New Zealand education policy has been formed from a combination of nineteenth century liberalism which accepts limited intervention in the education process to ensure equality, and the demands of a capitalist economy which has relied on education to provide a selective function to aid market processes. In a recession, it is this latter function which is emphasized; vocational training is declared to be crucial and the system is governed by competition according to universalistic criteria. These rationalizations conceal the actual basis of selection and encourage the subservience of education to the demands of a depressed economy. In this climate, debates about multiculturalism and education make little sense without giving major consideration to the issue of power, and specifically, the power of minority groups to make and carry through decisions within the institutional structure of society. The critical area for New Zealand is in those urban schools where there are a majority of Polynesian students, many of whom are going to leave school without any or adequate academic qualifications with the obvious implications this has for labor market participation. In discussing multiculturalism, effective equality is constrained by the willingness of dominant groups to grant autonomy and to accede to power sharing. (Author/BRR)