Settling In: How Was The Last Labour-Led Government Doing Two Months Out From Election Day?

Entitled “The View From The Seventh Floor”, this article was published on 26 January 2000, sixty days after the election of the Labour-Alliance coalition government on 27 November 1999. The circumstances and challenges confronting Helen Clark’s new government, when set alongside those facing Jacinda Ardern and her colleagues, are at once strikingly similar but also jarringly different. By reproducing my seventeen-year-old article today, I hope to provide the readers of Bowalley Road with an opportunity to compare and contrast these two historical moments of significant political departure. - Chris Trotter

WHAT HAPPENS on the Seventh Floor of the Beehive affects everyone. From a handful of cramped offices thirty metres above Lambton Quay, issue forth the media releases, speech notes, bills and regulations intended to shape ­- and re-shape - the New Zealand economy. For the next three years, the speed and direction of economic policy will be determined by the two politicians currently occupying the Seventh Floor – Labour’s Treasurer and Finance Minister, Michael Cullen, and Jim Anderton, the Alliance’s Minister for Economic Development. The success or failure of these two ministers will have an enormous bearing on the fate of the Labour-Alliance Coalition. Voters respond most vociferously to Government decisions which have a direct impact on their material standard of living. If they wish to remain on the Seventh Floor, Cullen and Anderton will have to get it right much more often than they get it wrong.

Five years ago, the idea that Michael Cullen and Jim Anderton might one day be working alongside one another would have been greeted with derision. As Labour and the Alliance staked out their respective economic positions, the responsibility for articulating the issues which divided the two parties fell to the two men who must now – somehow – unite them. It must be said, that both Cullen and Anderton embraced the former task with all the fervour and vitriol for which the Left is famous. Cullen christened the Alliance Leader “Jim Il Sung” – equating Anderton’s protectionist predilections with the North Korean command economy. Anderton, not to be outdone, never tired of reminding Alliance audiences that Cullen’s air-fare to an exclusive seminar in Aspen, Colorado, had been paid for by a member of the Business Roundtable so that Labour’s finance spokesperson could be further indoctrinated with New Right economic theory.

These were blunt rhetorical instruments, however, when compared to the razor-sharp analysis of Laila Harré, who, in her maiden speech to Parliament, provided by far the best summary of the policy issues separating Labour and the Alliance:

“A government cannot both embrace the full force of globalisation and retain sovereignty over key economic decisions. A government cannot deliver a first class health and education service accessible to all regardless of wealth without a substantially more progressive income tax system. A government cannot deal with fundamental issues of biosecurity and ecological diversity by adopting a market model which will by definition subsume these needs to the perceived interests of foreign investors. These fundamental issues of difference between the Alliance and Labour must be resolved, and not simply disguised by clever packaging.”

It is now clear that Harré’s words were directed as much towards her own party’s leadership as they were to Labour. The 1996 election débacle brought about a decisive shift in Jim Anderton’s

long-term political strategy, the first sign of which was his June 1997 speech to the NewLabour Party conference in Hamilton, where he proposed a substantial revision of the Alliance’s taxation policies. This rightward shift brought the smouldering civil war within the Alliance’s ranks to flash-point - precipitating a battle in which the Marxist Left of the NLP was pitted against an opportunistic coalition made up of Anderton supporters, Mana Motuhake and the Democrats. The Greens, rather than become involved in another three years of fratricidal bloodletting, opted to withdraw from the Alliance altogether.

Anderton’s faction – as so often in the past – emerged triumphant from the repositioning argument, thereby clearing the way for the formal rapprochement with Labour which took place at the Alliance Annual Conference held on Massey University’s Albany campus in August 1998. The decision of the latter to opt for a “loose” coalition with Labour – rather than a detailed National/NZ First-style agreement – signalled a further defeat for the NLP Left. Harré and her allies had argued strongly for a much less accommodating approach.

From Helen Clark and Michael Cullen’s perspective, Anderton’s demonstrated capacity to master the Left of the Alliance was a necessary precondition to any reciprocal shift of position on the part of the Labour Party. The Labour Caucus’s decision to confirm a six cent tax hike for those earning more than $60,000 per annum was Clark and Cullen’s answering gesture to Albany’s warm fuzziness – and proof positive that the process of “policy convergence” was now an accomplished fact.

Astute readers will recognise in this brief historical narrative a political motif strikingly similar to the one imposed on NZ First by Michael Laws in 1996. Before either party could “coalesce” with a mainstream political force, it first had to be shorn of its more radical elements. That this process necessarily entailed the shedding of large chunks of its electoral support, and the steady disillusionment of its most active supporters, was considered by both the Alliance and the NZ First leadership to be the unavoidable price of power.

All attempts by the Left of the NLP to arrest this process of de-radicalisation proved fruitless. In spite of Alliance Director Matt McCarten’s best Machiavellian efforts to supplant Mana Motuhake and Democrat candidates with NLP Leftists on the Alliance List, the tax issue once again provided Anderton with the means to demote and exclude the radicals from serious contention. By aligning the Alliance’s initial tax rate with Labour’s, Anderton not only eliminated the progressive elements of Alliance fiscal policy, but also undermined its capacity to offer a truly radical alternative to Labour’s economic direction. The NLP Left’s last ditch defence of Progressive Taxation did little more than reveal the true extent of its isolation and weakness within the wider Alliance coalition.

Walking around the Seventh Floor of the Beehive today, one gets the feeling that Jim Anderton has “come home”. Surrounding the Minister of Economic Development is exactly the same group of individuals who supplied him with advice and support back in the late 1980s. Just across the circular stairwell is the office of Peter Harris - the former CTU economist who, alongside the redoubtable Pat Kelly, was one of the key driving forces of the Labour Party’s “Economic Policy Network” – a group set up by Anderton in the mid-1980s to contest the Douglas/Prebble assertion that “There is No Alternative”. Interestingly, Peter Harris is now advising Michael Cullen. Advising Anderton, as they have done since 1988, are Integrated Economic Services’ John Lepper, Petrus Simons, and Len Bayliss. The other long-term advisor from the 80s with easy access to Anderton’s office is constitutional lawyer, Andrew Ladley. It was Ladley who successfully argued the case for Anderton’s readmission to the Labour Caucus following his suspension for refusing to support the privatisation of the BNZ in 1988.

Matt McCarten’s request to keep the Alliance’s Parliamentary and Organisational staff in close physical proximity – i.e. on the same floor of the Executive Building - was over-ruled by both Anderton and Clark. If you want to chat with the radicals nowadays you have to move out of the Beehive altogether and make your way through a maze of corridors to their new offices in the old parliamentary complex. Nothing could better illustrate the changes that have swept over the Alliance as it has moved steadily towards the political mainstream.

It was a series of tactical – not ideological – differences which separated Cullen, and Anderton back in the late-1980s. Ten years on, even those have disappeared.

This essay was originally published in The Independent Business Weekly of Wednesday, 26 January 2000.