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?”