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|37th Minister of Finance|
2 November 1990 – 1993
|Prime Minister||Jim Bolger|
|Preceded by||David Caygill|
|Succeeded by||Bill Birch|
|Member of the New Zealand Parliament|
1981 – 1994
|Preceded by||Colin McLachlan|
|Succeeded by||David Carter|
|Born||13 December 1950|
Taranaki, New Zealand
|Relations||George Pearce (great-grandfather)|
Ruth Richardson (born 13 December 1950) served as New Zealand's Minister of Finance from 1990 to 1993, is credited for being the first Finance Minister to have published a modern public sector balance sheet. Following the work of the preceding Labour Government that initiated the financial reforms and passed the necessary legislation, she supported and carried on the reforms, and extended them in a significant way with the fiscal responsibility Act 1994. And more than the Labour ministers who initiated the reforms, she advocated for the merits of modern accounting and financial systems subsequently introduced modern accounting to the national government. These Public Financial Management reforms were part of her wider economic reforms that helped to take New Zealand out of its economic and financial crisis, including the Mother of all Budgets as the first budget was called. Many have noted the wide-ranging affects on New Zealand's social fabric including child poverty along with wealth inequality which were both exacerbated.
This first budget formed the catalyst of her economic reforms known in the media as 'Ruthanasia', as they were widely unpopular at the time with huge, controversial changes following the works of the previous labour government. The successful reforms have been thoroughly researched and documented in academia and held up as a model reform program.
Richardson was born in southern Taranaki on 13 December 1950. Her family had a long history in the area, and her great-grandfather George Pearce had served as MP for Patea from 1908 to 1919. Her father was active in the National Party's Patea branch. Richardson was brought up as a Roman Catholic, and after finishing primary school, was sent to Sacred Heart College, a Catholic girls' high school in Wanganui.
Richardson decided on a career in Parliament at an early age, before she even left high school. Sir Roy Jack, a National Party MP and a friend of her family, advised her to study law, which she did. Richardson gained a law degree with honours from the University of Canterbury. After graduating, she worked for the Department of Justice, again following Sir Roy Jack's advice. In 1975, Richardson married Andrew Wright, a colleague from the Department.
Richardson's first attempt to break into politics came when she challenged Sir Roy Jack for the National Party nomination in the 1972 election. His Waimarino electorate was to become Rangitikei because of post-census boundary changes. Besides alienating her from her old mentor, she also created considerable irritation in the higher ranks of the party, which frowned on challenges to sitting MPs who sought renomination. The party was especially hostile when the challenge was made against long-serving MPs such as Sir Roy Jack. George Chapman who chaired the selection said that "The tensions were tremendous, but Roy was finally confirmed as the candidate."  She was a member of the non-partisan political lobby organisation the Women's Electoral Lobby.
In 1978, Richardson contested the National Party's nomination for the Tasman seat. She won the nomination, but in the 1978 election itself, she failed to defeat incumbent Labour MP Bill Rowling (who was leader of his party at the time). In 1980, she was invited to contest the nomination for Selwyn, an electorate just outside Christchurch which was held by retiring National MP Colin McLachlan. She won the nomination, and in the 1981 election, was elected to Parliament.
Early parliamentary career
|New Zealand Parliament|
Richardson quickly distinguished herself in the National Party caucus as a supporter of free market economics, privatisation, and trade liberalisation. This contrasted considerably with the views held by National Party Prime Minister Robert Muldoon, who favoured an interventionist approach based on significant overseas borrowing. Richardson's focus on financial matters was itself a cause for comment, as many female MPs (particularly in the National Party) had confined themselves to matters such as health and social welfare. Richardson entered parliament with a strong determination not to end up in those roles.
When National lost the 1984 election, Richardson became a member of the Opposition. Richardson stood out in National's caucus for her strong support of the radical economic reforms of the Labour Party's new Finance Minister, Roger Douglas. These reforms, sometimes known as "Rogernomics", involved the privatisation of state assets, the removal of tariffs and subsidies, and applying monetarism to control inflation. These reforms were seen by many in the Labour Party as being against the traditional policies of the left-wing Labour Party, but were also opposed by the more conservative wings of the National Party. Particularly hostile were followers of Robert Muldoon, a traditionalist conservative who opposed free market reforms as undermining state authority.
Shortly after National's electoral loss, Jim McLay replaced Muldoon as leader of the National Party, and there was a considerable rearrangement of responsibilities. People such as Bill Birch and George Gair, who McLay associated with the Muldoon era, were demoted. They were replaced by newer MPs, such as Richardson and Simon Upton, who McLay believed would help revitalise the party. This move proved fatal to McLay personally, however, as the sacked Birch and Gair allied themselves with McLay's rival, Jim Bolger. Bolger ousted McLay and became party leader.
The change in leadership was damaging for Richardson, as Bolger (and many of his allies) strongly disliked her. This dislike was due to three main factors: anger at McLay's "favouritism" towards her, dislike of her advocacy for radical free-market economic policies, and dislike of her personality (which many colleagues found "abrasive" and "condescending"). When George Gair (elevated for his role in Bolger's rise to power) retired from the position of deputy leader, Richardson stepped forward for the position. Bolger, however, made it clear that he strongly opposed Richardson's candidacy, instead throwing his support behind Don McKinnon. McKinnon defeated Richardson and became deputy leader.
Bolger did, however, make Richardson the party's spokesperson on finance. This was an attempt to pacify Richardson and her supporters, rather than an expression of confidence in her – it was well known that Bolger himself preferred the more cautious Bill Birch for the finance role. The move to defuse tension was only partially successful, and hostility between supporters of Bolger and supporters of Richardson remained. Many National politicians believed that Richardson sought to replace Bolger as leader, but even if Bolger was vulnerable, the two factions that opposed him (one led by Richardson and the other led by Winston Peters) were unwilling to cooperate. Bolger's leadership remained secure, and when his popularity rose, the window of opportunity was lost.
Minister of Finance
When National came to power in the 1990 election, Richardson had enough support within the party to be made Minister of Finance, a role Bolger would rather have given to Bill Birch. Many people believed that the National Party would adopt more cautious, conservative policies than the radical Labour government. On coming to office, however, the new Government was confronted with a much worse fiscal and economic position than the out-going Government had disclosed. In particular, the government-owned Bank of New Zealand required a multimillion-dollar recapitalisation. The forecast budget surplus was quickly revised, upon National coming into office, to a large budget deficit. In response, the new Government announced significant cuts to social welfare benefits, and reversed National's 1990 election promise to remove the tax surcharge on superannuation.
Whilst employment law reform had been expressed in the 1990 manifesto, many National Party supporters, and some of its parliamentary caucus, were disappointed at the continuation of the policies established by Douglas. Richardson's first Budget, which she had jokingly dubbed the "Mother of all Budgets" – a term that would haunt her political career—compounded this unpopularity, as it significantly cut state spending in many areas as an attempt to bring deficits under control. As a result of the policies, which were widely known as 'Ruthanasia', Richardson became one of the most disliked politicians in the country.
While she remained Finance Minister for the whole three-year term of the first Bolger government, this was a period marked by increasing tension within the Cabinet. Tax policy was an area where Richardson and the more moderate members of the Cabinet often failed to agree even the basics.
Although National was re-elected in the 1993 election, it was by the narrowest of margins (1 seat) and many people within the party believed that Richardson's presence was damaging to the party. In addition, Bolger and his allies had still not been reconciled with her. In order to partially reflect the strong discontent in the electorate with the reform process (National arguably only won because the opposition vote was split between three parties) Richardson lost her role as Minister of Finance, and was offered the role of Minister of Justice. Richardson refused, preferring to take a role on the back-benches then called a by-election. She was replaced by Bill Birch, Bolger's original preference.
Though her period as Finance Minister was comparatively short, Richardson's legacy in subjects such as Fiscal Responsibility and Economic Liberty is large. Many of the reforms she championed have endured and remain an example for a modern Public Financial Management. As an example, with the first public sector balance sheet produced it was used to avoid a double down-grade to the Sovereign credit rating. In fact, New Zealand remains the only country that has introduced modern accounting and integrated its balance sheet with the budget, as a tool for its budgeting, appropriations, and financial reporting. Since these public sector reforms New Zealand has achieved and maintained significantly positive net worth, notwithstanding several chocks to the economy including the Financial crisis of 2007/08 and the Christchurch earthquake in 2011, where most comparable governments like Australia and Canada, or larger countries such as the UK and US, have a negative net worth.
Perhaps most importantly, the Fiscal transparency of the New Zealand government remains unparalleled among developed economies with The Treasury publishing monthly and annual (year end) financial statements. The Treasury is also publishing a Fiscal Risk Analysis, which means no future New Zealand government will be faced with the fiscal shock that the Bolger government experienced in 1990. The Fiscal Responsibility Act (now part of the Public Finance Act) requires the Treasury to disclose the fiscal risks facing an in-coming government prior to every election.
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She continued to be involved in politics through her advocacy of the ACT New Zealand party. ACT, established by Roger Douglas and his allies, promotes policies very close to those of Richardson. She has also a number of roles related to business and corporate governance, and served on a number of corporate boards. She is also a member of the Mont Pelerin Society, founded by economist Friedrich von Hayek.
- "For Economic Growth, the World Needs Accountants | IFAC". www.ifac.org.
- Chapman, George (1980). The Years of Lightning. Wellington: AH & AW Reed. p. 54. ISBN 0-589-01346-7.
- Julian, Rae (2018). "Women's Electoral Lobby of New Zealand 1975-2003". New Zealand history online. Retrieved 30 January 2019.
- "Can women breastfeed in New Zealand parliament: kind of?". Stuff (Fairfax). 11 May 2017.
- "Breastfeeding babies in the debating chamber becoming normalised". Stuff (Fairfax). 9 November 2017.
- "Fiscal Responsibility Conference" at Francisco Marroquin University. Guatemala, 1997
- "Economic Liberty Conference" at Francisco Marroquin University. Guatemala, 1997
- "Balance sheets and fiscal policy: the New Zealand example | Public Finance". www.publicfinanceinternational.org.
- "Financial statements of the Government". treasury.govt.nz.
- "Long-term fiscal position". treasury.govt.nz.
- "New Zealand Fiscal Management Approach". treasury.govt.nz. 15 January 2003.
- "The New Zealand Suffrage Centennial Medal 1993 – register of recipients". Department of the Prime Minister and Cabinet. 26 July 2018. Retrieved 18 September 2018.
- 1990 Parliamentary Candidates for the New Zealand National Party by John Stringer (New Zealand National Party, 1990)
- New Zealand Productivity Commission: From output budgeting to social investment: reflections on thirty five years of evolution in public sector management in New Zealand
- Public Finance International: Balance sheets and fiscal policy - the New Zealand example, October 11, 2018
- Financial Times: Lessons from New Zealand on fiscal discipline, October 11, 2017
- The Economist: New Zealand Inc, August 15, 1992
- Ruth Richardson New Zealand Ltd
- Appearances on C-SPAN
|New Zealand Parliament|
| Member of Parliament for Selwyn
| Minister of Finance