Throughout the 1980s and early 1990s Winston Peters had positioned himself as a staunch opponent of free-market economic reform. Then during the 1993-96 parliamentary term there were signs that he was shifting in his position. It became very obvious that New Zealand First's economic policy proposed only minor changes to government economic policy. This was in sharp contrast with the impression that Peters had previously given, that the economic reforms of the last 12 years have been totally wrong and that they therefore required to be substantially overturned. [Read more below]
A retreat from freemarket opposition
Peters’ first moves constituted shifting the emphasis of his criticism away from his opposition to the substance of the reforms to that of opposition to the actual reform process. The complaint was now one of things going too far and too fast. In 1994 he was quoted as saying that he ‘freely acknowledge[d] the advantages which have come from greater efficiency and tighter financial constraint’ (quoted in James, 4 Mar 1994: p.13). Furthermore, he claimed, ‘by association, a degree of authorship [of the economic reforms], asserting 30 "moves to free up the economy" before Rogernomics started' (James, 4 Mar 1994: p.13).
It was in 1996 that Peters retreated most visibly from his economic nationalistic and oppositional stance. In June 1996 Peters' declared
Michael Laws later commented on the earlier foreign ownership policy and how he managed to change it: ‘It was loppy stuff. Obviously, I talked to Winston and watered it down to apply only to strategic assets’ (quoted in Clifton, 21 Dec 1996: p.28-31).
In mid-July 1996 the new economic policy was presented to the party’s annual convention. In most policy areas, NZ First were making slight adjustments, moving them to the “right”. In education policy, for example, they adopted a policy of a 10% tertiary student fee – where previously NZ First promised no fees.
NZ First’s softening towards the Reserve Bank Act was informative. Although in 1996 Peters still proposed changes to the Reserve Bank Act, in practice these would not, in Michael Cullen’s opinion, ‘lead to any great changes in the operation of monetary policy’ (quoted in Kominik 23 Jul 1996: p.2). Even Bill Birch complemented NZ First economic policy in 1996 saying that now their ‘economic framework partly embraced what had already been set up by National' (Kominik 23 Jul 1996: p.2).
Despite the conversion to neoliberal economics there was still an “unrealistic” element to the economic policy, as NZ First still proposed to cut taxes and increase spending at the same time – a contradictory policy which simply lacked credibility.
In typical Peters style, the announcements of economic policy moderation were given to different audiences in a very different way. Throughout 1996, the moderating messages ‘were delivered to business audiences then, their purpose served, soft-pedaled for wider consumption as a "suggestion" and a "clarification"' (Speden, 8 Jul 1996: p.2).
Adjusting to “political realities”
Despite the overt role played by Michael Laws in changing the party’s economic policy, the most obvious explanation for NZ First’s transformation in the mid-1990s was that NZ First was succumbing to “political realities”. It seems that as the Alliance and NZ First programmes of economic nationalism came further under the microscope, the untenable (or technically difficult) elements were being exposed. Laws later explained the dropping of the party’s strong brand of economic nationalism: 'it is an inordinately difficult proposition to wed oneself to this sort of financial jingoism when one lives in an extremely small and minor South Pacific hybrid that is utterly reliant on foreign trade’ (Laws, 1998: p.324).
Previously NZ First had clearly been swimming against the tide of public and elite opinion on the issue of economic reform. Although the section of society still opposed to the free-market reform – NZ First’s and the Alliance’s potential constituency – remained sizable, its numbers had been steadily diminishing (Hames, 1995: p.228). Any political strategist with an eye to such trends, was likely to assume that as the reforms became further embedded there was little future in taking a oppositional stance to the economic reforms.
Obviously the preparations for coalition negotiations and relationships under MMP also played a part in the party’s transformation – in that NZ First needed to carefully position itself in the centre between Labour and National in order to increase its post-election negotiation options and leverage. Before the right-ward shift in economic policy, NZ First appeared to be very incompatible with parties of the right – in particularly those of the neo-liberal economic right. A new economic policy framework was therefore created which would match the party’s centrist aspirations.
Another pragmatic element entered the equation in the form of the sudden realisation in 1996 that any economic policy that NZ First advocated may actually be tested in government. As Laws explained, 'the policy stood an excellent chance of being implemented so there must be no tarty wish lists’ (Laws, 1998: p.323). To him it was a question of protecting NZ First ideals and reputation on political process: 'There was no point in holding on to financially untenable policies given the inevitability of their post-election abandonment' (Laws, 1998: p.329). After all, 'making promises that could never be honoured was the exact antithesis of NZ First's supposed philosophy' (Laws, 1998: p.329).
Positioning in an overcrowded political marketplace
Another part of the explanation for the shift to the right may also lie in some expectations of party leaders about future developments in the party system. During the reconfiguration of the party system throughout the 1993-96 parliamentary term, all the parties were positioning themselves in order to ensure survival or growth. For example, Jack Nagel speculated in 1994 that, ‘If Maori and social conservative parties are launched, they may take much of NZF's electoral base, leaving it unable to compete with the Alliance for the interventionist vote' (Nagel, 1994: pp.156-157). In a sense, therefore, NZ First’s policy transformation might be seen as a pro-active move to avoid Nagel’s foreseen scenario. As Laws argued, ‘If anything the Alliance were the true preserve of such sentiments with their support for high tariff barriers, an interventionist Reserve Bank and even a confessed abhorrence of export growth' (Laws, 1998: p.324).
The continuing existence and competition of the Alliance may also have played a part in discouraging NZ First from continuing to champion economic nationalism and “left wing” solutions. For in the 1993-96 parliamentary term, political parties were becoming acutely aware of the greater need under the reconfiguring party system of MMP to distinguish themselves from their rivals and cut out for themselves a sizeable and loyal constituency to ensure existence. Likewise, Ruth Laugesen had already pointed out that the Alliance and NZ First had a problem of ‘distinguishing themselves from each other in an overcrowded political marketplace, particularly when the range of available policy prescriptions is limited’ (Laugesen, 2 Sep 1996). It seems, therefore that in the competition for the anti-free market vote, the Alliance had shown itself to be the dominant player and NZ First may have been wise enough to accept defeat and take on another strategy and constituency.
Laws coined the phrase that ‘a centre party should be "economically conservative but socially progressive" – and quickly instilled such sentiments into all Winston's speeches and media statements' (Laws, 1998: p.323). This new formula was actually in strong contradiction to NZ First’s previous centre party strategy, which was more in line with Winston Peters’ own inclinations to be socially conservative and economically conservative/moderate.
Adrift without an ideological anchor
Another part of the explanation for the policy shift lies in a less calculated and consciously planned origin. For it could be said that NZ First’s various transformations and erratic policy behaviour is due to the fact that the party did not have a solid, stable and adequately united support base to ensure stability of party ideology and policy. It is usual practice for a political party of any longevity to align itself with powerful or substantial social, ethnic or economic force or institution outside of Parliament.
Instead, NZ First was kept afloat by its contradictory and complex dual-support base, and without any one institution to provide an ideological anchor. In this situation, individuals play an important role. Without strong and stable ideological principles, when the balance of forces change within the party, policy is inclined to shift dramatically as well. According to Laws, the lack of a ‘core philosophy’ in the party resulted in the party having ‘most of its election policy constructed by two of its newest recruits – McCardle and me – frustrated refugees from the status quo' (Laws, 1998: p.322).
The continued influence of Michael Laws
Michael Laws became the key author of NZ First policy. The result was therefore, that a conservative, technocratic and pragmatic economic policy was written:
Laws’ job in constructing a new “centre” policy was, however, fraught due to the fact ‘that NZ First had already determined various policy positions which often contradicted a centrist prescription’ (Laws, 1998: p.323):
Laws outlines how he managed to moderate the party’s economic policy despite these restraints:
Laws’ exercise also brought him to face up to NZ First’s long standing economic contradiction of promoting lower taxes and higher spending. The previous Finance spokesperson, Brian [?] Downey:
[This blog post is part of a series about the history of the New Zealand First party. These posts are being published following the recent decline and then defeat of the party at the 2008 general election. Little academic research has been published on the Winston Peters phenomenon, despite the fact that he and his party have been central to parliamentary politics in New Zealand since the 1980s. Although this series focuses on the early years of New Zealand First, the later years will be dealt with in the future. Considered feedback from readers is very welcome.]