1989-91

Chapter 4: 1989-91

After Lange’s departure as leader of the party and leader of the country, Deputy PM, Minister for the Environment and Minister for Justice Geoffrey Palmer was elected in August 1989. He knew that Labour was doomed at the election to be held the following year, from the moment he took the reins of power. Moore was to be PM for a year, until September 1990, and although a worrying time for Labour, his succession to the leadership was quite a successful move for the party. It put an end to the bitter caucus infighting between Lange and Douglas supporters which had now blighted the party for close to two years, as well as, of course, the intense rivalry between the two personalities themselves. It also worked well as Palmer was a likeable figure within both the Party and in the opinion polls, and he was not a divisive or controversial figure. He could also see that the Party’s time for radical reform was over and that New Zealanders were by this time just wishing for a return to economic prosperity or at least recovery, and socially for life to settle back to normal. As well as authoring an influential book, “Unbridled Power”, during his thirteen months at the top, he also set up the royal commission that recommended switching to the Mixed Member Proportional (MMP) voting system, passed the New Zealand Constitution Act 1986 and laid the groundwork for the Resource Management Act.

In September 1989 there was yet another change in leadership, and therefore the prime ministership: the new leader became Mike Moore, who led the doomed ship that was the government for a very short period of less than two months. He was chosen to contend the party leadership as Palmer’s electoral support, although good at the beginning of his leadership, had plummeted, in line with support for Labour. It was hoped that the sinking ship may be repaired and go on to sail the high seas after November, although that definitely wasn’t to be the case.

After over half a decade of major economic upheaval: ground-breaking reform, prosperity, disaster- New Zealanders were ready for a new conservative decade, and many decided a return to the Right was the best way to go. The 1990s was ushered in with terrible economic conditions- massive unemployment, continuing inflation, mortgage defaults, business bankruptcies and a generally sluggish, zero-dynamic state-of-play. The January 1990 sesqui-centenary, celebrating 150 years since the Treaty of Waitangi was not eagerly-awaited; in fact it was considered by many (and eventually played out to be) something of a non-event. One of the first acts of the new Bolger National Government was surprisingly a very social democratic move to return $1 billion worth of lands, waters and fisheries to the Maori People. The following year a move that was more right-wing occurred: the Employment Contracts Act. As the new decade progressed, there were tragedies: the 1995 collapse of a rural viewing platform where many youth lost their lives. Early in the new decade such consumables as fax machines, button telephones, a huge growth in VCRs, and the introduction of pay TV occurred. Mid to late decade the introduction of the Information Superhighway/ cyberspace - the Internet, or more correctly, a new and revolutionary side of the Internet called the World Wide Web. Websites would spring up virtually overnight for businesses, government, information, leisure and practically every area of life. The 1990s would see a vast take-up by New Zealanders of mobile (cell) phones, personal computers (PCs) with dial-up Internet access, and then broadband high-speed Internet, and by the end of the decade, flat-panel Plasma or LCD TVs with digital broadcasting/transmission. Kiwis youth, both Pakeha and Maori, would also become more disillusioned with life, than ever previously experienced, and would assist the creation of a new and permanent underclass.

Sesqui 1990 (Sesquicentennial) in February 1990 was ostensibly a big deal that fizzled out before it had really even begun. Wellington was chosen for its centre as it marked 150 years since the founding of Wellington and of the signing of the Treaty of Waitangi. It was also chosen as it was the newly-created cultural Capital since the Wellington City Council 1989 adoption of its new theme and plans for many years to come: ‘Absolutely Positively Wellington’. (It was further expanded upon in 1993, under Mayor Fran Wilde, former Lange Government Minister). The council played on the extant feeling of Wellington that it was cultural and modern-European and it moulded the new and ambitious plan to redevelop the city in the minds of its people, but also of its image around the country and overseas. Even though Auckland was more cosmopolitan, more multicultural, had a milder climate (no wind!), Wellington was the perfect choice for the country’s celebrations...or so the planners believed. In a nutshell the event was an abysmal failure. Marketed as ‘New Zealand’s Biggest Event Ever’ in 1988-89, it was slated to run for six weeks, and to be held at two locations: the Winter Showgrounds in Newtown, where Wellington’s annual Winter Show had been held for many years which was an amusement park-styled location just five to ten minutes from the Central Business District; and also the fairgrounds at Taranaki [Street] Wharf almost in the heart of the CBD. After only twelve days the event was abruptly closed, and in addition to being a disaster for both the government and the Wellington City Council, it was also a financial catastrophe, where a massive $6.4 million ended up being owed to creditors. In fact it has become something of a reminder to New Zealanders of corporate mismanagement on a grand scale. The festival was to include cultural, trade and scientific exhibits, as well as entertainment and fun park amusements, the latter mostly at the Newtown location. Because of the large amount of monies still owing when it was prematurely shut down, it had a flow-on effect of causing receiverships and bankruptcies of a number of smaller companies who had been contracted to provide various goods and services. Sesqui was effectually doomed before it had commenced as many Wellingtonians and those from other parts of the nation were disillusioned with life in general due to the sharp recession, unemployment rivalling that of the Great Depression and a belief that all the pain of the Lange years had only dragged personal incomes down; there had been little reward. As well as the financial slump, there was at the time a generally depressed and negative psyche. There occurred graffiti of the major billboard on the Urban Motorway (Hutt Road), and the official Sesqui mascot, named ‘Pesky Sesky’, which may have been an opossum or even a sasquatch (?), had blown away in one of the capital’s notorious windstorms! All in all, there was little public support for the event, even though it should have been a meaningful anniversary of New Zealand. Added to the loss to taxpayers and Wellington ratepayers was the $150,000 fireworks on the evening of the opening day, which would be approximately $300,000 in today’s dollars. Sesqui 1990 was the absolute antithesis of the 1988 Bicentenary across the Tasman.

The Commonwealth Games in Auckland in January 1990 was a totally different story. Watched by hundreds of millions around the globe, it was a fantastic showpiece for New Zealand in general, and Kiwi sports talent in particular. It was an administrative and commercial success. Although all Commonwealth Games (like Olympic Games) are a drawcard for dozens of countries, this was handled differently to Sesqui, and Auckland further cemented itself as the dominant centre to Wellington’s detriment. The Games logo was a shooting star motif and was called the “Hungry Enzyme”. The official mascot was a revitalised Kiwi, “Goldie”, and was perceived to be a major success. It had been the mascot for both Olympic and Commonwealth Games teams in the past, and was still in its original form. Goldie became a strongly competitive force after being depicted as a performer in each of the Games’ sports. The official anthem was “This is the moment”, sung by Chris Thompson. New Zealand performed well, coming fourth, after Australia, England, and Canada, and this was a very acceptable result. The fourteenth Games were the Friendly Games, as in 1982 in Christchurch, and were officially a part of Sesqui. The main stadium was Mt Smart and ten sports were on offer: athletics, aquatics, badminton, boxing, cycling, gymnastics, judo, lawn bowls, shooting and weightlifting. There was also the Triathlon, a demonstration event. The official medal tally was: Gold: 17, Silver: 14, Bronze: 27, total: 58 medals.

As the first stage in a long-awaited reform of the currency, in fact the first since decimal currency was introduced in 1967, 1990 saw the abolition of one and two cent coins as legal tender. Later fives and tens would be removed, and then one- and later two-dollar coins were introduced. Further on there would be a major transformation - in the 2000s, where paper currency was replaced with plastic notes that, along with watermarks and other security features, would become un- counterfeit- able. Much later, in 2010, twenty cent coins were removed from circulation and fifty cents became small and light. The New Zealand changes mirrored Australian government mint reforms in terms of removal of one and two cents and plastic notes, but New Zealand went further with the discarding of ten cents, twenty cents and physical reduction of fifty cents. Today, New Zealand has a streamlined, efficient currency that is in tune with the twenty-first century.

Telecom was sold in this year for a whopping $4.25 billion. This occurred under the Labour government, just before the election of the new Bolger National administration. In 2010 Bolger said of the sale that it was a mistake, and that New Zealand governments, [Labour or National], have been inept at privatisation. Prior to the sale, in 1987, it had been split off the Post Office, and of late, NZ Post is facing a severe and inevitable decline in its core business, a situation which may be halted if it can embrace the delivery side of the massively-burgeoning e-Commerce trade, such as Australia Post has most successfully done. Bolger said that “With glorious hindsight you could say we hung on to the wrong bit”, but added that at the time the deal was done, the postal business was the “right bit” to retain. (See Bennett, 2010).

The year 1990 was a momentous one in Europe with the death of Communism, manifest most famously in January with the tearing down of the Berlin Wall, to create a unified, democratic Germany. This was watched on television back home on now three channels (TV3 established two years earlier), as well as radio and newspaper. Also, Kiwis witnessed the crumbling of the Soviet Union partly thanks to Mikhail Gorbachev, which did not deliver the successful type of democracy in Russia and the new CIS that occurred in Germany. In short, major overseas and local events were becoming more a part of New Zealanders consciousness by the new decade than ever before, and this would be even greater still by the end of the nineties, with more television channels and especially the Worldwide Web.

In this year Catherine Tizard (later Dame Catherine) became the first female governor-general of New Zealand. Born in 1931, in Auckland, she attended university in 1949 and met her husband, whom she married two years later. After having four children they eventually separated. Her first administrative position was at the Play Centre, which she later became president. After this she was elected to the Board of Governors of the Eastern Suburbs Secondary Schools of Auckland. After returning to university in 1961 to complete a degree in zoology, she became a part-time tutor for the Zoology Department at Auckland University the following year. This turned into a tenured appointment. In the early 1970s Tizard was elected to the Auckland City Council and remained a councillor until 1983. At this point she was elected the first woman mayor of Auckland. Immediately after leaving the mayoralty in 1990 she became New Zealand’s first woman governor-general, a post she would hold until 1996. Whilst Mayor, in 1985, she was awarded a DBE, and as governor-general, received a GCMG in 1990. During her tenure as Governor-General, it was not always easy sailing: at the Waitangi Day celebrations on February 6, 1995, she was spat on, which was out-of-keeping with the usual respect New Zealanders have for their Queen’s representative. Earlier, as Mayor, in December 1984, during the Dave Dobbin concert Queen Street riots, she found herself in the thick of the random violence. In 2002 Dame Catherine became a member of the Order of New Zealand (ONZ), which was the replacement of the old Order of the British Empire (OBE). In recent years Dame Catherine has had a hand in a number of community groups, such as the Historic Places Trust, the Marriage Guidance Council (!), the Auckland Institute and Museum, the Auckland Theatre Trust and the Auckland Maritime Museum Trust. (See NZ Government, 2011). At time of writing she is eighty-one years of age.

The Sky TV Network from the United Kingdom began pay-broadcasting in New Zealand in 1990. Previously only available in commercial premises such as pubs and hotels, it was now available for anyone to view from their home. It was founded in 1987 as Sky Media and was redirected into pay television following a successful bid for four groups of UHF frequencies in Auckland, Hamilton and Tauranga. It initially received rights from ESPN, shortly followed by CNN, HBO, BBC and Sky Movies. As Sky extended its coverage throughout most of the country in 1994, it launched two new channels: Discovery and Orange. By 1996 the entire nation had full, uninterrupted coverage. In 1997 Sky introduced Direct Broadcasting via Satellite (DBS), which was an analogue service using the Optus B1 satellite. This allowed for more channels and interactive choices. In December 1998 Sky went digital, which was several years ahead of Foxtel in Australia.

Sky had some problems with customer understanding of decoder technology, but after simplifying it, it was taken up with vigour. There was a brief period of Sky email – ‘Skymail’ – but due to low take-up it was pulled. Sky TV is now in over fifty percent of New Zealand homes, and keeps the broadcast networks – TV1, TV2, TV3 and TV4 – on their feet to deliver as good a service as Sky.

The Hawkes Bay earthquake of 1990 was 6.4 on the Richter scale and although there was nowhere near the devastation and casualties of the 1931 Napier quake, it was still a significant earth tremor. The epicentre was Weber (Tarewa), which is a hamlet approximately thirty kilometres south of Dannevirke. The local geology magnified the strength of the quake and made it seem more like an 7.0-plus event or thereabouts. The second shock to strike Weber in this year, it occurred only twelve weeks after its predecessor. Focal depth was thirty kilometres and the Maximum Intensity was MM9. Over the next two years two more earthquakes would strike this East Coast region. The 1990 event was felt from Hamilton in the northwest to Christchurch in the south, and different intensities were felt in different locations, as a result of the sediment and underlying soils in the area. Areas that were poorly consolidated experienced greater shaking and sustained more damage than ones that contained harder bedrock and more compact soil. There were no deaths or reported injuries. (See Canterbury Quakes, 2012).

On 27 October 1990 a general election was held. Opinion polls prior to the day pointed to a decisive National victory, led by Jim Bolger, and that is exactly what transpired. National won by a landslide and the radical, controversial era of 1980s Labour was well and truly over. In fact it only took a little over two hours after polling stations closed before outgoing PM, Mike Moore, telephoned Jim Bolger to congratulate him and concede defeat. The magnitude of the government’s defeat was even greater than the public and media foresaw. In fact from a parliament composed of fifty-seven seats for Labour, forty for National and one held by New Labour, the change was a total and massive swing of the pendulum. After the election, National now held sixty-seven seats of ninety-seven (over two-thirds!), Labour a dismal twenty-nine and again one New Labour. Discrepancy between the number of seats won and actual percentile share of the vote was not so great however, as has been the case in New Zealand more often than not under first-past-the-post. National only received about half of the share (48 percent), Labour one-third (35 percent), and minor parties 17 percent in total. Yet again there was a case for a change in the voting system, which would in fact be put to the public in a national referendum at the next election (1993), and would succeed, taking effect from the 1996 election. However it was a great victory for the conservative party, and gave Bolger an unequivocal mandate to do what his government felt was in the best interests of the nation- whether to implement change, to roll back some of Labour’s contentious reforms, or whether to stick with the status quo. There was definitely a mood in the electorate for change, not necessarily a rollback of the past four government’s reforms, but to move forward to tackle the economic quagmire New Zealand was currently in, and to effect social and political changes, with especial focus on Maori.

Bolger was elected on a promise of a “Decent Society”. This was a direct attack and repudiation on the previous Labour government’s economic reforms, although the phrase was intended to include social decency in addition. Bolger appealed to the voters by implying that the harshness of the previous six years would be reversed and although National as a rightist party was not known as being a kindly or economically and socially beneficent force. Only seventy-two hours after the election however, the new government was forced to bail out the Bank of New Zealand (BNZ), which was in 1990 the largest bank. Originally costing $380 million, this ballooned to almost three-quarters of a billion, as the budget had to be rewritten. This birthing event had an impact on Bolger’s direction of government for at least the next three years, with the first budget being nicknamed the “Mother of all Budgets.” (See Wikipedia, 2012).

On 13-14 November 1990, David Gray killed twelve people at Aramoana, before police shot him dead. A small seaside town, Aramoana is situated opposite the Otago Peninsula, about 15-20 kilometres northeast of Dunedin. David Gray was a recluse who was thought of as odd, but harmless. He was unemployed. Unsurprisingly, he was a big fan of warfare, weaponry and survivalist books, and owned a decent haul of firearms and ammunition. Also unsurprisingly, he was going crazy, but sadly this was not discovered until after twelve innocent people died unnecessarily. Paranoid and a believer of fanaticism, Gray’s madness came to a head on 13 November.  NZ City crime and punishment website describes the unfolding of the events in their article, “The Aramoana Massacre”:

“At around 8 pm Gray and his next door neighbour, Garry Holden, were heard arguing. Rifle shots were heard and Gray entered the Holden’s' residence where he shot at Chiquita Holden (Garry's daughter) wounding her. Chiquita ran out of the house to raise the alarm. She discovered her father's body face down in the yard. She fled to friend Julie Ann Bryson's house. Mrs Bryson rang 111 and then took Chiquita in her van back to her house knowing Chiquita's sister, Jasmine, and Julie Ann Bryson's daughter, Rewa, were there still, having hidden when Gray shot at Chiquita.

The Holden's house was on fire and Gray was standing outside. He fired on the pair as they passed by in the van. The local men in the town were alerted to the fire and came to see what was going on. Most will never forget the sight of Gray with a balaclava rolled up over his head and a rifle in his hands as he took shots at any moving targets. Vanessa Percy was gunned down as she ran screaming down the street. Gray then shot and killed two boys, Leo and Dion Percy. Their sister, Stacey, suffered severe wounds to her abdomen. All three children were in the back of their father's Ute on their way home, when their father had seen the fire. Ross Percy, their father, and Alec Tali were shot and killed near the Ute. Gray entered the Jamieson residence and killed locals Vic Crimp and Tim Jamieson. Jimmy Dickson was killed as he looked for his dog and his wife who went looking for him watched in horror as David Gray shot Chris Cole who was out walking. She managed to crawl for help but unfortunately help had come too late. Chris Cole died in hospital.

Sergeant Stewart Guthrie , from Port Chalmers police, and Russell Anderson, the local Fire Chief, with sirens blazing and an ambulance following, approached Aramoana. Fire engines were on alert and had to remain a certain distance away until the gunman was put under restraint. They split up and began to take in the dreadful scene and to locate Gray. During this time Sergeant Stewart Guthrie was shot and killed by Gray.

The Armed Offenders Squad had been called in and they surrounded Aramoana. All care had to be used as Gray had a high powered rifle with telescopic sights and was shooting at anything that moved. They moved slowly and when the dawn came up the next day the realisation started to hit New Zealanders of what was taking place. In the dark, early the next morning, many brave police officers slowly moved in. Gray was still at large and after claiming thirteen victims had to be considered one of our worst murderers of all time. In Bill O'Brien's book, "Aramoana - The True Story" he describes the many heroic acts that the police and residents performed. An anti terrorist unit was in the area helping to co-ordinate the scene. One by one the squad entered and searched houses still not finding Gray. Finally he was located and after tear gas was thrown in, he came out of the house shooting, yelling "Kill Me". Five shots hit Gray and he was killed. The siege was finally over.

This had taken 34 hours and the dedication of the police and Armed Offenders squad, a number of whom received Gallantry Awards from the Queen.

Rewa Bryson and Jasmine Holden's bodies were found in the burnt out Holden home. Thirteen people lost their lives and a town lost it's peace and serenity. David Gray is now believed to have been schizophrenic or otherwise mentally disordered - but for whatever reason, he became one of New Zealand's most horrific mass murderers.” (See NZ City, 2012).

1991-94

One of the first events of the year 1991 was the Bolger Government enactment of the Resource Management Act 1991, which involved rewriting planning law. On the NZ Government Legislation website, the purpose of the Act is stated:

“An Act to restate and reform the law relating to the use of land, air, and water”. (See New Zealand Government, 2011).

It also states in the definition that its “… purpose… is to promote the sustainable management of natural and physical resources.”

The Resource Management Act (RMA) has been lauded as the best act of its kind in the world by the United Nations, and was a game-changer for New Zealand environmental management. United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) states that: “New Zealand created the Resource Management Act because it was bankrupt and could no longer afford the costs of a centrally regulated administration”. This a pretty wild, unsubstantiated theory which UNESCAP does not elaborate on or explain, but it is clear that the country was indeed in a lot of economic trouble and there had been a massive move away from centralisation under the Labour years, which National was not keen to sweep away. The Web document discusses the sustainability of the Project under two banners: Awareness and vision, and Style of Government adaptability. Still a fairly regulated department, the Ministry of the Environment initially struggled to implement such a fundamentally nouveau and modern structure and one important official in the Ministry commented that the Act resulted in “total chaos” (see UNESCAP, 2003). Although a mammoth undertaking, the Act sought to reorganise and decentralise power mandated within its structure, to achieve a situation where the combination of recession and national threats to natural resources and soils, for example, would be addressed and positive action taken in the years to come. The Act has been very successful and a model for other nations, especially in the Asia-Pacific region, and revisions were made in 2009.

In 1991 the Finance Minister, Ruth Richardson, brought down her first budget. Named by the media as the “mother of all budgets”, it entailed huge reductions in social welfare expenditure. The dole and several other benefits were cut and for the first time rents were charged for state housing. These were however substantially lower than market levels for private rental. Not long after this budget, the term “Ruthanasia” was colloquially coined, meaning a similar thing to euthanasia. The ’91 Budget introduced market forces in the operation of schools, hospitals and universities by introducing user charges, as well as a directive to universities and Polytechs to compete for enrolments. The super surtax which was implemented under the Labour administration was left unchanged, which proved controversial in itself. The Budget additionally created a new scenario of reduced governmental standards in favour of market forces.

In 1991 Jim Anderton formed the leftist Alliance Party, which would play a significant role in the later National governments of the nineties, and the Clark Labour years in the noughties. The Alliance would also ‘write the book’ for the new powerful role of minor parties from the commencement of Multi-Member Proportional representation (MMP) at the 1996 election. A fiercely left-wing, green and labour-oriented party, it grew in 1991 out of the remnants of four parties: NewLabour, being the largest and led by Anderton, Democratic Party- which was sympathetic to the old Social Credit, Mana Motuhake- a forceful presence in the Maori population, and the Greens. Anderton was a disgruntled Labour MP prior to 1989, and had expressed his dissatisfaction at the direction the Party had taken throughout the former decade, whilst in government. He was especially found the radical rightist economic policies, i.e. Rogernomics, distasteful. During the 1990 election Anderton ran under the aegis of NewLabour in his existing seat, and surprisingly (to him and the media) retained it. This gave him new-found impetus to make NewLabour into something much bigger and this was when Alliance was formed.

In the 1993 election Anderton consolidated his vote, gaining more ground- they won 18 percent of the vote, but this actually really meant an additional second seat was one- Sandra Lee Vercoe in Auckland. Anderton was a huge supporter of MMP before the ’93 referendum (part of the general election) as it obviously meant a goldmine of new List seats for his party, and was a new man after its successful yes-vote. As a result of MMP Alliance gained 10 percent of the vote at the ’96 election. Two were the electorate seats held by Anderton and Vercoe, and a further eight were Alliance List seats. This made Alliance a third force in the Parliament, effectually for the first time in New Zealand’s century-plus history of the chamber. Despite the Greens greedily deciding to leave the Alliance the following year in the grand belief they could do better on their own, the party continued to make ground at the 1999 election, where voters aligned them with the expected-to-be Labour government, which had returned to their grass-roots traditionalist approach to economics; Clark fundamentally eschewed the Lange years and nothing was spoken of that time during her long tenure in office.

In 2002 Anderton left the group which was now in its decline electorally. At this time there was a split and after a short, but vigorous decade of power, Alliance has practically dwindled away. On their website, which is a free, Wordpress blogging site, their banner is “New Zealand’s Democratic Socialist Party”. At the 2011 election it stood fourteen candidates, of which nine were list only, and five were list and electorate candidates. The co-leaders are Kay Murray and Andrew McKenzie, who were respectively numbers one and two on the list.  The Alliance has not had any representation in the Parliament since the end of the 1999 to 2002 parliamentary term, which is now a full decade, and its share of the vote, which was almost eight percent during that period, has dramatically fallen at each election from 1.3 per cent, to 0.07 to 0.05 to currently 0.03. It has been virtually obliterated. The massive success of John Key’s centre-right National government at the 2008 elections, and even more so in late 2011, has continued to turn voters away from centre-left and left-wing parties. These parties are facing a similar catastrophic situation to the Australian Labor Party, where many are questioning whether they have had their time.

The Employment Contract Act (ECA) of 1991 was perhaps one of the two most far-reaching and controversial projects of the National administration of the 1990s (second being the land rights package) and would be copied by Australia in the twenty-first century. It was intended by Bolger to be the pillar of his era, and that it certainly was! The key premise of the legislation was that it would make New Zealand competitive again and pull it out of the deep hole it had entered at the end of the eighties. ECA provided the maximum freedom to employers and employees to bargain together without any government intervention. It could be described as a shift from collectivism to private arrangement/individualisation in the workplace, although as the nineties progressed employee groups and unions cried foul that the system allowed unfair, unscrupulous employers, especially large corporations, to bully the workforce to the extent of being unemployed if labour did not comply. Unionisation was struck a double (fatal?) blow where it became voluntary and fundamentally impotent. On the opposite spectrum the peak employer organisation, New Zealand Employers’ Federation, and smaller employer groupings began to complain that the contracts were becoming impossible to create and operate due to a rising militancy in the workforce in direct response to the Act. Weekend and public holiday penalty rates became a thing of the past (at least until ECA was repealed and replaced by the Labour government in 2001), and this was compensated by higher regular pay rates and a new American-style system of bonuses, commission and non-monetary benefits. There was physical evidence that in the five years from its inception the New Zealand economy had become competitive again, and that this was directly attributable to the success of the ECA, but in the latter days of the regime, academics and some in the media began to argue that it was not due to ECA; that it was just in effect a corollary of the boom-bust cycle of the economy. Brian Easton, in his long-running essays argued thus in 1997, mostly by repudiating an Australian economist’s claim that the growth was wholely the work of the ECA:

“There have been various claims about the economic impact of the New Zealand Employment Contracts Act, 1991 (ECA). For instance in Free to Work: The Liberalisation of New Zealand’s Labour Market, Australian economist Wolfgang Kasper claims that the resulting industrial relations had economic benefits. He concludes “the Employment Contracts Act has substantially enhanced the productivity of labour and capital, output, and employment growth because it has been an essential ingredient in the transformation of New Zealand’s institutional order to greater flexibility and competitiveness”.

However … the empirical evidence does not support his conclusions. There appears to have been little economic benefit, if any, from the ECA, other than perhaps for employers at the expense of workers. In particular there is no evidence of significant productivity gains, an issue that is explored in this paper. International comparisons support the likelihood that the ECA did not have an economic benefit.”

He goes on to corroborate his conclusion by citing such factors as a drop in real wages, questionable labour productivity growth, the ‘productivity puzzle’, an actual fall in employment since its inception, low enthusiasm for the ECA and the economy at macro-level, as well as a comparison of economic growth before and after similar regimes in the US and Western Europe. He summarises thus:

“There has been a tendency by advocates of economic reforms to hypothesize certain benefits and then assume that these benefits have been necessarily realized after the reforms are implemented. Anecdote and selective use of statistics are then used to buttress the case. Systematic empirical investigation, as presented here, often suggests otherwise.

This pattern has been true among advocates of the ECA. On the basis of the empirical evidence it is very difficult to reach, in a systematic way, any strong conclusions about the beneficial economic effects of the Employment Contracts Act. In particular the poor productivity growth rules out the likelihood that the ECA was a major contributor to the macroeconomic expansion of the mid-1990s. The Act would, however, seem to have contributed to the poor real wage growth and the failure of many workers to obtain a share in any increase in the prosperity of the 1990s.” (See Easton, 1997).

The salient question at this juncture is why did the Contracts Act fail (as it did in Australia several years later), and not just as a corollary of a change in government? I hypothesise three likely factors:

1.    The system became to be seen as inherently unfair for ordinary wage-/salary-earning employees: obviously the ECA had a built-in bias towards ownership and management of labour, often but not necessarily to the detriment of the worker. The union movement in New Zealand was near-death by the final decade of the twentieth century, not only due to ECA, but it had been gradually fading since Muldoonism and ECA was practically its death knoll. Because of the union movement’s impotency the strengths of ECA steamrolled and this might have assisted the Bolger administration, but the people disallowed it. One of the most contentious points was its banning of weekend and public holiday penalty rates, especially prevalent in the hospitality, retail and service sectors. Why should families and couples sacrifice their evenings, weekends or public holidays to the obvious benefit of the company but not for any personal profit? A system that was designed nearly a century prior and had worked well for economy and society wasn’t broke, so why fix it? This leads to the second hypothesis:

2.    ECA became to be seen as a direct antithesis of New Zealand’s English-founded Westminster system, long considered moral and just, and the former strongly against Seddonism, which advocated fairness in the workplace and social stratum. It was more closely aligned with an American regime, neither appropriate nor desirable for this part of the world, and would not, and could not function over the longer term. There was certainly no alacrity amongst organised labour and even employee groups such as the NZ Employers’ Federation demonstrated at times a hesitancy to operate in the full spirit of the Act. New Zealand became to be seen as a harsher environment than most European societies, Canada and Australia (the latter’s adoption of the system, ‘Workchoices’ was considered to be a watered-down version of ECA) and condemned for it by some in the international community.

3.    As a consequence of the above-two hypotheses ECA became a definite liability for the National Government at both the 1993 and 1996 polls, although it wasn’t enough to end their reign. By 1999 however it factored in strongly for voter displeasure and the new Clark Labour government had promised the voters that it would abolish the system if it won the general election. ECA undoubtedly played a significant hand in Labour’s ascendancy to the Beehive’s government offices, but it was not the only reason National was kicked out. Nine years, or three terms in office is a long time in New Zealand, and the public wanted the other crowd back in. Nevertheless the magnitude of Labour’s win may have been more muted if not for ECA.

The year 1991 saw the Consumer Price Index (CPI) at its lowest level since 1976. CPI measures general inflation, and after the extremes of the seventies and much of the 1980s, this was not such a great achievement as it may appear at face-value, but was still a pleasing event for the early days of the new government. However it also underlay the new depths of the recession, which was not showing any real signs of disappearing. It may however have been viewed as a new beginning, a possible light at the end of the tunnel, after close to twenty years of massive spikes in the CPI; a possibility that National may well pull the nation out of its deep quandary and even bring back an era of prosperity not visaged since the late sixties. Inflation is unfortunately a double-edged sword though; a cycle in keeping with the boom-bust nature of Western economies: prices come down, stabilise, interest rates drop in tandem, this aids personal and corporate saving, but also encourages discretionary spending and before long prices are creeping up again. This was the case in the nineties in New Zealand, but throughout the decade never reached the despairing heights of the previous two decades.

Jim Bolger cut welfare payments at the July 1991 Budget for the financial year 1991-2, in line with his centre-right, conservative agenda, and to put the Budget in a surplus direction. The freeing up of hundreds of millions of dollars also assisted economic recovery for other programmes such as infrastructure and to relieve the dire state of Balance of Payments (BoP) and foreign debt. As expected, it also attracted the ire of social welfare groups, sections of the electorate and the Opposition. The key areas of spending cuts were health, housing, education and pensions, which affected almost fifty per cent of the population (two million persons), and in effect terminated what some may argue was the most comprehensive social welfare system on the globe, including Europe. This may be a little over-exaggeration, but it was clear from August 1991 that New Zealand’s social welfare foundation was, if not crumbling, at least in serious jeopardy. However it was believed to be the only option by Bolger and National- and perhaps even grudgingly by Labour and the Alliance- to yank the country out of deep trouble that had not been seen since the Great Depression. This action, along with 1 April reductions in unemployment and sickness benefits and the first mini-budget of December 1990, came with its casualties within the Party: shortly after the July budget four National MPs crossed the floor, and in August two resigned to become independents. In October the then Minister for Maori Affairs, Winston Peters, who would go on to form New Zealand First, a populist centre-right party, that has performed better and better (especially in the 2011 election), was sacked from Cabinet due to his consistent and increasing criticism of the government. This was foreseeably a bad move as Peters made life quite difficult for the government for much of the rest of the nineties, especially after he quit the Party.

In 1991 the number of unemployed exceeded 200,000 for the first time. This represented five per cent of the total population (men, women and children) and closer to ten per cent of the labour force (people aged fifteen to sixty-five who were not infirm or disabled). Social welfare spending cuts and sickness benefits initially assisted an increase in the employment levels, but it was not until 1992 when economic recovery was underway that the figures started dropping. This was the low point, but was also indicative of a new New Zealand where the heretofore aim of zero unemployment was no longer a reality, and that a more meaningful figure of 2-3 per cent may be more realistic for the 1990s and into the new millennium. After twenty years of mostly high unemployment levels it was believed by economists and social scientists that zero or even very low unemployment was no longer possible; the cultural changes brought on by the sixties and seventies had altered this reality of not just New Zealand, but the entire Western Hemisphere. Unwelcome news for the new administration, but blame was apportioned to the previous Labour terms, which in part was truth, however the electorate is not impressed by excuses; they want positive action and it is questionable whether it was exactly that or simply the bottom dropping out of the quagmire that was the early nineties recession, that was responsible for a sharp turnaround in employment the following year.

In the early morning of 14 December 1991 an avalanche on Mount Cook (Aoraki) reduced its height by 10.5 m, which brought it down from 3764.5m to 3754m- still New Zealand’s tallest peak by far! Located in the South Canterbury region of the South Island, it is part of the Aoraki Mount Cook National Park, an alpine wonderland made up of twenty-seven other mountains which are over 3000m and hundreds of others not far off that. This is the famous Southern Alps. The avalanche, which was actually a rockslide, involved 12 million cubic metres of the mountain collapsing, and plummeting down the ice fields of the east face. Travelling 7.5 kilometres at an average velocity of 200 kilometres per hour, it slammed into the Tasman Glacier on the valley floor. There were no fatalities or injuries or property damaged, but several climbers had a close shave: the outer edge of the rock slide passed under 300 metres from Plateau Hut as they were preparing themselves for an attempt on the summit. One of the mountaineers was Rob Hall, who shortly after described his experiences to TVNZ. Sadly he died on an attempt on Mount Everest five years later.

Senior lecturer, I.F. Owens, Department of Geography at the University of Canterbury commented on the avalanche in 1992:

“In some ways this was an unusual event. Its vertical extent of over 2700m is large compared to most historical rock avalanches…but the fact that it originated at the highest point of land and reduced its elevation by some 10 to 20m is even more remarkable and has not been reported for any other country. Another unusual feature is the lack of a clear trigger…There was no seismic activity in the period leading up to failure and the weather was clear. While the steep hanging glaciers on the mountain may have removed a critical part of the support for the mass that failed, it is unlikely that this will ever be demonstrated conclusively. Its estimated average velocity [200 km/hr] was also quite high compared to historical rock avalanches.” (See Owens, 1992).

In early 1991 the government sent a small contingent of the armed forces to join the USA, Britain and the other multi-national allies to the Gulf War (aka the Iraq-Kuwait Conflict, aka the Second Persian Gulf War), in Kuwait. President G.H. Bush had given Iraqi dictator Saddam Hussein many opportunities to pull out of Kuwait, but to no avail. New Zealand contributed a medical team of around one-hundred and three C-130 Hercules transporter aircraft. As with the Iraq War of 2003, there was no direct military involvement, i.e. fighting in battles. Although one of the smaller Coalition forces in the Gulf War, New Zealand’s medical contribution was very important, and assisted the injured from the other forces such as US, Britain, France and Germany. The Hercules transport aircraft greatly assisted the movement of provisions and medical supplies for the Coalition partners. The involvement, which also took place in the First Persian Gulf War (Iran-Iraq War) of 1980-88, and in Afghanistan (2001-), as well as Iraq (2003), showed a re-commitment to New Zealand’s key major ally and trading partner, the US, an effort at repairing the ANZUS rift of the 1980s and continued frosty relations during the nineties. In 2006 US Secretary of Defence declared that the it was time to start afresh, and this stance was further cemented by the new Bush administration’s Secretary of Defence Condoleeza Rice, in 2007. For the first time since the early eighties, she referred to New Zealand as an “ally” of America.