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| David Lange in 1984. |
For the benefit of those who might not have experienced a Labour government, last month we published an article on the record of the various Labour governments that have been in office in Australia since 1984. This month we look at what the Labour government that ruled New Zealand between 1984 and 1990 put the workers there through.
The New Zealand Labour Party came to power in 1984 and stayed there until 1990. Labour shocked its supporters, party members and most of its voters by following a path of financial market deregulation, cutbacks in public services, sales tax, users pay, corporatization and privatisation of a large portion of the state, removing industrial and agricultural subsidies, removing trade barriers, import restrictions, import tax and duties. None of which was outlined in its pre-election campaigns. By the end of Labour's 6-year rule, unemployment was at catastrophic levels, record numbers of businesses had failed, the state had been turned upside down, and many of Labour’s traditional supporters and party members had left the party in droves. The only people happy were NZ Treasury, richer capitalists and the National Party (NZ Tories).
Prior to the Labour Party victory in the snap general election of 1984, Robert Muldoon had been both Prime Minister and Finance Minister for all of the nearly nine years of National Party government in New Zealand. Due to the screwed up concepts of socialism many people have, Muldoon has gone down in “history'” as having instituted or continued so-called “socialist” policies in his time as Prime Minister and the Labour Government of 1984—1990 has been labelled “right-wing free marketeers”.
The “socialist” label attached to Muldoon is of course nonsense but used by some to describe Muldoon’s policy of reenforcing the state’s role as provider of support through social welfare, subsidies to exporters, tariff walls to protect inefficient local industries, and the investment of huge amounts of state capital in ambitious energy projects named “Think Big”. “Think Big” was aimed at making NZ at least 60 percent self-sufficient in energy and was largely motivated by the oil shocks of the 70s. It is worth noting that NZ enjoyed a prosperous period post second world war with England guaranteeing a market for NZ produce (meat, butter, wool) and high wool prices generated by the likes of the Korean war. It was the entry of England into the EEC, and an international decline in agricultural produce prices that resulted in successive NZ governments giving subsidies to farmers and borrowing overseas in the hope of riding out the unfavourable market conditions.
When it came to the snap election in 1984, NZ was under a wage freeze (a price freeze had just been lifted), inflation ranged from 6.1 to 15 percent during the year, the economy was described as “one of the most regulated, protected and subsidised in the developed world” (Europa World Year Book), unemployment stood at 66,500, public debt stood at $21.88 billion. The fixed exchange rate was clearly overvalued while politically government unity was disintegrating as Muldoon’s autocratic style drew fire from within and without, and the economic position of the country worsened.
The 1984 election was more than anything focused on Muldoon, and the cry from the as usually confused “left” was “out with Muldoon”, never giving a thought to what was to replace Muldoon. Not only the “left” wanted rid of Muldoon, feminists, homosexuals, liberals, civil right activists to name a few wanted him out. None gave a moment’s thought as to what actually made capitalism tick—or were the least interested in how the system operated. A significant portion of the capitalist class wanted Muldoon out as well, having their eye on the international investment capital that would flow in once financial deregulation occurred.
Power for power’s sake
Labour came to power in July 1984 with a 17-seat majority and total share of the votes of 43 percent (NZ operated a First Past the Post electoral system until recently). Its election policies centred on health, housing, employment, education, the economy, overseas debt and an anti-nuclear stance (though Labour leader David I.ange had opposed the anti-nuclear position when it came up for formal endorsement at the Labour Party conference, he later championed it as Prime Minister as if it were his own brain-child). The Labour Party had a great deal of assistance in the 1984 election victory from the newly formed New Zealand Party who had one of New Zealand’s wealthiest capitalist’s as its leader: Robert Jones, property tycoon. By drawing the protest vote with its so-called “traditional National Party policies”—votes that would otherwise have remained with National— Robert Jones helped achieve his objective—a Labour government and promptly wrapped the New Zealand Party up to the immense chagrin of its officials, This if anything should have given an unsuspecting public a clue as to what the new Labour government would be all about.
Even before the fourth Labour government resumed office it was confronted with a major balance of payments crisis and had to agree to a 20 percent devaluation of the NZ dollar. This decision was made on the advice of the NZ Treasury and Reserve Bank economic advisers where the Chicago School of Economic thought already dominated. (The Chicago School advocated removing state intervention and instituting laissez faire type economics). This set the tone for the rest of the Labour government term and was quickly followed up with abolition of exchange controls, deregulation of finance, abolition of subsidies and incentives and the floating of the NZ dollar. Within days, Lange was announcing the "cupboard was bare” and everybody should look to "tightening their belts ”. It soon became clear who was to be doing the belt-tightening and who would be letting the belts out. As the international capital flowed in, the local pigs were gorging themselves at the trough in a speculative frenzy that was to end up with the largest share-market and property crash in the history of the country in October 1987. Inflation was to peak at close to 20 percent in 1987.
Before and during the run up to the election in 1984, there was no indication from Labour that it would adopt such policies and its official economic policy was not much different from the conventional Keynesian style economics that both National and Labour had been following for decades. The Labour government therefore deliberately deceived the electorate and its own party supporters. Mike Moore—a cabinet minister and later Prime Minister told the Auckland Press Club that “had we talked about some of the things we did in 1984, we would never have got there (elected )”. A post-election remit of the Labour Party opposed free market policies; this made no difference to the course pursued by the Labour cabinet. So much for Labour Party democracy. There is little doubt that the Labour Party wanted power for power’s sake, and the conservative nature of the election campaign they waged reflected that.
Rogernomics
The Labour government finance minister Roger Douglas along with associate finance ministers Caygill and Prebble took on board the advice of Treasury. The economic policy enacted by the Labour government quickly became known as “Rogernomics” in the same vein as “Reaganomics”. The cabinet argued as a justification for their actions that their economic reforms would allow the fulfilment of the Labour Party’s social goals, even though no one ever defined the nature of these social goals. A similar argument is contained in the Treasury document Economic Management. “Users Pay” was a term that suddenly started slipping from Labour Ministers’ mouths and was meant to signify a new approach to providing services by the state, where the user of the service would be charged for at least part of the cost of the service.
In 1986, the State-Owned Enterprises Bill was passed through parliament. Lange and Palmer (deputy prime minister) denied when challenged that corporatization of many government departments would involve job losses and was a prelude to privatisation—they already had an eye to the approaching 1987 general election. Corporatizing government departments had never been a Labour Party policy. At the head of the new SOEs, the government placed leading business figures, many of whom were friends of the finance ministers. The SOEs’ boards of directors were supposedly accountable to Ministers (in a directors-shareholders style of relationship) and although the SOE Bill contained a section which enabled the Crown to pay the SOEs for non-commercial services this rarely occurred. The result of the implementation of the SOE Act was the loss of tens of thousands of jobs. With Alan Gibbs (businessman well known for his cabinet connections and backer of the New Right think-tank—the Centre for Independent Studies ) as chairman, ForestCorp (formerly the Forest Service) sacked the forestry work force and took some back as independent contractors.
The previously state owned Bank of New Zealand which has the largest share of retail banking in New Zealand had been partly sold (33 percent) by the Labour government in June 1989 amid pathetic cries of “they’re selling the family silver” from the likes of Pat Kelly—a long time trade unionist and Labour Party member.
By October 1990, $NZ13.7 million had been paid out by the government to private sector advisers employed in connection with sales of crown businesses.
The Lange Labour government introduced a supertax on the elderly. Extra income earned from savings or investments meant the old age pension was severely eroded by a surcharge tax. Of course while ordinary workers were being sacked in their thousands, mortgage interest rates at more than 20 percent, and workers were being asked to tighten their belts, parliamentary Labour in collusion with their fellow gutters in the opposition voted themselves a nice fat golden retirement package.
Government debt grew from $NZ21 billion in 1984 to nearly SNZ44 billion in 1991 despite state asset sales. Debt servicing grew from 10.6 percent of Government spending in 1980 to 15 percent in 1991. So much for the miracles of Rogernomics.
Unemployment over Labour’s term of office grew from about 60,000 to over 160,000 registered as officially unemployed. This had a particularly marked affect on female workers, despite the election of the Labour government being supported by feminists and the setting up of a Women’s Ministry. Unemployment figures are misleading, particularly in periods of high unemployment, as many married women or women living in partnerships are forced out of the workforce to be dependent on their partner, and so don’t show up in the official figures.
Labour disintegrates
Despite a show of unity during the first term of office from 1984 to 1987, and subsequent re-election on the back of a very slick TV campaign funded by taxpayer money and their nuclear ship ban (National was still opposed to the ban), Labour began to slowly fall apart.
The prime minister’s office in New Zealand has quite extraordinary powers and past Prime Ministers have used these powers to manipulate cabinet, sack hostile ministers and appoint friendly ministers without any endorsement needed from either cabinet or caucus. Lange was pretty much driven by cabinet and Treasury during the first term, in the second term, he opposed aspects of Roger Douglas’s budget that led to a falling out and eventual sacking of Douglas by Lange using the dictatorial powers of his office. Lange replaced Douglas with Caygill. Prebble was to follow soon after when he publicly criticised Lange’s ability as a Prime Minister.
A concerted campaign by Lange’s opponents led by Douglas and Prebble and ill health eventually resulted in Lange’s resignation. The deputy prime minister, Palmer replaced Lange as Prime minister but only for a few months before resigning in favour of Mike Moore. Moore and Labour lost the 1990 general election to the National Party (National had by then decided being anti-nuclear was a good idea) in what was a landslide victory, ending 6 years of Labour reign, a reign that devastated the very workers that Labour purportedly represented. National turned around and followed exactly the same economic policies only with more vigour, breaking virtually every single promise made during the election run-up. What Labour started, National finished.
Why did all this happen? And under a Labour government? Very logically. Property institutions under capitalism ensure that democracy can only be a veil, while underneath the vested interests that arise inevitably from a system of society based on production for profit, minority ownership and control of the means of production and distribution ensure that the interests of the majority—the workers— come last. The undemocratic nature of political parties such as Labour, government, companies and corporations are a reflection of this system and its need to subjugate workers in order to carry on fleecing them. Labour when faced with running capitalism became the manipulated.
The incredible thing is that rather than having learnt their lesson, many former Labour supporters have deserted the Labour Party to a party called New Labour— part of the Alliance (a political alliance of New Labour, Manu Motuhake, Green, and other minor parties)—with the same old failed formula, the impossible task of trying to run capitalism in favour of the workers.
Having become totally disillusioned with politics and politicians in general after being lied to and deceived, voters when faced with the choice of continuing with the First Past the Post electoral system and a Mixed Member Proportional system similar to the electoral system in Germany, turned to MMP. MMP means larger and fewer electorates, and a party list vote and is said to favour coalition style of government. Many workers are hopeful that this will result in fairer government. There is no evidence to support this, and the capitalist class and overseas investors seem far from concerned. Capitalism will merely adjust to the situation and workers will continue to suffer insecurity, pollution, poverty, violence and a life of drudgery and uncertainty.
Dave Tildesley
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