The dramatic events that have been witnessed on the world stage; whether it be the marvellous beginnings of the Arab revolution, the upswing in the class struggle in Europe due to the euro crisis or the re-awakening of the class struggle in the United States have been seen by most New Zealanders, until recently, as being very distant affairs.

The New Zealand Bourgeoisie and their apologists have been painting a picture that New Zealand escaped lightly from 2008 economic recession. Throughout 2011 the National-led government has been promising spectacular growth and an export led recovery. As in previous years this has not materialised. One thing is absolutely clear on the basis of New Zealand capitalism this is not going to materialise!


Superficially, throughout 2011 New Zealand society could be viewed as relatively calm as far as the class struggle was concerned. Most workers have had to endure restructuring, pay cuts, redundancy and intensification of their work so that the capitalists can attempt to maintain their profitability. It is understandable for a time that workers will accept such cuts in their living standards as they hope that things will improve as promised. Adding to this mood was the fact that workers were initially stunned by the worldwide down turn and would look to individual solutions.

As Marxists we understand that at some point the situation will change and in a dramatic way when workers begin to understand that no amount of concessions to the capitalists will appease them and the only way to defend their living standards is through collective militant action. Certainly, the world events have had an effect on the consciousness of the masses here.

Here in New Zealand at the beginning of 2012 the working class is beginning to catch up with their brothers and sisters around the world as illustrated with the bitter dispute at the Ports of Auckland, the lock out at the anti-union Talley' s owned Affco plants of the Meat Workers Union and the struggle of the care workers employed by Oceania for a decent pay rise. The above and the recent 5,000 strong demonstration and march to the Auckland port gates in support of Ports of Auckland strikers is just the opening overture of the upswing in the class struggle here in New Zealand.

New Zealand capitalism is in crisis and the above events are a turning point as far as New Zealand is concerned. New Zealand capitalism can no longer afford the reforms enjoyed by workers in the past. On a capitalist basis New Zealand will lurch from one crisis to the next, each crisis being deeper than the previous one. Such an organic crisis of capitalism is due to the existence of private ownership of the means of production and the nation state, which are colossal brakes on the productive forces. The capitalists are promising the majority of New Zealanders a bleak future of declining living standards, crumbling infrastructure and ineffective or non-existent public services.

The class struggle is breaking out in New Zealand and class consciousness is being raised. This means that the ideas of genuine socialism will begin to gain ground as an alternative to the anarchy of capitalism. In New Zealand a favourable period is opening up for the ideas of Marxism.


To date the recovery has been a lack lustre affair and in 2011, as in recent years, recorded meagre growth. According to Statistics New Zealand, in the December quarter of 2011, GDP growth was a paltry 0.3%. As we have explained in previous perspectives the recovery has been a jobless one with unemployment, as recorded by Statistics New Zealand in the December quarter of 2011, at 6.3%.

The real state of the New Zealand economy and what has happened to the economy since the 2008 world recession was highlighted in a New Zealand Institute of Economic Research (NZIER) Insight 33 report- Seven Long Years( NZIER created a Proust Index for New Zealand. Such an index compiles a number of economic measures that shows how far back the economy has gone since the world recession. As NZIER state “the recession has cost us dear. In economic terms, New Zealand is now back at 2005.” Hence seven lost years!




NZIER goes on further to state “ This loss is similar to Italy and France, and better than Britain or the United States. Greece has lost twelve years. Australia performed better; its clock has only wound back to late 2008.”

Modest growth in the economy is expected when the rebuild of earthquake ravaged Christchurch gets under way. Apart from this the economy is not expected to grow significantly in the immediate period ahead. As for an export led recovery, this has been somewhat lack lustre too with high exchange rates to New Zealand's competitor nations dampening down returns.

The high price for dairy exports is starting to slip as competitor nations increase their milk production to take advantage of high commodity milk prices on the world market. It must be noted that high milk commodity prices are a result of the Americans and Europeans culling their dairy herds as a consequence of the 2008 world recession when demand for milk products declined. When this increased milk production comes fully on line and floods the market then the milk bubble will burst. This will have a detrimental effect on the economy as dairy exports are a major player in the export sector.

Australia has been one of the few economies with a favourable exchange rate for exporters. However, with a two tier economy emerging in Australia, with a booming minerals sector and a slowing near stagnant domestic economy, this means that it is becoming harder to export in to this market as consumer spending falls.

Naturally the bourgeois economists promise “jam tomorrow” but when it comes we find only stale bread!

The National-led government has continued a policy of public spending cuts coupled with counter-reforms with regard to workers' rights and beneficiaries. The economic argument of the National-led government is that the public debt is high and that the government's books must be in surplus in three years time. As we have previously stated, public debt in New Zealand is low. As we have previously explained, unlike in other western countries private debt was not nationalised. The problem for New Zealand economy is that private debt (both corporate and individual) stands at approximately 85% of GDP.

Therefore the domestic economy remains in the doldrums as consumer spending is flat due to this indebtedness. It is further depressed by government imposed austerity.

Once again this illustrates the sickness inherent in New Zealand capitalism. The consequences of such an impasse are now beginning to be played out in New Zealand with a heightening of the class struggle.

National-led Government

The National Party has secured a second term of office. Without doubt the National-led government is carrying on where the last National-led government left off. As far as the National Party is concerned, they have no economic policy worthy of any serious consideration. Fundamentally, the policy of the government is leave everything to the anarchy of the market and hope it comes right!

The National-led government is following a monetarist policy of cutting public expenditure in an attempt to recover the profitability for the capitalists and place the crisis of capitalism firmly on the backs of the working class.

According to the Public Service Association (PSA) over 5,000 jobs have gone or been left vacant in the public services and this figure is expected to climb as government departments are merged into super Ministries and jobs are shed or not replaced.

The recent announcement of up to 300 jobs losses in the Ministry of Foreign Affairs and Trade (MFAT) is just the latest in a long line of job losses in the public services. Without doubt if these job losses go through then it will decimate MFAT. Apparently, there is no need for ambassadorial staff as they can be replaced with technology. This is a joke in bad taste. For the average New Zealander who needs real help overseas from the New Zealand High Commission or embassy they will be asked to ring a 0800 free phone number!

No section of the public service is immune from such logic. The New Zealand Police face a zero increase in budget, a cut in real terms. The police association is on the record as wishing to negotiate a 3% wage rise after years of no real pay increases. This will have to come out of a zero budget increase. Whatever happens it means serious cuts in the police force, a deterioration in the service and growing disillusionments in the police ranks.

The same can be said with the armed forces were morale is reportedly low due to the contracting out of desk jobs to civilians (on lower pay) and cuts in the defence budgets. It will be interesting to see, when the state forces are called upon to combat future growing militancy of workers, what the armed forces and the police will do! Perhaps the Police Association may ballot its members for the right to strike like their British counterparts! From a bourgeois perspective this is sheer lunacy as they may not be able to guarantee the armed forces and police ranks loyalty if they continue down this path. The more far sighted bourgeois will no doubt be worried by such developments.

The National-led government conveniently forget to mention that the public service is one of the leanest in the world. The government have capped the number of public service jobs at 36,000, but the government has not stated by how much it will fall by. The prime minister, John Key, and the government as a whole have stated that such “efficiencies” will not affect front-line services. There has not been a definition of front line services but the District Health Board in the Waikato have put out a statement that it will have to cut front line staff ( doctors, nurses, porters) to stay within budgets. This will happen more and more as the cuts start to take effect.

Not satisfied with central government cuts, the National-led government has announced “reforms” of local government. The propaganda from the National-led government is that councils are becoming more indebted and that rate rises are too high, not that this indebtedness bears any serious consideration in most councils. The recent government discussion paper on this matter is full of inaccuracies with regard to its figures and even Local Government New Zealand appears to be highly unhappy with the documents content. Not that the government will let the facts get in the way of their argument! Councils can look forward to rate capping, amalgamations and the government meddling in local body politics as the progressive nature of the Local Government Act 2002 is undermined as outcomes on the four well-beings (social, cultural, environmental and economic) are to be axed.

Although it is not fully defined, the government will set the framework from which local government will work. The aim is to turn the clock back on local government to that of “roads, rubbish and rates.” The new framework will be based on council infrastructure and local public services. In the case of local public services the government will decide what councils should and shouldn't be carrying out.

Those public services seen as the government's responsibility are likely to be undermined or simply cease. For example, it is unlikely that Housing New Zealand will take over the social housing functions that councils manage at the moment or that any department of government will take over councils' social services or economic development initiatives etc. In fact centralisation of services by government will increase under this model along with associated cuts.

Despite the government rhetoric to justify the so called reforms, the real aim of such proposed reforms is to politically straight jacket the Auckland Council's aspirations, as it covers a quarter of the population of the country. This is because when the Auckland super city was created the government got the wrong result with a left leaning council being elected that is now increasingly at loggerheads with the government.

Generally the other intention is to make deep cuts in local government spending with keeping rate rises to that of the rate of inflation. Already councils are making cuts as they are underfunded and highly reliant on the rates alone to fund most services. Unlike in other western nations there are no central government support grants for local government apart from some infrastructure subsidies that are getting increasingly harder for councils to obtain. The biggest cost to councils is infrastructure. If rate capping goes ahead then the infrastructure deficit will balloon out as the Consumer Price Index will not keep pace with local government inflation costs.

For council workers the legislation will be used to attack pay and conditions with the proposal of beefed up elected Mayors that can interfere in the operational sides of councils.

What the above illustrate is that at some point public sector workers will have to take industrial action to defend their living standards.

The wider National-led government agenda is to further attack workers rights and a draft of anti-worker legislation is being prepared for Parliament this winter. Already, employers have been embolden by the re-election of National and are attempting to undermine collective agreements and drive down wages through the casualisation of labour. This is a continuation of the last Parliament when the Hobbit Law and the first tranche of anti-worker legislation was passed. Casualisation is happening in both private and public sectors and is one of the reason for the growing militancy of workers.

The government is further undermining what is left of the Welfare State and further counter reforms are signalled for beneficiaries, who are likely to be forced to look for non-existent jobs regardless of their circumstances.

The other major policy plank of the National-led government is the part-privatisation of 4 state owned power companies and a further sell down of Air New Zealand. This is big business looting the state. This is highly unpopular with the public with over 66% or more opposing such a move. The Finance Minister, Bill English, is on record as saying that he is unsure how much the Crown will make with such a sale! They have even abandoned any pretence that the shares on offer will be available to New Zelanders only.

Fundamentally if the assets are partially privatised then it is most likely that they will be fully privatised at a later date as the private share holders demand bigger returns and the Crown's 51% stake to be sold off. These state owned enterprises are returning good dividends to the taxpayer. Once sold, that revenue will be lost from the Crown accounts and further undermine the public service.

The overarching aim according to the National-led government is to transform the New Zealand economy so that everyone can prosper and enjoy a brighter future. Fine words indeed. What they actually mean is to transform the economy so that the capitalists can prosper and make super profits off the backs of the working class. The New Zealand economy is a rentier economy and is beginning to take on features of a “banana republic.”

Labour Party

The Labour Party suffered its worst general election defeat since 1928. The blame of such a defeat lies at the feet of the right-wing leadership of the Labour Party. The disastrous policy of rising the state retirement age to 67, introduced in the middle of the election campaign, was the final nail in the coffin of Labour's general election campaign. It was a move from merely implicit support for the capitalist system to an open attack on workers. It was enough to ensure the lowest turnout since 1878 as workers stayed at home and didn't vote.

The election of David Shearer as leader means a continuation of the policies of right-wing of the party. Shearer's first major speech since becoming leader was signalling a move further to the right for the Labour Party with the abandonment of some policies that offered reforms to workers albeit minor ones. If this is the case then the Labour Party leadership will further remove itself away from the working class.

However, with little experience in the movement Shearer is a lightweight political parvenu. It has to be remembered that Shearer was parachuted in to Helen Clark's safe seat of Mount Albert when she resigned from Parliament. At some point there may be moves in the Labour's caucus to remove Shearer if the polls do not move in Labour's favour.

At present there is a review of party structures and what Labour stands for. No doubt this will be used by the right-wing Labour leaders to steer the party to the right at a time when there is growing militancy amongst workers. Such a move to the right is a recipe for conflict with the rank and file who have been attempting to move Labour to the left, with the union affiliates being key to this.

In such a situation this begins to open up good prospects for the ideas of Marxism. However, we expect that it will take a little time for such a conflict to mature and is dependent on events.

The Green Party

The Green Party did exceptionally well at the general election returning its highest number of MPs. Such a result was at the expense of the Labour Party who lost party votes to the Greens on the basis of disillusionment and of a perception that it may have stopped a National-led government being returned.

The Greens advocate for a green economy and have left image amongst youth concerned about the environment. This certainly helped the Greens achieve their best result at the general election. However, the Greens never explain how such a green economy can be achieved under New Zealand capitalism where the profit motive drives down environmental standards to the minimum. Such an economy is unachievable on the basis of capitalism and is utopian.

The Green Party leadership are attempting to move the party to the right. This can be seen by the right-wing media during the general election giving some of their policies an air of bourgeois respectability, and the fact that the leadership is prepared to do deals with the National-led government on aspects of policy. The perceived left radicalism of the former Green MPs has not been fostered into the new intake of Green MPs, as the party is becoming accustomed to the parliamentary baubles and is part of the rightward trend.

Trade Unions

The trade unions are a key area of work in the building of Marxist ideas. At present the trade union leaders are being forced to the left by the rank and file as the employers take on a more “tooth and claw” approach to industrial relations. This can be seen in Ports of Auckland dispute, Affco dispute and the Oceania dispute.

The above disputes are a turning point. At present only about 20% of workers are in unions and the employers are on the offensive to further reduce organised labour in the workplace. Without doubt in the period that is opening up workers will turn to the traditional mass organisations starting with the unions to begin to address the issues they face. When the present leadership of the CTU is found wanting workers will conclude the need to elect representatives that will reflect their views and aspirations and begin to transform the union movement into a militant one to defend their interests. In such a process the ideas of Marxism will gain ground and we can win the best militant workers to the banner of Marxism through patient work in the movement.


The winning of youth to Marxism is crucial as they are the key to the future. Today young people in New Zealand have grown up in the conditions of a "deregulated" economy and, like the youth of many other countries, face huge student debts, low paid jobs, high unemployment and a future with no hope.

Such an outlook will intensify further under the second term of the National-led government. Youth are bearing the brunt of the recession, and the so called recovery. Youth unemployment has been persistently high at over 20%. The period of the 'death agony of capitalism' will further radicalise a whole section of youth as they look for answers to the problems they face. At some point the anger of youth, with no real future, will be transformed into mass street protests and demonstrations.

This is where a genuine Marxist tendency can play a crucial role. We must win the most radical youth to the ideas of Marxism. We must educate them in the perspectives, methods and ideas of Marxism. The youth is also the starting point of our work. They are the most radical and open layer of society. By systematic work on the university campuses and within the new young layer entering the trade unions, we can win the best over to the ideas of Marxism and build the tendency.


New Zealand capitalism has entered a new period: a period of extreme turbulence and struggles between the classes characterised by economic instability of booms and slumps and an economic system that is an absolute fetter on the development of the productive forces. Under such conditions the ideas of Marxism in New Zealand will gain ground and the building of the revolutionary party is the key to the socialist transformation of society here in New Zealand and the world. Forward to international socialism!




March 2012