The New Zealand Government has made significant changes to the economy throughout the last 15 years. The operation and organisation of business activity in New Zealand has been affected by this changing economy. All aspects of the New Zealand Government have been altered. The reason for this change was to improve the performance by being more efficient. The key reforms are privatisation and corporatisation of State Owned Enterprises (SOEs) and restructuring government agencies.
The most significant change was the election of the Labour Party in 1984, which ended the Muldoon Administration. At this time, New Zealand was in a rut because of poor economic management by the previous Government. Unemployment was high in 1983 and still climbing, real GDP was only 1.15 between 1976 and 1984, and international debt was at 41% of GDP in 1984. The United Kingdom (the major New Zealand export market) had join the European Union in 1973, and since had to endorse a quota where they could only import a certain number on overseas products. Under the National Government, New Zealand was close to self-sufficiency because the government refused to import products from overseas. The public were to losers in this situation as there were a limited number of products offered for sale, and they were also quite expensive too. This called for some desperate transformation.
When the Labour Party was elected under David Lange, they immediately changed the sectors that they thought needed urgent attention. They were Capital Markets, Financial, Industry, and International Trade. Other reforms occurred in 1985 (Monetary), 1986 (Tax and Corporatisation), 1988 (Privatisation), 1989 (Public Expenditure), 1990 (Labour Market), and 1991 (Resource Management and Social Services). In fact all state sectors underwent some sort of alteration at some stage. The period from 1984 – 1994 was dubbed “a period of radical change.” These reforms occurred simultaneously and some are still being refined now. From 1995 onwards there was a second period of “slower paced evolutionary” activity. (1999, OECD Government Reform)
The key idea in the reform process was to “roll back the state” – in other words focus more on what a government should do which is, governing the people. Defining a government’s core business can be difficult because in every country it is different, even in New Zealand. It is also difficult to set limits as its role is constantly changing; however, the main consistencies are those of Health, Education, Defence, and Welfare. Some restructuring and reforms affected these sectors.
The New Zealand Government owned many enterprises such as State Insurance, Air New Zealand, New Zealand Rail, The Bank of New Zealand, and Telecom. In 1987 most of these assets were sold. By doing this it meant the Government could pay off large accumulated debts and allow these companies to become more efficient. After the sale of these SOEs that the New Zealand Government has become more...