The Role And Functions Of New Zealand Government Essay

This essay has a total of 1711 words and 8 pages.

The Role And Functions Of New Zealand Government

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

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 efficient too, they can focus on their
primary task by providing essential services. Some of these services include public
hospitals, education, benefits, and emergency relief.

From the reforms came a radical change in New Zealand trade. In 1984 the Government
devalued the New Zealand Dollar by 20%, then in 1985 introduced a floating exchange rate.
Along with that, the removal of agricultural subsidies and import tariffs. It allowed New
Zealand to be a fairer country to trade with. As a direct result, the trade competitive
index jumped from 0.72 on 1985 to 0.98 in 1987. Foreign investment increased as the New
Zealand Dollar strengthened against the ‘green back' and the pound. Consequently,
importing and exporting firms benefited from the change in policies.

The services that the New Zealand Government provides have ongoing restructuring (which
means altering an already established department) in the State Sector. The State Sector
Act 1988, "which departmental Chief Executive is fully accountable for managing their
organisations efficiently and effectively, and changed the role of the State Services
Commission from employer to manager of public service to employer of Chief Executive and
Advisers to the Government about the management of the State Sector." (1999, OECD
Government Reform) Restructuring of this sector is eliminating inefficient staff
positions, creating more high-ranking positions as overseers and advisers for a more
effective business activity. It could even mean closing factories or offices not required
any more. Centralising corporate headquarters from Warkworth to Auckland, or closing a
freezing works in Masterton and moving operations to Takapau is another example of
restructuring. It removes the burden from the government so they can concentrate on other

In 1991 the Employment Contracts legislation allowed unionism to become voluntary instead
of compulsory. This meant their power over employment negotiations weakened. Then in 2000,
the Employment Relations Act amended small pieces of the Employment Contracts Act.
Employees had to be registered in the union to take advantage of the rights the
legislation offers. The union must register at the Department of Labour under the
following conditions: they must be independent from the employer, and be a democratic
organisation. While unions have reduced its influence, many "traditional organisations
became more active supporters of the reform process." (1999, OECD Government Reform)

Of the radical reform period, consultation and communication with the general public has
been minimal. As new bills were passed, the general public needed to be informed of the
changes. As time moved on, more publicity was made when changing major legislation, or
adding new acts. During the Employment Relations Bill the media had in-depth interviews
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