Letter from our correspondent in New Zealand Attitudes towards the War in Afghanistan and the general economic and political situation in New Zealand

Since the attacks on America of 11th September, many people have been eagerly following events on TV, demonstrating the heightened interest in international affairs that has been reported from other countries on the In Defence Of Marxism web site. In the short run at least, many people have been taken in by the imperialist propaganda that has been pouring out of their TVs and other bourgeois media. Take my friend Joanne, for example. She is a Labour party member. But she thinks America is in the right. I tried to explain the far greater atrocities that the US government and big business have committed, but she did not buy it. Everything's different now, she says. She seems to think the threat of terrorism can somehow be surgically removed by military force. And she wants the New Zealand government to come down hard on potential terrorists over here. She is concerned about some Maori radicals who went to Libya for military training in the 1980's. I should point out that none of them have been stupid enough to actually put any of their military training into practice with terrorist acts. Indeed, one of them, Donna Awatere, is now an MP with the right-wing ACT Party! I would have thought that if the government were to start harassing people like that, it would be more likely to increase the possibility of terrorist incidents, not decrease it.

Of course not everybody has been taken in. There have been demos against the war, in fairly modest numbers so far, but starting before the first bombs were dropped on Afghanistan. As for the Labour-Alliance government, although their record is better than Blair's government in Britain in so far as they have not privatised anything, Prime Minister Helen Clark has as usual shown herself to be servile to the bourgeoisie when it comes to matters of so-called "national security" and the so-called "international community". Last year, after the New Zealand secret service were found guilty in a court of law of breaking into and searching the house of a Christchurch political activist without a search warrant, Clark hastily rushed a law through parliament allowing them to do just that in future. Watergate would have been legal if it had happened in New Zealand nowadays! So it was not surprising that Clark volunteered the services of the New Zealand SAS for the Afghanistan war immediately after the September 11th attacks. I cannot think of a better way of making New Zealand a target for terrorists!

The Left Parties

It is instructive to compare the fates of the Alliance and the Greens, the two smaller left parties represented in the New Zealand parliament. In the general election in November 1999, the Alliance got 7.7% of the popular vote while the Greens got 5.2%. The Alliance already had an electoral pact with Labour and accordingly went into coalition government with them. The Greens, more by luck than judgement, have supported the minority government but from outside the coalition: they were not invited to join it! Since then, the Alliance rating in the polls has gradually gone down, while that of the greens has gradually gone up. In recent months the Alliance have been polling around 2% while the Greens have been polling around 7%. Labour and the Greens have both benefited at the Alliance's expense: there seems to be no danger of the bourgeois parties National and Act getting back into government any time soon.

It seems that the Greens have benefited from being able to maintain an independent position, while the Alliance has been submerged in the coalition with Labour. That has been their big mistake. A few months ago Alliance leader and Deputy Prime Minister Jim Anderton berated an Alliance minister for attending a striking union's picket line. He said it was not appropriate behaviour for a government minister. Excuse me, Jim! Some of us voted for you to champion workers in struggle! And Anderton and the Alliance MPs have been, so far as I can tell, completely silent about the war in Afghanistan. They know very well that most of their members are against the war, but they do not want to rock the coalition boat.

Meanwhile the Greens have been having a field day, with the outspoken opposition of their leaders to the war. And just today, they threatened to vote against the government in a confidence motion in parliament to force a general election unless they agree to making a law outlawing the spread of genetically modified organisms in New Zealand outside of laboratories. The Alliance has essentially the same policy. But Jim Anderton just said that "the tail should not wag the dog", referring to the fact that Labour has 49 seats in the 120-seat parliament while the Alliance has 10. As it happens, a general election is not going to be forced, because New Zealand First, another small parliamentary party, is going to abstain in the confidence vote, which will give the minority coalition government the numbers needed to keep going.

The Alliance will maintain a toe-hold in parliament in the next general election, which must be held by November 2002, because, by the rules of New Zealand's proportional representation electoral system, a party with less than 5% of the party vote nationally can still have its share of seats provided they get at least one electorate seat: Jim Anderton, who was a Labour MP for many years, always wins his own seat, in what would normally be a safe Labour electorate, by a landslide. (Labour did not contest his seat in the last election.)

This political arithmetic puts the Alliance in a very unhealthy dependence on their leader. Anderton would be welcomed back into the Labour party with open arms if he wanted to go there and leave the Alliance in their pickle. He won't do that, though. He is sitting pretty. He is Deputy Prime Minister and Minister for Economic Development. But his policy of unswerving loyalty to the government has been disastrous for his party. A few weeks ago, a TV journalist asked Anderton, "you've been so well behaved, why are you doing so badly in the polls?" (It is interesting that the allegedly unbiased hack's unquestioning view of "good behaviour" was for a left-wing worker's party to stay loyal to a coalition government that has as one of its overriding aims, as Clark has admitted, to "maintain business confidence".) Anderton's reply was "I don't know, you tell me"!!!

It seems to me that the Alliance would have done better to have stayed out of a formal coalition with Labour. They could have ensured that Labour stayed in office by supporting the government in parliamentary motions of confidence and supply. But they could then have raised their own popularity and the consciousness of the working class by speaking out against anything the government did to betray the interests of workers. Many Alliance members are socialists. But they are wasting the opportunity of a great platform from which to raise socialist ideas.

The Alliance do have one trick up their sleeves that may raise their popularity before the next election: the "People's Bank". This is the one major concession that the Alliance got out of Labour when negotiating the coalition pact. Banks in New Zealand have made themselves very unpopular in recent years by closing many branches, so that many small towns no longer have any banks, and by massive hikes in banking fees. So the Alliance got Labour to agrees to open a state-owned bank, to be run by New Zealand Post (i.e. the Post Office), which has so far escaped being privatised, despite having been given a ready-for-privatisation name. The official name of the "People's Bank" has not been announced yet, but it will be open for business before the next parliamentary election. Amazingly, the government has appointed former National party Prime Minister Jim Bolger to head New Zealand Post as the new bank is being set up. Being championed by Jim Anderton and run by Jim Bolger, the bank has got itself another, less flattering unofficial name: "Jim's Bank"! By using New Zealand Post premises, the bank should quickly be able to open branches in parts of the country that have been deserted by the commercial retail banks.

Of course the People's Bank epitomises the left-reformist outlook of the Alliance leadership: bring back the good old days of the mixed economy! For the People's Bank appears to be a resurrection of the old Post Office Savings Bank, which got fattened up/slimmed down (whichever metaphor you prefer) for privatisation and a commercial-sounding name change to PostBank, and then sold by the previous Labour government to Australia and New Zealand Bank (ANZ), one of the major private sector banks. PostBank was completely integrated into ANZ and the PostBank "brand name" was dropped, with any last vestige of the public service tradition quickly removed. And, true to the time-honoured tradition of the old-style nationalised industries, the government have appointed Jim Bolger, a leading representative of big business, to run the "People's Bank" to ensure that it will not be too generous to "people".

The Crisis in the Airline Industry

The big economic news in New Zealand has been the troubles of the airlines. Of course this has been happening all over the world. But I think the New Zealand variant of the same old story is worth elaborating. It would be an amusing anecdote if were not for the thousands of people who have lost their jobs and all the money that has been wasted.

Ansett Airways was one of the two main domestic carriers in both Australia and New Zealand. It was owned by Rupert Murdock's NewsCorp. Two years ago, Air New Zealand, keen to expand into the Australian domestic market, bought Ansett's Australian operation. Because of anti-monopoly laws, Air New Zealand was not allowed to buy Ansett's New Zealand operation. That was partitioned off and sold separately to a consortium of mainly New Zealand-based businesses. Hardly any actual planes were included in the sale of the New Zealand operation. It seems that the buyers thought it was worth paying just for the rights to the routes! Additional planes were then leased from Qantas, and Ansett New Zealand was renamed Qantas New Zealand, even though Qantas was not among the new owners.

Murdock refused to allow any of the buyers to carry out due diligence on Ansett's assets before agreeing to the sale. That is like saying "You have to agree not to take too close a look at the company before buying it, otherwise you might find out what a swindle it is at the price I am charging!" Amazingly, Air New Zealand and the other buyers swallowed the bait.

Sure enough, Qantas New Zealand never recouped what they had spent on buying the airline from Murdock and a few months ago they bankrupt. Qantas then bought up what little there was of Qantas New Zealand's assets. After a few weeks of chaos for people wishing to travel within New Zealand, the gap in services left by the collapse of Qantas New Zealand was eventually taken up by Qantas, Air New Zealand and smaller New Zealand airlines. Many Qantas New Zealand employees got new jobs with the other airlines, but I think most still cannot get work in the industry.

And it turned out that the Ansett Australia fleet had been run down by Murdock prior to the sale and was in a sorry state of repair. Most of the fleet was grounded as unsafe by the Australia's Civil Aviation Authority. Faced with enormous repair bills, after initially pouring a great deal of money into Ansett Australia to try and salvage it, Air New Zealand eventually allowed Ansett Australia to go bankrupt a few weeks ago. About 6,000 staff in Australia lost their jobs. Their union is still trying to get Air New Zealand to pay redundancy money, which they are not legally obliged to do.

(The Sydney Morning Herald, Murdock's flagship organ in Australia, initially only reported Ansett Australia's bankruptcy on page 22! One reason for this might have been that most of the job losses were in Victoria rather than in New South Wales. But could it be that the NewsCorp editors were attempting to play down something for which their company and their boss were likely to draw some flack?)

By this time, Air New Zealand itself was on the verge of bankruptcy. The September 11th events did not help, but this was a problem that had been building up over months and years. There had been protracted negotiations with potential overseas buyers, in particular Singapore Airlines, which had taken a minority shareholding in the airline, to try and save Air New Zealand by an injection of capital in return for a majority shareholding.

But with the airline about to go out of business, the New Zealand government had to step in. They have bought 85% of the shares in Air New Zealand for NZ+ACQ-800 million, about US+ACQ-320 million. Their research indicates that this cash injection may be enough to save the airline. But with the current uncertainty about the world economy and the airline industry internationally, it is possible that more may be required. The Labour-Alliance government had only planned to extend state-ownership in one industry, with the set-up of the "People's Bank". But now they have been forced to make a much bigger investment to keep the national carrier afloat. They did not have much choice. New Zealand's tourist industry is a major part of the economy. It would have been severely disrupted if Air New Zealand had been allowed to go bankrupt. The National party has made a lot of fuss over what a fiasco this has been. But they have not said that that they would not have done exactly the same thing.

Air New Zealand had actually been privatised for NZ$300 million by the previous Labour government in the late '80s. In a recent TV interview, Michael Cullen, New Zealand's current Finance Minister was asked whether he now regretted having supported the privatisation of Air New Zealand, given that he had just had to buy it back for NZ$800 million: Cullen had been a minister in the Labour government at the time of the privatisation. Cullen replied that yes, if he had known what was going to happen, he would never have gone along with it. Jim Anderton, who had been in the same Labour government, happened to be sitting next to Cullen in the TV interview. Anderton smiled, and commented "I wasn't going to say anything, but actually I was against the privatisation of Air New Zealand at the time!"

Of course the money to buy back Air New Zealand has to come from somewhere. For example, as I have explained previously, the New Zealand public health service is in dire straights. In the parliamentary election, Labour promised to address this, but their record has been pathetic. In the most recent health funding round, (this was before the re-nationalisation of Air New Zealand), each of the country's twelve regional health boards only got enough extra funds to hire about one nurse. With the sudden drain on the state coffers to Air New Zealand, health workers and patients are wondering with trepidation what the next health funding round will bring.

As Marxists, we need to pose the question, why did Air New Zealand and the other buyers of Ansett allow themselves to be ripped off so blatantly by Rupert Murdock? After all, Air New Zealand was the jewel in the crown of New Zealand industry. A seat on its board of directors was one of the most sought after in New Zealand. Indeed, the board was full of people, such as Sir Ron Brierley, who were once counted amongst New Zealand's business hot-shots. And the people who bought Ansett's New Zealand operation had not been renowned for their idiocy either. I've seen no serious discussion of this question in the bourgeois media. Such superficial comments that there have been tend to fall into one of two categories: "They were obviously incompetent" or "It is easy to be wise in hindsight".

We need to look at the sale of Ansett in the context of trends in the world economy. At the time the sale was being negotiated, three to two years ago, the future of the world economy looked rosy to most capitalists. Many bought into Francis Fukuyama's claim that history had come to an end and that there would be no more recessions. Of course in reality the underlying trend was that the world economy was over-extending itself and heading for recession. The indicators were clear enough, and were pointed out by the Marxists and by a few bourgeois commentators at the time. But the tail-end of a major economic boom before a recession is a time when a kind of collective madness consumes most of the capitalist class, who believe their own propaganda that their system has solved all its problems.

So investors in the Australian and New Zealand air industries thought that in the years ahead more and more wealthy visitors would be able to afford to fly the long distances to Australia and New Zealand to see our beautiful countries. It seems they thought the good times were just going to keep getting better. So they did not mind paying over the odds for Ansett. But the reality was that the world's economy, and the airline industry in particular, was heading towards the peak of one of those cycles of over-production that, as Marx explained, are inherent in the capitalist mode of production. There is a core of irrationality in the outlook of even the most astute of capitalists. If there were not, they would have to admit that their mode of production is well past its use-by date. The duping of the New Zealand air industry's capitalists by Murdock and his NewsCorp is a classic example of this irrationality.

Simon O'Rorke
Wellington, New Zealand
30 October 2001