How it all ended for the fourth Labour Govt
Sir Michael Cullen was a central figure in the fourth and fifth Labour governments; but in his book, Labour Saving, A Memoir, Cullen talks about how it was the tumultuous years under David Lange and Finance Minister Sir Roger Douglas, that pushed him to the brink emotionally. This extract follows the period after Labour’s 1987 election win and its widening rift over economic direction and policy.
Having spent a good deal of time explaining in detail some of the ways in which the government continued to function as one pushing through a strong reform agenda, I must now turn to the sad story of why and how the Fourth Labour Government managed to create a political catastrophe. This enabled its destruction by a National party Opposition which itself was deeply divided internally.
The Cabinet and the caucus initially went along with the October 1987 package because they were panicked by the state of the economy and understood that Douglas was seen by many as the key driver of the policies to that point.
Far too little credit was given to other policies pursued in the first term in accounting for the victory in the 1987 election, notably the nuclear-free policy. Most of the caucus did not have a strong grasp of economics in any case, and certainly little understanding of economic history.
Many were taken in by the mantra of TINA (there is no alternative), that neoclassical siren calling the Labour ship onto the rocks while the crew, bedazzled by her beauty, seemed blissfully unaware of the danger. TINA was always the child of that all-too-often toxic relationship between ideological extremism and intellectual credulity. The terrible thing was that the caucus was one of the most intelligent ever seen in New Zealand politics.
Part of the problem was that Jim Anderton had given criticism and the championing of alternatives a bad name. By the end of 1987 he was almost totally isolated in the caucus. His frequent public attacks on the government breached fundamental rules and understandings. Public disagreement over policy was the lifeblood of the Press Gallery and the hemlock of a political party. But when the two gods at the top of Mount Olympus quarrelled, most wanted to hide at the bottom, a bad place to be when the rocks are coming down.
The year 1988 unfolded then, less like a Shakespearean tragedy than like some kind of tragicomic version of a sand-andsandals film epic where the wheels kept falling off the chariots. It may be true, as
I was appalled that so many of my colleagues could imagine Douglas as prime minister.
[historial and former Labour minister Michael] Bassett claims, that Lange’s health was poor and that Margaret Pope egged him on to conflict with his opponents. But what Bassett unconsciously reveals is that they were his opponents.
For much of the year, Lange became more erratic while Douglas became, if possible, even more convinced of his own absolute correctness. The arguments changed from week to week, but the underlying tensions never abated.
In retrospect, one can see that part of the reason that so much continued to get done was that ministers tended to retreat to the safety of their own offices and furiously work away on their own agendas. Collective discipline and camaraderie had substantially broken down. Even without the aid of a salivating Press Gallery enjoying such a feast of conflict, the public was losing faith in the government and the polls began to turn very sour indeed.
National could scarcely believe their luck, as all they had to do was sit back and wait for the fruits of office to fall in their laps. Not that they were without their own problems. Winston Peters kept outpolling Jim Bolger in the preferred prime minister polls, which served only to reinforce the mistake of many in Labour of underestimating Bolger’s intelligence and wiliness (as Labour had also done earlier with Keith Holyoake). By early November 1988 things had reached the stage where Lange dismissed Douglas’s most powerful lieutenant, Richard Prebble.
Prebble had been the pit-bull terrier of the Douglas team. But his teeth were no less sharp sitting on the backbenches and he was no longer subject to Cabinet discipline. Some of his actions in Cabinet struck me as pretty suspect, and his judgment was often poor. For example, as the Minister for (selling) Stateowned Enterprises, he had promoted legislation that enabled the sale of Telecom without the creation of a proper telecommunications market, subject only to the constraints of the Commerce Act. New Zealand’s economy was to suffer from that move for the best part of 20 years. Telecom ruthlessly exploited its monopoly of the then dominant copper wire technology until a combination of stronger legislation and new technology broke their stranglehold in the 2000s under another, and very different, Labour government.
Again, however, the manner of Prebble’s dismissal only raised further doubts about Lange’s willingness to follow a proper process and played into Douglas’s hands. The fact that within days the inflation rate news was a little better reinforced Douglas’s confidence. If truth be told, the drop had been bought dear with unemployment. In mid
December Douglas fired his ballistic missile by announcing that if Lange was re-elected leader at the caucus ballot in early 1989 he would step down as minister of finance. In doing so, he attacked Lange and made it clear he had lost confidence in the prime minister. It was an extraordinary display of hubris which revealed Douglas’s view that he really was the government. For all his faults and missteps over the previous year, Lange held the trump card in that he could dismiss Douglas. For once he showed a greater degree of cunning than usual in informing his most senior colleagues, and then Douglas, that he took the latter’s actions as, in effect, a resignation.
Douglas’s response was to lay down an open challenge by announcing he would contest the leadership. This raised the awful spectre of spending weeks over the summer break with one major news item: Labour’s leadership contest. Caucus wisely agreed
to bring forward the
vote to 21 December. Lange won by 38 to 13, normally a margin that would be seen as a handy one but, in the circumstances, little better than a pyrrhic victory. I was appalled that so many of my colleagues could imagine Douglas as prime minister.
Douglas inside the Cabinet was disruptive enough. Outside the Cabinet he was now free to pursue and promote his agenda very publicly and with the backing of the Business Roundtable. Unlike Anderton, who had essentially cut himself off from the party well before he formally left it, Douglas continued to promote his agenda in the public arena, with a view to at least getting back his old job. Many of those around him had form in that regard. To adapt one of Lange’s more famous phrases, one could almost smell the fish and chips on their breath. But Lange appeared to have learnt little from his relatively narrow escape.
He continued to behave erratically, giving more ammunition to his enemies within.
The worst example, perhaps, was his speech in the United States on the eve of Anzac Day 1989 in which, effectively, he unilaterally declared New Zealand’s participation in Anzus a ‘‘dead letter’’. This was despite undertakings to his colleagues, including Foreign Affairs Minister Russell Marshall, that he would not do any such thing.
Probably a good majority of caucus regarded Anzus as dead in the water following the nuclear-free policy. A majority would have voted for such a policy if asked to by the leadership (an overwhelming majority of the delegates to a party conference would have done – only loyalty to the leadership had stopped them in the past).
It was ground on which Lange could fight on principle and defeat his enemies. But such action taken unilaterally was foolish, especially given the timing, as the reception at many RSA clubs was none too warm that day.
Most of caucus wanted both men inside the tent, wanted some kind of peace settlement, so that we could continue to work for a government that had not lost its appetite for radical reform, as I have argued above.
I broke down in caucus one meeting pleading for some sense of loyalty to what we had been elected to do and those we were supposed to be working for. On another occasion, Prebble tried to physically challenge me in caucus, accusing me of being a liar (a Trump-like form of projection if ever there was one), but when he stood up and faced off to me, he realised I was quite a bit bigger and sat down.
Looking back, it is obvious there was no hope of a genuine reconciliation. But the dream remained for many in the caucus and it was this that led to Lange’s downfall. Since the departure of Douglas and Prebble from the Cabinet, Lange had not sought to replace them.
While the caucus rules provided for the election of Cabinet, the convention had developed that the Leader could fill casual vacancies. Had Lange exercised that right there were plenty of able, willing and suitable candidates. Instead, he opted for a test of wills, after promising a caucus vote on a number of occasions as a means of avoiding the no-confidence motion for which a head of steam was building up.
Such a motion was put on 29 June and lost by the narrow margin of 24 to 28 (this was the meeting in which I broke down). The writing was pretty much on the wall at that stage. The votes for the Cabinet vacancies were held on 3 August, with Douglas winning on the first ballot (just) and Annette on the second (by a somewhat bigger margin), Clive Matthewson having been eliminated on the first ballot.
Lange interpreted the election of Douglas as a vote of noconfidence in himself and, after informing Cabinet on 7 August, announced he was resigning the next day as prime minister.
It was a sad end to his career. Looking back, though, there is no doubt in my mind that he was right to go: whatever job Douglas was given, the two men could not work together.
When he talked to me on Monday about his decision, his weariness and poor state of emotional and physical health was apparent. He needed to be able to take more time out to recover and find a new life for himself.
The next day Geoffrey Palmer was easily elected Leader ahead of Mike Moore by 41 votes to 13. Helen Clark, who had been aware from the way things had been developing for some months that there was a very real prospect of a vacancy, won the deputy leadership by 29 to 25. That afternoon a joint press conference was held where Lange looked like exactly what he was – a man who had had a great burden lifted off him.
He left the way he had arrived, with a marvellous tongue-in-cheek one-liner after Palmer’s tribute ending ‘‘I’m sorry to see you go’’, saying, ‘‘Can I tell you, Geoffrey, I’ve changed my mind’’.
In the reshuffle Lange became the attorney-general outside Cabinet and stayed in Parliament until 1996.