In the last three decades, New Zealand’s governments have transformed the country from what was a heavily protected, slow-growth economy and bureaucratic state into a liberalized, modern economy focused on free trade and competition and a public sector focused on raising productivity and performance.
Massive reforms in the public sector and in many aspects of the economy and society were done swiftly and resulted in frustration and anxiety among segments of the population. Despite this, future governments have largely maintained these policies, despite deep concerns at the time they were introduced. New Zealand has moved from powerful, single-party majority governments to multiparty minority (coalition) governments, which depend on support by minor parties on an issue-by-issue basis. Given New Zealand’s challenging, basic conditions – its geographic isolation, a small domestic economy heavily dependent on exports, its large indigenous population and substantial immigrant inflow – the country has adapted well to the challenges of globalization.
New Zealand performs well with regard to indicators of governance, economy, social conditions and quality of life. In comparative terms, policy-making is dynamic, modern and adaptive. The country has gone further than almost every other OECD country with respect to applying new public management principles (NPM) and methods to enhance strategic capability and performance in the public sector.
It is particularly noteworthy that, unlike in the past, the transition from a Labour Party-led minority government to a National Party-led minority government in November 2008 was smoother than many had expected. Continuity, rather than adversarial politics, has dominated. While the National Party (NP) described the former Labour Party-led minority coalition arrangements as “disturbing,” “odd” and “unstable,” it has now opted for similar arrangements when in power. The NP refrained from forming a minority government supported only by the neoliberal, right-wing ACT New Zealand party and decided to add two further coalition partners, the Maori Party and the Green Party. New Zealand politicians have quickly learned the importance of good negotiation skills in forming and maintaining a minority coalition government.
Nevertheless, the longer-term policy challenges have not changed, as follows: (1) New Zealand’s economic well-being strongly depends on developing a larger highly skilled workforce. This will require new initiatives and further investment in education and training and in research and development; (2) New Zealand needs to develop even stronger links with its neighbors in the Pacific region; (3) Although New Zealand is relatively successful in integrating new migrants, there is still more investment required to build the education and skill levels of some segments of Maori and Pacific Island populations; (4) New Zealand is particularly vulnerable to the consequences of climate change.
Finally, since the current multiparty system has not led to the turmoil as some on the political right had feared, it may be counterproductive to proceed with new referenda on the electoral system in the upcoming general elections of 2011 and 2014. So far, the major New Zealand parties, Labour and National, have won in strength while smaller parties are better able to deal with the greater diversity among today’s citizens, as relative to the past.