both allies, the US and Britain. But there was lit-
tle doubt which was the more important. From
1966 to 1976 Britain progressively withdrew
from its responsibilities ‘east of Suez’. ANZUS
remained the sheet anchor of New Zealand’s and
Australia’s defence policies. In New Zealand this
was to change dramatically only in the mid-1980s.
The Labour government, which came to power
after the landslide victory of 1984, set to with a will
to cure New Zealand’s economic problems with
Thatcherite fervour. The identification of Labour
in New Zealand with politics of the left is quite
inappropriate. The consensus over welfare legisla-
tion remained intact, as it did in Conservative-
governed Britain. What Labour set out to do was
to make New Zealand more competitive – deregu-
lating, removing subsidies and tariffs, turning state
enterprises into corporations and raising new taxes.
At the same time a tight monetary policy was fol-
lowed. Unemployment increased and the standard
of living began to drop. But the electorate trusted
the government’s harsh remedies, believing there
was no other way. Labour was re-elected in 1987,
despite the hardship the restructuring was causing
to many New Zealanders.
Prime Minister David Lange’s forceful conduct
of New Zealand’s relations with powerful nations
gained popularity and compensated to some extent
for problems at home. New Zealand would not be
pushed around. Lange rightly discerned that the
old Cold War mentality was outdated. Nuclear
testing in the Pacific by the French had been
widely condemned. Labour had made an election
pledge in 1984 to ban nuclear-powered warships.
Lange’s government saw no future in a nuclear
defence of New Zealand that would destroy the
Dominion. But in American eyes the nuclear
deterrent was the only credible means of defence.
The temperature of the nuclear controversy was
raised to fever pitch in New Zealand when in July
1985 French secret agents sank Greenpeace’s ship
Rainbow Warriorin Auckland harbour just as it
was preparing to set sail for the French nuclear
testing site; one crewman was killed, and two
French agents were captured. Later a US nuclear
warship was refused permission to visit New
Zealand. For Washington this was a test case.
When the Lange government would not relent,
the US responded by declaring that it no longer
felt bound by the ANZUS commitment to defend
New Zealand. Fortunately, with the world changes
taking place, the need to defend New Zealand
from any hostile nation became ever more remote.
In the 1990s New Zealand’s future was bound
up with its foreign relations and trade in the
Pacific basin. The European Community, includ-
ing Britain, remained an important market for its
agricultural produce, but its largest trading part-
ners were Australia, Japan and the US. The Pacific
now accounted for three-quarters of its trade.
Although the economic remedies were not lifting
New Zealand out of recession, the government
did not alter the main thrust of its policies. In
1989 David Lange gave up the premiership, but
this did nothing to aid Labour’s popularity. The
electorate had suffered enough pain, and no ben-
efits were in sight. During the election of 1990,
many people supported third parties in their dis-
illusionment. This allowed Jim Bolger to lead a
National government.
Bolger’s main policy was to continue deregula-
tion. In an attempt to alleviate unemployment, his
government repealed those measures that pro-
tected wages and trade union rights. The consen-
sus over welfare support was broken. Universal
family benefits were abolished and cuts in other
welfare programmes were made. The government
succeeded in reducing inflation in 1991 to just
over 2 per cent. The cost – over 10 per cent unem-
ployment – was high. The rich had got richer and
the poor were poorer, with the Maoris, lacking the
whites’ standards of education, now at the bottom
of the unemployment heap. The ideal of an egali-
tarian society had long ago vanished. The govern-
ment responded to the country’s economic ills by
slashing welfare further. But the New Zealand
economy in the early 1990s failed to respond to
these drastic changes. In conditions of prolonged
depression the real danger lay in the electorate
despairing of their politicians altogether.
New Zealanders are pioneers. They pioneered
the welfare state. In the early 1990s they were pio-
neering the most radical U-turn away from the
welfare state, with the intention as the government
saw it of weaning the people off the expectation of
automatic handouts. Trade union power was
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