Colin James: Reflecting on the Fourth Labour Government

This is a paper delivered to a conference at the Stout Research Centre at Victoria University. The conference, held last Friday and Saturday, dealt with the Fourth Labour Government which came to power in 1984 and brought radical economic change to New Zealand.

Colin James is a Herald political commentator.

This conference was originally about leadership — David Lange's. Sometime after I agreed to contribute, Lange disappeared from the programme and the topic was changed to the first term of the fourth Labour government. That is an arbitrary boundary, though, on reflection, I do think it is the first term, from 1984 to 1987, that really counts and so, in a sense, this period is a relevant one for a conference.

The original topic would have proved difficult. Lange was, of course, leader in the formal sense of holding the position of "leader" of the Labour party. But he was in fact more a salesman (at least in the first term) for those who drove the policy change that characterised his government. They were in effect the leaders, though they didn't have the title.

Lange himself declared, in answer to a question by me in 1983 as to what he stood for: "I surge for the thing that I feel." He was, as Prime Minister, definitely a surger. And he felt a great deal, painfully at times. He became by the end of the first term a lonely figure, tossed by forces far greater than he could ride, let alone tame, detached from his own government in the second term and in the end detached from "the things he could feel". He tried to find his way back to the good society expounded by his doctor father — the Good Samaritan society, you might call it, which I suppose sums up his political instinct; he was not a political philosopher, still less an ideologue and especially not an apostle for the free-market economy his prime ministership facilitated. So there were some marvellous pieces of political theatre: the flat tax died in early 1988 and in late 1988 Richard Prebble and Sir Roger Douglas departed in high drama. But by then there was no way back: Lange was stranded in the hard glare of market economics and efficiency and his titular leadership died there in 1989.

Lange was caught up in a revolution. Being a "surger", the revolutionary nature of his government exhilarated him: he exulted in the meeting with Rod Deane, then deputy governor of the Reserve Bank, in London to approve the cabinet's wish to float the currency in March 1985. His tour-de-force in the Oxford Union debate in March 1985 — "I can small the uranium on your breath from here," he told an interjector — scandalised foreign service mandarins but delighted and warmed much of the nation and large numbers of non-New Zealanders round the world. His weekly press conferences were the best show in town, one-liners at a rapid-fire rate. He was at home in the theatre of politics and could project the headiness with verve and humour: in that sense he was at one with the revolutionary mood of the times.

I want to stay on that word "revolution" for a moment. Brian Easton has declared it a counter-revolution. But I think that focuses too tightly on the economic reforms and the overturning of keynesian policies. The fourth Labour government was about far more than economics; it ploughed up every policy field, in some cases very innovatively. Moreover, it did this amid rapid and deep social change that was independent of, and infected the tone of, Lange's government — and made its time in office not just a period but an era. It is in that wider context that I want to situate Lange's government and the Parliament of 1984-87.

I argued the case in New Territory for calling the period from 1984-92 a revolution on the grounds that it represented a change in the value system — not a violent overthrow of the existing order but nonetheless a "cultural" revolution, causing social, cultural and economic upheaval and insecurity to large numbers of people, sweeping away one elite and its ideas and replacing it with a different elite and ideas. Of course, there was much continuity of institutions and customs; but there was enough discontinuity, I think, to call it a revolution.

I indicated in New Territory and have argued more vigorously since that that revolution was this nation's independence revolution.

I don't mean by that the ban on nuclear ships and opposition to apartheid sport and other foreign policy or constitutional initiatives. I mean something much deeper, in the nature of social and cultural change: the sentimental detachment from Britain, the development of a vibrant local cultural expression.

I think this began in the 1970s and took the form of an unselfconsciousness New Zealandness in writing, plays, music, dance and art and craft whose creators no longer looked over their shoulders to the mother culture for comparison or differentiation. Of course, it didn't happen in a flash and a case could be made that in art and craft it began earlier. But it did suddenly in the late 1970s become much more noticeable and voluminous and, to coin a current vogue word, brash.

This was the generation that came to adulthood in the 1960s stretching its creative wings.

The pivotal year for me was 1978, with Plumb and Foreskin's Lament. By 1980 first-run New Zealand plays at Circa were unremarkable. Then revisionist interpretations of the country's history appeared in the 1980s. The Piano and Heavenly Creatures were just around the corner.

Of course, there had long existed a popular culture that was distinct from Britain's -- outdoorsy, sporting, egalitarian, male and in some way "better". But until my generation, born at the end of or after the second world war and reaching adulthood from the 1960s onward, that popular culture also included the notion that Britain was "home" — maybe in the sense of having escaped from home but nonetheless representing the place they knew they had come from. "Home" was my parents' generation's word for Britain. Recently arrived British migrants were "homeys".

The 1960s generation, which made its impact on higher culture from the 1970s and in politics from the 1980s, did not call Britain "home". Yes, Britain was, and still is, the automatic port of call for those on OE. But it has become a foreign country. "Home" now is New Zealand, with a distinct landscape, a distinct approach to daily life, distinct ways of thinking and distinct ways of expressing itself — a distinct popular culture and, from the late 1970s, a distinct high culture.

I contend that the independence revolution amounted to the "indigenisation" of the ethnic-Europeans (overwhelmingly Anglo-Celts and more Anglo than Celt). After the 1980s there could be no re-attachment of the umbilical cord, much as Richard Worth might still want to reclaim the right of appeals to the Privy Council.

This indigenisation was both an exhilarating and a difficult time — rather like adolescence. And New Zealand policymakers behaved rather like adolescents in the 1980s, recklessness mixed with experimentation. It was, for a journalist, a very heady time. For ordinary folk it was rough. Large numbers lost jobs or income or both. Old certainties disappeared.

In my view it was this indigenisation which accentuated and largely accounted for the speed, breadth and depth of the policy change in the 1980s.

Of course, there were other factors driving policy change. Market-based economic theory had made a powerful comeback and, coupled with new theories — agency theory, transaction theory, utilitarian libertarianism and moral hazard, the theory of public choice and so on — washed up here in the Treasury and elsewhere among younger economists. These ideas arrived at a time when policymakers had run out of regulatory options and the economy was in serious imbalance: more, or even different, regulation was not an option. A new type of globalisation — of information, people, capital and money, in part facilitated by technological changes in transport and information storage, processing and exchange — had started to seep through trade and regulatory barriers. Something had to give in economic policy and, because of that, to some extent in social policy as well — indeed, there had already been precursors of change in the pre-1984 government. And the values revolution which had swept through our sorts of countries in the 1960s had generated an openness to policy change among many of the generation which grew to adulthood in that decade. The incoming cabinet in 1984, the main players of which were largely of that generation, and a younger generation of bureaucrats were ready to roll.

Add to that potent brew the fact that New Zealand is a village-like polity. A few well-organised and well-connected people, with an agreed plan, can drive through big change quickly. In 1984-87 an inner group of five ministers, plus Lange, could command the cabinet, using shock tactics; the cabinet commanded the Labour caucus; the Labour caucus commanded the Parliament. We had, from 1984-87, effectively a one-party state, controlled from the top and incorporating top officials in the key ministries.

I will come back to that later. For the moment I want to stay in the wider context of the ethnic-Europeans' indigenisation here. My argument is that it was that indigenisation that was a crucial, perhaps the crucial, factor determining the rapidity, breadth and depth of policy change. Social change drives political change and in the 1980s New Zealand was amidst a social sea-change. The 1980s upheaval amounted to our independence revolution.

So it would have been surprising if there had not been deep policy change at that time, even if the other factors were not already driving change. The independence revolution's impact was to accelerate, broaden and deepen the change beyond what would have been the case — and, indeed, was the case in other countries, not least Australia.

But that's not all. There were two complications to the indigenisation of the ethnic-Europeans.

One was the re-indigenisation of the Maori. From the late 1960s on, and particularly through and after the land occupations in the late 1970s, Maori reclaimed their culture and language, claimed the right to seek redress for past injustices and then claimed a right to a place in the power structure. All of this was either operating in the mid-1980s or in genesis.

This reindigenisation of the Maori did not occur in isolation. Worldwide, indigenous peoples were asserting claims to recognition and status. But there were special circumstances in New Zealand, not least the relatively high percentage of Maori compared with, say, the Americas, Australia or Japan. And there was the Treaty of Waitangi as a mechanism for addressing and responding to claims. Arguably the most momentous legislation of the 1984-87 Parliament, a Parliament noted for momentous legislation, was the Treaty of Waitangi Tribunal Amendment Act 1985 which extended the jurisdiction of the Waitangi Tribunal back to the date of the signing of the Treaty. What would in 1984 have seemed an amazing array of developments have flowed from that and the subsequent court decisions and administrative initiatives — a mini-revolution in itself.

This mini-revolution, the reindigenisation of the Maori, both complemented and complicated the ethnic-Europeans' indigenisation. It added piquancy, momentum and sidestreams to the independence revolution. Moreover, it was more strongly rooted than the indigenisation of the ethnic-Europeans, since it was attached to the land and underpinned in that attachment by an animist culture that sees everything interrelated through whakapapa. Many liberal non-Maori in the 1980s felt culturally inferior to Maori.

That leads to the second complication of the ethnic-Europeans' indigenisation, which is best demonstrated by Te Papa's arbitrary 1840 cutoff point for non-Maori history. That cutoff suggests there is no cultural history, indeed no history for non-Maori beyond 1840 — though, of course, there is a rich history, one from which has come the well-fed, technologically advanced world we live in in this country, the great democratic freedoms and great traditions of music, writing, art and architecture. The newly indigenised ethnic-European culture will not be complete until it reclaims those European historical and cultural roots as an integral element. We are what we have been as much as what we are.

There is a third complication: miscegenation. This has meant until now that many Maori — my guess is at least three-quarters — are in effect members of the ethnic-European indigenised culture and not of the reindigenised Maori culture and only a quarter (though this element is growing) are both Maori and European, that is, bicultural. Very few non-Maori are bicultural.

But this is changing: among those under 30 there is a much greater knowledge of, contact with and practice of elements of Maori culture. I think over the next generation or two the ethnic-European culture will incorporate more and more Maori culture. I also think that Maori culture will be relaxed as Maori believe it secure again and open themselves more to modernisation than the past generation has allowed. I think more Maori will be both ancient and modern as a growing number of the emerging under-40s leaders are. This has been evident for a couple of decades in the graphic arts and music. Again, culture leads politics.

In short, over the next couple of decades or generations we will see, I think, a meshing of the two cultures. This is not a merger; nor is it a one-way street which only Maori travel. It is the establishment of a national identity which draws on both cultures in different ways. The unselfconscious reference to Maori terms and practices by younger New Zealanders is a pointer. Almost without noticing it and with little fuss, non-Maori are acquiring some Maori habits and language. No indigenised ethnic-European in this country can avoid being part-Maori in culture even if not in ancestry. The two indigenisations may often appear in conflict but they are also entwined.

But that was all far in the future in 1987. My point in traversing all this is to underline the massive social and cultural change that was under way as the 1984-87 Parliament smashed the icons of the 1950s consensus.

Just look at the record. A selection:
* the extension of the Waitangi Tribunal's jurisdiction;
* the State-owned Enterprises Act which reversed a century of state initiatives and put much of the state-owned part of the economy on a commercial footing;
* massive tax changes and the GST;
* the floating of the currency, freeing of interest rates, deregulation of the financial sector and freeing of foreign investment;
* a bold start made to dismantle the hermetical protection of the economy from imports (I first heard the heretical words "free trade with the United States" at a retreat run by Mike Moore in late 1984);
* the removal of subsidies;
* the targeting of social services but greatly increased spending on them, especially to assist Maori;
* the anti-nuclear law and the end of Anzus;
* decriminalisation of homosexuality;
* a Ministry of Women's Affairs and more funding for services useful to women;
* the removal of the Economic Stabilisation Act;
* a new Constitution Act.

How did the record stack up against the 1984 manifesto? That promised, in order of priority, "full employment, economic growth, fairness and social justice, maximum possible stability in prices, a more democratic approach to economic management, greater control by New Zealanders over their own economy". In 1987 in The Election Book, I concluded about those priorities: "On every count the Labour government has failed." I saw the record as mixed on another set of promises: "consensus…; a fair prices and incomes policy; an investment strategy to help restore full employment and reduce the external deficit; reform of industry assistance; a fair tax system; monetary policy that underpins a balanced growth strategy; fiscal policy that tackles the problems caused by the internal deficit; and the retargeting of public resources to ensure a more effective delivery of those services to those in greater need."

Ministers insisted in 1987 they had not abandoned the objectives, just changed the choice and priority of the means. With hindsight, we can say, as some argued at the time, that the means far overshadowed the ends and the ends are now necessarily different as a result.

By the 1987 election, Labour was bleeding from its core vote. Though its share of the vote went up 4 per cent in that election, it was swelled by recruits from the National side of politics. That was unsustainable and portended serious damage to Labour. Lange in 1986 encapsulated this, though failed to act on his insight: "You are seeing a certain amount of redistribution now but it is perverse. It is a negative redistribution… Those in the least-assured position are still eroding in terms of the quantity and quality of their living. It's amazing we haven't been slugged for not doing more on that before now." The slugging had begun but it was not until the next term he felt its full force.

In fact, as noted above, Labour in 1984-87 actually increased social spending on education, health, housing, lower-income assistance and welfare. In that sense it was a true social democratic government. But salary rises ate up much of the new spending in health and education. And it committed a cardinal sin against New Zealand-style social democracy: it abolished the guaranteed job, the cornerstone of the welfare state for 50 years. For that there had to be utu. And there was in 1990.

How could the government carry out its revolution in a parliamentary democracy which is supposed to have checks and balances and to subject governments to the popular will? In the 1920s and again in the 2000s such radical action would have stalled in the mixed Parliaments of those divided eras. But in 1984 checks and balances were minimal: New Zealanders had come to trust governments too much. The 1984-87 Parliament was in effect a pawn of a determined and radical executive. That Parliament was the high point — and last gasp — of the post-1935 parliamentary dictatorship, the winner-takes-all political culture.

In fact, even in 1984-87 there was the whiff of change in the offing — from 1978 Social Credit had had a small presence in the Parliament, though not enough for most of that time, to have any effect on the executive's will. After 1987, though the two parties regained their duopoly for a time, they then began to fragment. By 1995 we had entered the current period of minority and/or coalition government.

The catalyst was Sir Geoffrey Palmer's royal commission in 1986 which recommended a change in the voting system. This looked at the time an exercise in futility and in the 1987-90 Parliament an FPP select committee reached for the pigeon-hole. But National insouciantly in 1990 promised a binding referendum and an angry public took the opportunity to leg-rope future governments to vexing small parties.

Sir Geoffrey, whose contribution to the 1984-87 government and Parliament was immense, made several important changes to parliamentary procedure: he set up a new committee, chaired by an Opposition MP, to scrutinise regulations; he instituted the important rule that all bar exceptional legislation automatically went to select committees for scrutiny (previously there had been government discretion to withhold bills) and enabled select committees to initiate inquiries on their own motion; and he removed the financial control of Parliament and its staff from the control of the Leader of the House and thus from the direct control of the government. These changes did not seriously impede governments he was in but has become a crucial feature of MMP Parliaments.

So what of the 1984-87 Parliament? It was a momentous and revolutionary Parliament. But it was so only because it was under the thumb of a bunch of determined revolutionaries and operated under rules which left it highly manipulable. And it met amid huge social change amounting to an independence revolution. Small wonder we can't go back to those days and that we shall look back on those days with wonder.

* Read other presentations to the conference in last Saturday's Dialogue.