Table of Contents
For the scholar of crisis leadership, the New Zealand Government’s response to the 2008–09 global financial crisis represents a distinct and interesting case study. The combination of three characteristics in particular renders it unique. First, New Zealand’s small, open economy is heavily dependent on trade, particularly in agricultural products; consequently, even in the best circumstances, it is hopelessly vulnerable to the vagaries of commodity prices in the international economy. Second, when the crisis hit New Zealand it was already in the grip of a home-grown economic downturn, attributable to a severe drought and a slowing of the housing market. Finally, the occurrence of the crisis immediately before a general election, on 8 November 2008, ensured that attempts by leaders to interpret economic events were intensely politicised and contested.
This chapter will analyse the leadership of key players in New Zealand’s experience of the global financial crisis through an application of the theoretical framework advanced by Boin et al. (2009; see also Chapter 2, this volume). As a caveat to their theoretical model, Boin et al. (2009:95, 98–9) observe that situational and temporal factors can significantly influence the course and outcomes of a crisis. As suggested in the opening lines of this chapter, the course and outcomes of the global financial crisis in New Zealand are certainly no exception. Indeed, the three aforementioned characteristics, which render the case unique, have important implications for any attempted analysis.
The first situational factor—New Zealand’s small, open economy—influenced crisis leadership in conflicting ways. In one sense, it allowed New Zealand’s leaders to externalise blame for the crisis more easily, but at the same time, it gave them very limited ability to reduce its impact. Consequently, the master narrative of the crisis in New Zealand was not one of climactic, unforeseen events; indeed, domestic banking and financial institutions remained relatively strong (Bollard 2008c). Rather, it was a narrative of steady decline in growth and steady rises in oil and food prices—following developments in international markets—until a recession was declared on 5 August 2008. Tellingly, Morgan Research’s (2008d) consumer confidence polling suggested that the New Zealand public, having felt the sting of an international downturn during the 1997–98 East Asian financial crisis, were aware of their vulnerability to international developments, and their confidence fell away accordingly.
The second situational factor—the home-grown downturn—was also significant. This was because it was in the interest of all political actors, at various times, for the framing of the two crises to become linked. Early in the period, the Clark Government sought to link the developing international crisis to the domestic downturn in order to escape blame for the latter. Later on, the new Key Government sought to establish a similar link in order to blame the Clark Government for the effect of the former.
Finally, the significance of the November general election as a temporal factor cannot be overstated. In particular, this was because all early pre-election polls strongly suggested that the vote would produce a change of government (Morgan Research 2008a; One News-Colmar Brunton 2008a; TV3-TNS 2008). The coincidental occurrence of elections heavily skewed all media coverage and popular perception of the crisis towards its impact as an electoral battleground. This resulted in two very different narratives running through the leadership of the crisis: one of a long-standing government desperately struggling against its decline; the other of a long-standing opposition seizing its first opportunity to govern in more than a decade.