New Zealand Is Tired of Its Fiscal Crash Diet

Article excerpt

Late last year, John Woods, New Zealand's ambassador to the United States, was pleasantly surprised to receive a fan letter - from Speaker of the House Newt Gingrich.

"As we attempt the changes that we believe are best for the US," Mr. Gingrich enthused, "it is encouraging to hear that these kind of changes can be done and succeed in their objectives." New Zealand's economic story, he said, was "a shining example of the scale of change" that the budget-slashing GOP hoped to usher into Washington.

Well, maybe not. If the political pollsters are to be believed, this story may have a different ending when a new government is elected this Saturday. At issue are the policies of the past 12 years, which have transformed one of the developed world's most-regulated economies into one of its most-open and competitive. Those policies have included reducing trade tariffs, scrapping government subsidies, financial-market deregulation, privatization, and tax reform. Inflation is kept on a tight leash by the central Reserve Bank. The choice facing voters is mostly seen as a referendum on all or some of the above. Earlier this year, it looked as if the election might center on race relations - between the native Maoris and the majority Europeans - but even that perennial issue has taken a back seat to the question of the economic future. Not everyone in this South Pacific nation of 3.7 million appears to be as gung-ho as Gingrich about it. Contesting the election is a smorgasbord of 23 parties, of which four are considered serious contenders, with the governing conservative National Party being the single-most popular. Under a new proportional-representation system, a single party is unlikely to gain a clear majority, and the next government will rule through a coalition. In that event, the next prime minister could be Labor Party leader Helen Clark. Fiscal conservatives worry that any change of course - even if it is toward the center, as is widely supposed - will be at the expense of the reforms. "Don't risk throwing it all away," implores Prime Minister James Bolger, leader of the governing National Party, who has spent much of the current campaign reminding voters that "the best social policy is a strong economy." But his opponents accuse him of getting it backward: The best economic policy is a strong social policy, they argue. Opposition parties are promising more public spending on education, social welfare, and health. "If you believe the economy is about people, not money - then so do we," claims the opposition. "People want a new, moderate course," declares Jim Anderton, leader of the center-left Alliance. "For too long, the 'center' has been a dirty word. …