Thirty Years Ago Today: Musings on the Fourth Labour Government

The New Zealand media and the New Zealand public are still chattering about what Jacinda Ardern will do with her brand-spanking-new single party majority Government. The consensus – apart from a few wishful-thinkers – is “probably not much.” This is the era of “incrementalism”, which during the Helen Clark years at least meant minor tinkering with the 1990s reforms, while leaving the 1980s reforms alone. These days it seems to mean doing nothing outside pet projects, while leaving the status quo intact.

That probably sounds more bitter than I intended. After all, the age of actually believing in genuinely transformative ideologies (as opposed to culture war) is largely over in this country – Jacinda Ardern will basically be giving New Zealand what it wants, which is Someone Who Can Manage a Crisis, not Someone Who Can Turn the World Upside Down. 2020 has done enough of that already, without politicians getting into the act. Besides, the media, never mind Treasury, is very happy with the status quo, and would fight tooth and nail to defend it.

But it wasn’t always like that. Once upon a time, New Zealand Governments did actually believe in things, for good or ill. It’s the reason we wound up with proportional representation at all – the public was heartily sick of elected dictators doing what they damned well pleased, especially without warning. Which brings me to the subject of today’s post.

The last time the New Zealand Labour Party had an absolute majority in Parliament.

It’s timely, because that particular Government was thrown out of office in an epic landslide thirty years ago today. Not that anyone in the media has picked up on the anniversary. It’s all ancient history now, and in a strange way, the defeat of Winston Peters marks the end of the last politician in New Zealand who genuinely wanted to revisit the Neoliberal Revolution.

That bloke on the left (ha!) is Roger Douglas – Finance Minister for most of the Government, and its defining ideological figure. For anyone who is under the age of 45 (which includes both myself and Jacinda Ardern), his New Zealand is the only one of which we have meaningful memory – to a degree where the neoliberal assumptions of that Government have become part of the political wallpaper. The pre-1984 era is a matter for history books, bitter grey-haired unionists, and pompous Baby Boomer Journalists telling stories about how bad the coffee was in their youth. There is a whiff of sepia photos about the age before Douglas, which invites either nostalgia or contempt, depending on who you are talking to.

So what can we thank (or blame) the Fourth Labour Government for?

  • A floating exchange-rate.
  • A complete commitment to Free Trade.
  • New Zealand becoming a nuclear-free zone.
  • New Zealand no longer being part of the ANZUS Defence Alliance with Australia and the United States.
  • Deregulation of the financial markets.
  • The abolition of farming subsidies.
  • The creation of State Owned Enterprises (SOEs).
  • Privatisation of State Assets (not Rail though, contrary to popular belief).
  • The legalisation of homosexuality.
  • The abolition of the death penalty for treason.
  • Overhauling the Public Service, to make it more closely ape the Private Sector.
  • Overhauling the entire system of local government.
  • The New Zealand Bill of Rights Act.
  • Overhauling the Education System.
  • Tertiary Education Fees.
  • Central Bank Independence and Inflation Targeting Monetary Policy.
  • Cutting the top rate of income tax from 66% to 33%.
  • The implementation of a Goods and Services Tax (GST).
  • Increasing the minimum wage (often forgotten).
  • Restoring compulsory unionism (often forgotten).
  • Ending diplomatic relations with Apartheid South Africa.

It’s a rather curious mixed-bag of policies, some of which I even approve of. Unlike Margaret Thatcher in Britain, New Zealand’s Fourth Labour Government was genuinely socially liberal as well as economically neoliberal. It also didn’t mess with the unions or unemployment benefits, even as it was throwing people out of work. But how much of the nicer side of the 1980s was a sop to the Left is a matter of debate. It has long been a common view that the Nuclear Free Issue – with which Prime Minister David Lange is so associated – was a distracting smokescreen of convenience.

(This is also why the New Zealand Greens – for all that they will say they hate the legacy of 1984 – are actually just fine with whole swathes of it, and in some cases even want to extend it. They are, after all, a fundamentally liberal party, who get most of their support from the educated wealthy).

But while the Revolution was being cheered in posh Auckland suburbs (some of which Labour came very close to winning in 1987), it was hated in the provinces. Famously, the transition of the Post Office into a profit-making State-Owned Enterprise forced the closure of countless local branches. The end of protections for local industries gutted the provincial towns, even as Auckland and Wellington did very well for themselves. The overnight end of farm subsidies resulted in farmer bankruptcies and even suicides. On the latter point, I have always thought David Lange joking about being chased around rural roads by an angry BMW to be in rather poor taste.

(The farmers got their revenge. In 1991, the following National Government destroyed New Zealand’s Trade Union Movement as payback. Labour Relations had been the one area where the Free-Market Dogma of the 1980s was off-limits. Even this Labour Government left the unions and the Welfare State alone).

But to personalise things for a moment… it was the Education Reforms of 1989 that most affected me. Not that I understood, of course, being all of about six years old. You see, my mother was (and is) a teacher. In 1989, she was teaching at a small, rural, one teacher school on the West Coast. Nelson Creek School was actually the first school I ever went to – and I have the distinction of being the youngest person ever to have attended it, since the school – along with many like it – was closed by the Reforms. My mother got a replacement job in the North Island, so we all had to move.

When last I heard, the old school building had been turned into a residential property. Better than letting it fall into ruin, I suppose.

**

So yes – these are the economic policy settings bequeathed to New Zealand by the 1984-1990 Labour Government. The public understandably became rather fed up at unpopular Privatisations (hated as much by National voters as Labour ones, oddly enough), mass unemployment, and a Government that was shredding the social fabric of New Zealand. Thirty years ago today, on 27th October, 1990, they delivered what was at the time, Labour’s worst election result since the advent of the two party system. Even the West Coast went National, for the first time in its history. The Fourth Labour Government was at an end.

Except that the incoming National Government – without warning – then gutted the unions, smashed the Welfare State, and went rather mad with trying to corporatise the Health Sector. Roger Douglas was extremely envious at National being allowed to touch things he couldn’t. Public fury at that betrayal led to the adoption of proportional representation in a referendum, with the aim of preventing single-party majority government ever again (oh wait…), and Prime Minister Jim Bolger’s sacking of Finance Minister Ruth Richardson in November 1993 really marks the End of the Revolution Proper. There was even a minor pushback after 1996 (courtesy of Winston Peters), and then more significantly during 1999-2008 (courtesy of Jim Anderton badgering the Fifth Labour Government). But it’s ultimately all window-dressing. We still live in Douglas’ world.

In fact, if ever there was a sign that no-one really cares about 1984 anymore, it is the election of a single-party majority government in 2020. New Zealand now trusts their politicians not to go crazy anymore… because our politicians don’t actually believe in economic transformation anymore. Not even in an international climate where you could get away with things you could never do in normal circumstances. Douglas himself believed that one should never waste a crisis, but current politicians clearly disagree.

There were few things more poignant than going along to the Taieri Candidates Forum last month. Only one of the seven candidates referenced the 1984 reforms, and it was neither New Zealand First nor the Greens (much less National or Labour). It was the Social Credit candidate, a quixotic effort from a living fossil of a party. That candidate got 98 votes on election day. Considering the turmoil that the Douglas Revolution started, it really is the end of an era. Back in March, I pondered whether Coronavirus would lead to a new era of economic thinking in New Zealand… no chance of that, I am afraid, and those wishful thinkers can expect to be disappointed.

In short, the Government that was voted out so emphatically thirty years ago still runs New Zealand from beyond the electoral grave, and that isn’t changing any time soon.

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