A black and white photo of five people sitting at a table. Overlaid are two lines charting unemployment rates: orange from 1987-1993, and red from 2020-2024, with a peak noted at 9.5% and a dip at 4.1%.
Image: Henry Cooke

PoliticsFebruary 10, 2025

Are we back in the early 1990s?

Contributing writer
A black and white photo of five people sitting at a table. Overlaid are two lines charting unemployment rates: orange from 1987-1993, and red from 2020-2024, with a peak noted at 9.5% and a dip at 4.1%.
Image: Henry Cooke

The last time New Zealand had this kind of recession we voted in MMP. What might we do this time?

First published in Henry Cooke’s politics newsletter, Museum Street.

New Zealand is not at its best right now.

I write this from afar so I have to rely on brutal headline indicators and the testimony of my friends and family. Unemployment popped up above 5% in the final quarter of last year, with one in 10 Pacifica people out of a job and close to 100,000 young people not in education, training or work. High interest rates and falling house prices have made more secure people feel far poorer. Those able to are leaving the country in record numbers. All this is unsurprising as Aotearoa was in a serious recession last year – the worst six-month decline in GDP since 1991 (if you exclude the pandemic).

Wait a minute. 1991? Stop me if this sounds familiar:

  • A Labour government faces a tough election year (1990) after two terms in office, opting to change its leader at the last minute but not getting anywhere near retaining power. Said leader stays on as few really think the loss is his fault or want the job right away.
  • Interest rates are incredibly high to deal with a very serious inflation spike.
  • Unemployment is high and the economy is going backwards.
  • The incoming National government faces an immediate perceived need to cut government spending as Treasury forecasts widening deficits.

These are the broad outlines of both the 1990 election and the 2023 one, and if you look under the hood the comparisons never really end. “TV3” was in serious financial trouble in 1990, entering receivership at one point. Talk of a referendum on a four-year term was bouncing around. Petrol prices were high as turmoil roiled the Middle East. There was a big debate about cutting government spending on a single ship purchase.

Many familiar faces were there. Winston Peters was causing no end of mischief, consistently critiquing National in his last election fought under that party’s banner. Phil Goff was a leading young minister and key ally of the Labour right, while Helen Clark was threading a very different path towards the centre left. Don Brash was just getting started on his very long term as the governor of the Reserve Bank.

It’s not a perfect match. Things were a lot worse in the early 1990s.

Above is a look at unemployment, using the first quarter of 1987 and 2020 as our basis. As you can see we start at a similar point – but the 1990s recession hurt Kiwi workers a lot more. Interest rates were in the teens, not the single digits. The country’s books were in worse shape in general, giving Ruth Richardson (finance minister in the fourth National government from 1990-1993) far more ammo. Servicing government debt cost a whopping 6.3% of GDP in 1990, compared to 1.7% in 2023.

This led to cuts undertaken by Richardson that were on an entirely different level to those ever contemplated by Nicola Willis. Willis has effectively cut benefit rates in the future by indexing them to price inflation instead of wage inflation; Richardson just straight up slashed them. Willis has changed the parameters for fees-free university; Richardson allowed universities to set whatever fees they liked. Willis is looking to save money in health; Richardson looked to directly introduce a profit motive, with her government at one point suggesting a $50 fee for overnight hospital stays.

Richardson’s many cuts saw government spending shrink from 39.9% of the economy in 1991 to 37.1% in 1993 – which might not sound like a lot, but is quite a bit to manage in two years with spending of this magnitude. Willis is forecast to manage a trim from 33.6% in 2024 to 33.3% in 2026 – a cut of 0.3 percentage points compared to the 2.8 percentage points Richardson achieved. (Looking back at the historic data reveals some very interesting trends in where we spend our government money. In 1991 public health spending sat at 5.2% of GDP, education at 5.8%, and the wider benefits system at 12.8%. In 2024 health had grown to 7.3%, education shrunk to 4.9%, and the benefits system was down to 10.8%.)

And it wasn’t just spending – National also gutted unions with the Employment Contracts Act in the 1990-1993 term, a law change so sweeping that there is still a lively debate in union circles about whether or not they should have undertaken a general strike. Brooke van Velden is doing a lot to give more power to employers right now, but she has a lot less room to move than Richardson and her successor Bill Birch did, as key parts of the the Employment Contracts Act remain in place.

A line graph with two lines, one blue and one red, displaying data from November 1989 to November 1993. The vertical axis represents numerical values ranging from 10 to 70. Both lines fluctuate over the time period.
How National (blue) and Labour (red) were polling between early 1990 and the end of 1993 (Data: The Progress Report)

Richardson earned more of a backlash than Willis and Luxon have ever managed. At this point in the 1990-1993 cycle, Labour was about 10 points clear of National in the polls, as opposed to the single point they appear to be ahead by currently. Richardson required security help from the diplomatic protection squad. And yet National won in 1993.

The 1993 election is one of the most intriguing in modern New Zealand history. National won just 7,100 more votes than Labour, with neither party managing to get much more than a third of the vote, an amazing result in any election, but particularly one under the First Past the Post system that had largely locked out any other party from winning any seats. These two titans of postwar politics, which had both undertaken vigorous reform programmes while many voters looked on aghast, seemed utterly spent forces.

And best of all for voters who hated both of them, they had a way to show it – the MMP referendum held alongside the election. This referendum would create an entirely new world of coalitions and party votes and ways for voters to say not just that they didn’t like the government, but that they didn’t like the government in a specific way. Minor parties were already springing up everywhere, even before the system that would make their continued relevance possible, with Jim Anderton winning almost a fifth of the total vote for his left-wing Alliance and Peters making a strong showing in the first general election outing for NZ First.

As Helen Clark told me for my MMP series on Stuff, they “they wanted to put a ball and chain around politicians’ ankles". We are in very many ways still living in the world that those three years at the start of the 1990s created.

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But what does this mean for the next election?

It’s very hard to tell. Under MMP, Labour’s 1993 results would probably have seen them lead the government. But as we have canvassed, there are major differences between our two eras, and it is very unclear if the backlash that National is currently facing will keep growing or peter out as interest rates drop and the economy (one hopes!) picks up. There is, if you are a National Party partisan, plenty of potential upside. National didn’t just scrape a win in 1993 – it actually managed to retain most of its vote in 1996, giving it the chance to lead government for another three years.

Outside of electoral politics, I wonder what might happen if we see discontent build to the level it did in the 1990s without the outlet of the MMP referendum and subsequent humiliation of the political class. A referendum on a four-year term gives one a far weaker avenue of telling the politicians you hate all of them. Where will that energy go instead?

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Lyric Waiwiri-Smith
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A woman stands in front of a colorful painted wall. Beside her is a social media post about Wellington City Council's water services, mentioning the Treaty.
Nicole McKee and the Facebook post (Image: The Spinoff)

OPINIONPoliticsFebruary 10, 2025

Windbag: What Act’s Nicole McKee misunderstands about te Tiriti o Waitangi

Wellington editor
A woman stands in front of a colorful painted wall. Beside her is a social media post about Wellington City Council's water services, mentioning the Treaty.
Nicole McKee and the Facebook post (Image: The Spinoff)

Te Tiriti isn’t about affirmative action. It’s about power.

In a recent Facebook post, Act minister Nicole McKee lambasted Wellington Water for a chief operating officer job listing which required applicants to have knowledge and understanding of te Tiriti o Waitangi. “Just fix the bloody pipes! The treaty doesn’t have anything to do with it,” she wrote.

But te Tiriti isn’t just a buzzword in this instance, it’s directly relevant to how Wellington Water is governed. The Crown’s Treaty settlements officially recognise Ngāti Toa and Taranaki Whanui as having rights and decision-making powers over water. The chief operating officer of Wellington Water has to manage the competing interests of iwi and Crown. It’s te Tiriti in practice.

McKee’s frustration isn’t entirely unfounded. Demonstrating knowledge of Treaty principles has indeed become a box-ticking exercise for many public service jobs. She is lumping te Tiriti into the wider culture war alongside DEI (diversity, equity and inclusion), corporate diversity pledges, wokeness, and other things that make her voters mad.

Her party leader David Seymour often uses a similar framing, tying Te Tiriti to affirmative action policies. In his select committee submission on the Treaty principles bill, he spoke about health providers prioritising Māori and concert organisers who charged higher ticket prices for non-Māori. He described te Tiriti as an agreement between two races and emphasised perceived racial inequalities.

It’s no surprise that Act has pursued this line of argument. Concerns about affirmative action and other diversity policies are real and growing, in New Zealand and abroad. But it’s not really about te Tiriti. A government could change its approach to affirmative action policies without needing to rewrite the nation’s founding document.

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Te Tiriti isn’t an agreement between races. It isn’t a diversity pledge, an anti-racism initiative or a promise to favour Māori individuals. Te Tiriti is a power-sharing agreement. It’s a deal between two sovereign entities setting the foundations and limits of a new government.

The text of te Tiriti recognises and protects two forms of power in New Zealand: kawanatanga, the powers of a governor, and rangatiratanga, the powers of a chief.

Having two sources of power isn’t inherently strange. Many countries have multiple layers of local, state and federal government, upper and lower houses, and a separate judiciary.

Shane Jones and Davis Seymour as Waitangi in 2024 (Photo: Fiona Goodall/Getty Images)

In New Zealand, by comparison, power is incredibly centralised. Parliament has absolute legal supremacy. It has assumed the decision-making power of the kawana and turned the governor-general into a mere figurehead. New Zealand’s supreme court cannot overrule laws passed by parliament. There is no upper house to limit its power. Parliament abolished provincial governments and eliminated the legislative chamber.

A New Zealand government that maintains the support of the parliament has theoretically limitless power. Justice Robin Cooke once argued that there was some line the courts would not allow parliament to cross, but that has never been truly tested. The only limit on power is the election every three years.

There are some advantages to this system. Governments can respond quickly and decisively to new threats – from the economic reforms of the 1980s to the Covid-19 lockdowns. But because parliament has absolute power, it is bound by nothing – not even te Tiriti o Waitangi. Parliament could, in theory, breach te Tiriti in any way it wanted. It could cancel all Treaty settlement claims. It could pass a law declaring te Tiriti “a simple nullity”.

This National/Act/New Zealand First coalition has been defined by its attempts to consolidate power. The fast-track bill takes power from the courts and puts it in the hands of ministers. Its local government reforms have limited the decision-making powers of local councils. And the Treaty principles bill is a constitutional power grab – it restricts the interpretation of tino rangatiratanga and concentrate more power in the Beehive.

Some may ask what’s the problem with that? Parliament is elected by the people, it’s a democratic institution. If the majority of people want to eliminate the powers of iwi, why shouldn’t they? But that’s exactly what the Tiriti was intended to prevent. It is a guard against a future authoritarian leader or the tyranny of the majority.

When he proposed te Tiriti, William Hobson said he would protect Māori customs and religion. He made specific promises about what the government would and wouldn’t do – it wasn’t just his word, but the word of the Crown.

In April 1840, while te Tiriti was still travelling around the motu, Hobson wrote a letter to chiefs who were worried their lands, customs and status would be trampled on and degraded. To reassure them, Hobson made a pledge, which would make a good oath of office:

“The Governor will ever strive to assure unto you the customs and all the possessions belonging to the Māori. The Governor will also do his utmost towards the maintenance of peace and goodwill and industry in this country.”

Hobson promised the government would always protect the power and status of iwi.

Illustration of a historical treaty signing event. Diverse figures in 19th-century attire gather around a table draped with a Union Jack. A man shakes hands with a seated individual. Text box reads "E-Tangata Waitangi 2025, 03.02.25 – 09.02.25.
Image: Liam Rātana

David Seymour says we need a national debate about te Tiriti. And he’s right, we do. But it shouldn’t be discussions about affirmative action. It should be about whether our current system of parliamentary supremacy makes sense in a country centred on te Tiriti, which inherently acknowledges that the governor does not have supreme power.

What would New Zealand’s system of government look like if it was designed to honour te Tiriti? It could mean giving the governor-general the power to refuse royal consent on laws that breach te Tiriti. It could mean giving the Supreme Court the power to overrule parliament on Treaty matters. It could mean a second house of parliament, made up of iwi representatives, with the ability to challenge or veto legislation. It could mean, as Te Pāti Māori has suggested, a parliamentary commissioner to assess legislation violating te Tiriti.

Whatever it may be, stronger legal protection will help to uphold the mana of te Tiriti, so that a future parliament can’t unilaterally decide to abandon William Hobson’s pledge.

Politics