1983-88

Chapter 3: 1983-88

If the late 1960s to early seventies was the era of political, societal and cultural change for the country, then the mid-1980s from 1984 to 1986 was undoubtedly the powerhouse of unparalleled economic change.  From floating of the dollar, to deregulation, privatisation, “SOEs”, GST, it was all the brainchild of David Lange, new Labour Prime Minister from July 1984, and his sidekick, Minister for Finance, Roger Douglas. This earth-changing period in New Zealand would forever on be referred to as the “Rogernomics” era. Not only did the fabric of New Zealand’s economy change, but the nation had now completely grown up to be a fearless and powerful component of the free-market in the global economy. Protectionism became a byword of Muldoonism and earlier, and people’s attitudes towards where New Zealand was placed in the ever-shrinking world (through transport and communication advances), would theoretically become unbounded. New Zealanders had a stronger and much more forceful psyche after the mid-eighties, but it did not come without its challenges both at the time and for evermore, nor without a great amount of community divide on the new direction. Nevertheless, like it or not, Labour had been elected with a sizeable majority, and sink or swim, Lange and Douglas would utilise this mandate for major change.

In 1983 the Closer Economic Relationship came into being. Signed by NZ PM Muldoon and Australian PM Malcolm Fraser the previous year, this marked the start of a new era in trans-Tasman relations, one that would provide New Zealand with a more effective trading partner in the shape of Australia, and one that would hopefully be even better than it had already been for over one-hundred years. Originally an Australian initiative, prior to 1982, it became warmly embraced by New Zealand, leading to its signing. CER has continued to the present day, being encouraged by all later Australian and New Zealand Prime Ministers.

US nuclear-powered navy frigate “Texas” entered New Zealand waters in 1983. It was met by vociferous protests because of widespread opposition to nuclear power; a bipartisan and community opinion and state-of-affairs that were becoming increasingly significant in the country at the time. It would reach its zenith the following year with the total banning of nuclear vessels by the new Lange Government and become synonymous with the bombing of the Rainbow Warrior the following year. But at this period an awakening was occurring for a fully nuclear-free New Zealand and nuclear-free Pacific. The latter was a response to the long-running tests at Mururoa Atoll near Tahiti. In terms of nuclear power in general the New Zealand people’s views mirrored most of the globe’s feelings in the 1980s. The two superpowers, Russia and USA had come closer to World War III – a nuclear holocaust caused by the escalating seriousness of the late-stages Cold War- than people even realised. For children and teenagers especially, but adults also, the mid-eighties in New Zealand was a frightening time in this respect. Added to these megalithic powers, there was also the problem of French nuclear-testing in the South Pacific, of which some were claiming that the radiation was reaching closer island-nations such as New Caledonia and Fiji, and a closer proximity to New Zealand. Whether the latter was correct or not, there was a general mood of discontent with nuclear power, from the majority of the electorate, and also from both National and Labour. The key difference between Labour and National, however, was that prior to 1984 the government was not willing to alter its nuclear policies or risk alienating America. Not only had Labour made it clear that nuclear-powered vessels would not be welcome in New Zealand ports under a Labour government, which were primarily those  from the US, but the new leader, Lange, had even made it part of the Labour Manifesto if elected in 1984.

In 1983 the New Zealand Party was established by millionaire property tycoon, Bob Jones (later Sir Bob). Its fundamental policy was to promote social and economic liberalisation, and therefore was a right-wing, conservative minor party. Its motto was “Freedom and Prosperity” and was occasionally classified as a libertarian movement, although this term has not been a feature of New Zealand history. Jones’s party was sometimes credited with assisting the defeat of the Muldoon government in 1984 by splitting the vote, although the evidence is such that the result would have been probably even without its existence. Muldoon’s Think Big programme, which was grounded in the prime minister’s belief that only with massive government involvement could New Zealand prosper- strangely contrary to the normal beliefs of a centrist-right party- also required huge overseas borrowing to finance his projects and this is central to what Bob Jones’ Party was all about. Jones, who was a self-made millionaire and property tycoon, strongly opposed these policies, writing articles against the government, in particular making the claim that the National Government had totally abandoned its principles of free enterprise and personal liberty. Rather than being an opponent of the National Party, Jones was staunchly against the particular Muldoonist brand of it, and he had previously been a friend of Muldoon. He even compared the government to that of Soviet Russia. The New Zealand Party had far more radical, capitalist policies than either Labour or National, and as well as garnering much community support, also attracted equally as much community opposition.  After Jones laid the foundations for the party and chose its name, its primary policies were drafted. Some of his most famous ones related to economic matters such as adoption of laissez-faire principles, a liberalisation of the economy, and also defence concerns, such as a total abolition of the country’s armed forces (!), reduction of military expenditure and a cutting of defence ties with the US and Australia.

In 1983 the Official Information Act replaced the Official Secrecy Act. This was an important attitude-change by the Muldoon government from one of maintaining a closed, secure system to one that was more transparent, democratic and reflected the changing times of the 1980s. Passed the previous year, the OIA is believed to be one of the freest FOI regimes in the world. Basically the Muldoon government reversed the old official secrets mantra and made a declaration that all government information is open (unless it needs to be protected). There are few absolute exemptions or exclusions, except in matters of national security, and its underlying premise is that it is “a balancing goal to protect official information consistent with the public interest and personal privacy.” (New Zealand Privacy Commissioner, 2005).

By the start of 1984 Auckland’s population exceeded that of the entire South Island! Constant and accelerating urbanisation in the twentieth century, particularly in the second half was not only a New Zealand phenomenon, but that of all Western industrialised countries. In 1984 the greater Auckland metropolitan region had a population of around 800,000, which for a small country of 3.5 million, was significant. Two-thirds of the national population lived north of Lake Taupo. In fact Auckland’s population was more than double the next largest city, Wellington, which could only boast of 350,000. Auckland has continued to grow, and is now approaching a figure of 1.1 million. In addition to natural increase, as well as movement of peoples from other places in New Zealand, Auckland’s meteoric rise was also attributable to a mass drift of South Pacific Islanders/Polynesians (what are now referred to as ‘Pasifika’). This exodus from countries such as Samoa, Fiji, Tonga, Nukualofa, Tokelau and the Cook Islands had its roots as far back as the 1950s, but became very significant since the 1970s. Auckland now contains more South Pacific Islanders than any other city of Polynesia, and in 1984 was demographically changing faster than at any time previously. However Auckland’s rapid growth up to the mid-eighties wasn’t solely due to South Pacific immigration, but also it was New Zealand’s gateway for immigration, because of its already-established migrant population network, its size, it being almost an ‘international city’, and its mild climate. As well as South Pacific immigration to Auckland in 1984 by Polynesian peoples, its already large Fijian Indian population (in large numbers also in Wellington, Christchurch and Hamilton) increased as well. Northeast Asian (China, South Korea) and Southeast Asian (Vietnam, Singapore, Thailand, Laos, Cambodia) immigration was only starting to take off at this time. It would rapidly accelerate in the 1990s. New immigrant destinations for New Zealand, such as Africa (including South Africa) and the Middle East had its origins in the mid-eighties. Almost all of these new New Zealanders would choose Auckland as their starting-off point for their new lives in this country, however Islander immigration was by far the largest single source of new arrivals in Auckland in 1984.

Although the new wave of cultural change commenced around 1981-3, the year 1984 saw the grasping of the following idiomatic features of the 1980s:

*Break dancing

*”Ghetto blasters”

*Street kids

*Youth unemployment  

*Drugs

*Crime

Break dancing was a particular style of popular street dance, which had its origins in the music of Michael Jackson and was also a synthesis of 1980s musical style worldwide, particularly in the USA and other western countries, but was adopted in New Zealand mostly by Maori and Pacific Islander youth. It started around 1983/3, but hit its fame in 1984/5; it was displayed in the 1984 film Footloose, starring Kevin Bacon. Some cite the New Zealand phenomenon as having originating in American (Western) Samoa. Early hip hop releases around the mid-1980s in New Zealand include the collection Ak89 - In Love With These Rhymes, compiled by Simon Laan and released by Auckland radio station bFM in 1989 (on cassette only), and a variety of releases by Deepgrooves,Voodoo Vinyl and Southside Records, owned by Murray Cammick. Amongst these were releases by Urban Disturbance featuring a young rapper, Zane Lowe, now a UK radio personality, and MC OJ & Rhythm Slave. After almost a decade of popularity, break dancing went out of fashion in the 1990s, but there was a revival; now part of the hip-hop (rap) movement since the millennium.

“One reason break dancing became popular was that many youth saw it as a way of being recognized or a channel of identity. Maori youth that had little chance of being recognized for accomplishments in school or sport found break dancing as a new way to achieve recognition. Early on, New Zealand even sponsored a national break dancing competition for young Maori and Pacific Islanders. This helped many young breakers to realize their potential by giving them a nation (sic) audience”. (See Wikipedia, NZ Hip Hop, 2011).

“Ghetto-blasters” were a major feature of New Zealand’s cultural movement around 1984. The Ghetto blaster, also known as the jam box, wog box, radio-cassette was a device introduced in the late 1970s in the Northern Hemisphere and arrived in New Zealand in the early eighties. It became a household appliance in NZ by 1984, and was not only a means of listening to music/audio-recordings from broadcast radio, but also via audio-cassettes. It became intricately-entwined with NZ popular culture by 1984 in the form of young persons, indigenous and Pasifika groups of youth, general youth, street/break-dancing and fundamentally an integral feature of 1980s culture. The term
“Ghetto-blasters” may have been accurate in the US, Britain and parts of Western Europe, but in 1984 (and still today), New Zealand, even Auckland, has not been afflicted with ghettos, except possibly with the exception of Manakau and South Auckland and Porirua, north of Wellington. Even these areas are not ghettos in the American or European sense of the term.

Street kids, youth unemployment, drugs and alcohol abuse and crime, unfortunately became a feature of New Zealand’s landscape by 1984. Not limited to the major centres of Auckland, Wellington, Christchurch, Dunedin and Hamilton, this social blight became a sad aspect of all New Zealand cities, towns and minor centres. All of the these societal difficulties did not begin in the mid-eighties, and were not limited to New Zealand, but were the result of more than a  decade of creeping unemployment, inflation, cost-of-living pressures, social, economic and cultural change, also in large part due to overseas influences. It would have been unusual, to say the least, if New Zealand had not experienced such shifts. The five afore-mentioned problems were intertwined and youth unemployment was often the root cause of the other four. At the time unemployment of persons aged 18-25 was as high as forty per cent in some areas, mostly regional or rural areas and some urban settings such as Manukau in South Auckland and Porirua in Wellington. The problem of youth gangs was taking off at this time and congregations of young people looking for trouble in places like inner-city pedestrian malls and outside fast food restaurants. Glue-sniffing was not such a problem in the major centres, but the latter were fast becoming no-go areas because of public drunkenness by youth and illegal drug use. Not only was this an issue within Maori and Pacific Islander youth, but also pakeha, and violent crime was rapidly becoming a new problem for the authorities, one which had been relatively restricted up until this time.

In 1984 the little-known Maori culture club, the Patea Maori Club, based in Auckland, released an album named “Poi E”, with sixteen tracks, the twelfth one being the song behind the album. Within days of its release it hit the number one in the NZ pops, where it remained for four consecutive weeks. It was that year’s biggest-selling single, even eclipsing major international record labels. The music video involved traditional poi twirling and tribal costume. It also showed scenes of Auckland’s inner-city, youth and street kids. The whole album was sung entirely in Maori and Poi E had a catchy harmony. It was produced and led by Dalvanius Prime, who is known for merging traditional Maori song and more recent Maori-flavoured hip-hop. Perhaps no other song, video or book is more evocative of New Zealand culture in the 1980s, from the author’s point-of-view.

Conjointly with the increasingly Polynesian makeup of New Zealand culture, especially youth culture, the street language/slang/idioms started to alter. Samoan words started to be spoken by Maori and Pakeha youth, some derogatory, such as “FOB”, meaning “Fresh Off the Boat”, but often in a jesting, humorous manner. Other Maori slang words came into being or became more widely used. Another word that will forever be associated with the eighties in New Zealand, and is still used today is “Choice!” meaning “Great/excellent”, etc. Other words that were a mixture of Maori/pigeon Maori/English that gained prominent usage around the mid-eighties were:

Cuz- meaning cousin or friend/mate

Bro- meaning brother or friend/mate

Sweet as- meaning great/very good

Chur Bro- meaning sure Bro, recently shortened further to Chur Bo

Green-fingered bro- meaning regular marijuana/cannabis smoker

Halfpai- meaning to do a half-arsed job

OTP- On the Piss- meaning getting intoxicated

Et/ Eta/ Eta Harry- mostly used in Gisborne, meaning getting on with the job

In late June 1984 Prime Minister Muldoon called a snap election for 14 July. It would be a nationwide vote to decide the shape of the 41^st Parliament, and whether, given poor polling, the National Party should stay in power. The leader of the Labour Party and Opposition was a relatively young lawyer, highly charismatic, personality-driven, and very confident and above all a great debater with excellent vocabulary skills. His name “Lange” was also a source of interest, as not many Kiwis knew the correct pronunciation of the surname; whether it rhymed with “flange”, pronounced “Lang”, or something else altogether. David Lange was so charismatic that even people who had voted National all their lives were prepared to commit to the other side of politics. One may argue that he embodied a new “presidential” style of leadership, not in the sense of dictatorial, but more a new-age 1980s broad-based, populist, consensus type of leadership, as would be seen more in the United States than in formerly British nations.  As a politician he also immersed himself with the people by regularly leaving Parliament House or the Beehive to walk, shop or get lunch down in Lambton Quay.

The election campaign, designed to be a short one by the Prime Minister, got off to a poor start. On the night of the announcement Muldoon, in a reasonably intoxicated state, announced to TVNZ reporters and thousands of New Zealanders that there will be a snap election on July 14. When suggested to him that it doesn’t give him a lot of time to prepare, he responded in a drunken slur,

“It doesn’t give my opponents much time to run … up …to an election”. (See YouTube video).

This gave rise to the unofficial nickname for the ’84 General Election of the “Schnapps Election”. Observers of New Zealand politics and history have later said that the writing was on the wall after this brief interview where Muldoon wasn’t at his best, but this was not necessarily the case. Firstly the Nationals had governed by a very slim majority anyway- forty-seven seats to Labour’s forty-three for three years, and had therefore a precarious hold on power. Secondly, the government had been increasingly seen as inflexible/rigid, not listening to the electorate and its concerns. Thirdly price and wage freezes had been an abject failure and was partly responsible for poor economic performance in the early eighties. Fourthly the Think Big programme did not deliver the investment and infrastructure that the government had promised. The original purpose of calling a snap election was that National MP Marilyn Waring had told Muldoon that she wouldn’t support the Opposition’s side when voting for Labour’s anti-nuclear policy, which was a major part of Lange’s 1984 election manifesto. It never eventuated, but even if that had been the case, and Waring’s statement was not absolute and binding, meaning she may have changed her mind in the eleventh hour, this would not have been a threat to block supply thereby creating a state of no-confidence in the government. Put simply, the decision to go to the polls early was not valid; however, that stated, it is still very likely that National would have lost the poll.

The short election campaign scored each side some points, but it was Labour that came out in front. Their campaign was more positive than negative, which is the opposite of what an Opposition normally undertakes. Labour campaigned to reduce government borrowing which was immediately popular in the electorate.  In addition to National’s flagging performance and key economic failures over the previous three years, there was a definite feeling in the air for a change in government. Three terms and nine years is a long time, and the Government was appearing fatigued and its policy framework was becoming hackneyed. The more youthful, highly motivated and charismatic Lange easily won the campaign from a personality perspective. The newly-formed New Zealand Party, led by Bob Jones was launched to oppose the government, although it was not formed to give Labour a win. It was hoped that it would win some seats (which it did not), but its main purpose was to act as a spoiler. It may be said that it was rather pointless as Labour won by a landslide anyway.

On Saturday 14 July 1984 the election was held, and it was apparent soon after polls closed at 6pm that there would be a change in government. Labour won fifty-six of the ninety-five seats in the parliament, giving which was a gain of thirteen, whilst National won thirty-seven. This gave Labour an absolute majority (forty-eight required to govern), and a lead of nineteen seats over National. It became the nation’s fourth Labour Government. Social Credit won two seats, the same as in 1981, and despite gaining 12.2 per cent of the vote, New Zealand Party failed to win any seats. Values Party came fifth but failed to win any seats. Most of the seats won by Labour were in urban areas, following the party's distinctive pattern. Exceptions to this general trend include the eastern tip of the North Island and the western coast of the South Island. Labour's strongest regions were the Wellington area (where the party won every seat), as well as Auckland, Christchurch and Dunedin (centres in which it won most seats). Smaller cities such as Hamilton, Nelson, Napier, Hastings and Palmerston North were also won by Labour. As expected, Labour also won all four Māori seats, maintaining its traditional strength there.

The National Party, the outgoing incumbent government, was (as expected) strongest in rural areas. Most of the rural North Island was won by National, as were a most of the rural areas on the South Island's eastern coast. In the larger cities, the party fared poorly, with Auckland and Christchurch being the only places that the party won seats. It was more successful in smaller cities, however, winning Rotorua, Tauranga, Invercargill, New Plymouth and Whangarei. It was placed second in two Māori electorates, and third in the other two. (See Wikipedia, 2011).

 Almost immediately after Muldoon’s defeat, he was criticised for not following convention and devaluing the dollar (it was eventually devalued before floating it subsequently). Roger Douglas became Lange’s right-hand man, the Minister for Finance, and he was about to embark on an economic rationalisation programme, the likes of New Zealand never seen before. His massive deregulation of the economy came quickly to be known as “Rogernomics”. Lange made himself Minister for Foreign Affairs, Deputy Prime Minister was Geoffrey Palmer, who also had the portfolio of Attorney-General, and of Justice, Defence Minister was Frank O’Flynn, Housing was Phil Goff, also held the portfolio of Employment, Health was Michael Bassett, also holding Local Government, Richard Prebble held the portfolios of Railways and State-Owned Enterprises (SOEs), Education was Russell Marshall and Minister for Maori Affairs was Koro Wetere. This was a carefully handpicked team in the Cabinet that would prove to be a winner over the next three years, and most would continue as ministers with the same or different portfolios in the fifth Labour government of 1987-90.

Initially the now-caretaker Prime Minister, Muldoon refused to devalue the kiwi dollar, which was against convention as the outgoing Prime Minister must follow the wishes of the new national leader, and this was Lange’s wish, but he about-faced and announced not only a twenty percent devaluation, but also under Labour’s wishes, the removal of controls on interest rates and a three-month wage freeze.

Roger Douglas was a third-generation MP, who had in 1980, whilst in Opposition, released an alternative budget which was at odds with both Labour and National policies. He was sacked from the Shadow Cabinet. Douglas was a Thatcherite and Reaganite in terms of monetarist and supply-side economic orthodoxy, and was now in a position to implement real fundamental change in the new government. Douglas found strong support from Treasury, whose advice had been mostly ignored by Muldoon. A 352-page paper advocating a New Right economy was presented by Treasury to Douglas and it was the origins of the Rogernomics revolution begun in 1984, and mostly complete by 1987. A fairly middle-of-the-road welfare state, less so than Sweden or Denmark, more along the lines of Britain or Australia, there was no serious ideology or political/social agenda in the 1970s and early 1980s, but now Labour was proposing the commencement of a better welfare state in confluence with a base of capitalist success.

One of the first changes was the removal of exchange controls and the floating of the New Zealand dollar. There was also a surtax imposed on super annuitants, thereby restricting the pension to only those who needed it. Targeting low-income earners was the new Family Care package and then the Guaranteed Minimum Family Income. This was the first breach of the universal welfare system in New Zealand since its inception under the 1930s Seddon administration. Perhaps the biggest and most widely-remembered implementation under Rogernomics was the imposition of a broad-based consumption tax in 1986. This was called the Goods and Services tax (GST), and was not simply a new tax, but an entirely nouveau taxation system. The Labour government, in 1984, floated the exchange rate, deregulated banking and abolished exchange and price controls. These changes that New Zealanders experienced were possibly more extensive, faster and closer to theoretical purity than anywhere else on the globe. It dismantled trade barriers, removing import licensing and farmers experienced the immediate removal of agricultural subsidies. Inflation was targeted and the Reserve Bank was held responsible for maintaining the rate at 0-2 per cent (which became a requirement under the Reserve Bank Act 1989).

Public sector reforms under Lange and Douglas’ administration caused government departments to become virtually unrecognisable. Service arms of government had private enterprise values imposed on them, the number of departments doubled, for example there were two defence departments: one to reflect on strategy and one to fight! The Department of Labour and the State Services Commission came out of it better as they managed to restructure themselves. Labour market reform was probably the only instance where interest groups were consulted. The new State-Owned Enterprises (SOEs) were made to perform identically to a business model and it was believed that this would provide for more efficiency as well as better returns to the public purse.

The reforms to government trading arms were the most successful in terms of efficiency. The unions were however not so keen as corporatisation quickly became privatisation; government mortgages, Rural Bank, state forest rights reductions, Air New Zealand and the railways were all sold. The entire previous century’s creation of public infrastructure was simply put up for tender and sold. The Think Big projects of the Muldoon years were also sold. The big winners were big business and the biggest winners of all were the merchant banker brokers such as Fletcher Challenge and others. This latter state-of-affairs mirrored similar situations in the US and Britain in the 1980s.

Were New Zealanders ready for such far-reaching reform in the mid-1980s? The scope and nature of the reforms were greater than expected given that Labour and other social-democratic parties are not generally known for emphasis on right-wing, capitalist, free-market polities, or for that matter, new and wide-reaching taxes such as the GST. In fact, for the first time in New Zealand, Labour and National were starting to converge, much as was the case with the conservative Coalition in Australia and the Australian Labor Party. It has given rise on both sides of the Tasman to the terms “Tweedledum and Tweedledee”, or more viciously, “Tweedledum and Tweedledummer”. To answer the question, it was not only Rogernomics legislation, including the “overnight” implementation of GST, but Kiwis have experienced a number of major bills brought in much faster than most other Western industrialised nations, and have shown to be more resilient than their compatriots in Australia, Britain or Canada. For example, in the nid-2000s in Australia smoking in pubs, bars and nightclubs was phased out gradually over a five-year period, whilst in New Zealand it was an overnight event. The fact that Labour, under Lange, had a mandate for change, and it was indeed a public part of their 1984 campaign manifesto, did not necessarily give it a mandate for such radical change. However it was on the whole received well, implemented successfully, and was even carried on by their opposite side, National, when they won back office in 1990!

Economic revolution was not however the only sea change by Lange in 1984: it also extended to the socio-political arena with the official legislation to ban nuclear-powered ships from all New Zealand ports. This was enthusiastically supported by the vast majority of the electorate and even gained bi-partisan support in the Parliament and Beehive. However one of the major ramifications of the policy was to put serious stress on the 1951 ANZUS alliance, in particular with New Zealand’s most-important trading partner and key ally, the United States. It did not appear to damage relations with Australia, although Bob Hawke and the ALP were careful to simultaneously maintain their allegiance to the USA, whilst also maintaining friendly and official relations with New Zealand. President Reagan was not in the business of making its allies feel intimidated, but it was still a David versus Goliath battle. The US made it plain that it was not happy about the little Antipodean country putting down its feet and standing its ground, but Lange was steadfast and resolute.  After all he had the whole of the Parliamentary Labour Caucus, much of the Opposition and most of the electorate behind him. The banning of the USS Buchanan was the first event in the security relationship crisis between the two countries. It quickly moved from a diplomatic issue, to one of a defence crisis, followed by the threat of the entire friendship, one that had been built up since World War II. Eventually there was talk of economic sanctions. On 4 February 1985 New Zealand officially disallowed the entry into New Zealand waters of the giant US aircraft carrier, the USS Buchanan. The banning of the USS Buchanan threatened to be much more than a minor foreign relations hiccup and David Lange flew to Washington to meet with President Reagan. The official US line was that the “United States would neither confirm nor deny that it had nuclear capability”. Purpose of Lange’s trip was to reassure the US administration that New Zealand remained fully committed to the US as an ally, and that this should not place any negative pressure on the state of the ANZUS alliance. Unfortunately for New Zealand the US did not take it lightly and over time New Zealand was left out of joint training exercises. America withdrew its security guarantees, New Zealand’s status went from ally to “friendly country” and ANZUS became effectively inoperative. Both Thatcher in Britain, and Hawke, in Australia, expressed their disapproval at Labour’s stance. There was a very real perception that the United States was bullying its smaller ally and interfering in New Zealand’s sovereign right to form its own internal and foreign policies.

Meanwhile in the South Pacific France was continuing to test nuclear weapons in such places as Tahiti and Mururoa. If America was listening to New Zealand’s new policy, then France had its head in the sand. It was now a majority of New Zealanders in support of the policy, and it had bipartisan support. On the night of 10 July 1985, docked at Auckland Harbour the Greenpeace flagship, the Rainbow Warrior was bombed. One crew member lost their life, official photographer, Fernando Perreira, who drowned after the explosion. This was New Zealand’s first experience with terrorism and it was also plain murder by another country in a sovereign country. It was found out that France had ordered the attack under its foreign intelligence service, the Direction Générale de la Sécurité Extérieure (DGSE), and was aiming to prevent the vessel from protesting at a nuclear test on the tiny atoll of Mururoa. It was quickly discovered that two agents of the French secret service were responsible: Alain Mafart and Dominique Prieur. These agents were arrested by the New Zealand Police on passport fraud and immigration charges. They were charged with arson, conspiracy to commit arson, wilful damage, and murder. As part of a plea bargain, they plead guilty to manslaughter and were sentenced to ten years in prison, of which they served just over two. The only casualty on the French side was the Foreign Minister, Charles Hernu, who had to resign. The fact that these two murderers got extradition to a tropical South Pacific paradise to serve their time, and that it was only for twenty-four months, still arouses anti-French emotion from many New Zealanders today.

David Lange said later, “The Rainbow Warrior was the defining moment for me because I knew that was the end of any New Zealand commitment to the so-called Western Alliance. It was not when it was sunk that I knew. It was when we knew who’d sunk it that I knew. And then the overwhelming silence from Great Britain…Margaret Thatcher was prepared to condemn Gaffafi for everything, but the French could go and kill people in our harbour. Hawke never said a word. Ronald Reagan pretended total indifference. We never had a peep out of those people that we were allegedly in a Western Alliance with; those people who fought for democracy.” (See Smith & Callan, 1999).

The Oxford Union debate in England, televised on TVNZ Channel Two on Saturday 2 March 1985 was perhaps the single most defining moment of his five-year prime-ministership, and was the point when he represented his government and his country on the world scene in the most memorable environment. “Nuclear weapons are morally indefensible” was the argument, and the players were the Right Honourable David Lange for the affirmative, and the Reverend Jerry Falwell, leader of the American Moral Majority, for the negative. The live coverage was estimated to have reached a television audience in excess of fifty million, and was presented by John Laurence for the American bureau programme, with special comment by Peter Jay, former British ambassador to Washington and past-president of the Oxford Union. Lange’s massive vocabulary, oratory skills and debating experience, which won him the prime ministership of New Zealand wowed, intimidated and silenced the opposite side; it also created a new-found respect for Lange back home, as well as in Britain and overseas viewers. One of the defining moments of the debate was when he received a standing ovation, with Falwell shaking his head and rubbing his forehead in defeat. Whilst the televangelist Falwell was famous for convincing people and making them “see the light”, Lange was the clear-cut winner of the debate, convincing the viewing public that not only were nuclear weapons morally indefensible, but that they were “evil and reprehensible”. The debate was not simply a public spin lesson early in his term, but was a delimitating moment of his first and second terms; his entire prime-ministership.

On 7 December 1984 a riot occurred in Queen St, Auckland. It occurred as the open-air concert by DD Smash was finishing, on Aotea Square, and caused almost $1 million in damages (equivalent to about $11m in today’s figures). A hastily-convened judicial committee decided that the cause was easy access to liquor and poor planning by the Auckland City Council. Others were not so sure, and surmised that it was a combination of factors such as steadily-rising youth unemployment, lack of family and society values, the “mob mentality”, general permissiveness, the type of team policing that today may be considered provocative, and alcohol of course. Although many Maori and Polynesian youth were present in the melee, there were also white persons, and the latter were also responsible for the riot. However, these were the days before CCTV and although there were persons of interest to the police, no one was arrested or charged, although those present would have known who these persons were.

1985 saw the Treaty of Waitangi Act 1975 amended to include claims dating back to 1840. It was the first amendment since the original act was passed, and was to be followed by four more amendments; two in 1988, one in 1993 and one in 2006. In addition to enabling the Tribunal to investigate claims from 1840, it also enlarged the Tribunal’s membership, enabling it to handle the larger number of claims. It created a requirement that the Tribunal have a Maori majority. The amendment widened the scope of the Tribunal’s enquiries and resulted in an ongoing debate over the correct response by the Crown to the findings and recommendations of the Tribunal. It was a component of the fourth Labour government’s policy of allowing greater acknowledgment of the Waitangi Treaty; references to the Treaty were included in other key legislation, for example in the State-Owned Enterprises Act. The second 1988 amendment was solely directed at the SOEs Act. The 1985 amendment was one of the most important changes to the Act in attaining relevance in the Treaty in New Zealand law and society.

On the 22 November 1985 Paul Reeves (later Sir) became the fifteenth Governor-General (G-G) of New Zealand. He was the first indigenous vice-regal representative. He would remain as G-G for five years, until November 1990. Immediately upon appointment there was scepticism due to the facts that he had had previous political involvement, supporting the Rowling Labour Government, his political involvement in opposing the Springboks Tour in 1981, and also the fact that he was an ordained Anglican bishop. Opposition Leader Jim McLay was one of those vocally opposing the appointment. However the Maori community was overjoyed that finally one of their own held such high office, and Sir James Henare argued that it was a direct result of the Treaty of Waitangi, although this seems tenuous at best. One of Reeves’ acts was to join the Newtown Residents’ Association (Wellington), and to invite members of that association to visit Government House. He was the first G-G to host an “open day” at the House, and the first to employ a public affairs officer.

Reeves’ tenure was not without controversy however. In November 1987 he made comments critical of Roger Douglas’ Rogernomics, stating the reforms were creating “an increasingly stratified society”. (See Maclean, 2006). After being rebuked by Lange, six months later he stated that “…the spirit of the market steals life from the vulnerable but the spirit of God gives life to all”. (See Maclean, 2006). He also later recalled that many times he felt alone, and would write to the Queen, but often would receive no reply, or just a reply from her private secretary. On a state visit to Vanuatu in 1989 Reeves was invited to slaughter a pig at an official ceremony, creating another controversy, as he was patron of the SPCA.

In 1986 the Constitution Act finally ended the right of Britain to pass laws for New Zealand, and the Privy Council was abolished. The High Court became the highest court in the land. This, to most New Zealanders and the Labour Government, was a welcome and timely development of the 1980s. However there were some traditionalists, monarchists, staunch conservatives and the National Party, as a whole, that did not feel so pleased. Jim McLeay knew he was outnumbered though, and accepted the majority view of the public.

Privatisation/SOEs: This was one of Rogernomics’ major programmes for 1984-7 government, and totally transformed both New Zealand’s economy and society. It transformed the economy as it turned government departments and public corporations into quasi-private enterprise, and profit-driven, and it transformed society as it made a basically government/public state into a private/profit-driven free-for-all. Some would applaud the new New Zealand, whilst others would claim that the country had been given to major business, corporate interests, and even private, family-run firms. The reality was somewhere in the middle.

The GST was finally passed as law and implemented in August 1986. It was based mostly on Value-Added tax (VAT) in the UK, and was initially set at ten per cent (later raised to 12.5 in 1988, and then to fifteen). Marginal tax rates were flattened, and the GST involved the removal of a number of other taxes such as payroll tax, and a massive reduction in personal income tax from a previous high for the highest tax bracket of sixty-six percent to thirty-three percent. It was also lowered for all income brackets. Although GST didn’t deliver all the benefits promised, such as a general improvement in standard of living for all New Zealanders, and a slowdown in inflation over the next decade or two, it was nevertheless seen as a success, and was not wound down or reversed by the new Bolger government in 1990. It was also copied by Australian Prime Minister John Howard in 2000. Rather than being brought in after winning government, the Australian experience was different in that the incumbent government went to the voters with the proposal before the election. It failed to win voter support in that country in 1993, but succeeded in 1998.

1986 saw the passing of the Homosexual Law Reform Act. It was a contentious issue even by the mid-1980s, but had been on the agenda for the Labour Party ever since it was defeated by Muldoon in 1984. Unlike Muldoon, Lange supported it as did most of the Labour Party, and it was therefore going to pass in parliament. The Bill was also presented as a conscience vote and therefore it was voted in by members of the National Opposition also. The Act is a law that legalised consensual sex between men aged sixteen and older. It removed the provisions of the Crime Act 1961 that criminalised this lifestyle choice. From 1840 when New Zealand became part of the British Empire, penalties for homosexual sex were harsh, reflecting British law, but there was a softening of the punishments in 1961, reflecting a new era of social attitudes. This was furthered by a 1968 petition signed by seventy-five prominent citizens calling for legislative change, but was rejected by the Holyoake government. First attempts at law reform in 1974, and later in 1979 and 1980 failed, but in 1985 government MP Fran Wilde introduced the Homosexual Law Reform Act. The original bill was comprised of two sections: firstly the decriminalisation of male homosexuality; second part was a provision of anti-discrimination law protections for gay men and lesbians. The first part passed narrowly – 49 to 44 – on 9 July 1986, and even though the second part failed that part was incorporated into the New Zealand Human Rights Act 1993. The new Act was a focus of fierce debate from far right sections of the community, such as a group of fundamentalist Christian political activists including Norman Jones, National for Invercargill, Keith Hay and Peter Tait. Another group which threatened to finish the Labour Government in 1987 was the Coalition of Concerned Citizens. (The government was returned with near-exact numbers in the House to those of 1984).

The Homosexual Law Reform Act of 1986 was doubtlessly only the beginning of a more equal, less discriminatory, all-inclusive New Zealand. By the 1990s New Zealand would have several openly-gay MPs and by the twenty-first century it would have a system of civil union for gay or lesbian couples. It has been ahead of Australia and most of the United States in this social hemisphere.

The Act was also passed in a challenging time for New Zealand, as well as the world. Antibody Immuno Deficiency Virus (AIDS) was only just becoming part of the human awareness in New Zealand and even though a part of US society since at least the late seventies, it was still mostly an unknown subject. However by this time the number of deaths in the US, Britain and Europe had skyrocketed since it was first discovered about ten years earlier. It was now a major blight and a huge worry for New Zealanders. High-profile deaths such as Hollywood actor Rock Hudson had brought the new disease into people’s homes worldwide via their television set, as he rapidly deteriorated and died the year before. AIDS had originally been known in the 1970s as GRID- Gay-Related Immuno Deficiency- as when it was discovered in the US it was believed to be caused only by unprotected homosexual sex. This was now known to not be the case- in fact by the 1990s it was being spread mostly by the heterosexual world community, and especially in Africa.

Another thing killing people overseas and in New Zealand at this time was Legionnaire’s Disease. This was a disease which turned out to be caused by bacteria multiplying in the water towers of building air-conditioners. Also known as Legionellosis, it acquired its name when in July 1976 there was an outbreak of pneumonia amongst people attending a convention of the American Legion at a large hotel in Philadelphia. The cause of the outbreak was discovered six months later. In New Zealand, 1986 was the year it first appeared.

Potential sources of such contaminated water include cooling towers (some forty to sixty per cent of one’s tested) used in industrial cooling water systems as well as in large central air conditioning systems, evaporative coolers, nebulizers, humidifiers, whirlpools, hot water systems, showers, windshield washers, whirlpool spas, architectural fountains, room-air humidifiers, ice making machines, misting equipment, and similar disseminators that draw upon a public water supply. The disease was tackled effectively over the next few years.

A Royal Commission into possible changes in the electoral system was held in this year. In particular it examined the possibility of a European-style addition to the New Zealand electoral system called “Multi-Member Proportional Representation”, or MMP. This was a variation on the voting system used in Australia and America for Senates, or on the state level, upper houses of parliament/Congress. The proposal was not that New Zealand should ditch the first-past-the-post simple majority system of voting, but rather that a more representative, fairer system be layered on top of the former. For example, in New Zealand, small parties had no chance in winning seats, as it was a winner-take-all system, and a minor party could never hope to achieve an absolute majority of votes in one particular electorate. Take for example the case of Bob Jones’ New Zealand party in 1984 which won 12.4 per cent of the vote, and the Values Party winning a substantial number of votes. If Jones’ party had won all the votes in a single seat, or even two seats, it would have been represented in parliament, but because of simple majority that wasn’t possible. The 1986 Royal Commission was a result of pressures from such smaller parties to the electoral commission, and would lead to positive change at the end of the century, also under a Labour government. It also, more importantly perhaps, would halt the case of a major party losing to the other one even with a greater percentage of the vote, as happened time and time again in the second half of the century.

One of the biggest news stories in 1986 was the maritime disaster in the Marlborough Sounds, of the cruise ship, the Mikhail Lermontov. It occurred on 16 February at Port Gore, which is directly across the Cook Strait from Wellington, and involved one loss-of-life and eleven casualties. The vessel was the Soviet Union’s prestige cruise liner and could accommodate five-hundred and fifty passengers in comfort. It was a regular liner in New Zealand waters and had been refitted four years prior to the sinking. The particular cruise on the day was part of a summer cruise season, of which a number were eleven-day sailings. On 16 February the vessel left Picton at 3:10pm, carrying seven-hundred and forty passengers and crew. On board the vessel was Marlborough harbourmaster Don Jamieson, who was left in charge by the captain, who had gone to his cabin. The vessel sailed up Queen Charlotte Sound towards the Cook Strait. As it neared Cape Jackson Jamieson altered the heading to bring it closer to the Cape. This course correction was queried by the navigator as he believed it was a dangerous move, but Jamieson had already made the decision to drive the ship between Cape Jackson and its outlying lighthouse – a 460-metre-wide passage. The captain was not notified. At approximately 5:20pm the Lermontov, travelling at a speed of fifteen knots (twenty-seven km/hr), grounded against rocks on the starboard side, suffering major damage to its hull. The ship remained in motion, but started taking on water, and then rolling over. Captain now made his way back to the bridge and attempted to head towards Port Gore where the gigantic ship could be beached on shore, as opposed to sinking in open waters. An hour later the situation was dire with all onboard power lost, and drifting on and off a sandbank. As the tide rose it lifted the Lermontov completely off the sandbank and she sank in deep waters at approximately 10:50pm. As with the Wahine eighteen years earlier, rescue ships arrived soon after, however due to rain the rescue was almost unmanageable. All the passengers and crew were accounted for and taken off the stricken vessel except a Russian engineer who was believed to have drowned when the ship initially hit the rocks. His body was not recovered. He was the only fatality and there were a further eleven casualties, all with minor injuries. The preliminary enquiry determined that harbourmaster Jamison was operating outside the limits of his piloting area; however he told investigators that he was very familiar with Marlborough Harbour. When questioned why he piloted the vessel through a narrow and too-shallow passage, he could not give a solid answer, only to state that he was suffering from mental and physical exhaustion after working eighty-hour weeks for the previous four months. Minister of Transport Richard Prebble chose not to hold a formal inquiry. Jamison refused to speak in public about the sinking but surrendered his pilot’s licence. Back in the Soviet Union they held their own inquiry and the captain was given a suspended four-year gaol sentence. The Marlborough Harbour Board and the owners of the Mikhail Lermontov reached an out-of-court settlement. Although not salvageable, the wreck’s oil was removed from her tanks over the next two months, and since 1986 three people have died whilst diving on the wreck.

Other events to occur in the year 1986 in New Zealand were:

The official end of the “White New Zealand” immigration policy: although there had been at least forty years of immigration from continental Europe, Fiji, Polynesia, and in the eighties Asia, the Middle East and parts of Africa, it was officially ended by parliamentary legislation in 1986.

The first visit to New Zealand by the Pope

The music of Dave Dobbyn, which will be fondly remembered by New Zealanders as a fundamental part of home-grown 1980s-era Kiwi music. His biggest hit was Footrot Flats, and it was turned into a major feature film: Footrot Flats: the Dog’s Tale. Dobbyn performed at Auckland’s Aotea Square in 1986, and was a sell-out success.

In the Soviet Union the world’s biggest nuclear accident occurred, where a power station went into meltdown. It was located at Chernobyl, in northwest Russia, and resulted in thousands of deaths in the town, followed by many more deaths throughout Russia, Eastern Europe, and Western Europe in the years following, due to radiation exposure.

1987 saw the single largest emigration numbers to date, and most were to Australia. The number of singles, couples and families leaving the shores permanently had been climbing rapidly every year since the late 1970s, and was notable by the early eighties. It was becoming a concern for the government, as it amounted to a serious financial drain, as well as a brain drain. It also wasn’t good for the nation’s pride. Muldoon once joked that every Kiwi moving to Australia increased the IQ of both countries, but it deserved serious analysis. One source states that currently (2011) there are about one million (close to one-fifth) of New Zealanders living in other countries, about one-half of whom are in Australia. (See Byrnes, p.318).

At about this time there was a challenge by the Maori Council in the Court of Appeal, which was successful. It marked a breakthrough in the indigenous struggle to regain some control of resources. The appeal was to halt crown lands being transferred to the newly-created SOEs when the ownership was under dispute and claims were before the Waitangi Tribunal. The court ruled that

“the principles of the Treaty of Waitangi override everything else in the State Owned Enterprises Act… [and that] those principles require that Pakeha and Maori treaty partners [are] to act towards each other reasonably and with the utmost good faith”. (See Smith & Callan, 1999, p. 255).

There was also an alike claim to protect fishing rights, filed by the Muriwhenua of the Far North and the Maori Council, which brought a temporary stop the issue of fishing quota under the new Quota Management System until Maori rights to the fisheries were resolved. The 1989 Maori Fisheries Act returned ten per cent of the fisheries and founded a Maori Fisheries Commission with a grant of $10 million.

In 1987 the Maori language - Te Taura Whiri i Te Reo Māori - became the second official language, with full equality to English. This was as a result of the Maori Language Act 1987 passed with substantial bipartisan support. The early agitation for making Maori a key part of New Zealand culture and identity may be traced back to 1961 when the Hunn Report described the Maori language as a relic of ancient Maori life. In the early 1970s concerns for the Maori language were expressed by Maori urban groups including Nga Tamatoa and Te Reo Maori society. In 1972 a Maori Language Petition was signed by 30,000 signatories and sent to Parliament. By 1973 a NZCER national survey indicated that only approximately 70,000 Maori, or 18-20 percent of Maori were fluent Maori speakers, and that most are elderly. In 1975 Ngati Raukawa, Ngati Toa and Te Ati Awa originated a tribal development exercise which emphasised Maori language development. The Ruatoki School became the first bilingual school in New Zealand in 1978. Between 1979 and 1980 the Te Ataarangi movement was established in an effort to restore Maori language knowledge to Maori adults, and in 1981 Te Wananga o Raukawa was established in Otaki. The now well-known Te Kohanga Reo was established in 1982 in primary schools, and throughout the 1980s experiments in Maori radio broadcasting led to the establishment of Te Upoko o te Ika and Radio Ngati Porou. 1985 saw the first Kura kaupapa Maori for Maori children and the Te Reo Maori claim WAI 11 brought before the Waitangi Tribunal. By now the number of Maori speakers had dropped to only about 50,000, or about twelve percent of the Maori population. Recommendation that legislation be enacted to enable Maori language to be used in legal proceedings occurred in 1986, and that a supervising body be set up. After the 1987 Maori Language Act was passed, it was not long before Maori language speakers began increasing, official government documents, signage, ministry titles and descriptions started containing both English and Maori, and from the late 1990s Web Sites of government departments, official government organisations, as well as local government city and regional councils. It is a long step to restoration of the language as it was at the time of the early European settlement, but with the official status in place, it can only be a matter of time.

Kiwis have always been keen gamblers, and in 1907 the first government lottery ticket- the Golden Kiwi- was introduced. Eighty years later saw the introduction of Lotto, and the year after that Instant Lottery tickets, or “scratchies”. Lotto has since become more complex, with Strike, Powerball and Keno, but 1987 was the year that modern day national lotteries really started. The NZ Lotteries Commission was established on 1 June 1987 and the first tickets went on sale on 22 July. The draw was on 1 August and carried a top prize of $100,000. First prize is now $1 million, but often jackpots to several millions. Lotto NZ paid out NZ$64.5 million in prizes for the Lotto games in 1987/8 - its first full year of operation. By the year 2007/8, this figure had risen to NZ$274.15 million in prize payouts. To date, more than NZ$3.75 billion has been paid out to lucky lottery winners of the NZ Lotto since it began back in 1987. There have been at least three-hundred and seventy people who have won NZ$1 million or more on the NZ Lotto since its inception.

Rogernomics extended to changes in farmers’ lives in 1987. From this year onwards they had to pay for Ministry of Agriculture and Fisheries’ (MAF’s) advisory services. This was all part of the new economic landscape: “a level playing field”, “efficiency and accountability” and the “funder/provider split”. The user-pays theme was almost a flashback to Muldoonism. Farmers’ Federation was very vocal in its hostility for the new scheme and the Lange/Douglas administration. The year earlier they had gathered at Palmerston North, called by the Rangitikei and Manawatu branches, and attendance was approximately one-thousand. Roger Douglas was present, and he told the farmers what he was trying to accomplish as Finance Minister and agreed that the increase and exchange rate increases were hurting, just as drawbacks on government spending were also doing. He recalls what he said years later:

“We are taking a hell of a lot of political pain to do that. And you’ve got to believe we mean it, and you have to respond by adjusting your own actions. So does the rest of the community…Your council has shown it knows that if we go back to subsidies, the industry will be wrecked permanently. This country can’t afford that. If agriculture goes under, we all go under. We will continue to look for ways to help, but they must be ways which do not damage your industry forever.” (See Smith & Callan, 1999, p. 241).

Some other significant events of 1987 were:

New Zealand’s first heart transplant

The nation declared legally nuclear-free: a permanent state-of-affairs

1987 Rugby World Cup victory against France

The Edgecumbe Earthquake:

This occurred in the small Bay of Plenty town of Edgecumbe, at 1:42 pm on 2 March 1987, measuring 6.3 on the Richter scale. Moment magnitude was 6.5 megawatts, depth eight kilometres, and there were no fatalities, but twenty-five injured.  Even though it was shallow, the quake was one of the most damaging New Zealand has experienced in recent times, with about half of the houses in the town being damaged. There was also damage to a local milk processor, where storage tanks fell over. The nearby forestry town of Kawerau was damaged and the second-largest town in the region, Whakatane was badly shaken. A NZ Railways eighty-tonne locomotive was tipped over. There was a foreshock prior to the event and a large aftershock measuring 5.2 ten minutes after the quake. Even though the Edgecumbe Earthquake officially lists no fatalities, there was a heart-attack victim who died at the time of the tremors, and it is likely that it was caused by shock.

The 1980s was a time of unrelenting, never-before-experienced economic growth and prosperity, due to the new economy, freedom in the economy from Rogernomics and a general world financial and economic boom. Some of this economic prosperity came from the markets of America and Europe, in particular the astronomic rise of the stock markets in Wall Street, London, Europe, Hong Kong, Tokyo, and also in Sydney and Wellington. The physical appearances, i.e. skylines of Auckland CBD in particular, and also Wellington, were altering faster than people could keep up with. By 1987, at the height of the building boom in New Zealand, cranes dotted the CBDs and glass and steel skyscrapers seemed to appear everywhere. Beautiful old buildings fell to the demolition ball, whilst glassy, mirrored, mediocre (?) towers rose in their place. There was plenty of money for building, industry and there was a feeling that New Zealand was entering its latest golden age. However this was unreal, as it was built on the bullish share markets in Wellington and overseas, built on financial speculation, overconfidence, etc. “Greed [was] piled on ambition and heaped on ego.” (See Smith & Callan, 1999, p. 244).

On Tuesday 20 October 1987 all this was about to change. Black Tuesday, as it was to be known, saw share prices plummet by up to sixty percent, and it started on Wall Street, and flowed on worldwide. When the markets opened in New Zealand, the latest “South Seas bubble” had burst. This was the largest crash since the 1929 event, which had at the time triggered the Great Depression. The world and New Zealand was about to experience a similar massive recession. Over the following two months, to Christmas 1987 $23 billion was wiped off the stock market boards, equating to almost fifty percent of the market. The supremely wealthy, ordinary investors, major companies and small business all fell with the stock market. By the end of 1989 the New Zealand market had still not recovered to the extent that overseas markets had. This was to be a costly and memorable lesson for New Zealand. Many commentators have observed that “the New Zealand share market rose higher, fell further and stayed down longer than those in comparable countries. New Zealand share-trading volumes boomed one-hundred percent in the year preceding Black Tuesday. In Australia, Britain and the United States the figure was between twenty and thirty percent.” (See Belich, 2001, p.407). Whether justified or not, the crash led to a loss of confidence in the government, and was to prove irreparable in 1990. Rogernomics reforms continued unabated in the debris of the crash, although it was now under the command of Lange, as he had developed hesitations about the latest new round of reforms. The boom and bust ventured into the lives of many, not just the market speculators. The boom was a mass movement, similarly the bust was also. Major players who lost big time included Allan Hawkins of Equiticorp, who was bankrupted and imprisoned. He “crashed to earth, to a chorus of satisfaction from those who had previously worshipped [him]”. (See Belich, 2001, p. 406).

The re-election of Labour on 15 August 1987 saw a plus-five-percent swing in support and a minor gain of two seats, from fifty-five to fifty-seven. It won forty-eight percent of the popular vote. National, under its new leader, Jim Bolger, also saw a swing of plus-eight-percent, and a rise of two seats, from thirty-eight to forty. It commanded forty-four percent of the vote. This was due to none of the minor parties winning any seats. Also there was fallout in voter turnout to 89.1 percent, or over 70,000. As in 1984 Labour secured most of the seats in the four major centres, as well as most of the West Coast of the South Island. National performed well in most of the rural and regional areas. Although not an increased mandate, it was more than enough of a mandate for government legitimacy and appeared not to have been harmed by the massive changes brought about by Rogernomics or the sharemarket demise. However even though the incumbent government emerged from the election with a seventeen-seat lead over the Opposition, the real discrepancy between each party’s count was significantly less. Labour had won a five percent swing increase from 1984, but National had secured a huge 8.5 percent increase (35.5 percent to 44 percent). This meant that even though Labour had retained its lead, the gap had closed by a bigger amount than the basic seat count indicated. This gap would widen over the next three years, due to general voter backlash and dissatisfaction, and the direction and leadership of the Party would gradually but surely fall apart.

1988 was a year where the nation was still commiserating over the events of late 1987, but had not yet truly entered the serious recession. It was in a kind of limbo, and the boom was only slowly collapsing. By February unemployment had hit the 100,000 mark, but this was nothing compared to what it would later rise to in the early years of the nineties. It was very bad for Pakeha, but much worse for Maori, where since 1986 and the end of 1988 the general Maori unemployment rate jumped to close on twenty percent. “In effect, about one-fifth of the Maori working age population lost their jobs in the two years from March 1987 to March 1989.” (See Belich, 2001, p.474). In proportionate terms Maori unemployment was roughly quadruple the Pakeha rate, and these figures may be understated due to those who gave up hope and no longer registered for work. By 1991 in some Maori areas the numbers who were “unavailable for work” reached almost half!

On 30 March the State Sector Act was passed to reform the Public Service. The State Sector Act 1988 defines what constitutes the State sector organisations in New Zealand. Along with accompanying reforms, it substantially reshaped the Public service, and to some extent its culture. It granted Ministers some role in the appointments of departmental chief executives. This was a part of the later Labour cabinet, persuaded by Douglas, to set in motion reform of the Public Service, a transformation of some departments into SOEs and sale of other departments. Old Labour, before 1984, had worked towards big government, whereas new Labour conversely sought to devolve or sell as much of its inherited business as possible.

January 1988 may be marked as the start of the Lange-Douglas split, which commenced when Lange cancelled a previously-announced economic and tax package after returning from overseas. From the prime minister’s statement in 1984 that “the government will either stand or fall with Roger Douglas”, their extraordinarily close relationship had gradually fallen apart. Even though the stock market crash had seriously damaged the New Zealand economy, Douglas still wanted to persevere with economic reforms.  In December he recommended further asset sales, the liberalisation of the labour market, further remodelling of the public sector, further reduction of tariffs, the introduction of a Guaranteed Minimum Family Income (GMFI), and radical tax reforms involving a flat income tax rate of twenty-three per cent and an increase in the goods and services tax (GST) to 12.5 per cent. The tax reforms and GMFI were approved by Cabinet, and on 17 December Lange, Douglas and other senior cabinet ministers proclaimed this package at a press conference. Possibly due to a reflection over Christmas and New Year whether it was a wise move, Lange cancelled the flat tax in January. From this moment on the relationship between the two top men gradually moved downhill, and it flowed on to their supporters in the cabinet and caucus. First Richard Prebble was dismissed and then Douglas left cabinet at the end of 1988. He remained in the party as a backbencher, where he may have been the main architect behind a vote of no-confidence in the prime minister six months later. Lange narrowly won this vote, but against his wishes caucus re-elected Douglas to cabinet in August 1989. This was the final straw for the prime minister who resigned on 8 August 1989.