Past on the current crisis
Birch and Bolger remained close during this turbulent period . . . Often, after working after midnight, one would knock on the other’s door, a nightcap would be poured and the pair would chew over the day’s events.
The package responded to the desperately poor economic outlook inherited by National, made worse by an unforeseen $620 million bail-out of the Bank of New Zealand.
He also launched other reforms including the points system for ranking prospective migrants, which remains the basis of today’s immigration system.
By mid-1991, the public mood darkened towards National as the benefit cuts took effect. Critics, including many National MPs, complained that the Government, having slated Labour’s Rogernomics, seemed wedded to the same policies.
Richardson’s ‘‘Mother of All Budgets’’ introduced user-pays and means testing into previously universal areas of welfare entitlement. Vast in scope, the Budget lopped $1 billion off state spending. Health got the biggest overhaul, with user charges and plans to split health funding from service providers.
The Budget included a freeze on pensions and progressive lifting of the eligibility age to 65. The unpopular superannuation surcharge, a tax on non-super income, was retained despite Bolger’s pre-election ‘‘no ifs, no buts, no maybes’’ promise to ditch it.
Birch’s cost-cutting ACC reforms formed part of the Budget announcement. His plan introduced a new earners’ premium and abolished lump sum payments for permanent disability. The final legislation softened the impacts for groups such as sexual abuse victims, but it also created problems for subsequent ministers to fix.
Birch now says he was uncomfortable about the way the Budget was promoted. He understood the need to contain the deficit, but was unhappy about the theme of state withdrawal from supporting those in need, which he sees as a legitimate government role.
Richardson’s hardline agenda reached its zenith with the 1991 Budget and was gradually chipped away. The superannuation changes were revisited, with Birch helping design a new regime that kept the surcharge with a much gentler impact on non-super income.
The massive scale of change had to be carefully managed to sustain some popular support. Birch was made chairman of a powerful new Cabinet committee on implementing social assistance reforms. This gave Birch a formal vehicle to extend his growing grip on decision-making.
By the end of 1991, there were signs the economy was starting to turn around, though the Government remained out of favour, Bolger becoming the most unpopular prime minister in New Zealand polling history. Birch became an important calming influence in the restive National caucus.
Unemployment remained stubbornly high. Birch took over the difficult employment portfolio and beefed up state work subsidy schemes, which helped trim the dole queues by the 1993 election.
He also launched a new industry skills strategy, which extended training programmes to occupations not served by apprenticeships or formal training. He says this was among the most important reforms of his time in politics.
He branched into other portfolios, sometimes creating friction. For example, he briefly clashed publicly with housing hinister John Luxton over reversing a plan to turn Housing New Zealand into a State-owned enterprise.
Despite this and other backpedals from Richardson’s 1991 Budget reforms, Birch was united with her on keeping a tight lid on spending. They both resisted Bolger’s enthusiasm for building a new national museum, though the leader’s backing ensured Te Papa was green-lit in mid-1992. Birch led a clampdown on public-sector pay negotiations, and he also sped up plans for bulk funding senior teacher salaries.
Amid all this, the electoral system referendum captured much attention. Senior politicians, including Birch, resisted change, but their entreaties were probably counter-productive. It’s likely that voters were more interested in punishing the distrusted political class than in examining the merits of MMP, the option that easily won the September 1992 vote.
Birch and Bolger remained close during this turbulent period. Birch and his wife Rosa stayed in a house on Premier House ground, near the Bolger family. Often, after working after midnight, one would knock on the other’s door, a nightcap would be poured and the pair would chew over the day’s events.
A brief, pleasant diversion from the hard grind came when a celebration was held in November 1992 marking Bolger and Birch’s 20th anniversary as MPs. Paul East delivered a witty speech, calling the pair ‘‘the Lone Ranger and Tonto of New Zealand politics’’.
It complimented the very real power of their political partnership, though Bolger was curiously reluctant to acknowledge it.
He talked at length about other friends he had worked with over the years, until Rosa finally interjected: ‘‘Bill was there too, you know’’.
Bill Birch: Minister of Everything, by Brad Tattersfield, is published by Mary Egan Publishing and available for $40.