Ruth Richardson's state honour is a slap in the face for the poor

The Spinoff

2 days ago

The architect of 1991's 'mother of all budgets', who was made a Companion of the New Zealand Order of Merit in the King's Birthday honours this week, did immense damage to the country's poorest and most vulnerable, writes Max Rashbrooke.
In the early 1990s, two Porirua preschoolers burned to death when their state house was set alight by a candle their family had begun using after the power was cut off. They had been forced to this extremity by a National government that, obsessed by 'market forces', had decided to remove their housing subsidy and require them to pay market rents instead. This sharp rise in costs had left them unable to pay their power bill; hence the candle.
Labour MP Graham Kelly caused an uproar in parliament when he attributed these deaths to National's policies – but even allowing for imponderable factors, like whether a candle falls over or not, he was in the broadest sense right. Policies that target the poor always have consequences in the end. And no one targeted the poor harder than Ruth Richardson, who on Monday was made a Companion to the New Zealand Order of Merit.
Alongside the market-rent reforms, Richardson is most notorious for the 1991 'mother of all budgets', which cut the benefits of some of the poorest and most vulnerable New Zealanders by up to one-quarter. In a move familiar throughout history, she decided that the burden of tackling New Zealand's (admittedly severe) budget deficit was to fall disproportionately on the poor, rather than those better able to bear it.
The result was immediate: a doubling of the number of those living in the most extreme poverty – that is, on less than 40% of the typical income – from 4% in 1990 to 8% two years later. Most policies are much slower to show their effects; Richardson is among a select few who can claim to have doubled poverty overnight.
The effects of this stark rise, quite apart from the pain and misery inflicted on families, have spread right throughout New Zealand. Food banks used to be virtually unknown in this country; in the 1990s they became commonplace.
Unable to afford to heat their homes, or indeed pay the rent, multiple families began living under one roof, enduring the cold or huddling together for warmth. Mould and damp proliferated.
Diseases like rheumatic fever, long since eliminated in other developed nations, flourished in these conditions, wrecking childhoods and ending lives prematurely. A sharp uptick in the hospitalisations of children for medical conditions – from 50 per 1,000 to 70 per 1,000 – began in 1992, just after Richardson's budget. While she was not, of course, the sole author of these misfortunes, she undoubtedly wrote much of the script.
Child poverty leaves scars that later affluence never really erases. Children born into hardship have, in adulthood, twice the rate of heart conditions of those born into wealth. They also have far lower reading scores and educational results.
Quite apart from being devastating in their own right, these deficits create colossal financial costs: the annual bill from child poverty in this country is estimated at anywhere between $12 billion and $21 billion. This is particularly ironic because Richardson's legacy on the right is one of financial rectitude: she is seen, in particular, as the author of the 1994 Fiscal Responsibility Act, which aimed to improve the transparency and long-term management of the government's accounts. But not only is this relatively small beer compared to the appalling damage poverty inflicts on people's lives, the long-term economic costs of increased hardship are an example of massive financial irresponsibility.
Not that Richardson has ever been able to acknowledge as much. Interviewed by the academic Andrew Dean a decade ago, she denied her policies had resulted in any wider harm: 'Over time, was there a social cost? No, there was a social benefit.'
That, then, is the person the New Zealand state decided to honour this week: someone who not only did immense damage to the country's poorest but is also quite disconnected from the realities of that harm. The puzzle is less – as some commentators suggested – that it took so long for her to be recognised, but rather that she has been recognised at all.
Maybe, though, we should not be surprised. Over in the UK, a similar strategy of slashing government budgets and benefit payments took place under the Conservatives between 2010 and 2024. This austerity cut access to the social services on which ordinary people rely, reduced ambulance services, and sparked poverty-related 'deaths of despair'. All up, it is conservatively estimated by researchers to have caused 190,000 preventable deaths.
The man most responsible for this social devastation, former chancellor George Osborne, nonetheless occupies a gilded position in British life, having moved smoothly into editing the Evening Standard newspaper and pontificating on global politics. Inflicting misery on the poor is, in short, socially acceptable as long as it is clothed in the classic establishment rhetoric of taking 'difficult' choices, 'balancing' the books and fiscal 'responsibility'. The poor may be, as the Christians say, always with us, but that does not guarantee that their lives will ever be accorded the proper respect.