Fourth National Government of New Zealand

Economic

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', 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. In combination with the high unemployment 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.

In some areas, governmental standards were relaxed in the expectation that market forces would assure quality via competition, such as in the Building Act 1991 - which was seen as one of the steps leading to the leaky homes crisis in the following decade.

'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.

One of the most ambitious and controversial aspects of the Fourth National Government's programme was the comprehensive overhaul of the public health system. The system of democratically elected Area Health Boards was abolished and replaced with Crown Health Enterprises (CHEs), run according to the prevailing new public management ethos that created an internal market for the provision of hospital services and required the CHEs to make a profit. The degree of corporatisation of hospital services was scaled back after the 1996 election. Thirty-eight public hospitals were closed down during the term of the Fourth National Government.

The 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 Fay, 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. The same year the commercial arm of Radio New Zealand was sold to Clear Channel forming The Radio Network. 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, Mighty River Power and Genesis Power. 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.

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

Constitutional

The government passed the Citizens Initiated Referenda Act 1993. This Act allowed for non-binding referendums to be held on the petition of citizens.

By 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 grievances in one go. However this was rejected by Māori.

Social policy

In 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.

Following 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

The Resource Management Act 1991 ('RMA') completely overhauled New Zealand's system of planning. The RMA replaced many laws regarding the environment, zoning, land and water use and many other issues and it provided 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 RMA as a welcome means to prevent the destruction of sacred sites, heritage buildings and fragile ecosystems.

In September 1993, the Fourth National Government ratified the United Nations Framework Convention on Climate Change (the UNFCCC). In July 1994, four months after the UNFCCC came into force, the Fourth National Government announced a number of specific climate change policies.

The Fourth National Government said that if emissions were not stabilised at 1990 levels by the year 2000, a low-level carbon charge would be introduced in December 1997.

By 1996, the National Government had established a new target for the reduction of greenhouse gases. This was to have either no increase in 2000 net emissions of carbon dioxide from 1990 volumes or a 20% reduction if it was cost-effective and had no impact on trade.

On 22 May 1998, the National Government signed the Kyoto Protocol to the UNFCCC. As an Annex B party, the National Government agreed to commit to a target of limiting greenhouse gas emissions for the five-year 2008-2012 commitment period (CP1) to five times the 1990 volume. New Zealand may meet this target by either reducing emissions or by obtaining carbon credits from the international market or from domestic carbon sinks.

Formation

Jim Bolger, leader of the National Party since 1986, led the party to a landslide victory in the 1990 general election, winning nearly half the popular vote and more than two-thirds of the seats in parliament—the biggest majority government in New Zealand history. 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.

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.

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, a former National cabinet minister before being sacked by Bolger three years earlier, had created the impression that he was opposed to National and would not even consider entering a National-led 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, who believed they were voting for New Zealand First in order to help get rid of National.

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 than Labour, who may have taken it for granted that he would go into government with them. Peters' terms were stiff; he became Deputy Prime Minister and was also 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.

Bolger and Peters appeared to have put their previous differences aside, and initially worked very well together. However, strains began appearing in the coalition by 1997. 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. The strains increased when Health Minister Jenny Shipley staged a caucus room coup and ousted Bolger as National leader and prime minister.

By 1998, Peters had become aware that the coalition had cost New Zealand First so much support that it might not be returned to parliament in the following year's election. In August 1998, Shipley sacked Peters after a dispute over the privatisation of Wellington International Airport. Peters tore up the coalition agreement soon afterwards. However several New Zealand First MPs, including deputy leader Tau Henare and 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 with the support of former New Zealand First and Alliance MPs. By contrast, Labour had established a friendly working relationship with the Alliance. Labour leader Helen Clark had improved her public image, while 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 nine seats and one seat, respectively. New Zealand First was severely punished at the polls, falling to only five seats. It would have been ejected from parliament altogether had Peters not barely held onto Tauranga.

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.