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.

The Strike That Labour Fears Most.

What If The Bosses Went On Strike? “Under a laisser-faire system the level of employment depends to a great extent on the so-called state of confidence [...] This gives to the capitalists a powerful indirect control over Government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis.” - Michal Kalecki 1943

WHILE SIMON BRIDGES and his backroom number-crunchers are concocting bogus industrial relations statistics, a much more dangerous strike is looming. If you’re waiting to hear Bridges condemn this particular strike, however, you will wait in vain. This isn’t the sort of strike the National Party condemns; it’s the sort of strike it does everything in its power to provoke. What sort of strike are we talking about? An Investment Strike.

It was at the funeral of Jock Barnes, leader of the Waterside Workers Union in 1951, that I first encountered the term. The person who introduced me to it was Ross Wilson, President of the NZ Council of Trade Unions, who told me about a recent conversation he’d had with the Prime Minister, Helen Clark. She’d told him, bluntly, that the employers were threatening to put away their cheque-books. If her government refused to back away from its more radical policies – especially the proposed changes to the Employment Contracts Act – it would face an investment strike.

This was early-June 2000: the so-called “Winter of Discontent”.

There is much about the present situation that calls to mind those months back in 2000. Then – as now – the focus was on a series of surveys (most of them conducted on behalf of the banks) purporting to show a “loss of business confidence”. Just as they have been doing for the past nine months, the business-friendly commentators of eighteen years ago attributed this loss of confidence to the policies of the incoming Labour-led coalition government.

“Loss of business confidence” is an expression freighted with economic significance. One of the first to make the consequences of its loss explicit was the Polish economist Michal Kalecki. In “Political Aspects of Full Employment”, an article published in the Political Quarterly in 1943, he wrote:

“Under a laisser-faire system the level of employment depends to a great extent on the so-called state of confidence. If this deteriorates, private investment declines, which results in a fall of output and employment (both directly and through the secondary effect of the fall in incomes upon consumption and investment). This gives to the capitalists a powerful indirect control over Government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis.”

The kicker lies in those last seven words: “because it would cause an economic crisis”. If the four pillars upholding the economic order set in place by Roger Douglas and Ruth Richardson: non-inflationary monetary policy; fiscal discipline; openness of markets; labour market flexibility; were ever to be threatened with serious erosion, then, in the words of the neoliberal ideologue, Roger Kerr: “doubts about New Zealand’s outlook will mount”.

Falling business confidence is, of course, the winking warning-light on the capitalists’ dashboard. Not only does it indicate rising doubt about the reliability of the new regime, but it also signals that the politicians responsible need a sharp reminder about who it is that really runs the country.

Back in 2000 that took the form of some of the country’s leading business executives issuing thinly-veiled threats to the Prime Minister and her Finance Minister. That Helen Clark and Michael Cullen felt it necessary to publicly allay the fears of those whose cheque-books were about to be locked away in the top-drawer of their desks, showed how very seriously those threats were taken. Under no circumstances could investors be allowed to go on strike “because it would cause an economic crisis”.

In the moments following Ross Wilson’s revelations I remember wondering what Jock Barnes would have done. He knew that, ultimately, all strikes are a matter of bluff. The trick lies in persuading the other side that you are willing to do whatever it takes to win. In 1951 the National Party called Barnes’ bluff: wagering that the unions would blink before the state did.

The only question that really matters in 2018, therefore, is: “Are Jacinda Ardern and Winston Peters willing to call the business community’s bluff?” Note that I have not included the Finance Minister in that question. Grant “Budget Responsibility Rules” Robertson has already made it clear where he stands.

While Jacinda thinks of the future and Winston remembers the past, the workers of New Zealand can only wait and hope that, as in 1951 (but not 2000!) the state blinks last.

This essay was originally published by The Otago Daily Times and The Greymouth Star of Friday, 29 June 2018.

Budget 2018: Labour’s Pre-Emptive Capitulation To Kiwi Capitalism’s Discontent.

The Budget Responsibility Rulers: The Budget Responsibility Rules, formulated by Labour’s Grant Robertson and signed-up to by the Greens’ James Shaw in March 2017, sent a strong signal to New Zealand’s business elites that no matter how much stardust got thrown about during the general election campaign, no repeat of the Winter of Discontent would be necessary.

THE WINTER OF DISCONTENT was an astonishingly successful bluff executed by the business community against Helen Clark’s government in May 2000. The bluff itself came in three parts. Part One was an all-out effort to undermine international confidence in the strength of the New Zealand dollar. Part Two called for the business community’s leading media allies to begin undermining middle-class confidence in the Clark-Anderton Government. Part Three required New Zealand’s leading businesses to issue Prime Minister Clark and her Finance Minister, Michael Cullen, with an “Investment Strike” notice. If the radical elements of the Labour-Alliance Government’s legislative programme weren’t shelved immediately, then business leaders would simply “put away their cheque-books” and the economy would stall.

Clark and Cullen, unwilling to call the business community’s bluff, capitulated almost immediately. Anderton was required to break the bad news to the Alliance caucus. Its plans to extract some of the neoliberal order’s sharpest teeth would have to be put on hold … indefinitely. Clark publicly declared that the paid parental leave provisions put forward by the Alliance’s Laila Harré would be enacted “over her dead body”. On 23 May 2000, Cullen told the Wellington Chamber of Commerce: “I am mindful that the previous government allowed itself to become disconnected from the electorate and out of touch with public opinion. It stopped listening and paid the political price for that at the last elections. I am determined that we shall not make the same mistake.”

The questions which Cullen either did not want or never thought to ask were: from which part of the electorate did Jenny Shipley’s turncoat government become disconnected; and whose opinions did they disregard?

The National-led government was not voted out of office in 1999 by New Zealand’s business elites. It lost power after nine years of vicious assaults upon trade unionists, beneficiaries, state house tenants, university students and just about every other sector group unlucky enough to be in a client relationship with the state. These were the New Zealanders who voted for Labour, the Alliance and the Greens in 1999. Tragically, they were also the Kiwis who Clark and Cullen abandoned just six months later when confronted with the business community’s bold political bluff: its point-blank refusal to accept the policy consequences of the Right’s electoral defeat.

Eighteen years later, a Labour-led government filled with friends, admirers and proteges of the Clark-Cullen era have gone one better than their easily-overawed political mentors by capitulating pre-emptively to the business community. The Budget Responsibility Rules, formulated by Labour’s Grant Robertson and signed-up to by the Greens’ James Shaw in March 2017, sent a strong signal to New Zealand’s business elites that no matter how much stardust got thrown about during the general election campaign, no repeat of the Winter of Discontent would be necessary. Grant Robertson’s dutiful and fiscally timid first budget has furnished New Zealand business leaders with all the proof they could possibly need that neoliberalism’s sharpest teeth are all perfectly safe.

The most effective bluff in politics isn’t the one your opponents are too gutless to call, it’s the one you no longer even have to make.

This essay was originally posted on The Daily Blog of Tuesday, 22 May 2018.