Internationalization and Two Liberal Welfare States Australia and New Zealand

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Abstract
While the formal welfare states of Australia and New Zealand resembled the British model in the post‐war period, economic policies and industrial‐relations systems differed. As highly competitive exporters of agricultural products and raw materials, both countries had developed highly protected import‐substituting manufacturing industries to ensure full employment as a complement to the minimal protection provided by the ‘liberal’ welfare state. When this configuration ceased to be economically viable in the 1970s, both countries chose to liberalize their industrial sectors, attempting to achieve price competitiveness through government‐controlled wage‐setting procedures. In New Zealand, these efforts failed and its Westminster‐type government opted for radical neo‐liberal reforms in the 1980s that reduced welfare‐state protection and caused a steep rise of unemployment. In Australia, by contrast, unions were better able to cooperate with the government in defending international competitiveness, and federal and bicameral institutions did favour policy compromises that combined liberalization with the maintenance and even expansion of welfare‐state protection.

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