[Congressional Record Volume 141, Number 56 (Monday, March 27, 1995)]
[Senate]
[Pages S4670-S4671]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         ADDITIONAL STATEMENTS

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               THE VISIT OF NEW ZEALAND'S PRIME MINISTER

 Mr. THOMAS. Mr. President, I would like to take this 
opportunity to call my colleagues' attention to the visit to the United 
States this week of New Zealand's Prime Minister, the Rt. Hon. James 
Bolger. This is the first visit of a sitting Prime Minister to our 
country in over a decade.
  New Zealand and the United States have had traditionally close 
relations based largely on shared cultural ties to Great Britain and 
security concerns in the South Pacific. We have been close allies in 
both world wars, and New Zealand has participated with us and Australia 
in the regional ANZUS security alliance. We both participate in such 
economic organizations as APEC [Asia Pacific Economic Corporation], 
PECC [Pacific Economic Cooperation Council], and the PBEC [Pacific 
Basin Economic Committee].
  But the relationship has not been without its tensions. The primary 
focus of United States-New Zealand relations over the last 10 years has 
revolved around port visits nuclear by armed and powered United States 
Navy ships. In the mid-1980's, New Zealand enacted legislation 
declaring the country a nuclear-free zone. As a result, United States 
nuclear powered or armed Navy ships were banned from New Zealand ports. 
Since it is not U.S. policy to identify which ships are or are not 
nuclear--some 40 percent are--the effect was to prohibit any port calls 
by our Navy. Washington retaliated by formally abrogating our defense 
treaty relationship with New Zealand, ceasing to share intelligence 
information, and cutting off all high-level ties between governments.
  Mr. President, while this issue is one of importance in our bilateral 
relationship and thus should not be swept under the rug, I choose not 
to dwell on it today for several reasons. First, it is not the only 
facet to our relationship. The rift has narrowed somewhat over the 
years; and in spite of it, we have continued to work side-by-side with 
New Zealand on other security issues. New Zealand has been an active 
participant in a series of peacekeeping missions, and fought with 
American troops in the gulf. More recently, New Zealand was the first 
country to make a monetary contribution to KEDO in furtherance of the 
agreed framework with North Korea.
  In addition, New Zealand has made important and impressive economic 
strides over the past decade which deserve our attention. In the 
1950's, New Zealand was one of the world's five wealthiest countries; 
but by the late 1970's, it had fallen to near 20th. The reason appears 
to have been the country's economic policies which bordered on almost 
Socialist central-market control. New Zealand had one of the 
[[Page S4671]] most insulated and restrictive economies in the region; 
the Government heavily regulated most industries, and nationalized 
others. It subsidized exports, while at the same time shutting internal 
market access to protect its domestic industries. Finally, the 
Government ran high deficits, instituted wage and price controls, and 
promulgated tight limits on both interest rates and international flows 
of capital. Between the 1960's and 1970's, the marginal tax rate facing 
the typical family rose from 23 to 35 percent--the top rate was 66 
percent. Inflation was high, averaging more than 10 percent. In 1978, 
for the first time ever, the unemployment rate passed 1 percent. By 
1983, it topped 5 percent.
  In 1984, the Government began to institute a series of economic 
reforms. It scrapped controls on wages, prices, and interest rates. It 
also phased out almost all subsidies and incentives for farming, and 
began charging market price for its energy supplies. Taxes were 
reduced--the maximum tax was halved to 33 percent.
  More importantly, the Government opened the economy to the outside 
world. In 1985, it abolished limits on foreign ownership of banks and 
other industries. Eventually, New Zealand privatized a great deal of 
its public enterprises, including telecommunications, computer services 
rail, airways, and so forth. This has been a boon for U.S. business. 
For example, Wisconsin Central Railroads purchased a large interest in 
the formally nationalized New Zealand Railways. Cyberstar, another 
Wisconsin firm, recently concluded a contract to lay fiber-optic cable 
in the Nelson area. Ameritech and Bell Atlantic each have a 24.82 
percent interest in Telecom New Zealand, the largest company in the 
country by stock market capitalization. Other U.S. firms which have 
made substantial investments in the country are Bell South, MCI, and 
Time Warner,
  The Government announced the phaseout of export incentives, export 
credits, and import quotas. It also moved to end limits on who would 
bid for import licenses and how many such licenses each individual 
could hold. In addition, New Zealand allowed people to borrow from, and 
lend to, foreigners without Government control and ended exchange 
controls. Finally, the Government embarked on a downsizing in the ranks 
of Government employees. The Government work force has been cut by 
almost 53 percent in all sectors, resulting in a substantial savings to 
the budget. This of it, Mr. President; if only we could emulate this 
feat. The subsequent turnaround in the economy has been quite dramatic. 
The following 1994 figures are illustrative of the results:

                                                                        
                              [In percent]                              
------------------------------------------------------------------------
                                            New       United            
                Category                  Zealand     States     Japan  
------------------------------------------------------------------------
Inflation..............................        2.8        2.7        0.7
GDP....................................        6.2        3.8        0.2
Budget Surplus (percent GDP)...........       +2.6       -1.8       -1.8
Gov't Debt (percent GDP)...............       50.7       64.7       83.4
Unemployment...........................        7.8        5.4        2.9
------------------------------------------------------------------------

  Mr. President, the Subcommittee on East Asian and Pacific Affairs, 
which I chair, will hold a hearing on these accomplishments on 
Wednesday. I look forward to hearing from the American firms is 
scheduled to testify, and learning more about the economic changes the 
last decade has wrought. In the same vein, I look forward to meeting 
with Prime Minister Bolger tomorrow when he visits the Senate. I 
believe that there are some important lessons for us to learn from New 
Zealand's turn-around. I, for one, will be paying close attention to 
what he has to tell us.


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