Whārangi 3: Prime minister
Lange, David Russell
Lawyer, politician, prime minister
I tuhia tēnei haurongo e Barry Gustafson,, ā, i tāngia tuatahitia i runga i te ipurangi i 2010.
In June 1984, Prime Minister Robert Muldoon called a snap election. National’s vote was seriously split by the New Zealand Party, recently created and led by Bob Jones. Lange fought an excellent campaign and Labour won a landslide victory, securing a 17-seat majority in the 95-member House of Representatives. At 41 years of age he became New Zealand’s youngest prime minister of the 20th century.
The incoming government was faced with a serious balance-of-payments crisis. This was caused partly by Muldoon’s refusal to devalue prior to the election and partly by the certainty in the business sector that the incoming Labour government, especially with Roger Douglas as minister of finance, would do so. In the days after the election the New Zealand currency was devalued by 20% on the instruction of the incoming government. This was accompanied by a continuation of the Muldoon wage and price freeze.
In 1985 Labour embarked on a programme of economic reform and in March the currency was floated. Subsequently there was a partial shift from direct to indirect tax with the introduction of a goods and services tax (GST). Overseas investment in New Zealand was encouraged. State assets were turned over to newly created state-owned enterprises (SOEs) with independent boards and managers operating on market principles. Some of these were later privatised, many ending up owned overseas. Import and currency controls were discarded and New Zealand was locked into the global economy.
Subsidies to farmers, protection for manufacturers, and tax incentives to both were removed. The public service and local government were totally restructured. Many of the changes were made difficult to reverse, not only by the selling of state assets but also eventually by legislation. These policies resembled those associated with the governments of Ronald Reagan in the United States and Margaret Thatcher in the United Kingdom. They could not have been introduced and implemented in New Zealand without Lange’s support.
At first, and until after the 1987 election, Lange appeared to be an enthusiastic, uncritical and very effective public salesman for what became commonly known as ‘Rogernomics’. The term denoted the economic policies followed by Minister of Finance Roger Douglas. The prime minister did believe that New Zealand’s sick economy needed to be radically reformed but was prepared to leave the details to his parliamentary colleagues. Lange later claimed that he had not realised exactly what Douglas intended to do or the adverse social consequences of his policies.
Lange became increasingly concerned that he was presiding over a government whose policies and actions, necessary though they might have been, were destroying many people’s security. He realised that many older people hated him as the symbol of an administration that had shattered their expectations. He also disliked the influence that some members of the Business Roundtable had on his minister of finance.
Lange was also criticised by some left-wing commentators. The columnist Bruce Jesson argued in 1986 that Roger Douglas would be remembered as the man of substance in the Labour cabinet. Lange would be seen as an initially ‘jovial and compassionate man’, who was ‘perfectly suited to the superficial politics of the television age’1 but was swept along by events beyond his control in the opposite direction to his intentions when he entered politics.