Hard times that fuel antipathy in the Antipodes

DURING the Barcelona Olympics, an Australian comedian had a huge success with an anthem called 'I Don't Care, As Long As We Beat New Zealand'. The song typified the long-standing rivalry between the two neighbours who are separated by more than the Tasman Sea.

The rivalry usually centres on sporting contests but, last week, the two countries were arguing about economic policy with a fury every bit as great as that which usually follows a closely fought cricket test or rugby match. The issues - fighting inflation, restructuring the welfare state and selling off public assets - are as pertinent on the other side of the globe as they are in Britain.

The row began when Joan Kirner, the Labour Premier of the Australian state of Victoria, commissioned a series of television commercials to try to boost her government's low popularity ratings before a regional election in October. The advertisements featured disaffected Kiwis condemning the radical reforms of New Zealand's conservative National Party government as a disaster for both them and the nation, and warned that Victoria faced the same fate if their conservative coalition counterparts won the October poll.

New Zealand has been through eight years of some of the most radical economic adjustments ever attempted in a democracy, experiments which have made Thatcherism seem mild.

Australians have watched with morbid fascination as, first, a New Zealand Labour government exposed virtually every section of the economy to the free market, and then the Prime Minister, Jim Bolger's National government began taking the axe to one of the world's most comprehensive welfare states.

With one in three of New Zealand's 3.4 million people on welfare benefits of one kind or another, the government - spearheaded by the hardline Finance Minister, Ruth Richardson - said the nation was living beyond its means. Setting out to create 'a true enterprise society', it declared that nearly half the population was rich enough to look after its own health, education, housing and retirement needs.

The family allowance was abolished and unemployment, widows, sickness and single-parent benefits cut by up to 25 per cent. Pensions were frozen, made subject to income testing for the first time and the qualifying age raised from 60 to 65.

Universal free hospital care was abolished this year, with patients made to pay NZdollars 50 (about pounds 14) a night (to a maximum of 10 nights a year) and outpatient fees introduced. The cost of doctors' visits rose steeply and prescription charges trebled.

State (council) house rents were raised to commercial market levels. Last week, the State Housing Corporation was restructured into a company charged with making a profit and returning dividends to the government. The poor will now be given accommodation vouchers, which can be used to subsidise either state house rents or private rents.

A number of state utilities and departments were restructured into profit-making enterprises with a view to privatisation. The number of civil servants has been halved in four years and a raft of nationalised industries, including Telecom and the Post Office Savings Bank, privatised. Ironically, the state-owned Bank of New Zealand has just been sold to the National Australia Bank.

Virtually all state subsidies and incentives to farmers and manufacturers have been abolished and import duties lowered.

Legislation was passed requiring the central reserve bank to adopt monetary policies designed to eradicate inflation, which this year dipped below 1 per cent - its lowest level for three decades.

Mr Bolger says the government's policies have succeeded in creating a nation living within its means for the first time in years. But opponents say that the country's welfare state, once its pride, has been destroyed and point to increasing demands on charities for food and clothing donations, now running at the highest levels since the Depression.

So when Australians joined those questioning the country's direction, the usually placid Mr Bolger responded by launching a personal attack on the fuller figure of Mrs Kirner.

'They say the show's never over till the fat lady sings,' he said. 'Well, I think it was her we heard warming up in the wings this week.'

Defending his record, Mr Bolger was able to point to some signs that the brutal medicine is working. After years of no growth, the economy is predicted to grow by more than 4 per cent in the next year. Inflation is at 1 per cent, the lowest in the 24-nation Organisation of Economic Co- operation and Development, mortgage interest rates have fallen to under 10 per cent and there is a record trade surplus.

Unemployment remains the black spot in the government's record, continuing at record high levels for New Zealand, though last week it fell to 10.1 per cent of the workforce. In Victoria it is 12 per cent (compared with 9.7 per cent in Britain). There is no shortage of low-income New Zealanders who identify with the criticisms aired in Victoria's television ads.

Mr Bolger is adamant that his government has created a 'new economy' - one that will revive New Zealand, which, in the mid- Fifties, boasted the eighth highest standard of living in the world, but 30 years later had slumped to 23rd. He has another year to convince his voters, of whom a recent poll said only a half believed the country was on the right track.

(Photograph omitted)