Page 5: Labour’s second term
Lange, David Russell
Lawyer, politician, prime minister
This biography, written by Barry Gustafson, was first published in the Dictionary of New Zealand Biography in 2010.
In the August 1987 election Lange and Labour obtained an increased majority. Although majorities fell drastically in Labour strongholds, National majorities were slashed in their safest urban seats as many traditional National voters showed their approval of either Roger Douglas’s free-market economic policies or Labour’s anti-nuclear actions.
Minister of education
Following the election, Lange gave Russell Marshall, his former minister of education, the foreign affairs portfolio and took education for himself. He hoped to reform the sector, emphasising efficiency, excellence and equity, from pre-school to tertiary education. Three reports laid out the government’s plans: Before five (1988), Tomorrow’s schools (1988) and Learning for life (1989).
Tomorrow’s schools was based on a report from a committee chaired by businessman Brian Picot, who described the centralised, cumbersome and expensive education bureaucracy as ‘good people, bad system’. Lange agreed with him. The Picot report proposed school managerial control and greater parental input. There was widespread public consultation but the teacher unions were not enthusiastic. Lange was unable to get bulk funding of schools included in the proposed reforms, but some 3,000 boards of trustees were elected in 1989.
Further economic reforms and the break with Douglas
Shortly after the 1987 election, the world-wide stock-market crash of 19 October severely damaged the New Zealand economy. Douglas wanted to continue with his reform programme. 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 23% and an increase in the goods and services tax (GST) to 12.5%. Cabinet approved a package of the tax reforms and the GMFI. Lange, Douglas and other senior ministers then announced the package at a press conference on 17 December. However, Lange, after reflecting over Christmas and the New Year, announced in January 1988 that there would be no flat tax. Thereafter, there was virtually a civil war in cabinet between Lange and Douglas and their supporters.
The split worsened and, although Lange usually disliked and avoided confrontation, he announced a review of the asset sales process and dismissed the responsible minister, Richard Prebble, in November 1988. Prebble responded that the prime minister was dictatorial and irrational.
Douglas also departed from the cabinet at the end of 1988 after a row with Lange but continued to challenge his leader from the back benches.
Resignation as leader
Lange narrowly won a vote of confidence in caucus in June 1989 but in August caucus re-elected Douglas to cabinet. Lange, tired and isolated, found this intolerable and resigned as leader on 8 August.