New Zealand at risk?

Yesterday, Don Brash gave a speech in which he wrapped himself in the flag and proclaimed his loyalty to New Zealand. In response to which we should simply remember three words: "gone by lunchtime". But rather than laughing at that, I'd like to focus on one of the other key points in the speech - that of New Zealand being "at risk". According to Brash, this is due to the widening gap in incomes and living standards between New Zealand and Australia:

In 1999, after-tax incomes in Australia were 20% higher than those in New Zealand. Last year, the gap was 33%. On present trends, that gap could easily be 40% within three years.

And this isn't just about statistics: that gap has profound implications for the quality of education we can afford for our children, for the quality of our housing, for the quality of our roads, and for the quality of our healthcare. It's no doubt a major reason why mortality rates from breast cancer are 30% higher in New Zealand than in Australia.

As a result of that gap in living standards, we've seen a rapid rise in the net flow of Kiwis to Australia...

What's ironic is that National proposes to close this gap by pursuing policies which will actively reduce the living standards of New Zealanders. Their employment policy, for example, would limit union access to workplaces and the right to collectively organise, slash holidays and rights to take personal grievance cases, and introduce probationary employment. This will reduce conditions and keep wages low, with a consequent effect on the living standards of ordinary New Zealanders. Their "welfare policy" is actually a labour market policy, aimed at forcing people onto the labour market to reduce wage pressure - again, reducing the wages, conditions, and living standards of ordinary New Zealanders. And the monetary policies National remains committed to - and which Brash so ruthlessly enforced during his tenure as Governor of the Reserve Bank - are explicitly aimed at creating and maintaining a "reserve army of labour" in order to avoid "inflationary" wage increases.

More broadly, National remains committed to a "low wage, low skill" economy, in which employers simply hire another warm body rather than investing in capital or training. This is the same economic model which saw that gap open in the first place, and attempting to perpetuate it will not see the gap close (except accidentally, as a result of policy change in Australia - something which may happen due to John Howard's recent ECA-style "reforms").

On top of this, National's tax policy would directly reduce the funds available for that quality education, quality housing, and quality healthcare Brash claims to care so much about - again, directly reducing the living standards of ordinary New Zealanders who rely on those government-funded services.

In short, these are not policies for closing the gap with Australia - they are policies for widening it. Ordinary New Zealanders will be made worse off, so that income and wealth can be transferred from the many to the few - exactly as happened in the 90's. That's the real risk to New Zealand, and it comes from Don Brash.