Third National Government of New Zealand
The Third National Government of New Zealand (also known as the Muldoon government) was the government of New Zealand from 1975 to 1984. It was an economically and socially conservative government, which aimed to preserve the Keynesian economic system established by the First Labour government while also being socially conservative. Throughout its three terms it was led by Robert Muldoon, a populist but antagonistic politician who was sometimes described as his party's best asset and worst liability.
- National superannuation
By 1975, New Zealand had a generous welfare system, which included unemployment and sickness benefits, a benefit for single parents (the DPB) and a means tested old-age pension from the normal retirement age of 60 plus a Universal pension from 65 years.
The third National government scrapped Labours contributory scheme and introduced National Superannuation, a non means tested pension available to all New Zealand citizens over the age of 60, linked to the average wage (initially 70% with the intention of increasing it to 80%). This was enormously expensive, costing NZ$2.5 billion per annum by 1984, but nevertheless far more popular than Labour's alternative of a Singaporean Central Provident Fund-style set of individualised compulsory savings.
The government continued the generally interventionist economic policies of previous governments in New Zealand. Although there was some pressure on Prime Minister and Finance Minister Robert Muldoon to take steps towards liberalising the economy, he was reluctant to do so as he felt that such moves would hurt ordinary New Zealanders. Such steps towards liberalisation made during this government's term were generally the initiatives of other politicians.
In 1980, the government launched the Think Big programme of large-scale industrial projects, mainly based around energy projects, to reduce New Zealand's dependence on foreign energy. This was a response to the oil shocks (1973 and 1979) of the 1970s, which dramatically raised the price of oil. Cabinet Minister Derek Quigley publicly criticised the Think Big policy and was demoted from Cabinet.
- Controlling inflation
The control of inflation was an important goal for Muldoon, who always aimed to uphold the living standards of working and middle class New Zealanders. There was a high level of inflation worldwide in the 1970s and 1980s, leading Muldoon to intervene more and more dramatically in the economy. This interventionist policy culminated in the wage and price freeze of the early 1980s, and Muldoon's refusal to devalue the New Zealand dollar in 1984, which led to the New Zealand constitutional crisis.
The government pursued a limited number of liberalisation policies. In 1982 the land transport sector was deregulated, which allowed the restructuring of the New Zealand Railways Corporation later in the decade. The Closer Economic Relations free trade agreement with Australia was signed in 1983.
- 1976 saw the phasing out of commodity subsidies and entitlement to the Additional Benefit.
- In 1976, the administration of many benefits, such as unemployment, sickness and the Domestic Purposes Benefit, was tightened up.
- Income exemptions, which the Third Labour Government had abolished and replaced with tax rebates, were reintroduced.
- In 1977, the family assistance tax rebate was significantly extended. As note by Brian Easton, the tax relief for a young family “could be up to $13 a week more than for a married man without children, on the same income.” In addition, full relief was available to families whose head “was on up to ten per cent above average earnings.”
- In 1977, the top income limit of the now $9 full rebate was increased to $150 a week, and a further $4 a week tax rebate for all single-income families with a child under the age of ten was introduced (it was reduced if the spouse’s income exceeded $20 a week). Also, as noted by Brian Easton, there was now a tiering of family assistance, with families with children under the age of five “receiving up to $13 a week, and those with a youngest child between five and ten receiving up to $4 a week.”
- The Disabled Person’s Community Welfare Act (introduced in 1975 under the Third Labour government) was further implemented in 1978, including a non-taxable $8 a week allowance for parents supporting physically or mentally handicapped children.
- The basic family assistance tax structure was maintained in the 1978 budget, with the eligibility age of the youngest children increased to 11 years, the single-income family rebate raised to $5 per week, and the young-family rebate raised to $9 per week.
- A new income-tax scale was introduced, with the main aim being switching income from low-income recipients (who were usually supplementary earners) to main earners.
- A new income-tax scale (and higher rebates) was introduced in 1978, which transferred income to main earners, such as mothers who worked part-time. The purpose of this change was to increase the income of one-earner families relative to one-and-a-bit earner families.
- The period of absence from New Zealand during which eligibility for National Superannuation was retained was lowered to 3 months (1979).
- Eligibility for the Additional benefit was extended to national superannuitants (1979).
- Equal eligibility for the unemployment benefit was introduced for married men and women.
- In the 1979 budget, the level of the national superannuation benefit for a married couple was lowered from a before-tax 80% of the before-tax average earnings to an after-tax 80% of the after-tax average earnings. Due to the progressive tax structure, this lowered the effective level of the benefit from 87% of after-tax average earnings to 80.%
- The 1979 budget reduced the effective levels of National Superannuation, the unemployment benefits for childless persons, and the additional benefit. However, social security spending increased by more than the expected rate of inflation, the family benefit was doubled, supplements to beneficiaries with children were increased, and the additional benefit was restructured.
- Waitangi Day
- Citizenship law
When the Treaty of Waitangi made New Zealand a part of the British Empire, everyone born in New Zealand (regardless of race) became British citizens. Following New Zealand's adoption of the Statute of Westminster in the late 1940s, New Zealand citizenship was introduced, but in practice there was no real difference between New Zealand and British citizens (The term "British" was not dropped from New Zealand-issued passports until 1977). In the 1970s, Britain reacted to what was seen as excessive non-white migration from the Commonwealth by restricting migration from all Commonwealth countries. In response, New Zealand passed the Citizenship Act 1977, establishing a completely separate citizenship, and British citizens began to be treated as legal aliens for the first time.
In the early 1980s there was also controversy over the citizenship status of Western Samoans. Western Samoa had been administered by New Zealand until its independence in 1962. However, Samoans - even those born under New Zealand rule - had no preferential access to New Zealand. This was challenged in the case of Lesa v The Attorney-General of New Zealand. Falema‘i Lesa, a Samoan born in Samoa prior to independence, wanted to claim New Zealand citizenship under the Citizenship Act 1977. In July 1982 the Judicial Committee of the Privy Council held that Lesa (and by extension all other Samoans born prior to 1962) could apply for New Zealand citizenship. In response, the Citizenship (Western Samoa) Act 1982 was passed, and granted New Zealand citizenship to all Samoans living in New Zealand at that time, and a quota system for new arrivals was established.
- National anthem
Treaty of Waitangi and Maori policy
- Bastion Point
In 1977, Ngati Whatua Maori occupied Bastion Point on the Waitemata Harbour, Auckland, in protest at the lack of settlement with the government under the Treaty of Waitangi for their claim to the land. The occupation was ended by New Zealand Army and Police units.
- Sporting contact with South Africa
Throughout the 1970s, the Republic of South Africa became increasingly unpopular for its racist apartheid policies. The third Labour government had blocked a proposed tour by the South African Springbok rugby team, but this had been opposed by many New Zealanders, who felt sport and politics should not mix. The third National government renewed sporting ties with South Africa, which resulted in many countries criticising New Zealand, and caused 28 African countries to boycott the 1976 Summer Olympics in protest at New Zealand's participation. Following this, Muldoon signed the Gleneagles Agreement stating that governments would take steps to prevent sporting contact with South Africa. Despite this, he refused to prevent the New Zealand Rugby Football Union from organising a tour by the Springboks in 1981. The 1981 Springbok Tour was marked by mass protest and violence from police, protesters and tour supporters.
- Falklands War
The government supported Britain in the Falklands War, although New Zealand did not participate in it. However diplomatic ties with Argentina were cut and New Zealand loaned HMNZS Canterbury to Britain for service in the Indian Ocean to free up HMS Amazon for action in the Falklands.
The 1975 election was widely seen as a contest of personalities: Labour Prime Minister Bill Rowling vs National Party leader Robert Muldoon. The Labour government initially felt that this would be to their advantage, as Muldoon had an abrasive style which many New Zealanders found distasteful. Consequently, Labour organised a 'Citizens for Rowling' organisation of prominent New Zealanders which, despite its name, focussed primarily on attacking Muldoon. This backfired on Labour, partly because many people disliked being told how to vote and partly because many voters liked Muldoon's populist style. A group named 'Rob's Mob' was formed to support him.
Labour was not helped by Rowling's inexperience. He had taken office just one year previously, following the death of the immensely popular Norman Kirk. Compared to both Kirk and Muldoon, Rowling lacked charisma and was widely (and probably unfairly) seen as weak and ineffective.
National won the election with 47.6% of the vote and 55 out of 87 seats, giving it a 23 seat majority. Labour retained 32 seats. Minor parties Social Credit and Values both slightly increased their percentage of votes cast, but neither won any seats. The distribution of seats was the exact opposite of that following the 1972 election.
The 1978 election
By 1978 Muldoon's combative style had become less appealing to voters, and Rowling consequently seemed a more attractive option than in 1975. National's share of the popular vote slumped from 47.6% in 1975 to 39.8%, slightly less than Labour's share. However this was not reflected in the number of seats won - National retained 51 seats, Labour won 40, and Social Credit re-entered parliament with one seat, despite winning 16.1% of the popular vote.
The 1981 election
A key issue in this election was the 1981 Springbok Tour. The tour of apartheid-era South Africa's rugby union team was opposed by many New Zealanders, who believed that it gave support to apartheid. However it was supported by many others, who believed that politics and sport should be separate. Muldoon had refused to make the New Zealand Rugby Football Union call off the tour, while the Labour opposition had actively opposed it. Muldoon gambled that while the Tour would cost him votes in the cities, these would be mostly in Labour-supporting seats while swinging voters in smaller towns such as Taupo would support his stance. It has recently been argued that had New Zealand been defeated in the Tour, National would have lost the election.
The 1981 election was one which exposed the problems of New Zealand's First Past the Post electoral system. The Social Credit Party received 20.6% of votes cast, but only two seats. Perhaps more damningly, Labour won slightly more votes than National, but four fewer seats. This was the second election in a row in which this had happened, and contributed to New Zealand's switch to the proportional representation electoral system Mixed Member Proportional (MMP) in the 1990s.
The election left National with a majority of only one seat, a situation which was to cause it major problems in its third term.
With a majority of only one, National's hold on power was always precarious. Its situation was made more difficult by the presence of several 'rogue MPs', including Marilyn Waring and Mike Minogue, who were openly dissatisfied with Muldoon and with the government's performance. For Muldoon, the final straw came when Waring announced she would support the Labour opposition's nuclear-free bill. On the night of 14 July 1984, Muldoon announced a snap election. In television footage of his announcement, he appears to be very drunk; however it is possible that his slurring may have had a partially or completely medical explanation.
By this time, the government was deeply unpopular for a range of reasons including Muldoon's antagonistic style, the huge range of economic controls put in place by the government, its reluctance to reflect the increasingly liberal social mood of the electorate, and the simple fact that it had been in power for nine years. National's position was made worse with the formation of the New Zealand Party, led by maverick property developer Bob Jones. The party supported free markets and a general dramatic reduction of government interference in economic and social life; National's founding principles. The New Zealand Party thus took many votes from former National voters who disliked the government but did not want to vote for Labour. Labour was helped by the contrast between the older and bad-tempered Muldoon and the young, witty David Lange.
National lost ten seats, while the New Zealand Party won 12.2% of the vote but no seats. Social Credit's share of seats remained unchanged at two. The Labour Party became the Fourth Labour government with 56 seats and a comfortable majority of 17.
|Election||Parliament||Seats||Total votes||Percentage||Gain (loss)||Seats won||Change||Majority|
|Deputy Prime Minister||Brian Talboys||1975–1980|
|Minister of Defence||Allan McCready||1975–1978|
|Minister of Education||Les Gandar||1975–1978|
|Minister of Finance||Robert Muldoon||1975–1984|
|Minister of Foreign Affairs||Brian Talboys||1975–1981|
|Minister of Health||Frank Gill||1975–1978|
|Minister of Internal Affairs||Allan Highet||1975–1984|
|Minister of Justice||David Thomson||1975–1978|
|Minister of Māori Affairs||Duncan MacIntyre||1975–1978|
|Minister of Railways||Colin McLachlan||24 August 1975 - 9 February 1981|
|George Gair||9 February 1981 - 2 November 1984|
- All Honourable Men: Inside the Muldoon Cabinet 1975-1984 by Hugh Templeton (1995, Auckland University Press, Auckland) ISBN 1-86940-128-X
- Belich, James (2001), Paradise Reforged: A History of the New Zealanders from the 1880s to the Year 2000.
- Pragmatism and Progress: Social Security in the Seventies by Brian Easton
- Contrary to popular belief, these changes were not made because Britain had joined the European Economic Community, but in response to increasing non-white immigration from 'new Commonwealth' countries such as India and Jamaica. Pearson, David (2005), 'Citizenship, Identity and Belonging: Addressing the Mythologies of the Unitary Nation State in Aotearoa/New Zealand', in James H. Liu, Tim McCreanor, Tracey McIntosh and Teresia Teaiwa, eds, New Zealand Identities: Departures and Destinations, Wellington, pp.28-9; Karatani, Rieko (2003), Defining British Citizenship: Empire, Commonwealth and Modern Britain, London, pp.164-6.
- Pearson, pp.28-9.
- Samoans in Te Ara: The Encyclopaedia of New Zealand:http://www.teara.govt.nz/NewZealanders/NewZealandPeoples/Samoans/1/en