Wellington, New Zealand
New Zealand's Labour government has major promises to keep after winning another term in office in the Aug. 15 general election. This is needed to restore the faith of its traditional supporters in the labor unions and lower income groups, who have warned they expect to see some old-fashioned socialist policies put into place over the next three years. To do this, Prime Minister David Lange has now targeted major improvements in the nation's health, education, and welfare services as his government's main aim. Many long-time Labour voters stayed away from the polls to protest economic policies that seemed to benefit the wealthy at their expense.
But enough conservative voters, who normally support right-wing parties, shifted to Labour to give it a healthy 15-seat majority (56 to 41) in the 97-seat House of Representatives.
Since coming to power in 1984, Mr. Lange's administration had concentrated on a radical reform of the economy on free market lines. It launched a massive deregulation program, floated the New Zealand dollar, abolished farming and manufacturing subsidies, and dismantled protectionist barriers. A number of government departments were converted into corporations and told to earn a profit.
The policy turned one of the world's most over-regulated and protected economies into one of the most free-wheeling. Financiers and speculators made millions, but the man in the street suffered as inflation soared to a record 18.9 percent, mortgage rates topped 20 percent, and unemployment rose. The government admits that unemployment (now 6.3 percent) is still rising and that this remains its biggest problem. It has pledged massive programs to give unskilled workers the training they need to get jobs.