This perspectives document should be viewed as an addendum to the 2015 document. As the general processes outlined in the previous document are apparent in the present situation.
The New Zealand economy is still showing signs of weak growth of about 3% GDP per year in 2015. As previously explained the majority of the economic growth is a result of re-building earthquake ravaged Christchurch, property bubbles in both Auckland and Christchurch and economic growth not based on the productive sectors of the economy. Auckland’s speculative property bubble is due to a shortage of housing and capitalist market failure to provide people with a basic human need – shelter. Auckland is not able to cope with population growth as a consequence of record inward migration.
Auckland’s property bubble has priced many out of owning a home. Asking prices for even a modest property are approximately 10 times the average income. This has become a major political issue with daily reports of growing homelessness, and people living in cars and garages as people are unable to afford to buy a house or rent from the private sector, or obtain a State House. This problem is further exagerated when combined with inadequate welfare provisions, a lack of State Housing that are supposed to support people in need. When this is combined with no meaningful housing or rental regulations it has allowed speculation to reach these dizzy levels.
The National-led government’s solution to Auckland’s housing crisis is to offer homeless people and existing State House tenents a $5,000 relocation grant if they move to a State House in the provinces! Additionally, the government is starting a programme of privatisation of State Housing which with further undermine public housing provision. This combined with a market led approach to housing exposes the brutality of capitalism in New Zealand.
Despite the false economic confidence of the New Zealand ruling class the economic fortunes for New Zealand are intrinsically linked to the fate of the Chinese and Australian economies. The Chinese economy is continuing to stagnate and is using Keynsian policy to keep the economy growing as demand for goods and services in the advanced countries is moderating as a consequence of capitalist austerity and subsequent deflationary pressures. The nervousness of the bourgeois internationally toward the Chinese slowdown was expressed with the dramatic falls on the world stock markets at the beginning of 2016. The consequences of the slow down in the Chinese economy have had a profound negative effect on the Australian economy, with the export of minerals to China turning from boom to bust literally overnight. The Australian government has set out on a path of austerity as a result.
The Australian National / Liberal colalition government has called a double dissolution of both Houses of Parliament and a snap general election. This is a symptom of the crisis as the Australian ruling class who demand austerity and the cutting of the social wage are politically blocked by a hostile Senate. This election is a gamble by the Turnbull government and it may backfire on them. It is a close election. It is most likely that the Australian Labor Party may gain the government benches. An Australian Labor government would be a government of crisis as the pressure from the ruling class will come down on the leadership to carry-out austerity. Without a socialist programme the right-wing Labor Party leadership will be forced to accept the logic of capitalism and carry out austerity. This is a recipe for sharp class conflict as Australian workers will have no option but to struggle in order to maintain the social wage gains of the past and their living standards. This will have revolutionary implications not only for Australia but the region as a whole. The point here is whatever the outcome of the general election a government of crisis will be elected and the tempo of the class struggle will increase in Australia.
Australia is no longer the lucky country and is now mired in the organic crisis of capitalism that is engulfing the planet. As a consequence of the slow-down in the Australian economy the number of New Zealand workers emigrating to Australia has fallen to record lows, with a large number of expats returning. Additionally, the number of Australian workers, who have automatic rights to residency here, leaving for New Zealand is increasing. In the past emigration to Australia tempered the class struggle in New Zealand. With this no longer being the case the class struggle in New Zealand will begin to pick up tempo as there is no longer a perceived escape route from the problems faced by workers here.
The effect of the Chinese economic slow down here is on commodity prices, inparticular dairy prices that have collapsed by half. Agricultural exports comprises of approxiamately 50% of New Zealand’s exports of which dairy makes up about 20% of all exports. The collapse of dairy prices and forecast low payouts of $4.20 this year and for the foreseeable future is disasterous for the sector and is beginning to be felt in provincial New Zealand with growing indebtedness of farmers and lay-offs of farm workers. There is global overproduction of dairy products. Overproduction has been made worse with the removal of EU dairy quotas and the closures of russian markets to EU goods. New Zealand’s dairy industry requires higher inputs than its global competitors and on this basis makes it harder to compete. Fonterra is weathering the economic storm for the time being but continuing low dairy auction prices will have an effect. Fonterra is attempting to capture the higher end of the supply chain but has not been that successful at this. Additionally, the TPPA will also make it more difficult for this occur as the so called capitalist free marketeers have protected their home markets! Additionally, there may be future attempts to demutalise the Fonterra co-operative. If this is the case it would quickly end up in foreign ownership and asset stripped with the present owners (dairy farmers) impoverished further as they become captured by foreign capital.
The recent budgetary forecast by the Treasury exposes the weaknesses of New Zealand economy and how it is effecting workers. With a so called booming economy the Treasury paints a bleak picture for New Zealand workers:
Unemployment still at 5.6% in June 2017 – 146,000, still above 5% in 2018
Real wages (i.e. after inflation) fall over the next two years, down 0.1% each year
Wages share of the nation’s income falling over the next 4 years
Weak productivity growth and growth in the nation’s income per person
Only 0.5% growth in GDP per person in the year to June 2016, only a little stronger at 0.9% in the following year, and maxing out at 1.9% in 2018 and 2019 (the average GDP growth per person between 1999 and 2008 was 2.5%, and at or above 1.9 percent for 6 of those 9 years).
With growing inequalities, this is the economic basis in which New Zealand workers will face the next world economic slump from. As can be deduced the effects of the impasse of capitalism are beginning to be serverely felt in New Zealand. We only have to look across the Tasman to see what is in store and like Australia – New Zealand can expect many years of capitalist austerity ahead, with growing class antagonism and consequently an upswing in the class struggle.
National Party
The National-led governemnt continues to carry out austerity measures through cutting of the public sector. The recent budget is a continuation of the previous ones with real term cuts to public services. For example in public health, the Labour Party estimate that the real term cuts in health expenditure since National came to power is $1.7 billion. In this year’s budget the CTU estimate that the health budget requires an additional $300 million just to stand still. Generally the budget can be summed up as a robbing Peter to pay Paul with occasionally crumbs thrown out for appearances sake to appease the masses to address social issues e.g. housing.
The National-led government argue public sector austerity is necessary so that they can pay down government debt and return the government books to surplus. This is a smokescreen used to carry out austerity. Public debt as we have explained previously is extremely low whilst private debt (household and corporate) is high. In fact this year private debt has now surpassed the pre 2008 world crash levels!
The National Party remain in the high 40% in the opinion polls. This is because of the weakness of the Labour Party leadership who do not offer a socialist solution to the problems that workers face. The National Party is most likely to win at the next general election in Novemeber 2017. They will be the returned as the largest party with a near enough majority that will be secured with electorate sweetheart deals, most likely with Act, Maori Party and United Future.
However, this is conditional on world events. If the world economy enters recession prior to the next general election then this will have a profound impact on the masses and the National Party will become deeply unpopular as they have no answers to the capitalist crisis except to deepen their austerity programme. Under such a scenario the populism of the prime minister will vanish overnight, and the propaganda about the need to agree capitalist trade deals (such as the TPPA, EU and South Korean trade deals) to secure an economic future of the country for all will be in tatters.
Labour Party
The Labour Party are languishing at about 30% in the opinion polls. The right-wing Labour leadership have enormous illusions in capitalism. They believe that they can grant meaningful reforms in the death agony of capitalism. Such a view beggars belief and reflects the leadership of yesterday hoping for a return of post-war prosperity. This is a utopian position. If this was a possibility the capitalists would be attempting to buy social peace at this moment by granting reforms. In fact the capitalists are stoking up the flames of class struggle as they attempt to undermine workers’ pay and conditions and cut the social wages in an attempt to maintain their profitability. This is a general trend and is the only way to maintain capitalism and its profit system in its death agony. Already we are witnessing the right-wing leadership, under Andrew Little, move to the right with the slogan Backing the Kiwi dream and defending middle New Zealanders. This is bereft of any class content and will not enthuse workers to positively vote for them or the rank and file to canvas for a Labour victory. Such petty nationalism should have no place in the Labour Party.
Added to this is the future of work commision led by the shadow finance minister with regard to future job losses as new mechanisation will replace a significant number of today’s traditional jobs. Unfortunately this issue is being addressed from a capitalist viewpoint and offers no real solutions to workers except institutionalised poverty.
The right-wing Labour Party leadership will come under increasing pressure to move to the left from advanced workers as the crisis of capitalism matures in New Zealand. The point is that the present leadership will be found wanting and replaced as left currents develop further in the party over time. A similar postion to the British Labour Party under Corbyn is not ruled out in the future.
New Zealand First
New Zealand First is a populist conservative party based on the leadership personality of Winston Peters. Winston Peters, won the Northland electorate seat at the by-elecion, is likely to retain the seat at the next election. Winston Peters uses populist demogogue and is from of the Muldoonist tradition of the National Party.
New Zealand First are most likely to poll over 5% at the next general election, retain and possibly win electorate seats in rural areas off National. This will guarantee them seats in the next parliament under MMP. The revival of New Zealand First is because of the weakness in the Labour leadership who pander towards petty-nationalism. The rivival of New Zealand First should be a warning to the labour movement and the need to develop coherant socialist policies to combat the blind alley of petty nationalism.
The Greens
The election of James Shaw as new male co-leader of the Greens reflects the rightward shift of the Green Party. The election candidates all positioned themselves in support of capitalism. The Green Party is under the illusion that they can manage capitalism to deliver environmental suustainability and curb climate change. This is utopian to say the least as capitalism is based on the private ownership of the means of production and the making of profits. The profit motive will always mean that environmental sustainability is sacrified as the lowest cost and environmental standards to the capitalists will always be the order of the day. One has only to look at New Zealand’s flawed market ETS and increasing greenhouse gas emmissions to understand this. There is increasing tensions in the senior staff of the Green Party with some recent high profile resignations. It cannot be ruled out that Metiria Turei may step down as female co-leader in the near future. Without doubt the Green Party is heading towards a possible split due to the moving to the right of the leadership.
Unions and Youth
The election of Richard Wagstaff as CTU President is reflective of the pessimism that exists in the present leadership. The new CTU President’s class collaborationist approach will not advance the union movement one iota. The idea that New Zealand can transform industrial relations into a Scandinavian model of social democracy is laughable. Even the post-war reforms in Scandanavia are being undone as the Scandinavin ruling class demand that workers there pay for the crisis of capitalism.
Industrial disputes remain at a low level, even so there has been successful defencive Auckland bus drivers strike over pay and conditions by the Tramways Union, and the Meat Workers Union at Affco over securing a collective agreement. However, we can anticipate with the prevailing conditions that there will be the revival of militant trade unionism to defend members pay and conditions. Under the pressure of events rank and file unionists, in particular youth will transform and democratise the unions into fighting militant unions and have a perspective towards socialism. This is where the ideas of Marxism will find fertile ground.
Like the rest of the world, New Zealand has entered an extremely turbulent period of sharpening class struggle with sudden and sharp turns in the situation. This is an ideal period to build the genuine forces of Marxism and build the revolutionary party. Forward to a socialist New Zealand and a socialist world!
to build the genuine forces of Marxism and build the revolutionary party. Forward to a socialist New Zealand and a socialist world!