Australasian Governance

Australia and New Zealand occupy distinctive places in debates about how governance could or should be conducted. In the latter stages of the twentieth century, New Zealand and Australia went further than most countries in embracing the policy prescriptions and rhetoric of neoliberalism and the concomitant reduction of the state's role in economic management this implies. Although the state is still actually a major player in political and economic affairs of Australia, and though New Zealand has retreated from its earlier radical embrace of neoliberalism, ideas about the appropriate role of government have changed profoundly in both countries. As the larger economy, and given New Zealand's recent policy reversals, the Australian experience is arguably of greatest long-term significance.

For much of the twentieth century, Australia had been a fairly insular, highly protected place, in which the government oversaw a particular accommodation between organized labor and various economic sectors. Restructuring in the global economy, the decreasing importance of Australian agriculture and the declining competitiveness of Australia's manufacturing sector forced change, however. By the 1980s, Australia's old model of “protection all round” was no longer sustainable. A consensus among economic and eventually political elites developed that the economy had to be opened to international competition.

Remarkably, it was the formerly Left-leaning Australian Labor Party that promoted this transformation, with the acquiescence of organized labor. All the key elements of the neoliberal agenda—a floating currency, trade liberalization, the phasing out of protection, and labor market reform—were pushed through during the 1980s and early 1990s. At the same time, major reforms to government itself and of Australia's foreign policy were put in place to consolidate these changes.

At one level, these changes were manifest in a reorganization of government departments and—especially under successive coalition governments during the 1990s—introducing the principles of “new public management” to Australia's public service. At another level, however, domestic and foreign policy were consciously linked in an effort to open both the Australian economy and workforce to international competitive pressures.

As a consequence, many areas of activity that were formerly the direct responsibility of government have either been passed to the private sector, as with job placements for the unemployed, or given to nominally independent institutions like the Reserve Bank of Australia (RBA), which has now assumed formal responsibility for the management of monetary policy. The RBA's seemingly permanent independence is emblematic of a new order in which particular ideas, generally imported from overseas, and specific economic interests, especially in the financial sector, exert a powerful influence over public policy.

New Zealand went even further and faster during the 1980s, as a technocratic elite sought to drive policy reform and turn abstract economic ideas into [Page 40]political and social reality. Increasing skepticism about the economic and social impacts of the reform process has seen a significant retreat from the earlier wholesale embrace of neoliberalism and the rising inequalities it was frequently associated with. What is clear is that New Zealand's per capita gross domestic product (GDP) growth has been the slowest in the developed world since 1984 and notably poorer than that of Australia, which had a less radical reform process. At the very least, this is a reminder that the Australasian countries have had different policy experiences and outcomes, and that government reforms alone may not be able to overcome structural constraints of size and isolation.

...