Corporations could now move factories to foreign countries where cheap labour was available and the profits, in turn, could be moved to newly formed international tax shelters and related trusts. Mislabelled "free trade agreements" (investors' rights) accelerated this process.
According to Noam Chomsky, professor of linguistics and writer and lecturer on philosophy, social issues and US foreign policy, by the 1990s "this has led to a totally different economy ... a big attack launched on the whole social contract that developed through a century of struggle". And he added: "It has led to a serious decline in unionisation, which carries with it a decline in wages and other forms of protection."
Between the mid-1980s and mid-1990s, New Zealand's economy shifted from one of the world's most egalitarian to one of the more unfair. A 1999 study by Massey University and the University of New South Wales showed that the gap between New Zealand's rich and poor was "one of the widest amongst developed economies".
According to the Financial Times, "the standard of living had fallen from 1.25 times the average standard of living in high-income countries in 1965 to 0.62 in 1999".
In the 1980s, progressive taxation, a main component of New Zealand's egalitarian state, was returned to levels not seen since the Great Depression. Death duties were abolished and income taxes flattened so the top marginal rate of income declined from 66 per cent to 33 per cent.
We remained the only developed nation without a capital gains tax, creating additional tax loopholes for the wealthiest, while the regressive tax GST was introduced in 1986 and increased in 2010. GST - as a "flat tax"- hits the poor harder than the rich.
Additionally, essential state industries from prisons to electrical providers were restructured or privatised. In part, this made up for lost revenue from tax cuts while making the workforce accept lower wages and reduced conditions.
Under such conditions, union membership declined and the power to negotiate was crushed, causing a rapid decline of wages relative to inflation and productivity. Unions folded. Working conditions plummeted.
Unemployment rose to 20 per cent by the early 1990s, lowering to 4 per cent during the Helen Clark years, and hovering around 6 per cent since 2008. The result is rampant poverty and declining incomes creating stressed social conditions that have resulted in increased suicides and crime.
The new tax system, which put more of the tax burden on the poor and middle class, created resentment. For many, taxes have morphed from a necessary part of the welfare state to something they now hate. New Zealand has the second-lowest personal tax burden in the OECD after Mexico.
Taking into account increasing population and inflation, government spending on health, education and housing keeps falling. During the recent "rockstar economy", top incomes soared, lower incomes fell and so the rise of income inequality continues.
-Brit Bunkley is an internationally exhibiting artist. He recently retired from UCOL, where he had been head of sculpture since 1995, and has taught various political science courses.
