Hunter W.
Banned
Disclaimer: I have used the title used for the 1996 documentary 'Revolution', which chronicled the economic reforms implemented by the 4th Labour and 4th National governments respectively. And have used the same titles from the four-episode series.
Muldoon ascendant
The 1975 general election resulted in a large National majority, its largest to date in fact. The Prime Minister the Right Honourable Robert Muldoon continued the decades-old statist approach in economic affairs. Unemployment continued its ever increasing figures, the economy shrank by the then unprecedented 4.1%. The Leader of the Opposition, Bill Rowling though winning a plurality of the electorate, failed to gain the require seats to operate a majority. As the 1970’s gave way to the 1980s New Zealand began to look like a westernized Bulgaria, government controls over capital exchanges and Muldoon’s heavy-handed approaches to both the Springbok Tour and soaring inflation began to take its toll.
The Labour Party continued to lick its wounds after the third consecutive defeat under the leadership of its avuncular spokesmen Bill Rowling. David Lange, observing his prospects of leadership, plotted his coup. By February 1983 he already had a majority of MP’s supporting him within the caucus. Rowling, aware of the dissatisfaction of his colleagues willingly stepped aside, paving the way for the charismatic Lange.
He immediately set to work reshaping Labour’s appeal, his Shadow Finance Minister, David Caygill in numerous speeches, gave the basic outline of the next Labour government.
“Our basic fundamentals, are; full employment, growth, health, education.”
“But, we must also be willing to adjust in the face of the current economic difficulties that need to be addressed. Labour will not shy away from policies that are required.”
Though many traditional left-of-centre MP’s was weary of his economic ideas he had developed prior to his appointment. Lange decided to scale back his proposals, thus winning back to their confidence.
By 1984 the economy continued to lurch towards precipice, many who had shares in New Zealand began to liquidate their assets as the anticipated election, which, to the surprise of many National MP’s, was called by a visibly tired and emotional Prime Minister. Against the advice of senior party officials, most of whom were concerned about the number of backbenchers who were anxious about their marginal seats.
Thus the campaign began, with the shades of orange empty seats in Rotorua. As Muldoon mounted a not dissimilar campaign to that of 1975. Consisting of town-hall style meetings across the country. Lange, meanwhile launched his extravagant campaign, in poorer areas around New Zealand, enticing the traditional constituencies to the polls. His Finance Minister however, was being briefed on the fiscal outlook, along with the continuing economic crisis. Muldoon whilst criticizing labour for its big spending policies still hypocritically failed to recognize the extent of the disaster in the making. Blissfully ignoring both the Treasury and the Reserve Bank when advice was offered. The closing weeks of the campaign climaxed in the television debate between himself and Muldoon, with Lange seemingly looking sharp, and Prime Ministerial. Muldoon nevertheless, appeared tired and bitter.
Enter Lange
The 1984 general election consequently resulted in a Labour victory, at substantial one at that.
However, the advice deferred to both Caygill and Lange suggested immediate devaluation was required. With this bearing heavily on the minds of David and the cabinet, he forwarded this to Robert Muldoon (still formally Prime Minister), which he refused outright. After informing his deputy, Geoffrey Palmer the incoming Prime Minister informed Muldoon he would not under any circumstances, make a joint statement his government would not devalue by the initial figure of 20%, which was later scaled back to 14.5%. Enraged, Lange appeared on television denouncing Muldoon; "This nation is at risk. That is how basic it is. This Prime Minister outgoing, beaten, has, in the course of one television interview tried to do more damage to the New Zealand economy than any statement ever made. He has actually alerted the world to a crisis. And like King Canute he stands there and says everyone is wrong but me".
The crisis continued for several days before, under the threat of a coup against him, relented. Afterwhich he devalued by 15%, as par Lange’s wishes.
The entry into government propelled the government into action, the new energetic and youthful Finance Minister immediately set about to implement the party manifesto. First, immediate review into both subsidies and market regulation. Both of which were presided over from both left-wing and non-government officials. To assure a skeptical public he appeared in several television interviews, saying “I have made it clear there will not be the wholesale dismantlement of subsides and mass deregulation. Yes, there will be some adjustments. Nevertheless, this government is committed to traditional left-leaning Kiwis.”
However, the conclusions of deregulation were divided. With some suggesting none was needed, while others recommended widespread restructuring. The floating of the exchange rate was put forward to cabinet, with little debate. And thereafter implemented. The advisory committee among other things, suggested an overhaul of income tax in New Zealand, with the creation of a broad-based indirect tax system. This however, was universally rejected for its unsavory effects on the poor. Something which Lange decided he could not live with, and for the time being, dropped. The first major political challenge was the dismantlement of farming subsidies, and the partial removal of tariff barriers. Both of which were hallmarks of Labour policy since the 1930’s, though federated farmers had request its abolishment. They also demanded “fairness”, referring to welfare and other state assets. These were ignored, Caygill continued regardless.
Interest rates were hiked to the rate of 19% in an attempt to control inflation while public spending, increased in spite of this, increased rapidly.
The opposition meanwhile was in a state of shock, Robert Muldoon had now been replaced by the Liberal Jim McLay, whose economic ideas were unpopular with the conservative wing of the party. In an act of desperation he appointed his likely opponent, Jim Bolger as his deputy. Both became known as the “Twin Jims”.
The nuclear issue became the centre of attention in 1984. The United States had been a major New Zealand partner since the creation of ANZUS in 1951. Lange, who since the inception of his parliamentary career. Wa sympathetic to the arguments of those who held anti-nuclear tendencies, and thereafter imposed a ban on warships carrying nuclear armaments. However, this did not include nuclear propelled warships. As such the United States sent the USS Buchanan to visit New Zealand, as a sign of solidarity. David Lange, who at the time was in the Tokolau Islands promptly returned home to inform the cabinet that the Buchanan’s entry was to be denied. U.S. President Ronald Reagan responded by suspending all American commitments to the defence of New Zealand. Referring to New Zealand as a “friend” replacing the “ally” component. The United Kingdom also informed Lange of its position on the subject of the anti-nuclear stance, angry that British warships could no longer visit New Zealand.
The 1985 budget heralded virtually no major economic changes, the big spending policies promised by labour were delivered. The economic upswing continued unabated, the farming sector, the first target of structural change began to recover. Unemployment also fell as increased government investment into employment schemes heralded now jobs and training. Both superannuation and social programs were vastly expanded.
Notwithstanding, David Caygill continued to implement modest reforms, he finally was able to force partial liberalisation of international investment, along with the complete removal of exchange controls. These did have superficial improvements, as capital flowed freely into the share market. Creating an artificial boom. He also introduced major changes to state assets, to be run like businesses but under government contract, though he ruled out privatization saying it was neither his intention or goal. Popular tax incentives were also introduced for low income individuals, leaving many New Zealanders better off.
Finance Minister David Caygill, April 1987.
Muldoon ascendant
The 1975 general election resulted in a large National majority, its largest to date in fact. The Prime Minister the Right Honourable Robert Muldoon continued the decades-old statist approach in economic affairs. Unemployment continued its ever increasing figures, the economy shrank by the then unprecedented 4.1%. The Leader of the Opposition, Bill Rowling though winning a plurality of the electorate, failed to gain the require seats to operate a majority. As the 1970’s gave way to the 1980s New Zealand began to look like a westernized Bulgaria, government controls over capital exchanges and Muldoon’s heavy-handed approaches to both the Springbok Tour and soaring inflation began to take its toll.
The Labour Party continued to lick its wounds after the third consecutive defeat under the leadership of its avuncular spokesmen Bill Rowling. David Lange, observing his prospects of leadership, plotted his coup. By February 1983 he already had a majority of MP’s supporting him within the caucus. Rowling, aware of the dissatisfaction of his colleagues willingly stepped aside, paving the way for the charismatic Lange.
He immediately set to work reshaping Labour’s appeal, his Shadow Finance Minister, David Caygill in numerous speeches, gave the basic outline of the next Labour government.
“Our basic fundamentals, are; full employment, growth, health, education.”
“But, we must also be willing to adjust in the face of the current economic difficulties that need to be addressed. Labour will not shy away from policies that are required.”
Though many traditional left-of-centre MP’s was weary of his economic ideas he had developed prior to his appointment. Lange decided to scale back his proposals, thus winning back to their confidence.
By 1984 the economy continued to lurch towards precipice, many who had shares in New Zealand began to liquidate their assets as the anticipated election, which, to the surprise of many National MP’s, was called by a visibly tired and emotional Prime Minister. Against the advice of senior party officials, most of whom were concerned about the number of backbenchers who were anxious about their marginal seats.
Thus the campaign began, with the shades of orange empty seats in Rotorua. As Muldoon mounted a not dissimilar campaign to that of 1975. Consisting of town-hall style meetings across the country. Lange, meanwhile launched his extravagant campaign, in poorer areas around New Zealand, enticing the traditional constituencies to the polls. His Finance Minister however, was being briefed on the fiscal outlook, along with the continuing economic crisis. Muldoon whilst criticizing labour for its big spending policies still hypocritically failed to recognize the extent of the disaster in the making. Blissfully ignoring both the Treasury and the Reserve Bank when advice was offered. The closing weeks of the campaign climaxed in the television debate between himself and Muldoon, with Lange seemingly looking sharp, and Prime Ministerial. Muldoon nevertheless, appeared tired and bitter.
Enter Lange
The 1984 general election consequently resulted in a Labour victory, at substantial one at that.
However, the advice deferred to both Caygill and Lange suggested immediate devaluation was required. With this bearing heavily on the minds of David and the cabinet, he forwarded this to Robert Muldoon (still formally Prime Minister), which he refused outright. After informing his deputy, Geoffrey Palmer the incoming Prime Minister informed Muldoon he would not under any circumstances, make a joint statement his government would not devalue by the initial figure of 20%, which was later scaled back to 14.5%. Enraged, Lange appeared on television denouncing Muldoon; "This nation is at risk. That is how basic it is. This Prime Minister outgoing, beaten, has, in the course of one television interview tried to do more damage to the New Zealand economy than any statement ever made. He has actually alerted the world to a crisis. And like King Canute he stands there and says everyone is wrong but me".
The crisis continued for several days before, under the threat of a coup against him, relented. Afterwhich he devalued by 15%, as par Lange’s wishes.
The entry into government propelled the government into action, the new energetic and youthful Finance Minister immediately set about to implement the party manifesto. First, immediate review into both subsidies and market regulation. Both of which were presided over from both left-wing and non-government officials. To assure a skeptical public he appeared in several television interviews, saying “I have made it clear there will not be the wholesale dismantlement of subsides and mass deregulation. Yes, there will be some adjustments. Nevertheless, this government is committed to traditional left-leaning Kiwis.”
However, the conclusions of deregulation were divided. With some suggesting none was needed, while others recommended widespread restructuring. The floating of the exchange rate was put forward to cabinet, with little debate. And thereafter implemented. The advisory committee among other things, suggested an overhaul of income tax in New Zealand, with the creation of a broad-based indirect tax system. This however, was universally rejected for its unsavory effects on the poor. Something which Lange decided he could not live with, and for the time being, dropped. The first major political challenge was the dismantlement of farming subsidies, and the partial removal of tariff barriers. Both of which were hallmarks of Labour policy since the 1930’s, though federated farmers had request its abolishment. They also demanded “fairness”, referring to welfare and other state assets. These were ignored, Caygill continued regardless.
Interest rates were hiked to the rate of 19% in an attempt to control inflation while public spending, increased in spite of this, increased rapidly.
The opposition meanwhile was in a state of shock, Robert Muldoon had now been replaced by the Liberal Jim McLay, whose economic ideas were unpopular with the conservative wing of the party. In an act of desperation he appointed his likely opponent, Jim Bolger as his deputy. Both became known as the “Twin Jims”.
The nuclear issue became the centre of attention in 1984. The United States had been a major New Zealand partner since the creation of ANZUS in 1951. Lange, who since the inception of his parliamentary career. Wa sympathetic to the arguments of those who held anti-nuclear tendencies, and thereafter imposed a ban on warships carrying nuclear armaments. However, this did not include nuclear propelled warships. As such the United States sent the USS Buchanan to visit New Zealand, as a sign of solidarity. David Lange, who at the time was in the Tokolau Islands promptly returned home to inform the cabinet that the Buchanan’s entry was to be denied. U.S. President Ronald Reagan responded by suspending all American commitments to the defence of New Zealand. Referring to New Zealand as a “friend” replacing the “ally” component. The United Kingdom also informed Lange of its position on the subject of the anti-nuclear stance, angry that British warships could no longer visit New Zealand.
The 1985 budget heralded virtually no major economic changes, the big spending policies promised by labour were delivered. The economic upswing continued unabated, the farming sector, the first target of structural change began to recover. Unemployment also fell as increased government investment into employment schemes heralded now jobs and training. Both superannuation and social programs were vastly expanded.
Notwithstanding, David Caygill continued to implement modest reforms, he finally was able to force partial liberalisation of international investment, along with the complete removal of exchange controls. These did have superficial improvements, as capital flowed freely into the share market. Creating an artificial boom. He also introduced major changes to state assets, to be run like businesses but under government contract, though he ruled out privatization saying it was neither his intention or goal. Popular tax incentives were also introduced for low income individuals, leaving many New Zealanders better off.
Finance Minister David Caygill, April 1987.
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