Second Labour government (1957–60)
The second Labour government was elected in 1957 with a slender two-seat majority. Led by 75-year-old Walter Nash, it offered a generous raft of policies including low-interest state loans for new houses, increased child benefits and the opportunity to capitalise them to make a deposit on a first home, free school textbooks and a £100 income-tax rebate. But the new government immediately faced a balance-of-payments crisis that demanded austerity. Minister of Finance Arnold Nordmeyer responded with import controls and a harsh Budget in 1958. Dubbed the ‘Black Budget’ by Labour's opponents, it increased the cost of beer, cigarettes and petrol – basic items of expenditure in Labour’s core electorates. Labour’s organisation and membership immediately began to collapse. The ‘Black Budget’ sealed Labour’s electoral fate in 1960, when many Labour supporters protested by not voting.
Socially conservative socialists
The 1972 Labour government under Norman Kirk responded to a mood for social change, especially among young people. Yet, in some ways the new government was more conservative than its National opposition. Kirk refused to consider changing restrictive laws on homosexuality and abortion. It was National MP Venn Young who introduced a private member’s bill on homosexual law reform. On the other hand, anti-abortion Labour MP Gerard Wall introduced a bill to prevent private clinics from offering abortions.
'Time for a change': the third Labour government (1972–5)
Labour, led by 49-year-old Norman Kirk, returned to power in 1972 with a 23-seat majority. During the party’s 12 years in opposition, New Zealand society had greatly changed. The 1960s had been a decade of protests against the Vietnam War, French nuclear tests in the Pacific and apartheid. Māori activists were raising issues of historical and contemporary injustice, women's liberation leaders campaigned for gender equity, students defied traditional social attitudes and authority structures, and environmental concerns reached the forefront of politics. One feature, however, remained the same – the country’s small economy remained vulnerable to international factors, specifically the United Kingdom’s move to join the European Economic Community (later called the European Union), which hurt New Zealand exports, and the power of the oil-exporting nations.
Television had become an important factor in politics and Kirk, once his public image was refined for television, appeared an articulate and decisive prime minister. At first Labour seemed to respond to the excitement of the times. It ended New Zealand’s involvement in the Vietnam War, set a date to withdraw troops from Singapore, ended conscription at home and dispatched a naval frigate to French Polynesia to protest against French nuclear tests at Moruroa (Mururoa) atoll. Fearing the effects on New Zealand’s racial harmony, and consequent civil disorder, the government cancelled a rugby tour by the all-white South African Springboks. It blocked an environmentally destructive plan to raise the level of Lake Manapōuri to generate electricity and, in a concession to counter-cultural values, sponsored the development of ‘ohu’ – rural communes.
Rowling replaces Kirk
Labour’s fortunes changed dramatically in 1974. In August, Norman Kirk died suddenly. His successor, Wallace (Bill) Rowling, was subjected to prolonged personal attack by the opposition and struggled to assert his authority. At the same time the booming economy of the government’s first years had turned sour with soaring inflation following oil price shocks in late 1973. The electorate’s confidence was shattered. In the 1975 election Labour’s majority was reversed and its programme of change, including the introduction of compulsory contributory superannuation, was terminated.
