Sir Michael Cullen: 1945-2021

Labour Saver? Thanks to Michael Cullen’s clever alchemy, the base metals of neoliberalism could be transmuted into the glittering gold of “modernisation”; and the grim squares of betrayal transformed into happy circles of fulfilment.

SIR MICHAEL CULLEN’S DEATH leaves Helen Clark as the sole remaining adult in Labour’s room. While he lived, Cullen’s influence on the present government was considerable. He was one of the few Boomers this Gen-X government listened to with genuine respect. Was that because Cullen took care to reassure his protégé, Finance Minister Grant Robertson, that the Labour-led Government’s economic settings were more-or-less correct? Undoubtedly that helped, but so did Cullen’s formidable intellect, his sense of humour, and his undoubted possession of that increasingly rare commodity – political wisdom.

Cullen called his recently published memoir Labour Saving. The title is instructive. Like so many Labour Party members confronted with the unrelenting radicalism of “Rogernomics”, Cullen had to decide how best to preserve the political party responsible for improving the lives of so many New Zealanders. Unlike Jim Anderton and his followers, he was convinced that the humanitarian essence of the Labour Party could be safeguarded without jettisoning Roger Douglas’s neoliberal programme.

It was a conviction he shared with Helen Clark, and without it their formidable political partnership would have been impossible. It is no small part of his legacy that, alongside Clark, he was successful in convincing both Labour’s remaining members, and an increasing number of centre-left voters, that the “reforms of the 1980s” were compatible with Labour’s core values. What historians will be called upon to decide is whether Clark-Cullen’s social-democratic rhetoric was ultimately reflected in Clark-Cullen’s on-the-ground achievements.

What cannot be disputed is Cullen’s immense usefulness to the Lange-Douglas Government as the Rogernomics “revolution” was passing through its early critical phases. Nowhere was this usefulness more evident than in the internal party debate over the introduction of the all-important Goods and Services Tax. Without the revenue collected by GST, the dramatic cuts in personal income tax would not have been possible. These reductions were absolutely essential if Rogernomics was to be accepted and, more importantly, supported by the New Zealand middle-class.

It was Cullen’s job to defuse the widespread opposition to the clearly regressive GST that was growing within the Labour Party. He did this by moving an amendment to any remits opposing GST. The amendment appeared to endorse the opposition to GST unless the inevitable increase in the cost-of-living of low-paid workers imposed by GST was fully offset by income tax reductions.

The choice of Cullen as the promoter of this “No GST unless …” solution was extremely shrewd. Within the Labour Party, Cullen was widely credited as having liberal-left leanings. Prior to winning the St Kilda nomination in 1981, he had been an active member of the Castle Street Branch of the Labour Party. Founded by the late Austin Mitchell, Castle Street, like Auckland’s Princes Street, was seen as a haven for university-based radicals. If Cullen was convinced that the regressive effects of GST could be offset by tax-cuts, then Labour traditionalists – as well as Labour “modernisers” – could vote in favour of Douglas’s “reform” with a clear conscience.

It was a template which would serve Cullen and the neoliberal Labour Party extremely well over the years that lay ahead. Decisions objectively inimical to the interests of low-paid workers and beneficiaries could be presented simply as new and better ways of achieving Labour’s traditional objectives. Thanks to Cullen’s clever alchemy, the base metals of neoliberalism could be transmuted into the glittering gold of “modernisation”; and the grim squares of betrayal transformed into happy circles of fulfilment.

The success of this strategy was compounded by the departure of the traditionalists’ leader, Jim Anderton, in 1989. With him went the party members who understood the true implications of the Rogernomics Revolution, and who possessed both the will and the wherewithal to oppose it openly in party forums. Though Anderton’s NewLabour Party – which in 1991 became the Alliance – harried Labour relentlessly throughout the 1990s, it could not, in the end, compete with the immense power of the Labour “brand”. As a former lecturer in social and economic history, Cullen rightly wagered that the doggedly loyal working-class voters who re-elected him to Parliament every three years would never abandon the party of Michael Joseph Savage.

Cullen also understood what so many of Anderton’s Alliance voters did not. That in the 15 years since the election of the Fourth Labour Government in 1984, neoliberalism had so firmly embedded itself in New Zealand’s key economic and administrative institutions that it could only be dislodged by an upheaval of revolutionary force. Neither Clark and Cullen were revolutionaries, which is why, when confronted with an employer class spooked by the genuinely social-democratic policies of the Alliance (Labour’s coalition partner between 1999 and 2002) they capitulated without a fight.

Stared down by the A-team of Auckland employers gathered in the Cathedral Room of the exclusive Auckland Club on 24 May 2000, Cullen blinked. The following day, speaking to yet another group of angry employers, Labour’s Finance Minister purred: “We want to be a government that moves forward with business, not one that watches indifferently from the side-lines.”

Sobered by what soon came to be known as “The Winter of Discontent”, Cullen proved as good as his word. The big reforms that constitute his political legacy: The Superannuation Fund; Working For Families; KiwiSaver; far from being the solid social-democratic victories Labour presents them as, were actually a sequence of inadequate workarounds for the problems created by neoliberal policies Cullen now knew better than ever not to challenge.

The Superannuation Fund (quickly dubbed the “Cullen Fund”) kept billions of dollars safely out of the hands of cash-starved ministries. This sequestering function was amply demonstrated by the speed with which the National Government suspended contributions to fund its GFC and Earthquake recovery projects. Working For Families, far from being “communism by stealth” acted as a giant wage subsidy for New Zealand employers. KiwiSaver, a privately run scheme, unguaranteed by the state, poured billions into the pockets of financial institutions. Social-democracy, at least as Mickey Savage and Norman Kirk understood it, had been murdered in the Cathedral Room.

With Cullen’s passing, the Labour Party has only Helen Clark to turn to for advice and consolation about the hard business of preaching Labour kindness while delivering neoliberal cruelty. Frustratingly for the present Labour Government, Clark is a much more protean figure than her former Finance Minister: less prone to staying put and saying only the right things.

Those who locate themselves on the centre-left will miss Michael Cullen. They’ll miss his prodigious intellect and his wickedly witty tongue. They’ll miss his wisdom. He has, however, left them with an enigma.

Who was he? This son of a London artisan who won a scholarship to the upper-class Christ’s College? This radical history lecturer who hung John Ball’s challenge to the English peasantry: “When Adam delved and Eve span, who was then the gentleman?” on his office wall – and then went on to accept a knighthood? This “too clever by three-quarters” MP with a left-wing reputation – who was willing to sell Rogernomics to a confused and disoriented Labour Party? This Labour Finance Minister who left state housing underfunded and beneficiaries’ children unassisted by Working For Families?

Sir Christopher Wren, buried in the heart of his greatest architectural achievement, St Paul’s Cathedral, wrote his own epitaph: Si monumentum requiris circumspice “If you would see his monument, look around.” Looking around at the New Zealand he has left behind him, how should we sum up Sir Michael Cullen’s legacy? Who won? Who lost? And who will eat that shame?

This essay was originally posted on the Interest.co.nz website on Monday, 23 August 2021.

Who Possesses The Plain, Old-Fashioned Common Sense To Say “No” To Labour’s CGT?

Yay Sayers: Prime Minister Jacinda Ardern and her Finance Minister, Grant Robertson, who recoil in horror at the very suggestion that Labour should tax the incomes of the very wealthy without mercy, remain absolutely convinced that taxing the local dairy owner’s capital gains will produce nothing but sweetness and light. They’ve run their blue pencils through Inheritance Tax, Land Tax, Financial Transaction Tax and Carbon Tax: but in spite of its emphatic rejection in two successive elections, they continue to give their CGT the big tick.

WHY CAN’T LABOUR take “No” for an answer? When the party first offered voters a Capital Gains Tax (CGT) in 2011 they responded by giving Labour 27 percent of the Party Vote. Undaunted, David Cunliffe and his team doubled-down on the CGT in 2014. Labour’s Party Vote slumped to a risible 24 percent. Point taken?

For a while it looked as though Labour’s ears had started working again. Cunliffe’s successor, Andrew Little, moved swiftly (if unilaterally) to take the twice-rejected CGT off the table. Which should have been the end of the story. But, it wasn’t. Within Labour’s caucus there remained a tight little clutch of CGT supporters who simply refused to let the policy go.

That tight little clutch: led by the current Finance Minister, Grant Robertson; which recoils in horror at the very suggestion that Labour should tax the incomes of the very wealthy without mercy; remains absolutely convinced that taxing the local dairy owner’s capital gains will produce nothing but sweetness and light. They’ve run their blue pencils through Inheritance Tax, Land Tax, Financial Transaction Tax and Carbon Tax: but in spite of its emphatic rejection in two successive elections, they continue to give their CGT the big tick.

Jacinda Ardern’s unopposed election to the Labour leadership provided a huge fillip to the CGT promoters’ club. With Little out of the way, the great crusade to tax the family bach could resume in earnest. Some insist that Jacinda’s “captain’s call”, to enact a CGT in the first term of a Labour-led government, was all her own work. Others claim that her dramatic policy adjustment was made at Robertson’s urging. Whoever was responsible, the sudden decline in Labour’s poll numbers was enough to give both politicians serious pause.

The upshot, of course, was the peculiar, two-stage, policy process whose radical recommendations New Zealanders are currently attempting to get their heads around. The most puzzling aspect of “Stage 1” – the Tax Working Group – was why the former Labour Finance Minister, Sir Michael Cullen, was roped-in to chair it.

In the media “lock-up” which immediately preceded the release of the Tax Working Group’s report, Sir Michael vouchsafed to journalists the following, typically cryptic, observation:

“I had a brief period as finance spokesperson for the Labour Party for some 17 years. You will not find a single comment by me publicly advocating a capital gains tax. You might draw your own conclusions from that fact.”

You think!

Cullen’s aside, properly decoded, offers up just one meaning: “This is a damn fool’s political errand, which I only accepted so that I could deliver these twerps a CGT of such breadth and bite that only a complete idiot would consider implementing it!” If that is not what it means, then we must, reluctantly, conclude that the former Finance Minister has lost his wits.

The problem exercising voters, now, is whether or not the behaviour of the CGT promoters’ club, consistent over an entire decade, admits of its members being anything other than twerps and idiots? In all that time, only one Labour politician, Andrew Little, has demonstrated the plain, old-fashioned common-sense to hurl the electorally and economically toxic CGT out the window.

What does it say about the Prime Minister and her Finance Minister that the very first thing they did following Little’s very own “captain’s call” (inspired, presumably, by Captain Oates’ heroic, if unavailing, act of self-sacrifice at the end of Robert Falcon Scott’s doomed Antarctic Expedition) was to rush outside, pick up the discarded CGT, dust it off, and replace it reverently on Labour’s table? Clearly, Ardern and Robertson are not the sort of Gen-Xers who enjoy being told that they are wrong!

The Greens, however, are much, much worse. Co-leader James Shaw has declared that, if the 2020 General Election arrives and a CGT has not been enacted, then his party does not deserve to be re-elected. The problem which he and his party may be forced to confront is that if the CGT proposed by the Tax Working Group is enacted next year (effective in 2021) then the electorate may feel moved to give the Greens exactly what they deserve!

Which leaves the responsibility for demonstrating plain, old-fashioned common sense to the politician who has spent 25 years insisting that only he and his party possess it.

Winston Peters.

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 1 March 2019.

"Clarkism" Still Driving The Labour Party.

The Sincerest Form Of Flattery: That “Clarkism” continues to be the driver of Labour policy is now impossible to either ignore or hide. Why else would Jacinda Ardern's finance minister (and Michael Cullen protégé) Grant Robertson have deliberately hamstrung the incoming progressive government with his absurd, unnecessary and politically indefensible “Budget Responsibility Rules”?

WHEN THEIR FRIENDS aren’t listening, the people at the top of this government are referred to bitterly as the “Clarkites”. Specifically, we’re talking about the former staffers of Helen Clark: Jacinda Ardern, Grant Robertson and Chris Hipkins. More generally, however, the term is used to describe that fraction of the Labour caucus unwilling or unable to fault the economic and social management of Clark and her Finance Minister, Michael Cullen. That significant figures from the Clark Era: Mike Munro, Heather Simpson, Cullen himself; continue to play major, albeit behind-the-scenes, roles in the Ardern-led government, only reinforces the potency of the “Clarkite” epithet.

Those Labour Party members unencumbered by stardust-speckled spectacles are beginning to comprehend that chronic government underspending goes back a lot further than Bill English and Steven Joyce. Finance Minister Cullen was a master at finding ways of diverting public revenues away from Labour’s traditional spending priorities: health, education, housing and welfare.

Not only did Clark’s finance minister set up the so-called “Cullen Fund” in response to the non-problem of “unaffordable” superannuation; but he also made sure that KiwiSaver (and the state’s contribution to its participants’ accounts) was managed by private-sector investors. Cullen also refused to return the Accident Compensation Corporation to its original status as a pay-as-you-go scheme – thereby diverting billions of dollars into the seemingly never-ending process of fully-funding it.

Funds that could have been used to upgrade the state housing stock; rebuild the capacity and efficiency of the nation’s railways; create a world-beating public transport system in Auckland and expand dramatically the country’s decrepit mental health services were, instead, piled-up in Scrooge McCullen’s money-bins.

There was method to the Finance Minister’s penny-pinching, however.

The more a government does for its citizens, the more they ask it to do. If their demands are met, then the resulting increase in state spending can all-too-easily boil-over into a full-blown fiscal crisis – necessitating savage reductions in government expenditure and unpopular tax increases.

Of course, these latter measures are only deemed necessary by politicians who regard government deficits as sinful, and who refuse to take full advantage of the state’s monetary fecundity. For these benighted souls, among whom Clark’s finance minister must be counted, the rule remains: “jam tomorrow and jam yesterday – but never jam today.”

For Clark, the trick was to keep public expectations subdued by “under-promising and over-delivering”. For her strategy to succeed, however, it was necessary for Cullen to present the government’s books as being healthy – but not too healthy.

A modest government surplus could be passed-off as evidence of prudent economic management. Too big a discrepancy between what the government collected and what it spent, however, and the voters would expect the surplus funds to be invested in improved public services and/or returned to them in the form of tax cuts. Cullen’s knack for making his surpluses disappear wasn’t just fiscally impressive – it was politically essential.

In 2009, with the Global Financial Crisis in full swing, the incoming National Government suspended “contributions” to the Cullen Fund. Why? So that billions of freed-up dollars could be spent on keeping the economy’s head above water. Labour was highly critical of this decision: perhaps because it demonstrated exactly how much the Clark-Cullen Government had prevented itself from spending for the best part of a decade.

That “Clarkism” continues to be the driver of Labour policy is now impossible to either ignore or hide. Why else would Robertson, Cullen’s protégé, have deliberately hamstrung the incoming progressive government with his absurd, unnecessary and politically indefensible “Budget Responsibility Rules”?

Earlier this week, the Prime Minister acknowledged that she and her colleagues were aware that the previous government’s underspending was massive – they just didn’t realise how massive. And yet, not even this pre-election awareness of the nation’s need was enough to make them dispense with the Budget Responsibility Rules. Nor were they persuaded of the necessity of abandoning their “No New Taxes Before 2020” pledge.

No sensible New Zealand economist believes Robertson’s self-denying ordinances to be either necessary or ethical. If opened, the bulging money-bins described above would remove the urgency (if not the argument) for raising taxes. So, why do the Clarkites refuse to be swayed?

The answer lies in their fear of losing control. If Labour credits the people with the answers, then how are they to be kept in its debt?

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 13 April 2018.

Transformational Politics Demands Transformational Economics.

Change Agents? Grant Robertson’s economic orthodoxy bodes ill for the expectations of Labour, NZ First and Green Party followers that Jacinda Ardern will, indeed, preside over the “transformational” change promised in her new government's coalition agreement.

LABOUR’S ECONOMIC ORTHODOXY presents its supporters with an A-Grade conundrum. If all you ever do is all anyone has ever done, then what are the chances that anything will ever change? Something in the Marxist nucleotide of Labour’s DNA continues to carry forward the message that economics and politics are inextricably linked. Stuff up the former and the latter will swiftly follow suit. That being the case, Grant Robertson could be Labour’s worst enemy.

Not that he should feel too badly about that, because Labour finance ministers have a well-established historical reputation for being their party’s worst enemies.

One has only to think of Philp Snowden, Chancellor of the Exchequer in Britain’s first and second Labour governments. While no one could fault the old man’s dedication to Labour’s working-class voters, his utterly conventional economic ideas left him helpless in the face of the Great Depression. In the words of his biographer, Keith Laybourn: “He was raised in an atmosphere which regarded borrowing as an evil and free trade as an essential ingredient of prosperity.”

It was Snowden’s unwavering faith in these nineteenth century liberal orthodoxies that broke his party and discredited his government. The people who paid the price for their Chancellor’s intellectual rigidity were (as is so often the case) his beloved working-class.

Things might have gone the same way here in New Zealand just a few years later had the proposals of Labour’s economically orthodox leaders (Michael Joseph Savage, Peter Fraser and Walter Nash) not been voted down by the more radical members of their party’s caucus.

It was thanks to this latter group that Labour went into the 1935 election with an economic policy calling for the “immediate control by the state of the entire banking system; the provision of currency and credit to ensure adequate production, guaranteed prices and wages; readjustment of all mortgages” – along with a policy of state-fostered industrialisation which, today, would be described as “economic nationalism”.

How very different these policies were from the policies of Roger Douglas, the Labour Finance Minister who championed the same laissez-faire economic policies implemented by Philip Snowden between 1929 and 1931. “Rogernomics” radically transformed New Zealand’s economy and politics – and very nearly destroyed the New Zealand Labour Party!

The two politicians most responsible for rescuing Labour from political oblivion were Helen Clark and Michael Cullen. In a double act of extraordinary sophistication, Clark and Cullen kept hold of the political reins for nine years by cleverly masking both the true extent of their government’s economic success, and the political opportunities it opened-up.

As Finance Minister, Cullen proved a master at making his burgeoning revenue surpluses, which might have funded a much more ambitious social-democratic programme, disappear.

Some of Cullen’s billions were invested in the special superannuation fund that still bears his name. Even more went into Working for Families, the massive employer subsidy which Cullen introduced in preference to allowing the trade unions to extract the money from corporate shareholders. Most of Cullen’s surplus billions, however, were directed towards paying down Crown debt.

The opportunity cost of these fiscal diversions would only become apparent towards the end of the next decade, when New Zealand’s physical and social infrastructure began to, quite simply, fall apart.

That Michael Cullen has for many years been Grant Robertson’s political patron and mentor bodes ill for the expectations of Labour, NZ First and Green Party members that Jacinda Ardern will, indeed, usher in the “transformational” change promised in the new government’s coalition agreement.

Even before he received his ministerial warrant, Robertson was at pains to bind Labour to precisely the same diversionary economic strategies pioneered by Cullen.

A Finance Minister who repeatedly swears allegiance to his own “Budget Responsibility Rules” is unlikely to champion the sort of creative and progressive economics that makes for creative and progressive politics.

Unless, like Savage, Fraser and Nash; Ardern, David Parker and Robertson are reined-in by a Labour caucus determined to fulfil their government’s “transformational” ambitions, then the long-deferred renovation of New Zealand’s disintegrating institutional and physical infrastructure will not receive the resources it requires.

A transformational government cannot be brought into being except by means of transformational economics. For all his faults, Roger Douglas understood this fundamental proposition. Progressive voters need a Finance Minister whose economic policies are as bold as his government’s political promises.

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 15 December 2017.

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.