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John Armstrong on politics

John Armstrong is the Herald's chief political commentator

John Armstrong: Labour rediscovers the joys of the good old ways

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Photo / Herald on Sunday
Photo / Herald on Sunday

In a mood that veered between the joy of liberation and outright catharsis, the Labour Party has dumped on free-market-based solutions to economic problems and flagged a much more interventionist style of economic management.

The party's annual conference proclaimed the neo-liberal economic experiment to be well and truly over.

It was goodbye Tina, hello Tara. The Thatcherite new right dictum of There Is No Alternative has given way to There Are Real Alternatives.

The party moved away from its previous market-based emphasis during Helen Clark's leadership. But the new framework is a quantum shift - and one National cannot replicate.

The dramatic tilt in party thinking was symbolised by David Cunliffe's deliberate talk of being "handson" and "interventionist" - terms long banished from a finance spokesman's vocabulary.

The overhaul of the party's economic policy - which has been going on for more than a year - is the biggest shift by Labour in that sphere since the Rogernomics revolution nearly three decades ago.

It is accompanied by an ambitious restructuring of social policy by deputy leader Annette King which would concentrate resources on helping children in their very early years so that problems of whatever kind could be spotted and rectified, rather than being left to fester. The ambulance would be parked at the top of the cliff in what would be the most serious - and no doubt expensive - offensive yet to break the cycle of social deprivation.

The shift to a far more hands-on economic policy is driven by the increasing view that the free market policies of the 1980s and 1990s have not lifted lift New Zealand's productivity and that the income gap with other like economies has widened.

The more pragmatic approach is also motivated by the belief that New Zealand has been a soft touch for too long, particularly in allowing overseas interests to buy up local companies without being required to invest locally in downstream production or new technology.

Labour's new policy on foreign investment tightens the rules for foreigners wanting to buy land. But the party has stopped short of banning such sales.

Labour has had to bow to the fact that New Zealand's savings record is so poor that it relies on foreign investment as a source of capital.

Apart from the already-foreshadowed intention to get the Reserve Bank to take stock of other economic indicators like the exchange rate, rather than focus solely on inflation, there is little detail of how Labour would run its "strategic partnership" plan, under which the Government and business would work far more closely together than have done.

However, the economic policy "framework" put before the conference is absolutely clear and utterly unapologetic about the direction in which Labour is heading.

At times during the conference's economic workshops you had to pinch yourself that you had not time-warped back into one of the old Jim Anderton-led Alliance rallies.

Labour will not go that far. It is not advocating some return to the highly regulated New Zealand economy pre-1984.

National will still say it is lurching to the left or going back to the future.

But Labour is confident that mainstream opinion favours a far more managed economy.

On top of that, the new framework's emphasis on "owning our future" and restoring the country's economic sovereignty has potent electoral appeal.

Crucially for Phil Goff, however, Labour has finally drawn the curtain on the Clark years.

Phil Goff now has his own agenda - and, equally critically going into election year, one which will be very different from National's.

- NZ Herald

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