TOPICS: Lessons from Australia and New Zealand

Australia and New Zealand are societies, like Britain, coming to terms with globalisation, China, affluence, debt and turbo-charged capitalism and doing so with very similar institutions and culture. The lessons are salutary. For a start, Britain’s economic success looks much more modest compared with what Australia has achieved over the last 15 years. Australia’s income per head has grown faster than not just Britain, but Canada, the US and New Zealand. It is the queen bee of the Anglo-Saxon economic world.

But like Britain, there are signs that things are starting to go wrong. The house-price boom is letting up. There is an escalating story of ill-regulated investment companies going bust with big losses for individual savers. Productivity is starting to fall. Private equity companies are stalking the Australian stock market, creating a feverish short-termism. A growing number of Australians are asking where the country goes from here.

It is a question asked even more intensely in New Zealand. With only four million people and even further away from the pulse of global economic life than Australia, it has not enjoyed anything like the same economic boom. Foreign companies and private equity companies pick off too many of its dynamic, medium-sized companies. In 2001, a grand conference launched the notion that New Zealand would become a knowledge economy. Six years later, there is little sign of this.

In both countries, this widespread and growing concern about what next is opening up opportunities for the political opposition, despite both incumbent governments having good records in their own terms. John Howard’s Liberal party in Australia has won four general elections and presided over the boom, but in one poll last week, Kevin Rudd’s Labour party registered a 20-point lead, signalling a massive landslide in the autumn general election.

But in New Zealand, it is Labour Prime Minister Helen Clark who is widely lauded for the way she has rebuilt public services and, especially, steered New Zealand clear of any involvement in Iraq. But there is scant reward for her pains. John Key’s right-of-centre National Party has recorded 15-point leads for a very similar reason. What is the prospectus for the future? Key has no answers.

Australia and New Zealand, brutally, have no defences to an endless wave of asset-stripping and financial engineering. If parties of the left have nothing to say about how ownership responsibilities should be discharged in modern capitalism, or how workers should respond, they are left only being able to talk about improving public services. Globalisation, as New Zealanders and Australians can testify, can raise your living standards, but it feels an illusory prosperity without very secure foundations.

The message to Prime Minister-in-waiting Brown could hardly be clearer — New Labour as a successful Anglo-Saxon incumbent government could face the same challenge from a resurgent opposition as Howard and Clark. — The Guardian