Jim Eagles: Myth of the evil decade

The past is fortunate - it tends to be viewed through rose-tinted spectacles. It's a natural human tendency to remember the good times and shove the bad ones to the deepest recesses of our minds, recalling the triumphs rather than the disasters.

And of course there is much to be said for yesteryear. While stuck on the motorways I fondly recall a time when Auckland's roads weren't clogged. When I view modern Devonport from the top of Mt Victoria I think of the days before the harbour bridge when there were lots of opens fields to play on.

But, in fairness to the present, I have to remind myself that yesteryear did have its flaws. One reason the roads were empty was that import restrictions made it almost impossible for an ordinary person to buy a car. These days nearly everyone can enjoy the freedom that a car provides.

In the days when Devonport had lots of wide open spaces it also lacked a lot of services we now take for granted. There was, if I remember correctly, only one cafe on the whole of the North Shore.

If we take off the rose-tinted glasses, the New Zealand of yesteryear may have been a green and pleasant land but it offered little in the way of choice in anything.

But there is a glaring exception to this rosy-hued rear vision when it comes to economics. For some years we've been lectured at great length on the evil "failed policies of the 90s". Time was when no speech by Helen Clark, no article by a left-wing economist and no political comment by a pinkish magazine was complete without the repetition of this phrase.

Some people may have been brainwashed into believing that the economic policies of the 90s were one aspect of yesteryear we were lucky to have left behind.

But perhaps we should take a look at the "failed policies" more closely. That process is handicapped by the fact that I have never heard anyone define what they are. However, by asking around I have managed to develop a sort of consensus about what the economic policies most associated with the 90s are.

One key economic policy from the 90s is the Fiscal Responsibility Act 1994. This requires governments to be extremely open about the balance of their income and expenditure and its effect on the economy, with the aim of avoiding the overspending of the 70s and 80s, which saw national debt reach dangerous levels.

So did fiscal responsibility fail? Presumably not, because not only is that act still in force but one of the proudest boasts of Finance Minister Michael Cullen is that he has been extraordinarily fiscally responsible, building up surpluses and paying off debt even when it might have been politically expedient to cut taxes.

Another key economic policy from the awful era is the independence of the Reserve Bank, set out in the Reserve Bank Act of 1989, which gave the bank freedom to operate monetary policy to keep down inflation.

The Government has adjusted the inflationary targets the bank has to meet, and appointed friendlier faces to its board, but the independence remains, interest rates are higher than would be politically desirable and inflation stays low.

One of the 90s policies most often criticised is the dreaded Employment Contracts Act 1991, which deregulated the labour market. But, strangely enough, while that act has been replaced by the union-friendly Employment Relations Act 2000, plus even more union-friendly amendments in 2004, not much has changed.

If the proof of a pudding is in the eating, union membership remains small, most workers are still on individual contracts, efforts to revive national awards have made little progress and wage increases have lagged behind both inflation and company profits.

Another 90s hate-figure is privatisation (though much of that was carried out by Labour in the 80s). The present Government has certainly halted further sales of state enterprises and rolled back some privatisations. Air New Zealand, for instance, is again largely stated-owned and we've bought back the rail network. But the airline and the railways are still run by listed companies, and it's hard to discern any real impact on the economy.

What about the removal of tariff and licensing barriers and the opening up of the economy to free trade, which prompted left-wing critics to make dire predictions of mass unemployment?

The Government has fractionally slowed the removal of the few remaining tariffs but otherwise has left things as they were and, indeed, has actively sought free trade agreements.

Then there's the hands-off industrial policy of previous administrations, which was severely criticised by those hankering after a planned economy.

Economic Development Minister Jim Anderton has busily set up industry groups and handed out grants to a few selected projects, but there have been some embarrassing failures and the impact on the wider economy has been minimal.

Overall, then, you'd have to say the main elements of the economic policies of the 90s are still very much in place, which is a little puzzling if they were failures.

Even more puzzling, presumably they must have something to do with the prolonged period of economic growth, high employment and low inflation the country has enjoyed. Is that a failure?

Perhaps it's time they stopped being referred to as "failed policies" and given the credit that is their due.

If you're looking for lessons, rather than slogans, it's a good idea to view yesteryear with clear eyes.

American writer George Santayana famously said, "Those who cannot remember the past are condemned to repeat it." But you could equally say that those who cannot remember the past accurately may find themselves unable to repeat the policies that worked.