New Zealand’s alternative 1984

Written By: - Date published: 9:00 am, January 14th, 2016 - 76 comments
Categories: Economy - Tags: , , ,

David Lange Fish and Chip

A number on the site from both right- and left-leaning persuasions have commented about the sustained and consistent overall policy position that New Zealand governments have taken since 1984. Whether good or bad.

What if it didn’t? What if something else happened in 1984, sufficient to alter even where we find ourselves today? Alternative histories are fun. I’ve written one confining myself only to Lange’s first term. What might have happened next is over to you.

Here we go.

Two weeks before election day, when things were looking positive for a change in government, Lange knew that the great necessity for reforming New Zealand from the ground up was building. He was well aware of the huge policy work that Roger Douglas was generating with the economic policy team. He was also aware that, if they were to survive more than one term, he would need a durable Cabinet. So he summoned Jim Anderton, Roger Douglas, and Geoffrey Palmer and told the three of them the likely Cabinet list.

Ex-Army Colonel Geoff Braybrook would get Defence, surgeon Gerard Wall to Health, high school Principal Noel Scott would be Education, Koro Wetere to Maori Affairs with specific responsibility for Treaty of Waitangi, Russell Marshall would be Foreign Affairs, Geoffrey Palmer Attorney General, Social Welfare would be Peter Tapsell’s task plus Associate Health, and Jonathan Hunt to Post Office and Telecommunications. He went for stability and proven experience.

These centrist portfolio-qualified appointments weren’t able to be resisted by either left or right, but at the meeting Anderton still asked the right question: what’s in it for me? Meaning, what does the left get? Lange said, with this much policy work to do, you will be a specific appointment to run the Prime Minister’s Office, and Douglas will be Minister of Finance with Caygill assisting. Red meat to both. That arrangement was to be too volatile to last, but Lange’s centrist voting bloc in Cabinet ensured that neither faction ever dominated Cabinet decisions. This was the critical brake. It also gave an in-built requirement for Cabinet renewal late into the term.

Straight after election day 1984 came the currency crisis. Treasury and Reserve bank key officials briefed that there was insufficient foreign exchange reserves to maintain the fixed exchange rate. Lange trounced Muldoon on television on the issue, and gained even stronger momentum for reform. In the first and hastily sworn-in Cabinet meeting, after debate led by Douglas and Anderton, the decision was made to peg the $NZ to the $AU. The dollar traded wildly for 48 hours, devalued overall by 10-15%, and thereafter stabilized. Through pegging, NZ’s $$ commodity baskets were both strengthened and somewhat broadened. That gave the fresh Cabinet confidence that they could reform, surf an unsettled media and public for a week or so, and come out with stable workable financial reform. Pegging was announced as an extension to CER, to mutual praise from brokers, new Australian PM Bob Hawke, and most critically from Federated Farmers.

The critical debate was then in the few months from swearing in and the first crisis, to Budget 1985. Everyone knew – most of all Lange – that this was the moment that set the government’s trajectory. The majority of Cabinet proved quite unwilling to undergo root-and-branch reform of their portfolios and resisted hard. What all including Anderton did accept from Douglas and Caygill was a timetable to strip away all farmer subsidies, vastly loosen import controls, and work to double down on the CER integration that currency pegging had accelerated. For citizens who couldn’t even buy margarine, the apparent loss of sovereignty to Australia through pegging was worth being able to buy the flash new Holdens and Fords rolling off Melbourne’s production lines, and hold the prize of mobility to Australian jobs. From Budget 1985, they had lost the farmers and would never get them back, but as Caygill observed, they were never ours. With the accelerated trade alignment that followed currency alignment, it was worth it. Integration also secured a very strong ally in Australia against France when the Greenpeace bombing occurred.

Douglas and Anderton both left at the end of the first term after predictable acrimony, but Caygill and Moore were entirely competent replacements in the Finance and Economic Development and Trade portfolios. The scene was set for slower, sustained reform, and three terms of Labour.

So, all you coulda-woulda types, all you wistful political nostaglists, start your engines: what would have happened next?”

76 comments on “New Zealand’s alternative 1984”

  1. weka 1

    Can’t help but read that and think Little.

  2. Rosie 2

    Hi Ad. While I can’t comment on the content of your post as I simply don’t have that level of political nous, (and I was just a kid at the time) and nor am I a coulda-woulda type (that’s just torture and unhelpful for reducing angst), I will tentatively answer “what would have happened next?”

    The mechanism that bleeds the low, average to slightly above average wage and salary earner financially dry and makes us suffer week to week would not have been put in place, potentially.

    Changes from that era are cemented in, and as you point out, for better or for worse, those on a left to right spectrum acknowledge the “overall consistent policy position”. Nothing much can change, not in as such a dramatic matter as previously but tax law can.

    A Labour Party acknowledging it’s past would and state a new policy to abolish GST, in this year, it’s centenary year.

    Give us all a break and do it.

    • Ad 2.1

      Can’t see any future Labour government lowering taxes like that.
      Even if GST is a little regressive.

      It would take National to cut government expenditure enough to make a tax cut like that.

      • Colonial Viper 2.1.1

        The banks take $4B to $5B a year out of the economy, Ad.

        The Auckland property market grows that much a month.

        So the money is there, if you are willing to change the structure of the economy.

        To me, the comment that ‘there is no alternative to GST’ is a cop out.

        It should also be noted that GST is not “slightly regressive”, which to me is akin to the phrase “slightly pregnant”. GST IS regressive, and poorer people pay a far larger proportion of their income in GST than well off people.

      • Rosie 2.1.2

        Replace with FTT and CGT and increase top income tax rate to compensate? Raise minimum wage to increase lower income tax take? I’m no tax expert either, just have a moral concern about disadvantage.

        GST is a lot regressive but I don’t see any party caring about it (apart from MANA talking about GST off food back in the day, Phil Goff talking about GST of produce in 2011 and NZ First talking about GST off rates in 2014) – so don’t expect any great shakes from the the party that introduced it.

        • Liberal Realist 2.1.2.1

          You hit it with the suggestion of an FTT coupled with a CGT.

          An FTT set at 2.5% on EVERY transaction, be it a purchasing an ice block at the dairy or placing an order of 10k shares on the NZX. CGT to push capital away from unproductive investment (when did house’s become investments and not homes? 1984.)

          A robust FTT will help mitigate unproductive speculation in capital and sharemarkets.

          Something also needs to be done about AU banking profit exports. I’d suggest regulating in such a way that it is more expensive to repatriate profits to AU than reinvest back into NZ.

          With the implementation of an FTT, GST should be abolished and UBI implemented.

      • National governments consistently outspend Labour governments, so I doubt it.

        Besides, you don’t need to cut spending to ditch a regressive tax. You just move revenue on to a different stream- for instance, ditching GST but implementing a few new taxes such as a Carbon tax and finanical transaction tax, and simplifying rules that allow corporate tax evasion.

        edit: CV has a solid point too. GST is VERY regressive, not “slightly” regressive. You need to have income-based tax brackets to even get to “slightly” regressive.

  3. Olwyn 3

    If I understand you properly, and I am not sure I do, then what would have happened next is that the neoliberal juggernaut would have rolled on but we on the left would have been better equipped to challenge it, and would also have given it less leverage to start with. The Bolger/Richardson government would have come in three years later than they did, supposing the same people stayed at the helm, but your prudent managers might have averted the BNZ crisis so that Bolger, as an old fashioned conservative, may have had a tad more traction against Richardson’s slash-and-burn tactics. Thus we would have followed a trajectory more similar to Australia’s, and may now even be looking into the pros and cons of becoming a state of Australia.

    • Ad 3.1

      It’s quite possible all a centrist or more left-leaning 1984 government would have done is simply delayed the Ruth Richardson years a little.

      Alternatively Labour would have reformed New Zealand’s labour markets only enough to stay competitive with Hawke’s own reforms.

      I have a sneaking suspicion our trajectory at this point would be a bit more like Australia’s is now ie A stronger democratic order, with stronger unions, and greater public sector capacity to withstand external shocks.

      • Anne 3.1.1

        It’s quite possible all a centrist or more left-leaning 1984 government would have done is simply delayed the Ruth Richardson years a little.

        That is my belief. What it might have done though is cause a sufficient bleeding of membership from right and left which could have resulted in a one term 4th Labour Govt. That may well have seen Helen Clark take office 3 years earlier in 1996. Swings and roundabouts I’d say.

        • Wayne 3.1.1.1

          I agree with Anne and Ad.

          In fact that seems to be what you envisage in your alternative history. Essentially a slower pathway to the present.

          By now compulsory trade unionism would have gone. A certain level of privatization would have occurred – perhaps there may have greater state ownership in electricity, though this is still more than half state owned when taking account of Transpower. Tariffs would be pretty low, certainly as low as Australia. Import licensing would have disappeared. Top taxes might be closer to 40% rather than 33%.

          Fundamentally New Zealand took the same path as occurred in Australia, Canada, the US and the UK. It was more abrupt here because we were further away from the norm of other western countries in the 1970’s and 1980’s.

          No other western country had anything like the import licensing regime that prevailed from 1938 to 1985. It is worth recalling that large numbers of imports were actually banned in New Zealand. It was only possible to import the components which were then assembled into the finished product. These were sold at about twice the world price. This was possible because it was not possible to commercially import for instance TV’s and stereos. Back in the 1970’s and early 80’s people used their duty free allowances when traveling to say Singapore or Australia to personally import a stereo.

          It is all rather forgotten now, but New Zealand was a country with an incredibly restricted market and economy. And Standardnista’s don’t like to remember the fact that in 1987 the Labour government increased its majority, largely because people applauded the liberation of the economy. It all crashed a few weeks later with the 1987 share crash which hit New Zealand much harder than other countries. The new economy had barely emerged only to be swatted down by international events.

          However, thirty years later we seem much more resilient to these impacts. In essence the necessary adjustments have been made. That is why modern manufacturing has been increasing in recent years, notwithstanding the doomsayers.

          • Sacha 3.1.1.1.1

            As discussed in other posts, NZ manufacturing has only been increasing if you include turning milk into powder.

          • Ad 3.1.1.1.2

            Plenty of Standardistas have good memories Wayne. Although in 1987 I was 19. I had two ‘gap years’; the first working shifts at Crown Lynn, and the second at Jordan Sandman Smyth the stockbrokers as a clerk. It was an epic time to have Bruce Judge and Alan Hawkins come in and beg us not to recommend selling. Then Buttle’s going under, and a bunch of others. Equiticorp trying and failing to buy BHP. People jumping out the windows. It was one of the best illustrations of why New Zealand had a ‘fortress economy’ in the first place; to protect us from global binge-purge cycles that destroyed hard-won local wealth on a global pyre. New Zealand didn’t have to become simply famous for having the fifth-highest traded currency in the world, or thousands down the road in rail, meatworks, and everywhere else. Even eradicating all those Supplemetary Minimum Prices; it didn’t have to happen so fast all the farmer could think of was suicide. It really didn’t need to happen like it did.

      • Olwyn 3.1.2

        It’s quite possible all a centrist or more left-leaning 1984 government would have done is simply delayed the Ruth Richardson years a little.

        I certainly don’t think that a more centrist or left-leaning Labour government would have reversed the tide. However, a delay can change the range of possibilities available, and give people time to wake up and defend the things that they find important. And with neoliberalism definitely in the wind, your prudent managers might have set out to avoid the traps that would rob them of choices. Hence I lean more toward your alternative scenario.

        • Colonial Viper 3.1.2.1

          The issue is that the Reserve Bank and Treasury was utterly infected by neoliberal Chicago school economics thinking.

          Douglas was merely a political front man for that Deep State agenda.

          • Olwyn 3.1.2.1.1

            I am sure you are right. What is interesting is how they got to be that way, and whether a firmer challenge would have restrained them to a greater extent.

          • Anne 3.1.2.1.2

            Douglas was merely a political front man for that Deep State agenda.

            Rather than the “Deep State” I think he was the initial political front man for the emerging Global Corporate agenda. And at the NZ end think… Alan Gibbs, Craig Heatley, Michael Faye, David Richwhite and others of their ilk.

  4. Chris 5

    The Richardson/Shipley/Bolger razor brigade wouldn’t have been handed its mandate on a plate. They would’ve have to have fought much harder for acceptance of neo-liberal reform, wouldn’t have been so arrogant to believe they could rush in so stridently expecting change so quickly, and would not have been anywhere near successful as they were. Resistance from the left would’ve been much stronger. Cultural values and beliefs in what a country should look like would’ve retained a sense of caring for each other that’s now is good as gone – probably forever. Election results would’ve been different. Key wouldn’t got three terms. Unlike now, Labour when in opposition would’ve fought against unfairness towards the least well off. Now they vote for it. National when in government would not have anywhere near the easy ride it gets now because we’d have at least something that resembled an effective opposition. We’d even likely to have had a few more Labour-led governments along the way.

    • Rosie 5.1

      Thanks Chris. Your “what if” is something I can grasp and understand. Some thing that can only be mourned really.

      “Cultural values and beliefs in what a country should look like would’ve retained a sense of caring for each other that’s now is good as gone – probably forever.”

      Even the changes in recent years, under the Nats agenda have sped up this loss of cultural values of compassion and a sense of fair play, going by observations of social behaviour. Once the pathogen of anti caring took hold, any new attacks made upon the organism, our society, make us even weaker.

  5. ropata 6

    Love those automatically generated links below the post… some great old posts there.
    Just for reference here are a couple of recent comment threads arguing about the 84 reforms (a recurring theme for the left)…

    Detrie:

    Why are we working so hard?

    Of course we could go back to a more ‘socialist’ times. I recall working for a govt department (infrastructure) in the 70s and always said the place could easily run on half the staff. The pay was modest, not much above minimum wages at the time, but work conditions great, good training, safe, secure, good friends, holidays, sick time etc. We wouldn’t become rich, but it was good times and well run, be it somewhat overstaffed, but better perhaps than having more on the dole. Then came rogernomics and ruth richardson eras. Efficiency and cost cutting the name of the game.

    I see the numbers working in my old infrastructure job now only a tiny fraction what it was. Everything is run down, much outsourced to lowest tender, less safe, zero training, minimal security, every hour accountable. Most are now hating their jobs but with few real options to improve. They’re told they are lucky to have a job.

    Now we’re older, I see that perhaps that slightly ‘less efficient’ 70s govt run workplace really had merits. At least people were employed, safe, well trained and had a purpose. Today, those same people are working longer for similar wages, little security. Disposable. There only for the rich offshore shareholders to extract that last ounce of profit. Not the bold promises new technology was supposed to provide.

    Ropata: /open-mike-10012016/#comment-1116766

    John Roughan praises Rogernomics and the fact that his children all work overseas?!?!
    #HeraldActPartyNewsletter
    http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=11571097

    Maybe they are overseas to escape the endless stream of party political broadcasts from dear old dad

    • greywarshark 6.1

      They couldn’t wait to escape? No-one was stopping them going overseas and furthering their careers before Rogernomics. Strawman argument? By the late 1960s going out of the country for your OE and getting a world perspective was common.

  6. Tautuhi 7

    The gifting away of State Assets for a pittance was a mistake, the BNZ Sale and its ongoing saga was a joke.

    Labour have never recovered from the recklessness of the neo liberals in the 1984 Labour Government.

    • Ad 7.1

      Would those things really have been stopped somehow?

      I don’t think Bolger would have fought for MMP if Labour hadn’t been so extreme and fast in its policy prescriptions ie no Green Party, and not much chance of any others getting in either.

      • Colonial Viper 7.1.1

        Would those things really have been stopped somehow?

        Well educated, experienced, professional Kiwis in positions of power had to sign on bottom lines for those things to happen, Ad. I for one do not think that the refrain of “There Was No Alternative” is a valid one.

        • Ad 7.1.1.1

          Well then, the point of the post is to provoke alternatives.
          So write one. Sacha did ok further down.

    • whateva next? 7.2

      Yep, voters still punishing Labour by voting National or NZ First

      • Colonial Viper 7.2.1

        And the former Labour supporters who cannot bring themselves to vote for National Greens of NZF, simply choose not to vote at all, handing the default victory to National.

        • Grant 7.2.1.1

          Which is exactly what Brian Bruce said in the link I referred whateva next? to the other day. /open-mike-09012016/#comment-1116762

          • whateva next? 7.2.1.1.1

            still haven’t had the chance to view sorry Grant, but intend to do so this weekend, but can I check, voting against Labour for Roger Douglas actions (who revealed himself by actions after), isn’t that cutting off our noses to spite our face?

        • Liberal Realist 7.2.1.2

          I am a former Labour supporter who would never vote National (over my dead body!). Last voted Labour in 1999. Greens 2002, 2005, 2008, 2011 & 2014. Now I’m lost – I will never vote Green with Shaw running the show (MT has clearly been sidelined) hence I don’t know where to put my vote in ’17.

          We really need a ‘true’ party of the progressive left. Let’s face it, Labour are right wing and have been since ’84. National are hard right and tracking into loony territory, NZ first are xenophobic, populist, conservative and basically classical right, Greens – I don’t know what they are any more.

          I don’t want to waste my vote on a party that won’t be represented however find myself with zero choices. I can’t not vote either. Bit of a personal quagmire!

  7. McFlock 8

    Personally, for any fundamental change for lab4 to have occurred, from about 1980 two things needed to happen within Labour: maintain a core understanding of left wing economics to counter the Chicago School growth in influence; and view support from the business community with suspicion.

    It was a little bit before my time, but folks who were around then reckoned they were less equipped to argue economic politics because the 1970s stagflation was a major problem for keynesianism. That was an opportunity for the treasury gnomes to get their foot in the door. Treasury had an effective plan to capture Labour party finance people and reduce interdepartmental competition when it comes to economic advice. E.g. most departments had their own economic planning units, some of which had priorities other than setting themselves up for bank directorships and suchlike.

    And national got in in 1990 promising to reverse many of the lab4 reforms, like student loans. Then promptly turned arouns and made them even worse. So NZers kicked out the entire system and chose MMP (better than a fucking flag).

    However, with that in mind Lab4 could have reduced some tarriffs and made arbitration more able to kick out the more BS industrial disputes. Done some public works schemes to keep the unemployed in work. Included unemployment targets in the Reserve Bank Act interest rate assessments, not just inflation.

    • greywarshark 8.1

      McFlock +1

      BM
      Your written English has got brutal.
      ‘They might not have been so’…Was that a phone text message – if so it is a good effort = those phones are fiddly.

    • Colonial Viper 8.2

      two things needed to happen within Labour: maintain a core understanding of left wing economics to counter the Chicago School growth in influence

      But what is Labour’s excuse today?

      The theoretical counters to Chicago school neoclassical economics and orthodox monetary policy are very well known these days. Keen, Galbraith, Varoufakis, Stiglitz, Chang, Piketty, Wolff and many other highly qualified academics have written extensively on the topic.

      • McFlock 8.2.1

        Why doES Labour today need an excuse? Not only did Lab5 not, for example, sell assets, it was actually open to renationalising a couple. Oh, they might not be as left wing as you, but they’re still much closer to your perspective than that of douglas, prebble, etc.

        • Colonial Viper 8.2.1.1

          Yep, Labour 5 maintained the neoliberal status quo, but when pushed managed a few issues differently in a more centrist manner.

          • Sacha 8.2.1.1.1

            And they backed down significantly in their first term when corporates threw their toys from the cot.

            • Colonial Viper 8.2.1.1.1.1

              Labour could have done more on that if they had wanted to. Splitting Telecom up was an example of what that Cabinet was capable of, when they put their mind to it. But they mostly let the current market led arrangements run the country.

    • Ad 8.3

      Most people know there are potential alternatives.
      Theoretical ones aren’t that hard to find.
      But how would an alternative route actually have happened?

      • weka 8.3.1

        So is the implication that the path was already well set up before the 1984 election and that extra special effort (and probably luck) would have been needed to have any chance of a different path?

        I guess that makes sense of ACT being part of Labour in 1984. Were Douglas and Prebble anything other than ACToids, or did they once actually belong in Labour?

        • Ad 8.3.1.1

          Douglas, Prebble, Bassett, Moore, Neilsen – a great string of them. That’s why what I am proposing is that the only way to even delay the Structural Adjustment that we went through was not through policy, but through actual numbers in Cabinet decreasing the pace of change.

          • weka 8.3.1.1.1

            How did that happen, that Labour ended up with so many MPs like that?

            • Ad 8.3.1.1.1.1

              God I’d really have to go through the history books; it’s something my seniors like LPrent and MickeySavage might like to comment on. 😉

              If I was going to have a stab at it, 9 years under Muldoon burnt off many who were previously fresh and keen from the brief Norman Kirk reign.

              And before that was the also-brief Nash-Nordmeyer reign.

              The guys I had to find to repopulate a fresh alternative 1984 Cabinet were Savage and WW11 vintage, with only a few from the Nash era.

              In the end, politics is about Who Turns Up.

              • weka

                Would it also relate to Labour’s internal culture and selection processes? We see that criticism of Labour now too. Is it possible that certain kinds of beliefs were being fostered, or even just defactoed in because of who was in the party and running the machine at the time?

            • Sacha 8.3.1.1.1.2

              Seeing the political spectrum as a straight line rather than a joined up circle misleads us. There is little distance from the far left to the far right, so ex-marxists becoming randians makes some sense.

              If Labour’s left had continued to foster an alternative economic platform, Douglas and chums would not have had such a smooth path. Unions rolling over was another part of the problem, compared with how they responded in Australia to the equivalent crisis.

  8. BM 9

    The same position as we are now.
    If Labour didn’t make these changes National certainly would have.

    They might not of being so brutal, but seeing the zeal in the eyes of Ruth Richardson as she slashed benefits, some how I doubt it.

    • Muttonbird 9.1

      Would have.*

    • weka 9.2

      We wouldn’t be in the same position. The huge damage done to NZ isn’t just the 1980s reforms, it’s that it was done by a supposed left wing govt. NZ has never recovered from that and neither has Labour. Had things gone differently in the 80s, even if National had just done it all in the 90s anyway, NZ would ahve been more resilient, and Labour would have had a better chance of being Labour in 2016.

      • BM 9.2.1

        NZ was rapidly going down the shitter, our export market to the UK had pretty much disappeared, we’d gone through an oil crisis and welfare costs had taken off.

        At the time

        1) Inflation was over 15%

        2)The OECD index placed New Zealand’s standard of living 20th out of 24 countries.

        3) annual budget deficit was $3 billion

        4) Oversea debt over $8 billion

        http://www.ssc.govt.nz/decade-of-change

        Douglas didn’t do what he did because he thought it would be fun, we were fucked and were about to go bankrupt.

        It was just unlucky that it was Labours turn to sort out the mess.

        • weka 9.2.1.1

          Yeah, yeah TINA. Douglas was ideologically driven, which is why he did the particulars he did in the way he did them.

          Nevertheless, your previous comment said that nothing would be different because National would eventually just have done the same things. And then I pointed out that the problem now isn’t just what was done but the fact that the NZ left was betrayed by Labour and has never recovered. If that betrayal hadn’t happened and it had instead been left to the right to do all that shit, we would be in a different position now.

          • BM 9.2.1.1.1

            Helen Clark had 9 years in power with party support around 40%

            Obviously most had moved on or actually saw value in Douglas’s reforms. it’s just the hardcore lefties who can’t seem get passed the 1980’s

            • weka 9.2.1.1.1.1

              Well you would say that seeing as how you’re part of the minority that really likes neoliberalism.

              “Helen Clark had 9 years in power with party support around 40%”

              Yes, and we will be able so say something similar lafter 2017 about Key. Doesn’t actually have any relevance to this discussion.

              The whole hard core leftie thing is either you being disingenuous or you literally don’t pay attention. Because for every hard core leftie there are dozens of others who think the 80s reforms were a mistake, who happily voted Clark thinking things would get better, and who now are dismayed about what to do given they haven’t. I’m not talking politicos, I’m talking about people like my parents who want a normal old NZ left wing party to vote for and find they haven’t got one. You can disagree with their politics, but you can’t actually make them disappear no matter how hard you try.

              • Ad

                1974 to 1985 was the height of the left’s activist era after the 1930s, which included the flourishing of such causes as environmentalism, the anti-nuclear movement, feminism, the anti-war movement, Maori rights, pro-gay-rights, and anti Rugby/racism.

                There was also simultaneous revolutions in art, popular music, architecture, painting, fashion, music festivals, and bunches of other stuff.

                There’s whole PhD’s done on this era. About a decade ago, Te Papa did a thing called The Seventies Show, which illustrated it all pretty well.

                Point being there was no shortage of momentum for an alternative policy platform and lots of really interesting activists to contest seats. Clark and Goff were two of them.

    • The thing is, it’s actually a lot harder for National to sell right-wing reform when Labour doesn’t accept it. The follow-on policies from rogernomics wouldn’t have been possible without Labour jumping dramatically to the right first because the political centre would be too far left.

      • BM 9.3.1

        I don’t think Labour really had a choice, the NZ economy had to be desperately reformed or go bust

        The problem was Muldoon, he didn’t take the required steps necessary to reform the economy and because of that there was immense pain and shock for many.

        Ironically the same people he was trying to shield from economic hardship ended up suffering far worse because of his inaction and protectionism.

        • Ad 9.3.1.1

          They had a choice at least about its speed, ability of the society and economy to adjust, and the amount of damage that they know it would cause and did cause. Remember Lange saying “It’s time for a cup of tea”?

          • BM 9.3.1.1.1

            Guess Douglas was a rip the plaster off sort of guy.

            Also 3 year terms rather encourages haste.

  9. mikesh 10

    Whatever they did I suspect there would have been lots of inflation, which of course we got anyway. They may have attempted to deal with this by talking to unions and employers, getting them to moderate wage and price increases.

    • Ad 10.1

      That depends quite a lot on whether they determined to change the Reserve Bank Act, its independence from the government, and its purposes, as they did.

  10. Nelson Muntz 11

    Har har.

  11. Glenn 12

    Now if this was one of the alternative history books I read on Amazon by Harry Turtledove and his ilk….the fish and chips would have held a block of C-4 which detonated on opening. French operatives were believed to be the perpetrators however little proof is found.

    After State funerals Jim Anderton is voted in as Labour’s new Prime Minister leading NZ for 6 terms and bringing about sustained prosperity. A Capital Gains Tax was the first change announced with proceeds being committed to State Housing.

    Jim Knox is chosen as Governor General in 1985 followed by Ken Douglas in 1990. At the end of his term The Republic of Aotearoa New Zealand*is declared .
    In 2015 the Economist Magazine chose Auckland as having the most affordable houses of any major city in the OECD and ANZ* as having the most stable economy..

    Robert Muldoon retains his position as Leader of the National Party until his death . Jim McLay becomes a backbencher leaving parliament in 1987. Jim Bolger also leaves and becomes a recluse on the family farm. Ruth Richardson left politics in despair and became an advocate for the ACT Party before it wound up in 1989. Jenny Shipley never has a political career and doesn’t register when Googled.

    Winston Peter’s New Zealand First Party becomes the favoured opposition party leading to 2 terms as the government from 2002.

    As there are no NZ alternative history books I can only dream. No hard feelings for the Fish and Chip Brigade.

    • Sacha 12.1

      “Jim Knox is chosen as Governor General in 1985 followed by Ken Douglas in 1990.”

      Good to hear they were anything other than pathetic pushovers in another universe.

  12. Sacha 13

    Encouraged by Hawke, the NZ Labour govt next set up tripartite bargaining, massively invested in education, training and sustainable entrepreneurialism, and implemented a sovereign wealth fund to encourage investment in productive export businesses. The economy thrived. Increased national income was invested in infrastructure, health and other things that voters appreciated.

    After a few fruitless terms, the opposition was reduced to being described as ‘Labour-lite’ as they were forced to proclaim policies not that far from the curent ones.

    Eventually voters took pity. However, the subsequent National govt lasted less than one term before being thrown out when voters had neoliberalism sneakily and swiftly sprung on them. A string of deaths in recently-privatised hopsitals was the final straw. The tiny Act ginger group in their ranks had skewed selection of party officials and candidates, but in government hubris got the best of them about how far and fast to put their religion into action.

    Fortunately, the Nats had not successfully dismantled the economy by then. It would take them a couple of decades to renounce the error of their ways, as a cluster of talentless seat-warmers (led by Shipley) clung on to their paychecks rather than graciously departing to the farm or the retirement village.

    • weka 13.1

      heh, very good Sacha.

    • Ad 13.2

      Lovely stuff. Exactly what I had hoped for.
      A whole bunch more like Denmark and Finland’s last thirty years.

      • Colonial Viper 13.2.1

        Getting the neolibs out of Treasury and the Reserve Bank is the challenge. The deep state will never allow a government to make these kinds of changes otherwise.

        • Ad 13.2.1.1

          Ain’t too many liberals or alternative-economics types that want to work in there now. It’s been 7 years of root-and-branch reforms and restructuring of Departments including Treasury. MBIE is so fucked it’s unbelievable, compared to a mildly activist version of MED.

          Same for the Commerce Commission, the judiciary, all the Tribunals eg Employment Tribunal. Stacked and tracked.

          Right now, it’s overall too hard to try and change things from within. Too risky, too stressful, and just too hard.

  13. Nic the NZer 14

    http://bilbo.economicoutlook.net/blog/?p=32776

    Bill Mitchells international review of neo-liberal shifts in democracy. Its highly relevant to this post.

  14. Peter 15

    What if it didn’t? What if something else happened in 1984, sufficient to alter even where we find ourselves today?

    I and my friends would be still voting Labour.

  15. TheSocialDemocrat 16

    Simply put, should Lange have appointed a centrist Minister of Finance rather than a right-wing one, we would have followed a similar, if not the same, trajectory as Australia.

      • TheSocialDemocrat 16.1.1

        Who would the Minister of Finance be? Not sure. While he was a Rogernome, I sense David Caygill could have been persuaded to follow a Keating route instead. Michael Cullen, perhaps?

  16. millsy 17

    Not too sure why people on here think Hawke and Keating fart rainbows.

    The fact is, that they were just as neo-liberal as the likes of Douglas and Richardson, and most of the Labor cabinet were even more hard right than they were, with one cabinet minister openly supporting privatisation, saying public ownership only benefits the staff (or words to that effect).

    They embraced privatisation as much as Lab4 here did,

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