N.Z. GOVERNMENT POPULARITY RISES AHEAD OF ELECTION
New Zealand's ruling Labour Party
government has just completed its three-year economic reform
which threw thousands of people out of work, yet its popularity
has risen as the September deadline for the election draws
closer, a recent poll shows.
    An Eyewitness/Heylen Poll, conducted for Television New
Zealand's Eyewitness news broadcast on April 2, showed Labour
had the support of 50 pct of voters compared with the
opposition National Party's 46 pct.
    The figures had been reversed in a poll a month earlier.
    The poll showed 40 pct of the canvassed voters thought the
economy would improve over the next year, up 12 points on last
month's result.
    The increase came in a week when the government turned
seven departments into nine profit-oriented corporations run by
businessmen who promptly sacked some 4,000 employees, including
half the country's 1,700 coal miners.
    The latest survey confounded those who proclaimed Labour's
days were numbered because of perceived insensitivity to its
traditional backers, the workers, political analysts said.
    The poll indicates people are swinging behind the party and
the arguments of Finance Minister Roger Douglas, who has
presided over the deregulation of the economy and the
construction of one based on market forces without subsidies or
currency controls, the analysts said.
    The economic reforms, by a party increasingly regarded in
New Zealand as more akin to the West European-style Social
Democrats than working class socialists, have rattled the
National Party, which is now regretting it was not as
innovative in the decade it ruled until Prime Minister Robert
Muldoon was ousted in 1983, one analyst said.
    The National Party was further shaken, the analyst said,
when the Press, a Christchurch daily, said on April 2 the party
was "on the verge of flying apart" with the prospect of a coup
attempt against leader Jim Bolger by Muldoon. Bolger said the
article was an April Fool's joke.
    Labour's reforms have brought unexpectedly strong tax
revenues, a lower budget deficit and less state borrowing, an
improvement in the balance of payments, a reduction in foreign
debt and improved productivity, economists said.
    Inflation should peak at 19.5 pct in the quarter ended
March 31 and fall to about eight pct within a year, they said.
    Labour's reforms have hit every sector, but the most
dramatic was the "corporatisation" of seven government
departments on April 1, which critics argue is the first stage
step towards the sale of state assets, the analysts said.
    The move stops short of privatisation, as the state will
retain ownership, but the new corporations are expected to be
financially self-supporting and pay dividends.
    Arguments have already broken out over money. One utility,
Electricorp, said its assets are worth less than 3.8 billion
dlrs yet the Treasury wants 8.5 billion for them.
    No agreement has been reached on the value of assets of the
former forest service, the analysts added.
    Chairman Alan Gibbs said in a speech the forest service had
been losing 100 mln dlrs annually, yet due to economies it now
employed less than 30 pct of its previous workforce and the new
corporation would pay the state a dividend of at least 20 mln
dlrs in its first year.
    Uncertainties have also arisen over the government, as the
only shareholder, retaining the right to order the new
corporations to undertake certain projects although the full
cost must be met by the state, the analysts said.
    Deputy prime minister Geoffrey Palmer said managers would
be held accountable for performance, with the government paying
for projects undertaken for social or environmental reasons.
    This policy has already caused problems, the analysts
added. For example, Electricorp has refused to spend several
hundred million dlrs to build a hydro project at Luggate,
further up the Clutha river from the Clyde high dam now under
construction in Central Otago.
    Prime Minister David Lange said this week that Labour MPs
had decided last year that Luggate be built and it was
important that the government honour its promises.
    "But it is also a matter of importance that we do not see
many more jobs lost because of economic distortion than we
would save by having that promise honoured to the last," he
added.
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