It’s easy to look back at the bad haircuts, beige clothes and brown Beehive carpetsand chuckle. But whatever one’s views on its aesthetics, the Fourth Labour Government – elected 40 years ago on July 14 – was no laughing matter.
After nine years of economic nationalism and social conservatism under National prime minister Robert Muldoon, David Lange’s new broom left no corner unswept. In the space of a few short years, fuelled by a high-octane blend of neoliberal theoryand neoclassical state minimalism, it reinvented the nation.
The incoming government was helped on its way by Muldoon precipitating a constitutional crisis just days after the election, and by a political system that allowed a government with a parliamentary majority to legislate with relative impunity.
Lange and his finance minister Roger Douglas also relied heavily on the intellectual support of senior Treasury officials who had spent the Muldoon years absorbing the free market philosophies of the Chicago School of Economics.
Labour deployed the political resources of a new, reforming government to full effect. And the list of its reforms says as much about the country we once were as it does about the one we have become.
Drunk with power: National’s Robert Muldoon calls the snap election in 1984.
The rise of Rogernomics
During its first term in office, public subsidies in the agriculture and forestry sectors were removed. Foreign exchange and interest rate controls were lifted. The dollar was floated and financial markets substantially deregulated.
The goods and services tax (GST) was introduced, the personal income tax structure simplified, and the top tax rate for individual income earners fell from 66 to 48 cents in the dollar.
Government businesses and departments were corporatised. Many were then privatised, particularly after Labour’s increased support at the 1987 election. One of the most regulated economies in the world rapidly became one of the most open.
It was dubbed “Rogernomics”, but the Lange-Douglas government’s social and foreign policy reforms were almost as significant. Rape within marriage was finally outlawed, homosexuality was decriminalised, and nuclear-free laws passed as part of a newly assertive and independent foreign policy.
Attorney-general Geoffrey Palmer revised parliament’s Standing Orders, transforming our legislature into one of the most open in the parliamentary democratic world. Palmer also shepherded the Constitution Act (1986) through the House, which formally ended the outmoded provision that New Zealand governments could ask the British parliament to legislate on their behalf.
The past shapes the present
The Lange government would drive other, deeper transformations over time. The manner in which both Labour and its National Party successor threw their executive weight about, for instance, goes a long way to explaining the advent of the MMP proportional electoral system in 1993.
Many, perhaps naively, hoped MMP would clip the wings of the political executive. But the more astute architects of reform recognised MMP was the perfect system for locking in the structural changes made in the 1980s and 1990s by Labour and National.
The sort of radical politics that would be required to undo the neoliberal reforms enacted since 1984 are much harder to achieve in a multi-party system than in one dominated by two parties which swap executive power.
Moreover, the DNA of Labour’s Lange-Douglas era can still be found in the party system that has evolved under MMP.
Most obviously, the ACT Party was co-founded by Roger Douglas. It draws its intellectual inspiration less from Ayn Rand’s Atlas Shrugged than from the Treasury’s epochal briefing to the incoming government in 1984, Economic Management. NZ First leader Winston Peters still adheres to aspects of the world Lange and his core cabinet ended.
And Te Pati Māori is the latest in many attempts to wrangle something for tangata whenua out of our Westminster parliamentary arrangements. The political environment in which it operates was shaped by Labour’s expansion of the Waitangi Tribunal’s powers.
A new orthodoxy
Perhaps the Fourth Labour Government’s most enduring legacy, however, is the least visible: it changed the way we talk and think about politics, especially what we now consider either politically possible or beyond the pale.
We have voluntarily chosen to constrain our ability to control fiscal and monetarypolicy. And these self-imposed limits on state power are now so embedded in legislation that any form of fiscal activism – such as saving jobs and businessesduring a pandemic – seems extraordinary.
The notion that the human condition amounts to the rational pursuit of individual self-interest is similarly pervasive. By this reasoning, wealth inequality – of which there is a great deal more than in 1984 – is a moral not a market failure. Not even a global financial crisis or pandemic could really shift the paradigm.
These things are now widely accepted as natural and immutable, rather than the political choices they are. Without anyone really noticing, two equivalent fictions – the “dead hand” of the state and the “invisible hand” of the market – have assumed the status of both lore and law.
In France, one of the crucibles of modern democracy, the fall of the ancien régimeduring the revolution is commemorated on July 14, Bastille Day. On that same day in 1984, an old New Zealand order also fell. It was replaced by a new orthodoxy that has effectively smothered an alternative political or economic imagination.
We are all still living in the shadow of 1984. That is the real legacy of the Fourth Labour Government.
Richard Shaw, Professor of Politics, Massey University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
To be honest, I regard Ruth Richardson’s 1990/91 austerity packages as having more of a negative impact on the country.
If one tries to split out individual parts of the decline of New Zealand, perhaps. But it’s neoliberalism as a whole that needs to be reversed and those responsible punished.
Interestingly the word “democracy”, that quaint notion that “we the people” can influence the decisions made in our name, was absent from that piece. Instead it makes clear that the 1984 Labour Government was driven to sell us to the wolves by “the intellectual support of senior Treasury officials”. In other words, as much as we vilify Douglas and Richardson for the tragedy of our circumstances today, it was unelected, nameless bureaucrats, high as kites on the false promise of neo-liberal theory, who, on Bastille day, we should wish in that wagon headed for the guillotine.
Many new gens would be barely aware of the beginnings of the toxic legacy of “Roger’n’Ruth” on the 40th anniversary of Rogernomics and the later Ruthanasia continuation.
Rotten Rog’ and his mates indeed came from the Friedman/Rand/Chicago Boys/Pinochet/Thacher/Reagan school of dirty neo liberal economics where every aspect of human life is reduced to a transaction.
The embedded Reserve Bank Act, State Sector Act etc. make it difficult to reverse the NZ neo liberal state because they all just roll over each election regardless of which MMP grouping holds power. So the challenge for 2026 is to run a campaign to sink neo liberalism as it applies to this country.
Ironically the much hated Resource Management Act came out of that period as well. Everyone tends to forgot the aim of that law was clip the wings of the Ministry of Works and its SOE replacement(s).
We will probably only sink ferries. Our heads are otherwise too tied up with passing judgment on women, perhaps with pink hair, who tell us to do something sensible for our own good but not personally convenient and costing us. How dare she replaces the ole chant of ‘What do we want? And we want it now.’ When someone gets round to taking on a task and sacriificing self-satisfaction then….
If you have a look at that cesspit that is the MSN comment section, the conservatives there cannot seem to forgive the Labour government for spending – in their eyes overspending obviously – during the pandemic, despite the fact that it saved thousands of jobs and probably hundreds of businesses. And when someone points out that conservatives should be in favour of small business people, all you hear is crickets.
In the 1980s people like myself believed they were voting for the traditional Labour Party that stood for an equal society.
I had no idea that Labour Doctor Jeykll would turn into neo-liberal Mr Hyde. I did not vote for asset sales and scaling back essential public services and I believe this was true of most voters.
I never made the mistake of leaping from Labour’s frying pan into National’s fire but obviously other people did. Did they know they were voting for cuts to welfare benefits and sports cars for property developers?
Do people learn from their mistakes? Disillusioned by the Ardern government for not trying to reverse the neo-liberal current, would people blindly choose a National Party led by a business executive and financed by wealthy donors? Surely not again?
Is it true that people get the government they deserve?
Lange’s government was a reaction against Muldoon who sent farmers large tax payer funded cheques in the post (SMPs), ran a complicated tax system to benefit farmers, had a wage freeze and was about to default on a loan. It was undoubtedly the brightest government ever and a credit to Labour.
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