Island Life by David Slack


December 17 and all that

Here's the promised second excerpt from Chris Trotter's new book No Left Turn, published by Random House and reprinted with their kind permission. This comes from Chapter Ten, Stronger Seas.

The December 17 package signalled a renewed offensive against the welfare state and the full-employment economy. The ideological impetus, as with the reforms of the previous three years, came from Treasury and was set out in Government Management - two weighty volumes of advice it released following the election. The strategy was simple: reduce the rate of income tax and with it the volume of state revenue; alarm the country with the inevitable expansion of the government's deficit; and then prepare the nation for a move against organised labour as the only means of turning around the massive rise in unemployment that would inevitably follow.

Sharp-eyed readers will already have spotted in the December 17 package a précis of the subsequent economic 'packages' adopted and introduced by successive governments - both Labour and National - over the course of the following 20 years. The massive shift in the tax burden from the rich to the poor was signalled, along with the cuts in welfare provision and the productivity-boosting reductions in wage-levels which followed the decisive defeat of the trade union movement.

The Treasury programme was now largely impervious to democratic checks and balances - provided always that no mechanism was devised to transmit the true level of popular opposition into the sacrosanct precincts of Parliament. Fortunately, at least from Treasury's perspective, New Zealand's lack of a written constitution, its unicameral Parliament and its distorting FPP electoral system all conspired to make such an intrusion extremely unlikely. Once a party was elected to power there were virtually no effective legal means of restraining it. And with both of the major parties selecting their policies from the same Treasury hymnal (and with FPP making any more than two large parliamentary parties exceedingly difficult to arrange) these bureaucratic guardians of the new orthodoxy were quietly confident that no dissenting melody could intrude upon New Zealand capitalism's revised choral repertoire. Unless, that is, the dissident song was sung by someone already in the chapel - like the prime minister.

Over the summer parliamentary recess, David Lange and Margaret Pope developed a detailed critique of the December 17 package and, on 22 January, with Douglas out of the country, Lange struck back. In a direct appeal to the public and over the heads of his own cabinet colleagues, he cancelled the fl at tax proposal.

This removed a key element from Douglas' strategy. Without a sudden and substantial fall in government revenue none of the other mechanisms could operate with anything like the same effectiveness. Douglas and State-Owned Enterprises Minister Richard Prebble had always relied on the destabilising impact of Treasury's laboriously prepared, comprehensive and readily implemented policy prescriptions. In this respect, the timing of the stockmarket crash and the hastily assembled character of the December 17 package proved to be fatal vulnerabilities. They had given the prime minister and his speechwriter a chance to organise a devastating counter-attack.

At this point, Lange could have reached out and joined hands with the large and well-organised left-wing of his party. He would have been able to count on several of his caucus colleagues to follow his lead, especially as the ruling bodies of the party (of which I was at that time a member) would certainly have made it clear that those who refused to back the prime minister would face de-selection. A cabinet revolt could have been forestalled by ruthless use of the prime-ministerial privilege to advise the Governor-General. The prospect of losing their warrants would have had a powerfully concentrating effect on the minds of all but the most fanatical of his ministerial enemies. Had Lange possessed the will and the skill, he could have mounted what in effect would have been a counter-coup against Treasury. But the man who had risen so effortlessly to the highest office in the land was not that sort of politician. He had courage, he had a conscience and he had Margaret Pope, but he did not have the ability to forge the political alliances that allow a politician to make more than a handful of grand gestures.

So he urged his cabinet colleagues to slow down the pace of change and 'pick up the casualties', and told the country it was time to pause 'for a cuppa'. But he had no coherent plan. Even so, his actions threw the parliamentary and organisational wings of the party into chaos. Rebellious noises from left-wing back-bench MPs (now including the revered Sonja Davies) were matched by openly mutinous noises from Lange's cabinet colleagues. A dressing of sorts was placed over these gaping wounds at a caucus retreat in Ashburton in February 1988, when an 'accord' promising greater consultation between cabinet and caucus was reluctantly conceded. By April, however, the tensions between Left and Right had again erupted into open conflict. Left-wing activists and trade unionists in Richard Prebble's Auckland Central electorate had been waging a two-year campaign to wrest control of the local party organisation from Prebble's henchmen. They were at the point of success when, in defiance of the national executive, the electorate committee chair ruled all but Prebble's followers ineligible to stand for election. What was to be done? The leader of the anti-Prebble group, Matt McCarten, at that time an up-and-coming Auckland trade unionist, recalled the debate in his memoir Rebel in the Ranks:

The reality is that Prebble and his key backers were senior ministers. Prebble told the Labour caucus that if the party backed our machine and dumped him it would be all over. The senior ministers apparently threatened the party. I had a meeting with Mark Gosche [Secretary of the Northern Service Workers' Union and McCarten's boss] who reported that he'd been told: 'Call your dogs off or the government is going to go after the union movement. We'll pass legislation against the unions, we've got the numbers at caucus, we're going to ram this through. We're going to do you.' . . . Apparently, 17 Labour MPs had signed a letter to David Lange saying that if Prebble went down, they would bring the government down and form a new party to stand against the Labour Party.

Shortly after this encounter, the party president, Rex Jones, flew to Auckland with the party's general secretary, Tony Timms, to bring McCarten and about eighty of his comrades up to speed with caucus developments. 'They've threatened,' said Jones. 'This could bring the government down.' McCarten's response was typically terse - and radical:

Hold on a minute. Two years ago I was told to go into Auckland Central and work with the locals to build the party and drive Prebble out. It seems obvious to me now that the right-wing MPs have put their hands up and threatened the party. So we should call a special conference of the Party and expel them. This government will likely fall but it's as good as gone anyway. The important thing is to preserve the Party. The Labour Party made a mistake selecting these people so sack them, throw them out and let them stand against us. They'll lose and the Labour Party can rebuild itself. Isn't that the obvious thing to do?

Jones's response from the top table was embarrassed laughter. 'You mad little fucker,' he muttered to McCarten.

But with characteristic acuity, McCarten had set forth the indisputable facts about the predicament the Labour Party now faced. The government was doomed. In the years ahead, the key battle would indeed be fought over how, and by whom, the party should be rebuilt. And if that process was to be successfully accomplished, the 'right-wing MPs' would have to be driven out.

But not yet. After much hand-wringing, Jones and Timms got their way and McCarten's 'machine' backed off. But, just in case the New Zealand Council of the party - dominated by the Left since the 1987 conference - attempted to relitigate the matter, Prebble placed each of its members under legal restraint. If the council moved against him, declared the Labour MP for Auckland Central, he would challenge his own party's constitution in court.

It was the beginning of a political war that would rage for more than a decade. This war may have lacked the dramatic spectacles of earlier struggles between Maori and Pakeha, workers and bosses, rednecks and protesters, Left and Right, and there were to be no columns of mounted specials trit-trotting through the streets of the capital, no rioters smashing up Queen Street, no police batonings. But it was no less a manifestation of the fundamental dichotomy that has riven this nation from the moment of its birth. The dichotomy which social historian Tony Simpson identified more than 30 years ago, between those who see New Zealand primarily as a good place to make money, and those who see it as a good place to live. That the struggle was located on the left of New Zealand politics, and that its principal antagonists were nearly all men

and women who, in 1988, were members of the Labour Party, emphasises how strongly the aspirations of the democratic and egalitarian majority provide the motive power for New Zealand history.

Treasury's subversion of the parliamentary wing of the Labour Party was the first - the indispensable - pre-condition for the success of its top-down revolution. Breaking Treasury's ideological overlordship and recovering the parliamentary Left's freedom of manoeuvre accordingly became the first - and equally indispensable - precondition for recommencing the nation's forward march.

In preparation for the looming struggle, the Labour Party divided itself into three quasi-formal factions. Jim Anderton moved swiftly to revamp the Economic Policy Network, a ginger group he had formed with Pat Kelly and Peter Harris (an economist with the PSA) at the time of the Great Economic Debate, into a more substantial vehicle for leftwing agitation called the Labour Policy Network (LPN). Prebble and his followers, seeing the urgent need to organise the party's right wing, launched the Backbone Club. The most powerful organisational force in the party, however, was the core group made up of office-holders on the national executive and the secretaries of the major affiliated unions, who were often the same people.

This latter group enjoyed the strong if highly circumspect support of Helen Clark, now a cabinet minister, and a number of key backbenchers. This gave it considerable support among Labour's regional structures, in the electorate committees and among the ordinary branch membership. Although by 1988 the consequences of Rogernomics had prompted thousands of party members to vote with their feet, the branches were still just able to outvote the trade union affi liates on the floor of the annual conference. The 'moderate centre', as its critics on the Left described the Clark-led group, also enjoyed the considerable support of the

CTU's national executive, the SUP - and, to Anderton and his followers' dismay, Pat Kelly. After being outmanoeuvred by Ken Douglas in his bid to secure the presidency of the new CTU, Rob Campbell had departed the trade union movement for a less stressful and more fi nancially rewarding career as an economic and business consultant. Kelly was the unions' acknowledged champion inside the Labour Party, although Campbell did retain his seat on Labour's national executive.

The long-term goal of the centrists was to steady the process of 'economic rationalisation', as the Australians called their version of Rogernomics, by bringing organised labour into the process as a disciplined and helpful economic and social partner. Their model, also Australian, was the detailed accord thrashed out between the Australian Council of Trade Unions and Bob Hawke's Labor opposition immediately prior to Hawke's election victory in early 1983. Campbell himself had argued for just such a social contract in After the Freeze, the 1983 book he wrote with the then FOL economist, Alf Kirk. Essentially a policy of limited accommodation with the Roger Douglas reforms, the proposed 'compact' demanded a 'constructive engagement' between the Labour government, the Labour Party and the CTU. Notwithstanding the spirit of concession and compromise in which it was promoted, the compact was still too radical a policy for the likes of Douglas and Prebble. The centrists and the Left, therefore, had a common cause in driving the Right's most hated leaders from cabinet. Whether they had anything else in common remained, for the time being, moot.

Throughout the remaining months of 1988, while the party and the unions swung in behind their leaders' attempts to slow the pace of change, Douglas and his followers in the Backbone Club manoeuvred frantically to depose the prime minister. Information was leaked

to the news media continuously. Strange, raucous characters whom no one had seen before turned up to party meetings and launched into well rehearsed and vitriolic attacks on the trade unions and their 'communist' friends. Prebble's own propaganda pitched the Left's 'forces of darkness' against the Right's 'forces of light'. It was a strange and bitter time to be a member of the Labour Party.

Then it got even worse. When Rex Jones announced he would not be seeking a second term as party president, Anderton declared himself a contender. The Left was enthusiastic and the LPN immediately began organising support. The centrists were aghast. They knew the caucus was, as Lange so succinctly put it, 'allergic' to the idea that Anderton should be in control of anything, let alone candidate re-selection. They were also angry because Anderton's candidacy confirmed every rumour the Backbone Club had spread: the Left was out to 'take over the party'; they were going to throw out every MP who resisted their 'communist' agenda. The centrists also suspected that an Anderton candidacy would make it next to impossible to sell the compact to the Left. And if, as many moderates now anticipated, they would be forced to solicit Backbone Club votes to keep Anderton out, a furious Left (nearly half the party membership) would cry betrayal and heap red-hot calumnies upon both their own heads and their 'collaborationist' agenda. So it proved. Anderton's principal rival in the contest was Ruth Dyson, a close ally of Helen Clark to whom, purely out of fear of Anderton, the Backbone Club had pledged its support. The Left's control of the affiliates' council and its support networks in the branches appeared to give it the numbers, but the vote would be close. The author remembers meeting Matt McCarten, Anderton's

numbers man, on the morning of the election in the dimly lit corridors of the Dunedin Town Hall. 'Well, Matt,' I asked nervously. 'What do you think? Will he win?' McCarten smiled ruefully. 'My heart says yes,' he replied quietly, 'but my calculator says no.' He was right. In the presidential ballot, outgoing president Rex Jones personally cast all 55 of the Engineers' Union's votes for Dyson. The fi nal result: Anderton, 473 votes; Dyson, 572.

Just before the ballot, Lange had addressed the conference:

When I opened the Economic Summit Conference (it seems like a lifetime ago) I talked about a country not too far from here. I talked about a country which was prosperous, which had no poor, which was tolerant and generous and fair. I talked about New Zealand and I meant every word. I mean it now. I would not be here if I did not believe it. I would not be here if I did not believe that New Zealand could be that country, and it will be.

But it was not. Outside the conference hall lay a country reeling from Labour's savage restructuring of its economy, the collapse of its stockmarket, the looming privatisation of its state-owned industries and the disappearance of so many of the familiar ideological landmarks that had given it direction for the past 50 years. The night before Lange spoke, hundreds had protested outside the very same town hall where young students had accosted Holyoake in 1971. But it wasn't a war they were protesting against. This time, the protest was against the fact that 170,000 of their fellow citizens were out of work, that their employers were refusing to offer them a wage increase and locking them out when they attempted to withdraw their labour. Ken Douglas, in offering the prospect of a compact to the conference - and the government - had said: 'Other forces control the levers of government and the levers of management. They are the real brokers of economic power.' He was appealing to the government as his predecessors in the 1930s had done, to intercede on behalf of working people against the managers. But the protesters looked at Prebble and Douglas, and they didn't see interceders. They saw traitors. 'People before Profits' declared one of the placards. To the once-loved Labour Party, another simply said: 'Give us back our future'.

For all this, the 1988 conference recorded some potentially influential achievements. The CTU did offer, and the party did accept, a more 'constructive engagement' between the government, the employers and the trade unions. A 'statement of intent' was issued, pledging both the organisational and parliamentary wings of the party to genuine consultation and to 'no surprises'. But these outcomes were much less appreciated than they would have been eighteen months earlier.

The ratification of a radically new

policy-making structure for the party also went largely unnoticed. As far back as 1978, Helen Clark had written:

A thorough party reorganisation which established a committed and working membership, involved in policy groups and a range of party educational activities, would be the prerequisite to the success of a triennial congress which came together to actually decide party policy for the next three years.

By virtue of her position on the party executive for the best part of a decade, Clark, with the help of Wilson and Dyson, had succeeded in having something very close to this 'Scandinavian' model ratified in Dunedin. Labour's rank-and-file members and politicians needed only one thing to make it work, but it was the one thing the 1988 conference had almost entirely destroyed - trust.

Copyright Chris Trotter 2007

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