by Robin Westenra
© Copyright 2012 Collapse Network. – All Rights Reserved.
A HISTORICAL BACKGROUND
New Zealand prior to the age of globalisation was more resilient.
It was an insular culture that treasured its links with the 'mother country' (Britain) which it supplied with sheep meat and wool.
In the post-war years New Zealand was one of the most prosperous countries in the OECD. In these years it developed a certain degree of industry which allowed it to manufacture food products, clothing, footwear etc, all developed with the idea of import substitution and maintaining a degree of self-reliance.
This changed with Britain joining the Common Market (later the EU) in the early 70's and with the two oil shocks which hit New Zealand hard. In this period NZ developed large deficits and the country borrowed in order to maintain living standards and a developed social welfare system (during this period NZ was one of the most egalitarian societies).
In the early 1980's New Zealand started a neo-liberal experiment; according to Noam Chomsky the only distinguishing factor was that NZ entered 'structural adjustments' voluntarily.
Along with opening up markets, abolishing quantitative import restrictions and slashing tariffs it also removed all subsidies and opened businesses to international competition. This meant that industries that had been built up over the years, those which had helped the country be less dependent on imports were decimated, until now the country has an almost complete reliance of imports from China.
LACK OF RESILIENCE
Marsden Point - New Zealand's one oil refinery
Essentially what this means is that New Zealand has lost much of the potential resilience needed to help survive the transition to a post-petroleum world.
New Zealand does have some of its own oil (the production of which has already peaked), but as In other countries of the world few of the benefits of oil exploration and production come back to the country. All of the oil it produces is exported because it's single refinery, built in the 1970's, isn't tooled to refine it.
We are therefore completely reliant upon imports of oil while being at the end of a very long supply chain Ships carrying our oil for example have to pass through the Straits of Malacca. It would take very little in the way of conflict for this supply chain to be disrupted.
Under IEA regulations every country is supposed to keep oil reserves in case of emergency. It is my understanding that this country has no reserves because it has agreements with other countries that allow IEA targets to be met (called 'ticket contracts'.)
Another example along the same lines is that, apparently, New Zealand has no gold reserves - even though it was the site of rich 19th century gold rushes.(and still mines gold) . If you check the statistics on Wikipedia, even Mali has more gold – we are simply not on the list.
In many other respects, New Zealand is in a good position to come through collapse and has been identified recently by Gerald Celente as a good destination for people who want to escape events in Europe and North America.
Apart from geographical isolation, natural ecosystems – one-third of NZ's land area is protected for conservation - and low population - as a country consisting of two large islands we are less likely to be affected by climate change than our neighbour Australia.
We still have the ability to produce food, a relatively mild climate.
Electricity is still largely hydroelectric. With conservation and development of solar and wind power we could continue to produce sufficient electricity so long as there is still a more-or-less functioning economy.
STRENGTHS AND WEAKNESS OF NZ ECONOMY
Nicole Foss, on her recent tour of New Zealand identified these particular aspects of the New Zealand economy:
A high household debt
Government debt, compared with other countries, is relatively low By comparison, private debt (household and corporate debt) is very high
New Zealand experienced a large housing bubble. Prices have recede a bit since 2008, but the bubble has yet to burst, especially in the largest city, Auckland.
Our economy is based upon the export of primary products such as dairy. Its economy is also reliant on tourism to a high degree. For a general introduction to the NZ economy go here.
New Zealand's isolation is a double-edged sword. We're relatively insulated from major world events, but our dependance upon trade causes our commodity prices to fluctuate in an exaggerated, boom or bust, fashion.
New Zealand is highly vulnerable to currency fluctuations and the yen carry trade.
Foreign banking system –
All of our major banks are Australian-owned, so New Zealand is extremely vulnerable to bank failures. The Reserve Bank has introduced a Open Bank Resolution policy whereby, in the case of a bank failure, the bank must favour its major creditors over investors or depositors.
This is a major component.
Our government seems to be in complete denial. It continues to 'kick this can' down the road. And it's no small wonder that, with the corporate media omitting coverage of these issues, there appears to be very little public awareness of the challenges ahead.
It has always been in New Zealand's nature to follow in the wake of the rest of the world It may seem that the troubles in other countries (even Australia) are a world away but when collapse does come and the world economy is brought down like a house of cards we will all come to the painful and sudden realisation that we are all intimately connected.