Why do those Lange-Douglas years cast such a long shadow 40 years on? Toby Manhire on the ghosts of 1984.

You needn’t rummage too deep into the basement to rouse the ghosts of the fourth Labour government. Tap “fourth Labour government” (the usual shorthand for the two-term administration elected in 1984) or “Rogernomics” (the byword for those tumultuous economic reforms) into Hansard, the online record of parliamentary debate, and they come scurrying to the door.

Even if you mask the name of the speaker, you can usually pick which party they come from. If it’s a cautiously positive reference to the reforms from 84, chances are it’s a National MP. If it’s completely gushing, that’ll be an Act MP – and naturally so, given former Labour ministers Roger Douglas and Richard Prebble are at the centre of Act’s Mount Rushmore. If the mention of the fourth Labour government comes with a mix of derision and nostalgia, it’s probably New Zealand First. As Winston Peters reminded us in the budget debate a fortnight ago, those were days of great betrayal.

If those years are invoked with anger and regret, with a visceral rawness, that will be a Labour MP: a descendant member of the very same political tribe. Chris Hipkins and Jacinda Ardern both spoke in their maiden statements of the formative impact of the Rogernomics years in their political awakenings. 

The best encapsulation of Labour’s anguished wrestle with that part of its history came in another maiden speech, Phil Twyford’s. “My moral and political compass took its bearings through the economic and social turbulence of the 1980s. Like thousands of other New Zealanders I marched against apartheid, blockaded our harbours against nuclear-armed ships, and door-knocked for the election of the fourth Labour government. Its independent foreign policy, long overdue social and environmental reforms, and progress on the Treaty were cause for elation,” said the incoming MP in 2008. 

“But, as for many, the sweet taste of social progress turned to ashes in my mouth. An economic crisis became the pretext for an ideological blitzkrieg that tried to impose a commercial model on almost every facet of our nation’s life. Change was needed, but by God we paid the price in terms of poverty, inequality, loss of productive capacity in our firms, and damaged generations. We are still paying.”

It’s not just the weight and contestation that keeps the fourth Labour government so alive in memories. There’s also the gobsmacking theatre of it all: a series of scenes scored into the national political memory. So many scenes.

Such as the time, back before the 1981 election, when Roger Douglas turns up to tell his Manurewa electorate committee that he’s quitting politics, only for a dashing young David Lange, then deputy leader, to show up unannounced and declare that Douglas is his finance minister in waiting and must stay. “I gave him no prescription and there was no doubt of my confidence in him,” said Lange.

There is, of course, that night in 1984 – 40 years ago tomorrow – when the snap election is called by a slurring Sir Rob Muldoon; Marilyn Waring chewing on an apple as he berates her and, later, hiding under her desk to escape the press; a night that ends for Muldoon with the discovery that a noble staffer, alert to his condition, had the tyres let down on his Triumph. 

There’s the Muldoon-Lange debate, six days out from the election, in which the prime minister’s final words to his challenger are, “I love you, Mr Lange.” Lange had mastered the TV medium with some help from Brian Edwards and, Bob Harvey reveals in Juggernaut, some unorthodox, theatrical breath training with director Jonathan Hardy, but mostly because of his preternatural eloquence and charisma. “Television was good to me,” Lange later wrote. “I was large. I was confident. I was reassuring. I was a teddy bear.” 

A victorious Lange on the stage at the Mangere Metro Theatre on election night. The thoughts running privately through his head? A call he’d just taken from US secretary of state and Anzus ally George Shultz. Another call from Muldoon, hinting at “bad news tomorrow” and the financial mess he is about to take on. And the time he’d stood on that stage before, as a kid in a play, dressed as a block of cheese.

So many scenes. Lange called July 16, the Monday following the election, “perhaps the most extraordinary of my life in politics”, and he wasn’t yet sworn in as prime minister. A stunning pair of interviews by Richard Harman air on Eye Witness News as Muldoon grips on and Lange steps up. Deputy PM Jim McLay and senior ministers gather around constitutional papers in his Beehive office later that night, seeking to contact senior public servants who are consulting on the crisis while huddled in a bathroom at a French restaurant in Cuba Mall. 

The next day, an informal, momentous meeting with Shultz, which sets in motion what Gerald Hensley, head of the prime minister’s department and hardly a hyperbolist, would call “the boldest revolution New Zealand’s foreign policy has ever undergone”. 

The November 1987 budget, taking several axes to a jungle of regulation, and unleashing a revolution of its own. 

The Oxford Union debate, obviously – Lange defying the vigorous advice of Foreign Affairs officials to become the poster child for nuclear disarmament: in his tux, in his element. The sinking of the Rainbow Warrior – a homicidal act of state terrorism in New Zealand. 

By now Lange has also, it’s pretty clear, fallen in love with his speech writer, Margaret Pope. He’s privately expressed doubts to her about carrying on, seeming “overwhelmed by the burden of responsibility”, Pope later wrote. And it’s still not yet a year since Labour came to power. 

That storm of reform – fast, deep and radical – required an unlikely confluence of weather patterns. Muldoon, in the role of prime minister and finance minister, had assumed enormous power as both prime minister and finance minister in a first-past-the-post cabinet that enjoyed something close to what Geoffrey Palmer called “unbridled power”. In the face of energy crises he’d thrown up the ramparts and launched Think Big. As the western world inched towards openness and deregulation, Muldoon – with the exception of, for example, Closer Economic Relations with Australia – clung to something slipping irrevocably away: what Colin James calls the postwar “prosperity consensus”. 

In defiance of the tide, a battalion of price controls remained in place, dictating the cost of dozens of products and services. Import licences enriched those who held them while pushing up prices and limiting choice. You needed special approval to buy foreign currency, even to order a magazine from abroad. 

In rural New Zealand, a matrix of subsidies, price guarantees and discount interest rates eased farmers’ bruising from Britain’s entry into the common market and created a false economy. Even Federated Farmers wanted their protections unpicked. 

And across everything: a wage freeze, a price freeze, an interest rate freeze. If he could, Muldoon would have frozen time itself. New Zealand was being run, in Lange’s phrase, like a Polish shipyard. After Muldoon, the dam burst, and so came the floods. 

 ‘Television was good to me. I was large. I was confident.
I was reassuring. I was a teddy bear.’

Then there was the snap election, triggered by the Waring withdrawal from caucus – or, some reckoned, by Muldoon’s inability to draw up a budget. For Roger Douglas it was a godsend. Labour’s economic policy, hurriedly drafted by deputy leader Geoffrey Palmer after rival factions sought two different prescriptions, was “perfect” for his needs, he told me. Palmer called it “papering over the cracks”; Muldoon called it a “bucket full of jellyfish”. Lange would later say that the ongoing debates within the Labour Party were made immaterial “by having a manifesto which could appeal to the right, the left, the centre, and the totally bewildered”.

An editorial in the Press the Monday after the election noted, “the Labour Party has won the general election with a substantial margin of seats in parliament, but without having given the country any detailed idea of what it intends to do.” Its next observation: “Sudden or substantial changes in the country’s direction are not likely soon.”

Two years after the 84 snap election, in an interview with NBR, Lange said, “We would not have the government we have now if we had been elected in November 1984. We would not have had the policy. We would have celebrated through December, gone on holiday, come back and had a formal opening of parliament and tried out our new seats … the first budget would have been drawn up in circumstances of great party orthodoxy.”

The next ingredient: Muldoon’s refusal to defer to the incoming administration and devalue the dollar, as the country teetered on the brink of defaulting on international obligations. A currency crisis had become a broader economic crisis which in turn morphed into a constitutional crisis. “Muldoon’s intransigence was an extraordinary gift to the new government,” Lange would later say, “putting the reality of the currency crisis squarely in front of the public and forever identifying the old regime with recklessness and irresponsibility.”

The Treasury’s 1984 briefing to incoming ministers provided such a dire picture of the economy that it caused Prebble and others to feel deflated, but that was swiftly replaced  by a sense of freedom – the emboldenment of assuming that, if you were a one-term government, you might as well go hell for leather. 

That document, later published by Douglas as Economic Management, had been put together by a Treasury largely ostracised by Muldoon, free to think big in a different way. To some critics, it amounted to a “Treasury coup”, as Bruce Jesson, an important columnist and conscience of the left across the period, put it. Douglas and co reject that view of history. In Lange’s view, Douglas and Treasury operated “hand in glove”; it was a “perfect marriage”, albeit one that he was over time disinclined to go along with. By 1987 Lange was convinced of “an unbending element in the view of Treasury and its minister which was more like religious belief than professional practice”.

In the 1987 election Lange had run a discernibly different campaign to Douglas. The prime minister wanted a second term to reap the reward of the sacrifices of the first. Douglas wanted to finish a job as yet only half done. 

The juggernaut continued. There was a move towards corporatisation, with state-owned enterprises required to remake themselves in a market mould, and, after the sharemarket crash, a programme of privatisation, elements of which Lange would later lament. He’d already attempted to impose a bulwark to the free-market agenda in the form of a Royal Commission on Social Policy – “a counterweight to the power of Treasury”, Lange called it.

That exercise largely foundered in the face of more Douglas-driven reforms. Another pair of scenes: Lange as one of seven grey suits, after the sharemarket crash of 87 and just before Christmas, announcing cabinet has agreed another profoundly radical reform, designed to restore confidence to business and the economy, centred around something remarkable: a single, flat rate of income tax. Then, after Christmas, with Douglas in London, Lange fronts another press conference and unilaterally kills it. The way you view these two set-pieces is as good a Rorschach test on the fourth Labour government as any. 

Next came another entry in the holy scriptures of the fourth Labour government: the cup of tea. In answer to a journalist’s question at a Press Club speech in Canberra in 88, Lange said: “What say we sort of have a little breather here. And then we’ll set off on the road again, after we’ve sort of picked up the casualties and had a cuppa.” He didn’t precisely say “cup of tea”, but that hardly matters. Neither did he precisely say, “I can smell the uranium on your breath.” Neither, after all, did Ingrid Bergman precisely say, “Play it again, Sam.” 

In the language of the fourth Labour government, the cup of tea is really a vial of poison: a marker for the all-out, inexorable civil war of Lange and Douglas – “the axle on which the government ran”, as Hensley put it – stemming ultimately from a deep difference of opinion about the role of the state. Though that might be too pompous an image. Michael Cullen recalled it like this: “The year 1988 unfolded less like a Shakespearean tragedy than like some kind of tragicomic version of a sand-and-sandals film epic where the wheels kept falling off the chariots.”

There are many more scenes that sit alongside the main plotline. The creation of a ministry of women’s affairs. The Māori Council winning its case against the Crown over the place of the Treaty in the SOE Act. Lange misreading his notes and pledging an electoral reform referendum. The rally at parliament decrying homosexual law reform. Geoffrey Palmer called Fran Wilde’s bill “undoubtedly the most controversial piece of legislation” of the period, but it is too often left out of the stories of the time, and the question of whether Labour can claim it for the historic honours board is not straightforward. 

Other parts of the story are less obliging to a plotting of scenes. The rural communities confronting mental health crises and suicides. The redundant workers in the dole queue. (Some workers made redundant amid the process of corporatisation chucked their payouts immediately in the place that seemed a sure thing: the stock market.) Unemployment peaked at 11.2% in the second quarter of 1991. The pain was not dealt equally. Māori unemployment hit 26.1% in 1992, more than double the rate five years earlier. 

The year 2024 brings a significant, and challenging, milestone in Labour’s history. Don’t take my word for it – that’s what Chris Hipkins said in a speech on values a few months ago. He said: “We will remember with pride the early steps that government took to stamp our proudly nuclear free mark on our foreign policy, the work of that government to advance human rights, including homosexual law reform, and to bring conservation and environmental issues much more to the fore. 

“But we will also look back with much more mixed feelings on the economic reforms of that and subsequent governments, and the four decades of growing inequality and societal decay that has followed.”

When I played those lines to Douglas and Prebble they were unimpressed, defending their Labour legacies, dismissing talk of decay. Prebble says he never received a single letter of complaint from someone made redundant. Douglas’s only regret is they didn’t go harder and faster.

Opinions on the necessity and impact of the fourth Labour government are countless, as the piles of books on my desk and tabs on my desktop testify. It’s made harder because the third act following the two terms of that Labour lot in the 80s is the first term of the Bolger government, which came to power in a 1990 National landslide, encountered economic surprises of its own (essentially, the state-owned BNZ was going bust) and, with Ruth Richardson at the finance tiller, unleashed swingeing benefit cuts in the “mother of all budgets”, swiftly followed by the deeply contentious Employment Contracts Act.

A fitful debate continues, too, over whether responsibility for the negative impacts of Rogernomics on communities should be sheeted back to the Labour administration, or to its inheritance from the Muldoon government. To lay the blame at the feet of the Lange-Douglas reforms, says Bryce Wilkinson of the free-market think-tank the New Zealand Initiative, is like blaming “the costs of the devastation left by riotous partygoers on the next day’s cleaners and repairers”. 

A better way to think about the fourth Labour government, Wilkinson argues, is by asking whether it would have been worse had such drastic action not been taken. “In reality, spendthrift economic policies and stifling regulations have painful consequences,” he writes. “If New Zealand governments had not addressed those consequences by their own volition, they would likely have had to borrow from the International Monetary Fund, whose assistance would have been conditional on reforms. The fourth Labour government might have fallen apart much the same. The global share market crash in 1987 would have happened regardless. New Zealand would likely have had a wage breakout and the need to control inflation by monetary policy means, regardless of who was in power.”

I suspect this is also the New Zealand government that has won the most attention internationally. There was the nuclear stance, with the spotlight turned up by the Oxford Union moment and flipped into a floodlight by the French attack in the harbour of Tāmaki Makaurau. 

Economists pored over the New Zealand experiment – what Don Brash would later call “probably the world’s first example of a ‘big bang’ approach to reform”. Economists John Kay and Mervyn King (the latter a future Bank of England governor) would in 1990 laud “possibly the most radical tax reform programme ever implemented by a western government”. 

Some of the New Zealand innovations provided a template for other economies. The decision to provide autonomy to the Reserve Bank and task it with a laser focus on keeping inflation within a set bracket – with Brash as the first governor delegated that responsibility – was imitated around the world. 

Ruth Richardson liked it. She described the independent Reserve Bank as “the only measure in the [1988] budget that I can applaud”. The man she had replaced as National spokesperson for finance, Rob Muldoon, was less impressed. “Ruth Richardson is still in the economic kindergarten, unfortunately,” he sniped from the backbench. “She picks up these simplistic ideas from books and comments and boardroom lunch tables without understanding them.”

After his resignation from the prime ministership, across six miserable years as a backbencher and beyond, Lange was keen to remind people that his government should always be reviewed in the context of what it followed. In a newspaper column in the early 90s, he wrote: “The chances are that the patient is going to survive and prosper. If we had carried on as we were, we would have stood on the windpipe of the patient and that would have been it. I don’t like the condition but it sure beats being dead.”

There was, equally, if not quite remorse, an unmistakable repudiation of the economic reforms as a whole. “It was a period which was calling out for the government we had in 1984 to 1987,” he told the Revolution documentary series in 1996, “and it was a chance where the social richness of New Zealand could have been enhanced because of its economic wealth and where instead the obsession for money overran any form of political, social, human sense.”

There are a host of familiar voices across the six parts of the Juggernaut series. One you’ll recognise is Kim Hill, variously on Checkpoint or Morning Report. Eighties Hill speaks so quickly I nearly felt the need to advise listeners there was no need to adjust the speed settings on their app. 

When I asked Hill last year whether there was one politician she’d most enjoyed interviewing, there was no hesitation. “God, I loved Lange,” she said. “You couldn’t not love him. Unless you had to work with him as prime minister. Then he was a disaster. But he was adorable. He was funny. And clever. And vulnerable. And all those things, you know, that made them a nightmare simultaneously.”

“He brightened the political landscape like no one else before or since,” wrote Tom Scott, who enjoyed a front-row seat to the Lange years as scribe and cartoonist, in his memoir Drawn Out. “At times, his oratory made us fiercely proud to be New Zealanders. He was wickedly funny, he was endlessly fascinating, he was baffling, he was infuriating, he was wonderful.”

A genius who struggled to strategise, a debate lover who hated conflict, a methodist teetotaller who ended his time as prime minister binge-drinking and racing cars, a contradiction. And, he told Hill in one of his last interviews, in politics and in life ultimately, “a loner – and lonely”.

‘The chances are that the patient is going to survive and prosper. If we had carried on as we were, we would have stood on the windpipe of the patient and that would have been it. I don’t like the condition but it sure beats being dead.’

Another of his final interviews, and one of the best, was with Audrey Young for the Herald in 2004, about a year before his death at the age of 63. Lange draws a contrast between his own ascent and that of Helen Clark – the then prime minister’s path to power was “principled, extremely hard-working, fearless, really persistence in the face of all sorts of adversities and personal assaults”. 

His own was “some sort of divine roulette”, said Lange. “I’d never been a tract writer; I’d never been a philosopher; I’d never taken part in extraordinary industrial dispute activism; I’d not been in any of that background but I was able to mix it in what had become, conceived to be, the new front line of politics – the ability on television to convey confidence and assurance without saying anything. And that is very important.”

He’s joking, at least half. 

Young asks: “You are pilloried by the left for too much reform and pilloried by the right for not enough. Do you feel as though you have an undefined place in history or an uncomfortable place?”

Lange: “No. It’s not an uncomfortable place. This is the difficulty about talking about it without sounding big-headed but you cannot speak of New Zealand now without my involvement in what it has become. My judgment of that is that it is a change for the better and my instinct tells me that if it hadn’t been for our administration there would have been calamity after calamity.”

That interview was conducted to mark the 20th anniversary of the Lange government coming to power. Another 20 years on, the argument continues.

Juggernaut: The Story of the Fourth Labour Government is released weekly on Thursdays.