The Sun rises in New Zealand

Abstract: This article describes what is referred to as an "Action Man" approach, in this case the initiative to establish several new States within New Zealand, including one with minimal Government. The article concludes that any effort to establish optionality in one specific geographic area inevitably constitutes acceptance of geographical borders, which comes close to accepting the Government as an institution to rule society and run our lives.



A. New Zealand's Economy

Some say that the standard system of time zones has given New Zealand a raw deal; when it is noon in Greenwich, England, it is 1.00 am in New Zealand and if one sails from New Zealand to the east, one ends up in the previous day. Not only is this difficult to comprehend, it also is an expression of the past imperial arrogance of England that regarded New Zealand as an insignificant colony at the edge of its empire.

Another way of looking at it is that the day starts in New Zealand or that the sun first rises in New Zealand, when countries such as Australia are still asleep. This may also be true looking at the impressive political and economical reform that has taken place in New Zealand over the past decade.

Public debt is now under 30% of GDP. Net public debt is forecast to fall to 17.6% of GDP within four years, down from over 50% just three years ago.

Tax levels - currently 33% top, 24% middle and 15% for the lowest scale and 33% corporate - will drop, a $NZ2.1 billion package has been announced. Yet, Budget surpluses are forecast of 3.3% of GDP in 1996-97, rising to 5.6% of GDP or $NZS.9 billion by 1998-99.

Yes, New Zealand is one of the few countries in the world to consistently have Budget surpluses, achieved without selling assets; this year's surplus is forecast to be $NZ2.7 billion. How has all this been achieved?

B. The Reform Program

The economic reform program started in July 1984, when a Labour government took over a New Zealand virtually bankrupted by interventionist government policies.

Chief architect of the economic reform program was then treasurer, Sir Roger Douglas, who first floated the NZ dollar and deregulated financial markets. Inflation was minimized by giving the Reserve Bank the statutory obligation to restrict the money supply such that inflation remained under 2%.

The reform program had the following objectives: to remove the privileges of specific organizations that had a stranglehold control over large sectors of society and to open up the economy for competition. Over the years, tariffs and import controls were reduced dramatically and subsidies for sectors such as farming and manufacturing were abolished. Trading parts were split off from government departments to become corporations, many of which were subsequently privatised. Privatization of government-owned organisations took place at a huge scale, which improved the financial situation of the Government and revitalized the private sector.

It took a different government to deregulate the labour market in 1991, ending centralized wage fixing by the Government and removing the grip of trade unions over employment conditions.

C. No Doom and Gloom

The socialists and trade unions predicted doom and gloom; they argued that the programs of corporatization and privatization would result in job losses at a massive scale. And indeed, employment levels were reduced substantially in such organizations; but overall, employment opportunities grew. Unemployment is now 6.3%, down from almost 11 % in 1991; unemployment is forecast to fall further to about 5% in four years.

D. Support for Reform

Perhaps there are places such as Hong Kong with more economic growth, lower unemployment and lower taxation. Economic growth in New Zealand is expected to average 3.5% over the next four years, down from the 5 to 6% achieved over the past two years. Many want even more rigorous tax cuts to keep the momentum of reform going. Sir Roger Douglas' new party, the Association of Consumers and Taxpayers, proposes to abolish income tax altogether. On the other hand, opinion polls show a substantial support for a more socialist direction.

Whatever the outcome of next year's election, many people in New Zealand now have become convinced that the protectionism, rigid central control and intervention of governments in the past is not beneficial for the economy, nor for their personal well-being. As a result of this, those who support what has been referred to in this magazine as the 'Action Man'-approach may feel inclined to shift the focus of his attention from Australia to New Zealand, to promote the formation of a State with minimal government.

E. The 'Action Man' Approach

For years, initiatives have been suggested by what has been referred in this magazine as the 'Action Man'-approach. One of the initiatives that has been proposed is for a new State to be formed in Australia, out of territory currently controlled by the State Queensland, perhaps augmented with territory from the State New South Wales. The 'Action Man'-approach argues that it is possible under the Constitution of Australia for such a new State to be formed, importantly, without automatically being a part of the Federation of Australian States. In other words, such a new State could negotiate its entry to the Federation or, alternatively, be an independent nation. This, according to the 'Action Man'-approach, opens up the opportunity to minimize government in such a new State.

The following is an attempt to describe the 'Action Man'-approach in the way it is focusing on New Zealand, not as a glorification of this approach, but to continue to keep readers up to date with any such developments.

The first question that comes up is: Why New Zealand?
The 'Action Man'-approach argues that New Zealand has a one-chamber Parliament without a Constitution or Bill of Rights; thus one only needs the approval of the Government of the day to make dramatic changes. Australia has also undergone some impressive reform; but the Hilmer program to establish more competition is not moving very fast; it got stuck for years in the complexity of State versus Federal Government control.

Reform in New Zealand over the past decade has made a lot of people convinced that the Government should be minimized. New Zealand has recently adopted a different voting system, called mixed member proportional voting. In this system, part of the Parliamentarians is chosen according to the old first-past-the-post system in which a single member represents a given territorial electoral district. New is that another part of the Parliamentarians is chosen in proportion to the amount of votes they get nationally. This has opened up the door for minority voices to be represented in Parliament to push through issues as part of a coalition or if they hold the balance of power.

From the point of view of the 'Action Man'-approach, perhaps even more promising is New Zealand's 1993 adoption of Citizens' Initiated Referendum, allowing almost anything to be put to the vote if supporters gather signatures of at least 10% of voters. Earlier this month (December 1995, ed.), the first such referendum was held, after 237,000 signatures were collected on the question: Should the number of professional fire-fighters employed full-time in the New Zealand Fire Service be reduced below the number employed on January 1,1995? Only 27.7% of eligible voters bothered to vote, showing the potential for a minority to push through controversial matters in their favor in this way.

So, what exactly does the 'Action Man'-approach suggest? Their reasoning is that not everyone in New Zealand will support minimal government. So, what they propose is that New Zealand becomes a Federation of States, including at least one State with minimal government. This would enable those who rather stick to conventional government to have a State where this continues. It would also enable those who want less government to live in a State that comes closer to what they want. Under this proposal, any Federal Government would need to be minimal, to prevent outside interference in what happens in a State, a Federal Constitution should guarantee the right of States to independently determine their own destinies and to leave the Federation, if they wish. States can then choose to set up a minimal legal framework that maximizes freedom of choice and open markets or alternatively a framework with a government with wider functions and operations.

Furthermore, any State should be able to join other Federations as well. One obvious opportunity is for such new States to join the Commonwealth of Australia, which also is a Federation of States held together by a Constitution. The Australian Constitution actually allows for New Zealand to join this Federation. Until now, New Zealand has declined the invitation, arguing that the terms of entry are not attractive enough. Of course, these conditions date back almost a century, so any renewed agreement will have to be renegotiated and updated to modern circumstances.

The strategy of joining multiple federations is regarded as an extra protection against too much interference by any such federation in State affairs. The vital condition to make this work is the option for a State to leave any federation, at the State's initiative.

The 'Action Man'-approach is looking at New Zealand's South Island as a good location for such a State with minimal government. Being an island, there are recognizable borders without the need for extensive border control. The South Island has very few inhabitants, meaning very few people would see their life-style negatively affected by such a development. This gives the new State the best possible opportunity to start from scratch, without compromising established development. It also means the new State can prove itself, decisively showing that economic prosperity can be achieved without government intervention and without using much existing infrastructure.

F. Conclusions

Quintessence's conclusions are that it seems attractive to seek a political way to establish more optionality in society. However, support for the political process condones the dictatorial aspects of government. The 'Action Man'-approach may argue that it aims to minimize the Government. Yet, the approach focuses on one specific geographic area only. The 'Action Man'-approach may argue that it is a first step, but nevertheless, such an approach condones, if not glorifies nationalism. Quintessence argues that advocating a State to control borders and control what takes place within such borders inevitably constitutes acceptance of the Government as an institution, no matter how minimal its appearance. Quintessence doubts whether any institution that can technically exercize a huge amount of control, can ever be minimized. So, rather than arguing about the technicalities of things such as constitutions, states and federations, should we not reject the very notion of government? Quintessence argues that any form of government is in conflict with the concept optionality. The big question therefore is, what should we be aiming for, what is our ultimate goal? Do we want the Government as an institution to rule society and run our lives? Or do we want optionality?




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