As the Treasurer in the National-NZ First coalition government, Winston Peters dubbed himself ‘The Peoples’ Treasurer’. Virtually all commentators, however, preferred the title of ‘The Treasury Poodle’. There is no doubt that, upon becoming part of the government, New Zealand First had to accept further elements of the new economic orthodoxy. While of course compromises have to be made in any coalition, ‘Peters in his role as Treasurer has not just compromised, he has become an enthusiastic convert to the National economic world view' (Laugesen, 15 Feb 1998: p.F1-2). Peters' role as Treasurer underlined NZ First’s further shifts to the right in economic ideology. His decision to take this portfolio was also a serious error for the party [Read more below]
Right from the beginning of the new government the negotiated Coalition Agreement committed NZ First to an essentially National Party line in macro-economic policy. The agreement broadly continued the National Party strategy developed between 1990 and 1996, with NZ First subscribing to the main directions of social and economic policy. The Coalition Agreement was therefore, from its inception, a repudiation of the position taken by NZ First throughout the election campaign’ (Lange, 21 Apr 1997).
NZ First made much of the additional public expenditure that they had managed to negotiate into the Coalition Agreement. However such expenditure was actually quite modest:
Such expenditure increases may appear on the surface to be substantial. In reality, they are not. When allowances is made for inflation (of, say, 2-3 per cent per annum), nominal increases of this magnitude will result in real expenditure levels remaining virtually unchanged over the three years in question. The decision that the Employment Contracts Act should be left substantially intact provides further evidence of the agreement's generally conservative economic policy direction (Boston and McLeay, 1998: p.234).
Economic nationalism jettisoned
Probably the most important economic compromise that NZ First made was the abandonment of their economic nationalist stance. This was indicated most strongly in Peters’ first Budget speech in June 1997, when he announced that all tariffs would be abolished by early the next decade. The new stance was also reiterated by NZ First’s new reluctance to oppose foreign investment. Essentially National's open borders economic policies therefore remained intact. NZ First's strong opposition to foreign investment was also quickly moderated and made to look bizarre as Peters appeared to court Asian politicians and investment.
The Government’s state assets sales programme also remained, as NZ First took a new approach to corporatisation and commercialisation – especially in regard to the proposals provided by the Roading Advisory Group which were cautiously endorsed by Transport speaker Peter Brown.
A conservative Treasurer
Ironically, Winston Peters' role as Treasurer seemed to underline NZ First’s shifts in economic ideology. There is little doubt that Peters’ decision to take this portfolio was a serious error for the party:
by becoming Treasurer Peters locked himself into a role alongside National on all fours with its economic policy direction. And, perversely, he chose to do the very thing that ensured his party would not get kudos for forcing extra social spending out of National: having agreed on spending parameters (a fair proportion of which was taken up with ongoing costs of previously instituted National policies) he presented himself as a tight budgeter, the epitome of "prudence". For "prudent", if you are a middle New Zealander, read "tightfisted" and "mean". In consequence his opponents effortlessly portrayed him to middle New Zealanders as the Treasury's "poodle"'…. Worse, his image as a tightwad on social spending was pointed out from within his own ranks – by Neil Kirton (James, Dec 1997).
Jeff Gamlin also argued that because Peters took the Treasury position, NZ First was unable to make advances in the social policy area:
it has meant the party has not been able to play a genuine counterweight role through focusing on the social issues. Such a role would have been in line with Mr Peters' combative approach but clearly he could not hope to promote bold and expensive social initiatives while remaining committed to the Treasury line (Gamlin, 12 Sep 1997: p.20).
The shift to the right was also reiterated by putting Tuariki John Delamere into the position of Associate Finance Minister. Delamere’s politics were clearly to the right of the party. He had previously been a National Party member, and in 1990/3? he unsuccessfully sought a general election nomination for the party. According to Richard Prebble, he later ‘flirted with Act' before going to NZ First (Prebble, 1997: p.71).
Part of the explanation for the further shift to the right in economic policy since the coalition formation could be found in the idea that NZ First and National had negotiated a policy truce where ‘Fundamental changes in economic direction will not be tolerated. In return, Shipley will underwrite NZ First's social policy agenda' (Trotter, 12 Dec 1997).
‘People’s Treasurer’ or ‘Treasury Poodle’?
In the early part of 1998, Peters attempted to reverse his image as the “Treasury Poodle”, instead proclaiming himself as “The People’s Treasurer”. As Trotter pointed out, ‘a "People's Treasurer" handing out tax cuts to the already wealthy, preaching "social responsibility" like a good Victorian patriarch, and resurrecting the work-for-the-dole schemes of the Great Depression is unlikely to generate an overwhelming volume of popular acclaim' (Trotter, 6 May 1998). This strategy was doomed to be a farce, as the imagery was not nearly plausible.
This image-management was, however, part of a wider NZ First attempt in 1998 to rebrand itself as a more “left” party than the public perceived it as. This exercise did in fact involve a small move the left in terms of actual policy changes. For instance, while in 1997 Peters proclaimed that there were "no prizes for coming last" in the tariff-reform process, suddenly Peters declared that he would be happy to move at the same pace as New Zealand’s major trading partners. Likewise, NZ First strengthened its position on asset sales and foreign ownership of New Zealand assets.
While it seemed surprising that Peters as Treasurer was so easily captured by the Treasury agenda, Michael Laws explains that Peters ‘wanted the mana associated with the senior role rather than the role itself’ (Laws, 1998: p.387). Accordingly it only took ‘Treasury a matter of weeks to appreciate this distinction and regain their vice-like grip on the Government's policy throat' (Laws, 1998: p.387).
[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.]