Fourth National Government of New Zealand

The Fourth National Government of New Zealand was the government of New Zealand from 2 November 1990 to 27 November 1999. Following in the footsteps of the previous Labour government, the fourth National government embarked on an extensive programme of spending cuts. This programme, popularly known as 'Ruthanasia' after Finance Minister Ruth Richardson, involved the reduction of social welfare benefits and the introduction of fees for healthcare and tertiary education. This was highly controversial, as was the retention of the superannuation surtax, a tax on old age pensions which National had promised to abolish. Also controversial, but in a different way, was the beginning of the Treaty settlement process.

Extreme dissatisfaction with both National and Labour led to the reform of the electoral system: the introduction of proportional representation in the form of MMP. The first MMP election was held in 1996, and resulted in a coalition between National and New Zealand First. This dissolved in 1998, and the consequent cobbling together of another coalition between National and the deserters of various parties contributed to the government's defeat in 1999.

ignificant policies

Economic

*'Economic Reform'The National Party was founded as a party of free enterprise and hands-off government, but it was not until the fourth Labour government enacted policies along these lines that National actually followed its founding principles. Finance Minister Ruth Richardson admired Labour Finance Minister Roger Douglas' reform of the New Zealand economic system in the 1980s and wished to follow in his footsteps, primarily by reducing state spending. On taking power, National discovered that the Bank of New Zealand needed large and immediate government aid, and that outgoing Finance Minister David Caygill's predictions of a small surplus were very wrong. These problems gave Richardson the opportunity and caucus support for major cost-cutting.

Richardson's first budget, delivered in 1991 and named by the media as 'the mother of all budgets' [Partially because Richardson was the first woman ever to deliver a New Zealand budget, and partially in reference to Saddam Hussein's description earlier in the year of a battle in the Gulf War as 'the mother of all battles'.] , introduced major cuts in social welfare spending. Unemployment and other benefits were substantially cut, and 'market rents' were introduced for state houses, in some cases tripling the rents of low-income people. [http://www.nzhistory.net.nz/culture/we-call-it-home/the-state-steps-in-and-out] In combination with the high employment resulting from some of the 1980s reforms, this caused poverty to increase, and foodbanks and soup kitchens appeared in New Zealand for the first time since the Great Depression of the 1930s.

The government also felt that market forces should be introduced into the running of hospitals, schools and universities. User charges were introduced in universities and hospitals for the first time, and educational institutes were instructed to compete with each other for students. Although not a policy as such, the government's retention of the superannuation surtax (a tax on pensions), despite promising to abolish it, was also significant.

'Ruthanasia' (named after Ruth Richardson) was massively unpopular, especially following the equally dramatic reforms of the 1980s. As a result, the government came extremely close to losing the 1993 election. Subsequently, Richardson was replaced as Finance Minister by Bill Birch, and left politics. National's period of major economic reform was over.

*Sale of state-owned enterprisesThe government continued the previous Labour governments' controversial sale of State-owned enterprises. Following the near collapse of the Bank of New Zealand in 1990, the Bank was sold in 1992 to National Australia Bank Group. In 1993 the government sold New Zealand Rail Limited to a consortium led by Faye Richwhite and Company for $400 million. In 1996 the government split the New Zealand Ministry of Works between consulting (Opus International Group) and construction (Works Infrastructure) arms, selling both branches. In 1997 electricity generator Contact Energy, formerly a part of the Electricity Corporation of New Zealand was floated on the New Zealand Stock Exchange. In 1998 the government sold its 51.6% share in Auckland International Airport by way of a public float. At that time, the Company had some 67,000 shareholders, mainly New Zealanders holding small parcels of shares.

The government also corporatised a number of government departments, or restructured state-owned enterprises with the intention of privatising them at a later date. For example, in 1998 the Electricity Corporation of New Zealand was divided into a further three generators, Meridian Energy Limited, Mighty River Power Limited and Genesis Power Limited. In 1999 the Accident Compensation Corporation was exposed to competition, albeit only for one year. Plans to corporatise Transit New Zealand never came to fruition however.

*The Employment Contracts Act

This was a major overhaul of employment law, which abolished collective bargaining and seriously weakened the power of unions.

Constitutional

*ReferendumThe government passed the Citizens' Initiated Referenda Act 1993. This Act allowed for non-binding referendums to be held on the petition of citizens.
*Electoral reformBy 1990, many New Zealanders were already seriously dissatisfied with their First Past the Post (FPP) electoral system, which had twice (in 1978 and 1981) led to a party losing the popular vote but winning the election. National's continuation of Labour's reforms despite a clear indication that the electorate was sick of reform intensified this feeling. National had promised a referendum on the electoral system, and having angered voters in so many other ways, felt that it would be unwise to break this promise. In the non-binding 1992 referendum an overwhelming majority of those who voted opted to replace FPP with a form of proportional representation, MMP. A binding referendum was held the following year in which a small majority voted for MMP. The first MMP election occurred in 1996.

Treaty of Waitangi

In 1985 the Labour government had enabled the Waitangi Tribunal to investigate breaches of the Treaty of Waitangi dating back to 1840. By the early 1990s the Tribunal had made some major reports, including those into the Waikato-Tainui and Ngai Tahu claims. An Office of Treaty Settlements was established and substantial resources and sums of money were given to various iwi in compensation for past wrongs. An attempt was made in 1995 to bring the process to an end with a billion dollar 'fiscal envelope' which was to have settled all outstanding greivances in one go. However this was rejected by Māori.

ocial policy

*Human Rights ActIn 1993, the Human Rights Act was passed, outlawing discrimination on the grounds of sexuality. The government was excluded from the provisions of the Act, probably due to concern over the possibility of gay marriage. Several National MPs, most prominently Police Minister John Banks, and many National supporters, opposed the Act on religious grounds.
*Work and IncomeFollowing National's coalition with New Zealand First in 1996, the Department of Social Welfare and the New Zealand Employment Service were merged to form Work and Income New Zealand (known by its acronym, WINZ). Alongside these reforms was the introduction of a work for the dole scheme, known as the community wage.

Environment

*Resource Management ActThe 'RMA' completely overhauled New Zealand's system of planning permission, uniting laws regarding the environment, zoning, land and water use and many other issues into one piece of legislation requiring developers (including state agencies) to have regard for environmental impacts and Māori and heritage values. Critics have since argued that the RMA gives too much power to opponents of development, who can slow down or halt projects even if they have no valid objections. Others have seen the Act as a welcome means to prevent the destruction of sacred sites, heritage buildings and fragile ecosystems.

Formation

The Fourth National government was elected in a landslide victory in the 1990 general election, winning nearly half the popular vote and more than two-thirds of the seats in parliament. However, the result can be seen more as a rejection of the fourth Labour government than an endorsement of National. The Labour government had enacted sweeping economic and social reforms but the extent of these had split the party, causing serious public conflict between senior government members, and two leadership changes in a year and a half. This combined with a widespread feeling that the reforms had gone far enough to ensure a change of government. Having rejected reformist Labour, and having been led to believe that National would not follow in its footsteps, many voters were extremely angry when the new government went on to make further reforms along the same lines.

The 1993 election

The 1993 election results were primarily an expression of voter dissatisfaction with both the major parties. National and Labour each received about a third of the popular vote, while the Alliance and New Zealand First parties, led by MPs who had angrily left Labour and National, respectively, received 18.2 and 8.4% of the popular vote. However the first past the post electoral system meant that the two minor parties received only two seats each, while National got 50 seats and Labour, with less than one percent less of the popular vote, got 45. Voter dissatisfaction with the electoral system was reflected in the simultaneous electoral reform referendum, which resulted in New Zealand adopting the Mixed Member Proportional electoral system for future general elections.

The 1996 election

This was New Zealand's first election under the Mixed Member Proportional (MMP) electoral system. In the lead-up to the election, many National and Labour MPs noted their parties' unpopularity and felt that they would do better by forming or joining another party. Between the 1993 and 1996 elections, nine of National's 50 MPs defected to or formed other parties. However only one of these (Peter McCardle, who had joined New Zealand First) was re-elected in 1996. National was able to complete its second term in government due to confidence and supply agreements with minor parties.

Both major parties continued to be distrusted by many voters. Both experienced a drop in the percentage of the popular vote, although this was probably due primarily to the new electoral system. Although National won more seats in parliament than all the minor parties combined, it lacked the numbers to form a majority government. In order to retain power it needed to form a coalition with another party.

The National-New Zealand First Coalition

Following the 1996 election neither National nor Labour had a majority of the seats in parliament, meaning that a coalition government needed to be formed. National and Labour each had 'natural coalition partners' in the form of ACT and the Alliance respectively. However in the 120 seat parliament, National and Act together had only 52 seats and Labour and the Alliance only 50. This made New Zealand First, with 17 seats, the 'kingmaker'. The other party in parliament, United, had only one seat and so was irrelevant.

Prior to the election, New Zealand First leader Winston Peters had created the impression that he was opposed to National and that voting for New Zealand First would change the government. However, after a month and a half of coalition negotiations with both National and Labour, Peters announced that his party would coalesce with National. This deeply angered many New Zealand First supporters.

Peters' decision could be justified by the fact that National had won more votes than Labour, but it is generally considered that National was willing to grant more policy concessions that Labour, who may have taken it for granted that he would go into government with them. As part of the coalition agreement, Peters was made Treasurer, a newly created position superior to but co-existing with that of Finance Minister. Various other New Zealand First MPs were given Ministerial or Associate Ministerial positions.

Within two years the coalition was showing major fractures. Several New Zealand First MPs had gone into politics specifically to combat some of National's early 1990s policies, and were unhappy at being made to perpetuate them. Neil Kirton, Associate Minister of Health, was particularly unhappy, and was fired from his position in 1997. He then led a campaign within New Zealand First to cancel the coalition and seek an arrangement with Labour.

By 1998, Peters had become aware that the coalition had lost his party so much support that it might not be returned to parliament in the following year's election. National's replacement of Jim Bolger, with whom he had a good working relationship, with Jenny Shipley increased the stresses on the coalition. In August 1998, Peters was fired from Cabinet after a dispute over the privatisation of Wellington International Airport. He cancelled the coalition shortly afterwards. However several New Zealand First MPs, including most of the Ministers, opted to leave the party and continue to support National. They (mostly now in a new party called Mauri Pacific) and a renegade Alliance MP, Alamein Kopu, formed a new coalition which allowed National to retain power until the 1999 election.

Defeat

By 1999, National was holding onto power via an unstable coalition of former New Zealand First (and one Alliance) MPs. By contrast, Labour had established a friendly working relationship with the Alliance. Labour leader Helen Clark had improved her public image, while Jenny Shipley had difficulty connecting with the public. A series of minor scandals concerning National's management of various state organisations helped Labour win nearly 39% of the party vote and 49 seats, compared to National's 30.5% (39 seats). Potential National allies Act and United won only 9 and 1 seats, respectively.

Electoral results

MMP was introduced in the 1996 election, thus making comparisons between the first two and second two elections difficult.

* For 1996 and 1999 'votes' means party votes only. 'Seats' means both list and electorate seats.
** New Zealand First were not part of the government at the 1999 election, although several former New Zealand First MPs had formed a new coalition with National.

Prime Ministers

Jim Bolger was Prime Minister for the first two and a half terms of this government. Late in 1997, the caucus replaced him with Jenny Shipley, who became New Zealand's first female Prime Minister.

*Jim Bolger (1990-1997)
*Jenny Shipley (1997-1999)

Cabinet Ministers

References

ee also

*Governments of New Zealand
*New Zealand National Party
*Ruthanasia
*Electoral reform in New Zealand
*Electoral system of New Zealand