Questionable assumptions ‘bad for small democracies’s’



smells like media bullshit


This item in Fairfax’s Dominion Post caught my eye a few days ago;


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Labour governments bad for small business



In this story, author John Anthony is reporting on a study by two  academics –  Massey University economics and finance senior lecturer Dr Chris Malone, and associate professor, Hamish Anderson. They came to the astonishing conclusion;

Small listed companies have performed significantly worse under Labour governments over the past 40 years because of major policy changes, a report says.


“The smaller firms have done abysmally poor during Labour terms of office.”

Funny thing about this article – it’s mostly rubbish. The Labour government in the mid/late 1980s was hardly a traditional left-wing administration as it implemented neo-liberal, free market policies at breakneck speed. It was the government that gave us the term “Rogernomics“.

In essence, it was a Labour government in name only, having been hijacked by future-ACT MPs and neo-liberal cadres. It was a foretaste of how Brash seized power in 2011 after a putsch overthrew Rodney Hide as ACT’s leader.

Yet the heading of the article is utterly misleading;


Labour governments ‘bad for small business’


Indeed, anyone glancing at the story would come away with entirely the wrong impression until their attention was caught by this bit;

The main reasons for poor performance in small firms during Labour governments included market under-performance, periods of falling inflation, harsh default-risk and credit conditions and the introduction of deregulation in 1984 that opened up firms to increased foreign competition and exchange rate pressures.

Notable features were the two Labour governments of the 1980s under Prime Minister David Lange.

In the first term from 1984 to 1987 the mean returns were amongst the highest in the sample but in the second term the smaller firms had a mean monthly return of minus 7.2 per cent.

Roger Douglas’s neo-liberal “free” market reforms truly kicked in during Labour’s second term in office (1987-1989) and the academic’s report is not very flattering;

“…in the second term the smaller firms had a mean monthly return of minus 7.2 per cent”.

It is interesting to note that overseas ratings agencies (Standard & Poors, Moodies, and Fitch) also seem to have a somewhat dim view of right-wing governments. Note the credit rating movements during right-wing Labour/National governments compared to the Clark-led Labour government;




Note the credit downgrades (red underlined) in the chart above and detailed belowed;

  1. Standard & Poors: From AA+ in April 1983,  to AA in  December 1986  (Rogernomics Labour)
  2. Standard & Poors: From AA in  December 1986, to AA- in January 1991 (National)
  3. Moodys: From Aa1 Stable Outlook, February 1996, to Aa1 Negative Outlook on 30 January 1998 (National)
  4. Standard & Poors: From AA+ Stable Outlook in January 1996, to AA+ Negative Outlook on 10 September 1998 (National)
  5. Moodys: From Aa1 On Review for Possible Downgrade  on 5 June 1998, to Aa2 Stable Outlook on 24 September 1998 (National)
  6. Fitch: From AA+ Stable Outlook on 28 November 2008, to Aa+ Negative Outlook Reaffirmed on 16 July 2009 (National)
  7. Fitch: From Aa+ Negative Outlook Reaffirmed on 16 July 2009  to AA Stable Outlook on 24 September 2011 (National)
  8. Standard & Poors: From AA+ Negative Outlook Reaffirmed on 22 November 2010 to AA Stable Outlook on 30 September 2011  (National)

Eight credit down-grades under two Right-wing governments.

By contrast, during Clark’s more left-wing Labour administration,  from 2000 to 2008;

  1. Standard & Poors: From AA+ Negative Outlook on 27 March 2000, improved to AA+ Stable Outlook on 7 March  2001
  2. Fitch: From AA on 27 March 2002, improved to AA+ on 16 August 2003
  3. Moodys: From AA2 Stable Outlook on 24 September 1998, improved to Aaa on 21 October 2002
  4. Fitch: From AA on 27 March 2002, improved to AA+ on 16 August 2003

Eight years, four credit upgrades.

As Labour’s economic development spokesperson,  Grant Robertson, stated in the same article,

“The last Labour government ran nine surpluses in a row while having the highest average growth rate of any government for 40 years.”

He’s right. Under Labour’s administration of the economy,


New Zealand New Zealand Government Debt To GDP 2000-2014




New Zealand unemployment rate 2000-2014





New Zealand Building Permits 2000-2014


  • The NZ stock market showed a steady rise, until the 2007/08 Global Financial Crisis;


New Zealand Stock Market (NZX 50) 2000-2014



New Zealand GDP 2000-2014


  • Consumer Confidence vs Business Confidence – showed conflicting results, with consumer confidence staying bouyant whilst business confidence appeared to fall. (It seems bizarre that whilst customers were happy to open their wallets/purses to spend – businesses remained gloomy until nearly two years after the initial effects of the GFC  were felt and the Recession was biting hard. Masochistic tendencies appear at play here?)


New Zealand business - consumer confidence To GDP 2000-2014



It seems farcical in the extreme that two academics – with the willing assistance of an uncritical  journalist – have presented “research” which brands the Labour Party as “bad for small business” when the 1984-89 Lange-led administration was an undemocratic aberration that was closer to the ACT Party than the Kirk or Clark governments.

In essence, Malone and Anderson have passed judgement on  governments implementing right wing, neo-liberal economic policies and, rather unsurprisingly,  given them a *fail* mark. But you wouldn’t think it with the headline “Labour governments ‘bad for small business’” and the statement that “smaller firms have done abysmally poor during Labour terms of office”.

But at least this has given  right-wing bloggers some joy – even if those same bloggers have been less than honest at what Malone and Anderson have actually written. But that’s the right wing for you; never let inconvenient truths get in the way of a good propaganda moment.





Fairfax media: Labour governments ‘bad for small business’

New Zealand Debt Management Office: New Zealand Sovereign Credit Ratings

New Zealand Debt Management Office: Summary of Direct Public Debt

Trading Economics: New Zealand Government Debt To GDP

National Party: What about the workers?

Statistics NZ: Unemployment Rate Falls to 3.4 Percent

Trading Economics: New Zealand Unemployment Rate

Ministry of Business, Innovation, & Employment: Previous minimum wage rates

Trading Economics: New Zealand Stock Market (NZX 50)

Trading Economics: New Zealand Building Permits

Trading Economics: New Zealand GDP

NZ Treasury: Recent Economic Performance and Outlook

Trading Economics: New Zealand Consumer Confidence

Trading Economics: New Zealand Business Confidence

Kiwiblog: Labour bad for small business



National dance to corporate interests

Above image acknowledgment: Francis Owen/Lurch Left Memes



= fs =


  1. I considered blogging on this, but you said it far better than I could. Neo-liberalism is bad for small business – whether it’s Labour or National that does it.

    • Kia ora, Caleb. Please still blog it. (And link back here, so we can read it.) I’m always keen to read other folks’ take on these issues.

      I’ve read your blog and I like it!

  2. Funny definition of small business as well. Most people think of a small business as being Mom & Pop type arrangements. I have no idea what is classed as small on the stock exchange but I’m pretty sure I won’t find my local plumber on there.

    The headline is so misleading we might as well just call it a lie.

    • Aaron – that was pretty much my conclusion as well. In terms of journalistic integrity, it was zero.

      It might as well have had a statement at the bottom, “This was a paid party advertisement authorised by Jamie Whyte, c/o ACT”.

  3. The former ‘Dominion’ and now the DomPost always was and still is a right wing rag.

    I never buy it as money spent on it is effectively donating to the national party re-election fund.

    I’ve pointed this out to people who have had subscriptions and some of them have agreed and cancelled them 🙂 .

    Its because of bull-shit bogus headlines like the DomPost prints that lead to the misinformation about national being sound economic managers.

    If we look at the last three national governments …….

    The Muldoon one left the country almost bankrupt and about to default on our debt repayments ….. his government also cancelled the labor created superannuation saving scheme set up to fund retirements.

    Then the Bolger/Shipley one was a shambles which presided over a long recession, asset sales, charges for staying the night in our free public hospitals and other right wing rubbish.

    Now with Key we’ve had tax cuts to the rich ……. selling our public assets to the rich ……… charter schools where the teachers need no qualifications ………. fastest growing inequality in our history …….. 240,000 or more kids living in poverty ….. more expense and debt for students ……. and our young priced out of buying homes while multi-millionaires buy 9 or more .

    Keys Nats will be as bad and toxic as all the ones before.

    Maybe even more toxic with all that oily whale shit hanging off them

    • Reason…

      Then the Bolger/Shipley one was a shambles which presided over a long recession, asset sales, charges for staying the night in our free public hospitals and other right wing rubbish.

      Not forgetting Bradford’s electricity “reforms”; running down health, education, police, and other state services; selling state housing…

      It was also the time of people dying on hospital waiting lists; Colin Morrison, Rau Williams, and others…

      When Helen Clark promised to raise taxes for upper income earners at the ’99 general election, I could just about hear the public clamour, “Whatever it takes! Just get rid of Shipley and her cronies!!”

    • Right on “Reason”. Just like the Midnight Oil tune “Short Memories”! Only I would contend that your 2nd to last sentence should read: “Key’s Nats ARE as bad and toxic as all the ones before”. They have just learnt to play their “House of Cards” better than their predecessors. Compliant MSM manipulation and cronyism, ex MSM spin doctors…. Marshall Mac et al had it sussed years ago. If it takes IMP to get rid of the Tories, their fags and acolytes then so be it. After all a precedent was set when Churchill snuggled up to Stalin to fight fascists?

  4. Excellent article as usual Frank – I love seeing such a well researched analysis backed up with stats and graphs etc.

    The myth about Labour’s poor fiscal and economic management in its last term compared to Nats current term is actually entrenched as fact in many people’s uninformed minds…until you show them the actual stats and make it even easier with a good graph, verified with appropriate links.

    My favourite question at the moment, and one that has stopped even the most stalwart of any of my Tory mates in their tracks is this:-

    “Tell me what National has done to improve the lives of all New Zealanders over the last 6 years – give me a list, please”

    All I ever get in return is the most beautiful silence, only broken by the sounds of crickets and tumbleweed blowing past ! 😉

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