary of government control (or any other form of dominant social structures like organised religion groups).
Bottom line is I am a huge fan of a democracy that is committed to freedom of speech and respects choice. I have clean examples of North Vs South Korea and East vs West Germany in mind. While neither West Germany and South Korea have ever been heavens on earth, they were much better than the alternative.
Who do you think will be more successful holding their government to account? a state dependent nation? or a national that provides that tax income to the state? State controls inevitably leads to cronyism, political power becomes a cast system, and the state dependent people becoming too weak, too timid, too corrupt, too brainwashed, too scared to do anything about it until the absolute inefficiency of the system results in its collapse.

I think you and i might be arguing for the same thing believer - a strong democracy. This would be shaped by active, credible media that is not afraid to challenge Government, a government that is truly transparent and accountable to the people (not just to the electoral cycle), and above all a Government that recognises that it serves all the people not just the rich and powerful.

All three of those points need work in NZ, but do not forget that NZ is in the top 20 of functional democracies in the world, so we are better at it than most. But that is a precarious position as any one politician can tip us in the wrong direction.

A government that represents the people and is not captured by (for example) banks.

There is zero correlation between capitalism and a socialist one (which should only be considered in terms of economics), and personal freedoms and/or a lack of them, which can apply to either side. In fact, if you have a little bit closer look, especially at the right wing conservative side (unashamedly capitalist) and tell me what the general view is of marriage equality.
I am not at all sure how you think a nation and its society should function without taxes, though

Wise words from experience.

Covid 19 has laid bare that 50 years of moving away from the gold standard of money brought about unfair wealth distribution, which has been very corrosive to the (health and) wellbeing of communities. Health problems on this scale are a great leveler, and one can only hope the greedy few who have been in charge (and those who enable them) get a clip round the ears and more.

Their neoliberal experiment is now over.

,

W already have a government controlled economy. If it's not in Wellington the Government has no capability or desire to deliver transformative infrastructure. It will, however, tax you for the privilege of hearing them talk about maybe doing it.

ACC fully-funded?

How much is in shares?

But it is the phrase 'out the other side' which is the 64,000 petajoule question. I suggest we may be looking at a very different societal construct - interest outlawed, sustainability displacing GDP as the goal, local being emphasised over global, community over individual, wellbeing over consumption.

We were predetermined to morph into a very different world, this may be the catalyst. Is she capable of leading through? I suspect it needs a Cullen intellect riding shotgun.

I think you're 10-15 years too early still.

PLEASE PLEASE spare us more of 110 Cullen taxes!
But like always your goal is to destroy society and population so i see your point of view in recommending the man that had no idea where $3B in surplus went.

Some people have to hope things are not-yet. What's the point? Adapting early is the best move.
https://www.transitionengineering.org/

Who said anything about taxes? But you point out my observation re needing intellectual capacity. And my goal isn't to destroy society - rather to change it to something maintainable in the long term. Working back from that, one comes to the realisation that population has to be lowered drastically (globally, less so here) and that consumption-growth was clearly short-term, and therefore clearly stupid.

And surplus proxy, digitally-held, isn't necessarily anything. You need energy and resources to validate it. As I keep pointing out.

Please don't knock the messenger - I'm looking for a valid rebuttal of the message. Valid in physics terms, please. Not money, it isn't indexed to anything real.

As taxation extinguishes money then a a surplus cannot go anywhere, it is just an accounting statement. As economist Bill Mitchell explained on his blog "nothing is saved from a budget surplus but private sector wealth is destroyed"
If you study Sectoral Balances then you will see that government budget deficits increase the net financial assets of the private sector while budget surpluses do the opposite.

ACC's been fully funded for decades, its the forward investments that are investing some of the leveraged surpluses ACC retains that get a bit cranky at times like this. Any more questions? Please ask Bronwyn Pullar, she has all the answers on a letter provided by Nick Smith former Minister Of ACC...

too late,your call for national unity and sharing of wealth is doomed to fall on deaf ears.

There are two things going on, first is the end of the debt fueled growth of the economy especially housing.
The second is a virus.
The RB and govt were all behind house price growth as the new way forward to riches along with extraordinary bank profits.
The Virus will just burn itself out, we don't know the cost and we can never really ever know that. The debt crisis will be very destructive, too many people working in the service sector or for local govt etc. not enough people producing. Take away wealth and you take away the ability to invest in production.

The only problem with your first statement Andrew is the OCR cut. The RBNZ and the Government are advocating more debt. The issue I have with this is that they have given no direction to it. As CT has pointed out now is the time to seriously reset from the neoliberal policies of the past. Using debt to re-establish manufacturing in NZ, even to the point of being able to develop exportable goods would be useful even if it took 10 years to start showing returns. but what if that debt only goes to propping up house prices? What good comes from that?

Globalism was never going to work, and has benefitted very few.

We are in uncharted territory, and need to steem the loss of capital from this country. A good start would be to temporarily suspend the export of dividends. We are food exporters, and if we maintain a clean bill of health other nations with still want our stuff.

I'm not a fan of globalism but the last couple of decades has seen an astonishing increase in life expectancy, literacy and reduction in absolute poverty. Maybe in the past there was more economic equality in NZ and the UK but globalism means the entire world and the prospects for a young person in India, China & even Africa is far better than it was when I was a child 50 years ago. A change to the system may be a good idea but don't deny the successes of the old system.

Agree Murray totally. Just creating a money go round as if a cat chasing its tail. It’s been going on so long now that any business that needed to have cheap credit to survive and/or needed to be encouraged to expand will have done it well and truly by now. And now, if those expansions were not logical but were fanciful, a la borrow just because you can, they most likely will become the proverbial albatross that sounds the death knell cause whatever market(s) they might have is heading south.

debt does have to be paid back.

Not so sure after this one. But just how complicated a debt jubilee would be is another matter. Mind you, the alternate to debt jubilee is all out World War. Are we as a global society mature enough not to go there?

Id better get in quick, a debt jubilee a bit like Zimbabwe?

This would seem suggest there is no pre existing crisis plan with financial appendix.

Maybe work out the schedule of activities we are looking to address, then the scale of funding estimated then consider funding options and iterate.

A nearer source of funding would be reptoritise the $12bn (most unallocated funds) of the roads.

We need crisis management, good governance and administration. Not opportunistic activism.

It you want an area to fund. Government support for any initiatives the increase productivity increase productivity of business that earn export receipts (BoP).

It is interesting that Muldoon scuttled compulsory super-an, dancing cossacks et al, but National then created ACC in something of the same image it seems. $billions on hand, with what to do. Guess it explains how the $27mill or so cornerstone investment into Feltex shares could be digested without even a burp.

I think she has a sensible head on her shoulders, being able to understand how different sections of the population are living and are affected by a crisis like this, not just business focussed. It is good that the government has the surplus now. If the coalition supports her well, she may be able to pull NZ through these tough times, without much long term damage. May get her second term too.

Not only NZ, but maybe the world will be able to shake off its neoliberal way of working and thinking.

Tried everything else - no cigar.
Maybe the virus will do the job ? keep clutching at those straws .

Yes, and I say this as a right winger, the pendulum has swung too far. Don't like seeing people sleeping rough in my suburb which used to be quite prosperous.

But we don't want to go back to the days when it took 3 months to get a new phone line put on.

Had to look up what was a narcissistic sociopath. Definition is defined as sense of entitlement, lacks empathy, exploits others, sense of power, delusion of power, parasitic lifestyle, arrogant. Wow, this profile suits a few people on this forum, aka the over leveraged.

Some, for sure, but less than a decade ago.

Bankers fit this profile :)

brilliant piece

The combination of expensive (people & assets) mainly through debt driven mechanisms, a virus that we don't yet have a cure for & a globally manic media creating a mountain out of a mole hill, is setting us up to fail in 2020. It may well be John Maudlin's Great Reset, who knows, but one thing is clear, we are talking ourselves into trouble if we carry on like this. The media are selling fear & bollocks & we should add lots of salt to everything they tell us. I can remember flu being around since I was a kid. I even got it a couple of times, so it was straight to bed for up to a week or more. I even read about some old people even dying of it. And look at today's numbers. They are pathetically small compared to 100 years ago. Come on people. We're better than this, aren't we?

You have no idea how this could play out left to its own devices, neither do I and neither, yet do scientists, so trying to downplay it is foolish.

Guaranteed income: from taxes bond sales and agricultural exports made the ongoing and massive expenditures..... feasible.
If this government wants agricultural exports to help pay for its Covid-19 bailout of the rest of NZ's economy, (and what alternatives does it have?), it will have to remove its proposed ideological monkeys from agriculture's back. The glamourous options of international education and tourism have been exposed for the insubstantial fluff that they are and once again the stark reality that NZ is a farming nation is evident.

This is the crisis to end neoliberalism, funny I always thought it would have been a peoples uprising not a virus to do the job....