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After winning reelection in July but failing to gain an outright majority, the Labor Party faced another three years of dependence on minority parties to govern. The results could force Prime Minister Helen Clark's government to shift toward the political center in order to maintain the support of a small party that favors tax cuts and pro-family policies.
New Zealand became self-governing prior to World War II and gained full independence from the United Kingdom in 1947. Since 1935, the main political forces in this parliamentary democracy have been the mildly conservative National Party and the center-left Labor Party. Both parties helped to create one of the world's most progressive welfare states.
Seeking to sharpen New Zealand's economic competitiveness in the face of increasing global competition, the Labor government in 1984 began cutting farm subsidies, trimming tariffs, and privatizing many industries. The harsh effects of these economic changes, and a deep recession, contributed to a National Party landslide at the 1990 elections.
Rather than reverse course, however, Prime Minister Jim Bolger's incoming government pushed the reforms even further by rolling back the welfare state. It slashed welfare payments, ended universal free hospital care, and reworked the labor law to discourage collective bargaining. Bolger led the National Party to reelection victories in 1993 and 1996 before being forced to resign in an intraparty coup.
The Labor Party has been in office since 1999, when it won an election dominated by questions about the National Party's privatization plans and management of state agencies. Like its victory in 1999, Labor's reelection in 2002 left the party with 52 seats in the 120-seat parliament. This means that Labor will have to depend on its allies to form a majority and govern.
Following the election, Labor formed a minority government with the populist Progressive Coalition Party, which had won two seats, and received a pledge of support from the centrist United Future Party (UFP), which had won eight. In return for the UFP's support, Prime Minister Clark, 52, pledged to create a commission on family issues, pass strong crime victims' rights legislation, and introduce transport legislation favored by the UFP. Meanwhile, the main opposition National Party was forced to ponder its future strategy after winning only 27 seats, its worst-ever finish.
In a key postelection move, the government in August named a new central bank chief who favors a somewhat looser monetary policy than his predecessor. The expected policy shift by the new governor, Alan Bollard, could help Clark's government meet its goal of boosting economic growth to 4 percent annually. Prior to Bollard's appointment, experts were predicting that New Zealand's economy would grow by 3 percent a year, on average, for the next three years.
The long-term challenge is to raise productivity enough to make 3-4 percent growth rates sustainable. The Finance Ministry said in the spring that New Zealand's economic growth rate was likely to decline to 2 percent annually in a decade.
New Zealanders can change their government through elections, and they face few restrictions on basic rights. Parliament is elected under rules that are designed to help smaller parties gain seats. New Zealand's so-called mixed-proportional system combines voting in geographic districts with proportional representation balloting. In addition, six seats are reserved for members of the indigenous Maori minority.
New Zealand's judiciary is independent, and defendants can appeal to the Privy Council in London. Police occasionally abuse suspects, according to the U.S. State Department's global human rights report for 2001, released in March 2002. New Zealand's private newspapers and magazines cover politics tenaciously and offer a range of political views.
While Prime Minister Clark and several other women hold senior government posts, women on the whole are underrepresented in government and politics. They also earned only 85 percent of men's average wages as of the third quarter of 2001. Despite numerous government initiatives aimed at protecting women, violence against women is a "serious and growing" problem, according to the U.S. State Department report. Moreover, 31 percent of women responding to a 2001 survey commissioned by New Zealand's official human rights body reported being victims of sexual harassment.
Members of New Zealand's Maori and smaller Pacific Islander and Asian communities face some discrimination in mainstream society, the U.S. State Department report said. The government's 2000 "Closing the Gaps" report said that Maoris continued to be found in outsized numbers among single-family households, prison inmates and school dropouts, and the ranks of the unemployed and the welfare-dependent. The Maori infant mortality rate is also high. Though they make up just 10 percent of New Zealand's population, Maoris account for more than half of all inmates.
Successive governments have introduced numerous programs to help boost the social and economic status of Maoris and Pacific Islanders. By most accounts, many of these initiatives, such as a policy of bringing more minorities into public sector jobs, have been only marginally successful.
A special tribunal continues to hear Maori tribal claims to land and other resources stemming from the white settlement of New Zealand. The 1840 Treaty of Waitangi, between the Maoris and British, leased Maori land in perpetuity to the white "settlers." Maoris now seek higher "rents" on their land.
Led by the New Zealand Council of Trade Unions, the main labor federation, unions advocate workers' rights forcefully and practice collective bargaining extensively. In a gain for unionized workers, the government in 2000 passed legislation that further promotes collective bargaining. The Employment Relations Act also requires management and workers to bargain in good faith when negotiating employment agreements. However, sympathy strikes, secondary strikes, and walkouts over social or political causes are still illegal. Despite these provisions, the government did not interfere with a brief strike in 2000 expressing solidarity with Fijian trade unionists. Less than 20 percent of New Zealand's wage earners are unionized.