Theory and social policy

¶ … Social Policy: KiwiSaver as a Social Policy

A vitally important social / economic policy that the New Zealand Government launched - thanks in part to the progressive influences of the Labour Alliance Coalition and cooperation from private providers and employers - is called KiwiSaver ("Poua he Oranga"). KiwiSaver is a kind of savings program to help all citizens prepare financially for their retirement, or whatever their future plans happen to be. The benefits are many, and the program is flexible. This program was certainly not designed with Maori needs in mind exclusively, but indeed KiwiSaver offers returns to individuals - if they take advantage of it - that may not be as well off financially as they would like to be in terms of support for their families and their future comfort.

KIWISAVER & DATA SHOWING the NEED:

To get started with KiwiSaver, one becomes a member, opens an account, and the Government will put a tax-free investment of $1,000 into that (legal citizen's) personal private account, according to www.kiwisaver.govt.nz.A KiwiSaver member must be a person earning a steady wage so that he or she can make contributions into an account. That $1,000 ("kick-start" money) goes into the account about three months after the account is opened.

Another advantage to joining KiwiSaver is the tax credit that is given to members after one year (July 1 to June 30, the fiscal year, is the time frame in this instance). The minimum tax credit is $1,042.86. A person must be a member, be over 18 years of age, and be a resident of New Zealand.

As of April 1, 2008, the employer of a KiwiSaver member is required by law to make contributions into the member's account. The first year, the employer is required to put 1% of a member's earnings into the KiwiSaver account; each year after that, the member's employer is required to increase the contribution by 1% until the maximum of 4% of a member's earnings is being put into the member's account. To help out with those contributions, the Government will give employers of members "up to $20 a week to help them meet the cost of making contributions."

After three years of making contributions to one's account, a member may withdraw from the KiwiSaver account to buy a home - if it is a first home purchase. This scenario becomes a bit complicated as far as withdrawing for a home purchase; for example, if the KiwiSaver member has already purchased a home in the past, he or she may withdraw KiwiSaver funds but not the original $1,000 that the Government placed into the account at the outset.

KiwiSaver is clearly becoming a successful social democracy-themed program; indeed, as of 31 May 2008, membership in KiwiSaver reached 673,942. Finance Minister Michael Cullen said in www.kiwisaver.govt.nzthat it was "especially gratifying to see so many young New Zealanders starting a savings habit" (more than 180,000 members are less than 25 years of age).

SOCIAL DEMOCRACY & KIWISAVER:

The political philosophy that was ostensibly the driver for the initial policies of social change when the Labour Alliance Coalition Government took over in 1999 - which in reality embraced the philosophy of social justice - was, according to Steve Maharey (today a member of Parliament) the "New Social Democracy." Why the New Social Democracy as a working policy phrase? Politicians are drawn to "safe" phrases and slogans, which cannot be thrown back into their faces by opponents of their policies. Meantime, Maharey, who has served in myriad roles in the New Zealand government and within the Labour Party over the years, explains in a speech (26 March, 2001), whilst he was "Acting Minister of Broadcasting" and "Associate Minister of Education" that his Labour Government used the shied away from labels like "The Third Way" and "Closing the Gap."

In the www.Beehive.govt.nzWeb site Maharey states (in 2001, the date of his speech) that "The Third Way" had become "somewhat imprecise" (read that actually to mean it was up for criticism by the political opposition). Also, the concept of "Closing the Gap" - as a political philosophy that steered a new form of social justice through the country - had become "imprecise," Maharey went on. And "Closing the Gap" had in fact become "a political lightning rod for the kind of criticism that was both politically destabilizing" and also it was "undermining" the results his government was seeking (Maharey, 2001). In short, Maharey believed "Closing the Gap" had become a target for criticism by conservative opponents of the Labour Alliance Coalition.

Those individuals (opponents of progressive legislation led by the Labour group) viewed the slogan "Closing the Gap" as something of a "zero-sum game" in which the Maori and Pacific Island peoples win and Pakeha New Zealanders (European ethnicities) are the losers. And so the bottom line in terms of what political philosophy guided the launching of KiwiSaver was the "New Social Democracy."

The facts that led to the need for a program like KiwiSaver were presented well before the KiwiSaver program began in 2006-2007. The Tax Policy Center (Urban Institute and Brookings Institution) showed data in 2006 that while the New Zealand Superannuation, or NZS, has helped prevent poverty among older citizens, nevertheless there is "a significant share of the population falling below the poverty line" (Toder, et al., 2006). However, the report explains, "There was a notable decline in employer-provided superannuation plans between 1993 and 2003." The number of employees that were covered in a superannuation plan that was provided by a private employer as a percentage of the employed labor force "decreased from 18.5 to 11.4%," hence, the need for KiwiSaver.

POLITICAL THEORY (NEOLIBERALISM) and KIWISAVER:

When Dr. Michael Cullen gave a speech to the government union forum on 7 November, 2002, he observed that the New Zealand Government had "rejected what he called the 'neoliberal' route to growth," according to Roger Kerr, Executive Director of the New Zealand Business Roundtable (Kerr, 2002). What Cullen specifically was referring to as neoliberal included (Kerr's words): "Low taxes, as little regulation as possible, the privatization of as much economic activity as possible, and a minimalist state." Kerr is making this point because he is among conservatives who question whether or not the Labour Alliance ever really gave up on neoliberalism as a theory leading to social policies. Kerr is not alone in questioning the actual definition of neoliberalism,

Kerr quotes from Australian Andrew Norton, with the Centre for Independent Studies in Sydney, who says using the term "neoliberalism" is a "code for 'I am a left-winger who does not like markets'...It is a leftist version of the secret handshake; a signal that the reader is with fellow travelers," Norton wrote, and Kerr quotes from Norton to make his point that a) neoliberalism is a confusing concept; and b) hidden behind the "neo" are real political and social liberals who are not to be trusted.

An article in the British Journal of Sociology of Education (Robertson, et al., 2002) asserts that as regards proponents of neoliberalism in New Zealand - with reference to the restructuring of education and other matters of social justice - have sought to "isolate and localize" problems "in order to contain and manage the risks associated with them" (Robertson, et al., 2002). In fact, neoliberalism in New Zealand, according to the authors (one of whom is a professor at the University of Auckland) amounts to offering social benefits to citizens through a kind of "trickle-down of wealth" generated by the state... [That encourages] individuals...to be more responsible for their own economic well-being."

The post-war welfare state "accepted and met - though with decreasing success - a legitimation burden based on taking responsibility for a wide range of social outcomes," Robertson and Dale argue. In fairness to New Zealand's post welfare policies, the authors state "New Zealand...has sought to promote a state of permanent innovation and flexibility both in its citizens and workers...in order to strengthen structural competitiveness..."

This article of course was written well before the launch in New Zealand of the KiwiSaver, and by reading the critique of neoliberalism one can see that it was high time for a program like KiwiSaver, on order for citizens (voters, taxpayers) to begin to provide for their own financial needs.

Meanwhile, that being said, a more general approach to the need for government to understand (through political theory played out by political parties) and know their constituencies very well, including the economic and social demographics of those constituencies. No matter what policies they prefer to lay claim to, the Labour Alliance party actually brought a "neoliberal" economic policy to the forefront by 2002, according to an article in Political Psychology (Allen, et al., 2000). Professors Michael W. Allen (of the University of Newcastle in Australia) and Sik Hung Ng (of Victoria University of Wellington) insist that people's concerns about the economy "...affect their political party preferences," and indeed it is no surprise that empirical research shows that people choose the party that will improve their economic situation.

The authors believe that some citizens have become "...socialized into a particular ideological system that molds their values, attitudes, beliefs and/or symbolic predispositions on a wide range of issues, including political parties and the economy." And this article also found that most party interests and self-interests revolve around both ideological considerations and economic considerations; however, those voters who are on the lower rung of the economic ladder tend to be less ideological and more economically-motivated, which makes sense.

Labour...[which is] traditionally welfare state in ideology, was the party that initiated the conversion to neoliberalism" prior to the election of the Alliance in 1999, the article continues. Allen and Ng write that many members of the Labour party "felt confused and betrayed" when the Alliance moved away from the welfare state policies and into neoliberalism. Another result of the Labour Alliance's shift from welfare to neoliberalism was an "increase in poverty and income inequality," the writes assert. Poverty increased "perhaps as much as 50% from 1984 to 1993," the authors write. Moreover, research presented by Allen and Ng indicates that "people with incomes in the top 25% income bracket believed that their economic situation had improved" under neoliberal policies. And those in the "bottom 25%" of the income bracket in New Zealand "believed their situation had deteriorated."

So the point here is, the political leadership in New Zealand is aware of the need to provide as many citizens as possible with secure financial futures. But the Labour Alliance and other parties are aware of the research provided by Allen and Ng that having a political policy that appeals to people because it embraces financial progress as a theory; the theory is that is we as a party go out of our way to offer some financial rewards to constituents, the voters will join our movement.

THE THIRD WAY & KIWISAVER POLICY IMPLICATIONS:

Is the Third Way linked to the establishment of KiwiSaver? The first step in this investigation is to examine what the Third Way (TTW) truly is - and in the case of University of Auckland law professor Jane Kelsey, what it is not. Kelsey puts forward the idea that TTW is not an attempt at transformation of the New Zealand government. The Third Way is just "a political project whose objective is short-term political management" (Kelsey, 2002). The author states in her book at the Crossroads (excerpted in (www.jobsletter.org.nz)(in something of a cynical tone) that TTW "enables centre-left governments to rationalize their role in consolidating neoliberalism" (Kelsey, 2002). She does concede, according to the introduction to her excerpts, that the Labour Alliance coalition has given some "genuine redirection" to social justice (which would include KiwiSaver), environmental and foreign policy, but she has serious reservations about the true meaning of the Third Way; in her view, is it a theory or a temporary tool?

Moreover, Kelsey writes that TTW management style may have a chance to "defuse the tensions created by globalization in the short run." She suggests that globalization has not been all that good for New Zealand, and in fact, globalization has been a thorn in the side when it comes to social justice; and she quickly adds that the Labour Alliance Coalition Government did, in its first ten months of being in control of the NZ Government, the business side ("a hallmark of the free market era") had been "restored" under the guise of the Labour Alliance's insistence that they were offering "a new way forward."

What Kelsey is really saying here is the theory of the Third Way is really just a ruse, and in fact the Labour Alliance basically continued the "globalization agenda" which had previously led to New Zealand falling from 9th in OECD ranking in 1970 to 19th in 1999, when the Labour Alliance took over. Kelsey suggests that the real political theory embracing the Third Way is better understood through the writings of Anthony (Lord) Giddens.

Giddens' view of the politics of TTW: it is "above all an endeavour to respond to change" (Giddens, 2000). Change in the case of KiwiSaver is certainly linked with the Third Way, as it was apparent to the Labour Party and others in political leadership roles that too many New Zealanders were being left out in the cold when it comes to their ability by buy a home or plan for their retirement with financial security. In his book the Third Way and its Critics, Chapter 2, Giddens believes that Third way politics amounts to "modernizing social democracy" (Giddens, 29); indeed, it the politics of the Third Way does not "displace social justice" but indeed "represents the only effective means of pursuing those ideals today" (Giddens, 29). On page 32-33 of his chapter Giddens suggests that social democracies need to be modernized, and Third Way politics "is an attempt to carry further the reform process" that social democrats have begun. After conservatives like Ronald Reagan and Mrs. Thatcher set the stage, some leaders on the left became more prepared to "question orthodoxies" related to social justice - and therein lies the need for the Third Way (or Third way politics as Giddens likes to say).

While Maharey avoids using the Third Way theory (fearing it will be seen as a "label") and instead insists that the "new social democracy" can help refurbish the "welfare state," Giddens insists that TTW implies "a thorough-going programme of policy modernization... [Needed in order to] modernize the state and government, including the welfare state..."

And Giddens is careful to point out on page 39 that pension reform leads to questions about social justice, and this is where TTW comes in. The Third Way is certainly a left-leaning theory, but moreover TTW is about "breaking with the established leftist doctrines" where they have failed to produce positive results. Indeed, when considering pension reform, many aging issues come to the front, such as, "How can we ensure that older people don't live in poverty?" And on page 48 of his essay, Giddens notes that discussions of social justice need to include the issue of crime. Third way politicians, he goes on, are correct to point to "the hypocrisy of the traditional left," many of whom push the crime issue off the table of reform and link crime with "other social problems." The Third Way considers "liberty" at the "forefront" when talking about crime, because solutions like surveillance and "saturation policing" butt up against personal liberties.