Objectives

Roger Douglas


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SETTING OBJECTIVES FOR AN ELECTION-WINNING MEDIUM-TERM LABOUR STRATEGY 1989

Introduction

The Government’s goal is to win a third term in 1990.
This paper suggests that, to win in 1990, we have to focus voters on what they want to achieve for New Zealand in the next 4 years.
We can turn current problems into opportunities if we define what Labour intends to deliver by 1993, and how we intend to do it.
A single, measurable, overriding policy objective is suggested as the criterion which integrates a total 4-year programme.
The paper emphasises fundamental underlying linkages between all of the areas which will be key issues in the coming election.
To ensure policy credibility and success, it suggests a framework based on respect for and exploitation of those basic linkages.
The exposition reviews how some of those linkages operate in key areas and examines how various policies can reinforce each other.
The paper is a broad description of an approach to policy which would work successfully in practice and ensure delivery.
It will be supported by a second paper which spells out detailed objectives for 1990, and key policies needed to achieve them.
Moreover, the approach suggested would push National further in the direction of Anderton’s Party, and increase the space for us.

Present voter perception of the Government

In 1987, Labour won with an increased majority. Our popular support today is half what it was before the last election.
We are 27% behind a weak Opposition: 65% of eligible voters disapprove of our current performance; only 23% approve.
On issues like health, race, unemployment and law and order, perception of our performance is against us by roughly 60:20.
Criticism of the Government – from the left, centre and right – can be summed up in one sentence: We have lost our way.
That is the one perception that Jim Anderton, Pat Kelly, Ruth Dyson, Bolger, the Round Table and the public all agree about.
We are seen as lacking consensus about direction among our MPs, between MPs and the NZLP, and or the Party and the community.
As a result, we are no longer perceived as having the ability to achieve constructive change on behalf of the nation as a whole.

Key issues looming for the 1990 election

The key issues for the coming election include unemployment, race, crime, health, education, housing, welfare and the economy.
We cannot win by seeking short-term answers to those problems over the next 3 months, or even the next 18 months.
None of them can be resolved to the satisfaction of the public unless we place them in medium-term context.
Because the issues are linked fundamentally and voters know it, we cannot win either if we look at each area in isolation.
Poor parenting, lack of motivation, inadequate skills, alienation, unemployment and delinquency reinforce each other.
Low income, inadequate housing, poor health, lack of opportunity and lack of economic growth are all part of the same syndrome.

What is the task that faces us from now to 1990?

The election is about which party voters see as achieving most for them and the country in the three years from 1990 to 1993.
We have to encourage people to think about where they want to get in the next 3 years, and which party can best get them there.
Our programme has to be about goals, objectives and dreams – and practical, commonsense delivery within that 3-year timeframe.
We cannot win by defending the last 5 years. Our performance in total over that time is now seen as confused and unsatisfactory.
We can win if Labour set a much better agenda for the next 4 years, and is seen to have the conviction needed to deliver it.
To do that, we must have an active medium-term strategy which unites us as a team, and appeals to a majority of the voters.
We cannot get it by competing with Anderton. On the contrary, we need to push National closer to him, to give us more space.

What key issue could unite us as a team and appeal to voters?

The issues defined on page 2 are central to the election because they react negatively on rich and poor alike across the community.
Those issues focus around the plight of the disadvantaged and the adverse impact their situation has on the rest of the public.
Both sides of that equation can be satisfied if we set ourselves one single overriding objective central to Labour philosophy:

Real sustainable gains in living standards and opportunity for all New Zealanders, and particularly for the disadvantaged.

Within that framework, we can integrate our thinking on growth, investment, jobs, equity, order, security and social harmony.
If all of our programmes are referred back to that objective, we can act with purpose, conviction and commitment as a Government.

Why gains for the disadvantaged are important to everyone

Delivering real gains to disadvantaged people is crucial because that automatically delivers something of value to everyone else.
Income is obviously important to disadvantaged people, but income in itself is not enough to remedy their situation.
Their deeper need is for the incentive and the opportunity to make real advances for themselves through their own efforts.
By helping them to achieve independence and contribute more to society, we transform their future and improve everyone else’s.
Those gains have an important role to play in creating a dynamic growth economy, higher incomes for everyone and a fairer society.
The alternative is a society with a permanent under-class of alienated people with no stake in prosperity or social harmony.

Political advantages of the suggested Labour objective

No other objective has similar power to link economic and social goals in a single, integrated structure of vision and purpose.
Nothing else offers comparable prospects of creating a united sense of purpose in the Parliamentary team and the Party.
There may be internal arguments within the Labour party about means, but there cannot be any argument about that objective.
If some conflicts remain about means, they can be tested against capability to deliver on one clearly-stated measurable goal.
The National Opposition is not capable of generating any comparable sense of purpose, direction, vision or unity.

Appeal outside the Labour party

The community as a whole is desperate to see a recovery of growth and the investment needed to develop our future growth potential.
The social costs of very low growth over a period of decades have damaged the security and well-being of people at every level.
Those costs hit the disadvantaged harder than anyone else, but their reaction to disadvantage has an impact on everyone.
The public knows growth is the only way to get sustainable jobs and avoid an ongoing erosion of living standards and wellbeing.
That necessarily involves a reduction of waste, inefficiency and avoidable burdens on those who create and contribute to growth.
Inside and outside the Labour Party, we can show that our strategy is tackling the fundamental problems of our society.
We would not be dealing piecemeal or short-term with symptoms, but attacking the root causes of dissatisfaction at all levels.
We can focus without shame, guilt or confusion on what we want to deliver to voters across the whole social and political spectrum.

What do disadvantaged people want from life?

The personal goals of unprivileged people are essentially identical with those of all the rest of the community.
They want opportunity, security and dignity – fair treatment, productive employment, rising living standards, personal choice.
They are worse off now than other people because they lack skills, information, motivation and incentives to achievement.
In their present condition, they are vulnerable to social and economic pressure and find it hard to survive without help.
If the help we give locks them into dependency, all we do is maintain them in that vulnerability as a permanent condition.

How to end that vicious cycle

They need access to education, health care, housing and benefits that guard them against emergency, adversity or disability.
But forced education where they learn nothing, life on a benefit, or unproductive, dead-end jobs simply perpetuate their problems.
Scope for constructive personal choice is basic to the dignity of human beings. It is just as important to them as it is to us.
The central feature of disadvantage is, in fact, not just lack of money or housing and so on – it is almost total lack of choice.
They need the kind of help that puts people on their feet, able to make a contribution and make gains for themselves by doing so.
Because their motivation is low, they need incentives more than other people, to lift their morale towards personal achievement.
Equity matters to them not just as individuals, but also to ensure a better life later for their children and grandchildren.

Barriers to be overcome

Many barriers stand in the way of our objective, but none of these burning problems prevent us from accomplishing a major ongoing advance, provided that we deal with them systematically.
We need to take time to explain them to the electorate enough to gain their understanding and patience for the approach to be taken, and how it will achieve the objectives of voters.

In any economy, resources are limited and scarce. Optimal allocation is critical to make the best use of them, e.g. SOEs.

Some privileged classes get more than their fair share at the expense of underprivileged people who get less (e.g. excessive protection of manufacturing).

Institutions frequently have vested interests in the existing distribution of wealth and traditional programmes (e.g. state sector reform).

Attitudes and understanding can be so conditioned by the past that people find it hard to see the benefits of change (e.g. intervention to benefit special interest groups).

Without goals and priorities, strong leadership and good communication, those problems can reduce public confidence (e.g. valuable efficiency gains look like cuts in service).

Unstable prices can undermine Government’s ability to deliver on objectives (e.g. interest rates, exchange rates).

Low rates of investment preclude the economic growth needed to create employment and sustain a healthy welfare system (e.g. an uncompetitive approach forces investment money offshore).

Any programme can suffer vicissitudes through economic shocks generated internationally in the world environment (e.g. but the right programme reduces the overall cost of such shocks).

Unwavering leadership is necessary to help the public through the time lags between promise and final delivery, otherwise both the time lags and costs increase, destroying consensus.

Overcoming barriers to progress

The first requirement is to integrate all of our thinking about policy and priorities around our one central Labour objective.
So far, our own internal conflicts have prevented us from working out agreed goals and determining our bottom line.
We cannot develop this programme or win the election of we go on evading the issues that are central to our own purpose.
After that, we rely on clear communication of goals and means to maintain ongoing public understanding and consensus.

These proposals should be launched with a communications programme at least as strong and coordinated as the GST effort.

We should use an aggressive communications approach to win maximum consensus both within the Party and the total community.

General approach to design of supporting policies

All these considerations dictate the broad approach needed in developing policies to support our one central policy objective.
Consistency is fundamental to credibility and public confidence wherever Government programmes have a medium-term context.
Transparency is essential to be able to monitor our progress and show the public the results which our action is achieving.
Given a clearly defined goal, we can be flexible in our choice of means, as long as we advance in the right direction.

Our objective is to turn demotivated people into self-starters. We will not succeed without an appropriate incentive structure.
One person’s privilege is another person’s disadvantage – if we protect past privilege, we entrench that disadvantage.
In ports and shipping alone, sabotage puts an estimated $600-$800m penalty per year on export returns and export jobs.
Where the regulatory environment reinforces privilege and entrenches disadvantage, we need to review it wherever it is.
Enlarging the effective personal choice for disadvantaged people is central to improving their self esteem and quality of life.

Developing specific proposals to support our objective

A variety of proposals are made later in this paper, as examples of how we can think our way through all the linkages.
They do not pretend to be definitive on matters of detail, and are all negotiable among us to support our one basic objective.
They do demonstrate, however, the way diverse policies in separate areas can support or destroy each other overall.
We will not be successful in the medium-term if we fail to take account of those interconnections and interrelationships.

Disadvantages of defensive strategies

The disadvantages of a defensive strategy are amply illustrated by the latest Heylen poll result on the health issue.
Seventy-four percent of voters disapproved of our performance on health – a key Labour issue – and only 17 percent approved of it.
That happened because our policies are perceived as cutting health, instead of delivering more care more efficiently.
The public needs to be told that more health care – not less – can be delivered from current health spending if the Government establishes the right structures and incentives.
To reinforce the parallel, the public needs to be told time and time again of the gains we won for them by making a comprehensive review of the priorities in state trading organisations.
Productivity gains of up to 100 percent were made. We can have comparable gains in public hospitals if we make similar changes.
The potential is there, without additional cost, virtually to eliminate the existing waiting lists for treatment.
We are not seen as getting health priorities right – merely as inflicting provider rationing on the present inadequate service.

Reorienting our own perspective

If the Government and the public have fallen into a trap in the last 18 months, it is seeing our problems in static perspective.
Some of our key "problems" are short-term consequences of actions taken to achieving real economic and social gain for New Zealand.
They cannot be "remedied" by shortening our focus and trying to find short-term ad hoc solutions that make the "problem" go away.
If we take that kind of approach, we lose the long-term gain. The only "remedy" is to focus firmly on achieving those gains.
Our job is to support and facilitate the processes which secure those rewards for all New Zealanders with a minimum of delay.
Because we have shortened our gaze, we are letting everyone lose sight of the real progress already made, and putting it at risk.
A National Government under Bolger or Peters will not develop or sustain the initiatives which this Government has set in place.
They will go back to interest group politics which favours the selected few at the expense of everyone else in the community.
They will certainly not bother to take the situation of the disadvantaged into constructive account in the total equation.

Winning credit for Labour’s achievements

In many fundamental respects, we are now ahead of Australia – not behind them – in progressing towards a reliable growth economy.
Our current account deficit is 1.9% of GDP, theirs 5%. Our inflation in the past year was 4.4%, theirs 6.6%.
Our net debt/GDP ratio is 30%, theirs 33%. Our debt servicing ratio is now 14%; theirs is 17.7%, to give just some examples.
We are getting no credit because we allowed the public to think the policies which achieved those gains may not be continued.

Source of public uncertainty about our direction’

Despite adjustment problems, 73% of 1987 Labour voters recently told MRL that long-term, Rogernomics was good for New Zealand.
The Government dismissed the author of those policies, but claims to be continuing them. To the public, that doesn’t make sense.
The feeling out there is that the author would not have been dismissed unless the Government wanted to change the policies.
Last July, that perception broke the link between rising economic confidence and support for us. The gap has widened ever since.
Our responsibility to the country and the Party is actively to restore confidence – not just tell people they should have it.
The graph describes one of our central problems as a Party, but it also defines the greatest opportunity now facing us.
We can re-establish the link between confidence and Government support if we offer credible objectives, means and capability.
The objective proposed in this paper is credible. We can lay out a 4-year plan to achieve it, and unite to accomplish the goal.
We can promote the objectives, promote the means, and promote our united determination to deliver a measurable central objective.
We have 15 months or more to show that we are not phoneying our way through like National or Jim Anderton’s party.
Labour has got its act together, and knows exactly where it will take New Zealand by 1993. If you want to get there, vote Labour.
The following numbered sections spell out some key principles which underpin a successful approach to policies that deliver:

How economic growth helps the underprivileged

All the authorities including the Royal Commission on Social Policy agree that productive work is fundamental in our system.
Jobs are the foundation of personal and family security. Growth is what safeguards the whole system of social provision.
Policies that foster growth and share the rewards fairly are the biggest contribution we can make to help disadvantaged people.
Policies that sacrifice growth prospects to provide short-term palliatives hurt the disadvantaged severely in the longer term.
As a Labour Government, we should not be ashamed of following the best OECD experience to achieve growth in output and employment.
It cannot be argued with any credibility whatever in the modern world that the 1930s or 1960s recipes have more to offer people.
If we try to compete with Anderton in making that argument, the world market will pass its own judgement on our prospects.
The disadvantaged will suffer more than anyone else in society if those chickens come home to roost, and we could not prevent it.

Learning from international experience

The key lessons learned by the OECD in the past 20 years about achieving successful structural adjustment for growth include:

Protecting particular sectors had profound adverse repercussions on an economy as a whole.
Removing distortions benefits the economy, improves control of government spending, reduces pressure on interest rates and improves the conditions for successful adjustment.
Individually, micro-economic measures have little effect, but a coherent programme which takes account of all the inter-dependencies is likely to be highly effective.
Credibility is crucial. It depends as much on determined implementation and sustained medium-term commitment as on the coherence and perceived equity of the programme.
Commitment and credibility are a prerequisite to achieve the substantial changes over time in ingrained attitudes which are essential to a successful final adjustment outcome

New Zealand’s problems are not unique

During the 1970s, most countries experienced increasing economic problems including rising government expenditure and rising debt.
The almost universal initial response was defensive protection of the industries which were worst-hit by a universal slowdown.
The experience of those solutions to output and employment problems was universally disappointing. It did not protect jobs.
The problems of rising debt, a rising burden on the private sector, and falling investment and job prospects were worsened.
Regardless of political persuasion, governments were forced to seek better resource allocation and use the market to help them.

Why growth alone is not enough to achieve high employment

Everywhere the process of achieving improved resource allocation put heavy pressure on employment as privileged sectors adjusted.
The subsequent improvement in economic growth did not, of itself, necessarily bring with it a recovery of growth in employment.
Unemployment has now fallen to half its 1983 peak in the US, Canada, Japan, Austria, Finland, Norway, Sweden and Switzerland.
It still remains close to that peak in the major EC countries plus Belgium, Denmark, Ireland, Netherlands, Portugal and Spain.
Their levels are twice as high as the first group. Australia and New Zealand currently fall roughly between the two groups.
Whether a recovery of growth brings jobs or not depends a lot on the flexibility or rigidity of a country’s labour market.
Countries with inflexible labour markets suffer higher job losses over longer periods, in response to international economic shock.
Privileged rigidities in sectors like ports and shipping impact adversely on employment and inflation across the whole economy.
Without major improvements in construction work practices, New Zealand will not get the investment needed e.g. in forestry.
A more flexible system would open major new opportunities for disadvantaged people without work, and boost national income.

How undue rigidity hurts the disadvantaged

The disadvantaged suffer much worse than anyone else, as a result of the avoidable costs imposed by rigidity on the economy.
The burden falls most heavily on part-time workers, females and racial minorities – the most vulnerable people in the job market.
Those conclusions are endorsed by international experience. If we are serious about our goal, we cannot totally ignore them.
There are many means of achieving flexibility. It takes very different forms in Japan, the US, Sweden and Switzerland.
A wide range of choices exists about how to improve flexibility. The precise form is less important than whether it is adequate.
There is ample room to negotiate about means in New Zealand, if all parties give due weight to considerations of social equity.

Why the wrong regulatory system increases unemployment

Where the expected productivity of a worker is lower than the required statutory minimum wage, the worker cannot get a job.
In New Zealand, the statutory minimum wage has double in 1984-87 while average wages rose by only 40%.
Our minimum wage rose to 50% of the average wage – a very high ratio by international standards in comparable countries.
The intention was to benefit and protect the low-paid, but one result is that many of those people are now unemployable.
It would be less costly to the state and of more human benefit to them to let them into lower-paid jobs, then top up their wages.
The opportunity is there to put their foot on the bottom rung of the ladder, give them job experience, and start them climbing.

How the tax/benefit/housing system can create or destroy jobs

The relationship of benefit levels to take-home pay plays a crucial role in incentives to work and to learn work skills.
If the differenced between employment and unemployment is insignificant or negative, no incentive exists to find a job.
The higher the total cost to employers, compared with after-tax pay, the lower the employment level for any given wage rate.
Employers will not hire where the total cost to them exceeds the level of productivity they can expect to get from a worker.
When long-term unemployment erodes skill and motivation, expected productivity can fall below the level of the minimum wage.
Schemes like Access have a degree of success, but good on-the-job training does more for a worker’s dignity, security and skill.

Opportunities for a better tax/benefit system in New Zealand

The tax benefit system in New Zealand has deficiencies which have been widely discussed inside and outside of Government.
Lower income people have missed out significantly in the tax changes made by the Government in recent years.
Margins between workers and those on benefits are inadequate. The system reduces instead of increasing incentives to work.
An opportunity is wide open to make a quite dramatic difference in favour of disadvantaged and low income working families.
We can put a reasonable amount of money in their pockets, irrespective of their ability to earn, while encouraging work.
The fairness and practicability of such a system depends on combining progressive average tax rates with low marginal rates.
Systems built on that principle benefit the disadvantaged, and encourage investment, savings and initiative at every level.
We can overcome the problems of the present system, if we are willing to be flexible and to engage in some lateral thinking.

Housing assistance

Present forms of housing assistance do not provide horizontal equity, and create poverty and dependency traps for people.
Beneficiaries in state rentals often have a marked advantage over workers with families who rent their accommodation privately.
They end up tied to their state house, and faced with a significant financial penalty if they move off the benefit.
That system can create lifetime dependency on the taxpayer which confines the beneficiary to a low income on a permanent basis.
The objective of assistance should be to help and encourage the disadvantaged into independence and to lift their horizons.
It should widen their scope for constructive personal choice instead of restricting or eliminating their future options.
Housing assistance needs to be reviewed in a total tax benefit context to ensure that it does not reinforce disadvantage.

Why international competitiveness helps the disadvantaged

Many industrialised countries tried protection initially, to protect traditional or favoured sectors from economic pressure.
Others used the power of the state instead to promote an expansion of sunrise industries judged to have better prospects.
Results in both cases have since been judged disappointing, and fell a long way below the expectations of the policy-makers.
Subsidies distorted competition, blurred price signals, delayed adjustment, and complicated the fiscal tasks of governments.
Employment trends in declining sectors have not differed much, regardless of the policy option adopted.
In heavily unionised industries, state aid boosted real wage levels and encouraged the substitution of capital for labour.
The economy as a whole tended to suffer because unprofitable activities were preserved in areas without comparative advantage.
Highly diversified industries incapable of significant involvement in international trade were an inevitable outcome.
New industries promoted in UK and France as "strategic" wound up dependent on state purchasing for their survival.
In the US, UK, Canada and France, restrictions on Japanese cars added 6-15% to car prices, with a minimal effect on employment.
The cost per job "saved" in the US, depending on industry, ranges from $100,000 up to as high as $750,000 in the steel industry.
The outcome is that some of the highest paid workers in the US are subsidised by other workers who earn much less than they do.
Jobs are preserved in favoured sectors at the expense of jobs in the rest of the economy, and the net job outcome is negative.

International change in direction of policy thrust

Internationally, based on experience, the emphasis has moved to reducing market intervention, and bolstering adjustment capacity.
The favoured means are lower border protection and subsidies, privatisation and deregulation, to boost competitiveness.
Resources then move to more efficient sectors, macro-economic flexibility improves, and stronger long-term growth is obtained.
Both workers and management are encouraged to focus more clearly on the factors vital to their survival and future prosperity.
Speed of adjustment is found to have a major dynamic impact on growth in both output and employment.
Accumulated losses in jobs and investment are greater where excessive impediments to market forces retard adjustment.
Where adjustment is swift, long-term unemployment and loss of human skills is minimised, and investment is stimulated.
Events in countries like France in the past decade show what happens when a nation gets itself significantly out of line with developments and directions at an international level.

The issue is not equity OR efficiency: it is equity AND efficiency

The government has increasingly allowed opponents to portray it as seeking heartless efficiency at the expense of equity.
Without efficiency, improved equity is impossible to achieve. Even the existing level of equity comes under increasing threat.
Waste consumes resources which would otherwise have been available to improve equity levels throughout the community.
Certainly everyone involved in wasting resources collects a rent, dividend or pay packet – but at the expense of the whole community.
The elimination of waste necessarily reduces the employment and the pay packets of those who were involved in producing it.
People as well as money and physical resources are forced to relocate in activities which produce a benefit to the community.
But it is nonsense to pretend that such a change in the status quo for them is a reduction in the overall levels of equity.
The interest groups who make that argument are stating a case for gain to them at the expense of everyone else’s wellbeing.

Why privilege benefits the few at a cost to everyone else

We need to be very clearheaded about this. The benefits of privilege are concentrated in the hands of well-organised groups.
Those people make large gains as through state favouritism, and object violently if anyone threatens their "economic rent".
Moreover, it is a mistake to think that those who benefit from state privilege are all wealthy capitalists or owners of firms.
Workers and unions in privileged sectors also pick up their share of the rent paid without benefit, by the rest of society.
The costs of privilege are dispersed widely across the total community of consumers and taxpayers, who are not well-organised.
The price they pay for the privilege of others is not transparent, and frequently very difficult for them to identify.

Why improving equity levels makes good political sense

The cost of any particular privilege, per consumer or per taxpayer, is unlikely to be critical as an annual payment.
But the hidden costs of the total privilege system are very large and very damaging to the output and potential of the economy.
Moreover, as the costs accumulate over time, everyone finally suffers, including even the recipients of the largest privileges.
But the burden at every stage falls heaviest on the employment and incomes of the most vulnerable and least privileged groups.
They are even less articulate and less organised than consumers or taxpayers in general and incapable of defending themselves.
Governments acting on their behalf must recognise that they will be opposed, tooth and claw, by well-organised interest groups.
Strong leadership, clarity of objectives and priorities, and good communications are crucial in achieving equity gains.
Otherwise the rhetoric of the interest groups will dominate public understanding, and set the agenda for the Government.
But the reward from consumers, taxpayers and the underprivileged far outweighs all that, if we are willing to do the job right.

One example: Improving equity in the public health system

The Government has, to a degree, played into the hands of the interest groups in the recent controversies over health.
We have allowed it to appear that changes in the health system are being driven purely by fiscal and efficiency considerations.
We are perceived as asking incompetent lay boards advised by self-interested providers to ration health care to our budget.
We are not seen to be asking ourselves: who should the public health service be benefiting most and what should it deliver?
The fact of the matter is that the whole public health system exists to serve the purpose of improving equity levels.
Its particular purpose is to ensure that groups who could not otherwise afford health care have access to the best of care.
Unless the system is kept at maximum efficiency and gets its priorities right, that care ends up becoming unaffordable.
At that point, the system as a whole is failing to do the particular job which is its primary duty to us and the public.
Unless we show clearly that we are using efficiency in the service of equity, we will go on losing by a 74:17 ratio.
We know from our SOE experience that there are efficiency gains of 30-100% to be had in hospitals, if we structure them better.
Without those gains, cost will keep rising, and even existing levels of equity will be further eroded in the future.
Changes in staffing and resource allocation are essential in health – not for negative reasons, but to achieve gains in care.
This is a positive programme to present to the public, not a negative one. We have to turn such issues right around.

Why a change in mix is not a change of principle

We have created a rod for our own back in such areas as health and education, by encouraging people to worship sacred cows that do not exist.
We do not have a simple system of public provision of health care in New Zealand – our system is a mix of public and private care.
The state plays only a small role in dental care or optometry. It subsidises part costs for doctors and pharmaceuticals.
It funds all hospital care for some people, and some of it for others, but private provision and payment also play a role.
If injury is caused by accident, however, the taxpayer picks up the total tab for instant treatment, public or private.
We have had a mixed system throughout our history, and over time, the ingredients in the mix have been adjusted according to need.
It serves nobody well if we pretend that we have a total public system, and turn any change of mix into a change of principle.
That locks us into a position where we are unable to review all the options on merit, for optimum benefit to the disadvantaged.
It may also deprive us of the opportunity to deliver improvements in health care which would be welcomed by the general community.
In that case, we may end up delegating health reform to a future government far less competent that we are, to do the job well.

Which mix of cash and kind works best?

Similar confusions exist, as I see it, about the advantage of provision in kind over provision of the means to afford services.
It has been argued that a stroke of the pen can wipe out provision based on payment, as we wiped out farm subsidies.
In that case, why has National Super been so deeply entrenched, and why have benefit levels been so reliable for so long?
It is arguable that those payments-based systems have been far less prone to erosion of quantity and quality than health care.
In making those points, I am not seeking to cause controversy. There is one test: What delivers best on our objectives?

We should all be prepared to look at that question on an open-minded basis, and reach responsible collective decisions.

A better future for Maori People

Race relations are an issue that can make or break any political party in the 1993 election campaign. Getting it right is fundamental.
The Maori issue is deeply interlocked with all other issues of disadvantage at every level. Perceived equity is critical.
The objective for Maori people must be to open up effective opportunities for them to share fully in the nation’s future.
Moreover, the need is to place them in a position to do so in a self-sustaining way, based on their own skill and initiative.
That is not simply or even fundamentally a question of righting past wrongs or restoring lost land and fisheries to them.
Complete justice based on the past is impossible and in attempting it we must take care not to make bitterness a permanent feature of our race relations.
Justice for Maori people has to be based on what will work best for them and the community in the 21^st century.
Their central problem is a lack of the knowledge and skills which are essential to self-esteem and success in the 1990s and beyond
Unless that efficiency can be remedied, the Maori people will remain at a permanent disadvantage in the 21^st century.
Their level of technical, professional and trade skills is even more important to their future than questions of land ownership.
Granting special privileges to Maori which we withhold from disadvantaged people of other races will not solve our problems.
On the other hand, the right answers for Maori and for all disadvantaged people will improve rather than impede New Zealand’s future progress.
There are also crucial efficiency issues affecting the control and ownership of Maori assets which have not yet been faced.
If we continue to ignore them, over time, the Maori people will continue to fall increasingly behind instead of catching up.

Government Strategy and the Labour Party

The public is absolutely not in the mood right now to elect any Government which seems dominated by left-wing union influence.
If Labour’s new candidates in this election increase that influence in the Caucus, there is no way on earth we can win.
Our Party includes some people whose views would place them in opposition to any electable Government, Labour or otherwise.
If we let them dominate or seem to dominate our approach to policy, there is no way we can ever get Labour elected.
Ultimately, we have a choice: we can go to the polls with a winning strategy and profoundly upset some of those people.
Or we can keep them happy, defeat our own party, and confine Labour permanently to the Opposition benches in the future.
Those members of the Party also have a choice: they can hang in there with us and win, or choose Jim Anderton and futility.
Any winning strategy risks losing some of them, but those losses would be more than made up by gains among sensible voters.
Labour has more to gain by attracting commonsense middle-of-the-road New Zealanders than by holding onto our wild extremists.

CONCLUSION

Five years ago, we came to power in a country with problems far more deep-seated and dangerous than any facing us today.
Instead of despairing or destroying ourselves through internal disagreement over means, we treated them as a major opportunity.
We implemented programmes designed to go to the root of the country’s difficulties, and give lasting benefit to New Zealand.
We did that for the benefit of the nation as a whole, without fear or favour, regardless of opposition from interest groups.
We can be returned again in 1990 – but only if we can show the same drive, integrity and commitment that we showed then.