The David Lange government and Labour’s changing leadership (1984–90)

The fourth Labour government initiated one of the most-sweeping policy reversals in thecountry’s history as, one after another, restrictions on free enterprise that had beenimposed progressively over some 50 years were removed. Among the reforms, agricultural subsidies were eliminated,income tax rates reduced, and controls on wages, prices, interest rates, and foreign exchange lifted. The government also took a strong stand against the proliferation of nuclear weapons in the region, and its decision to ban nuclear-powered and nuclear-armed vessels from New Zealand’s ports strained relations with theUnited States. Popular support for the Labour program was reflected by the party’s 1987 general election victory.

In the late 1980s inflation was finally brought under control, but unemployment continued to rise. Prime Minister Lange began to face substantial opposition within his own party, especially as a result of theprivatization of state-owned enterprises, which was initiated in 1987, and over his conflict with the finance minister,Roger Douglas. Douglas was pushing for economic measures, such as a flat-scale tax system and deregulation of the labour unions, that theprime minister considered extreme. Lange dismissed Douglas in December 1988, but in August 1989, with the aim of shoring up Labour’s poor standing in the polls, Labour MPs voted to return Douglas to the cabinet. Lange resigned a few days later and was replaced byjustice ministerGeoffrey (later Sir Geoffrey) Palmer. In just 13 months, however, Palmer was himself replaced byMike Moore, a former minister of foreign affairs, who held onto the position of prime minister for only eight weeks before theNational Party’s landslide victory in the October 1990 general election.James Brendan Bolger, the National leader, became prime minister. The National Party had campaigned for reduced government spending on social programs and the elimination of such labour practices as compulsory unionism but pledged to maintain New Zealand’s antinuclear stand.

The James Bolger and Jennifer Shipley governments (1990–99)

The 1993 elections proved to be the closest in some time, with the National Party managing a narrow win over Labour. Though initially facing politicaluncertainty, Bolger saw his popularity rise with strongeconomic growth and his condemnation in 1995 ofFrance’s nuclear testing in the South Pacific. In 1996 the country held its first elections under the mixed-member proportional system, which voters had approved by referendum three years earlier. Though no one party managed a majority in the elections, after much negotiation, the National Party formed acoalition government with the small New Zealand First Party. The new administration, however, was plagued by inexperience and factionalism. In addition, inability to allay concerns regarding social welfare issues, particularly the country’s superannuation (retirement savings) scheme, resulted in unrest.

In November 1997 Bolger resigned, and the Nationalcaucus electedJennifer Shipley as its leader and the country’s first female prime minister. That government, however, also struggled. After Shipley dismissed Winston Peters, of New Zealand First, as deputy prime minister and treasurer in 1998, the coalition between the two parties dissolved. Shipley was left with a minority government; later that year the country suffered arecession. At the 1999 election the National Party was voted out of office. Labour formed a coalition with Alliance (a breakaway group of smaller parties), and Labour leaderHelen Clark became the first directly elected woman prime minister.

The Helen Clark government (1999–2008)

That Labour government remained in power for three terms, winning elections in 2002 and 2005. It moved away from the economic liberalization policies of the fourth Labour government, modifying employment relations legislation, providing aminimum wage and income support for families, and developing a voluntary savings plan known as Kiwisaver. Its overall policy was to focus on what New Zealand needed to do to compete in an increasingly global economy while protecting its mostvulnerable citizens.

The Labour government returned to a more independentforeign policy, declining to serve in a combat role during theIraq War and restricting expenditure on the defense forces, at some cost to its close relationship withAustralia. The economy expanded under Labour, with low inflation and low unemployment prevailing until 2006, when it started to worsen ahead of the global economic downturn that reached its crisis in 2008.

John Key’s first term as prime minister (2008–11)

In the midst of the economic crisis, the tide began to turn against a government that had been in power for nine years. The National Party, underJohn Key, returned to power in 2008 on a platform of taxation change and a rolling back of what had come to be called “the nanny state.” Winning the most votes but falling short of an absolute majority, the National Party was able to form a government with the support of three smaller parties, including theMāori Party. The latter had formed in 2004 as a result of the Labour government’s denial ofMāori claims to customary rights over areas of the country’s shoreline and seabed.

In the 1970s and ’80s Māori had become much more active politically and culturally. Māori activism for social and economic rights intensified; demands included the use of thete reo Māori language in education, broadcasting, and official settings and the preservation of Māori arts andculture. Arguing from the rights and obligations of the crown set out in theTreaty of Waitangi, Māori sought the return of land and compensation for the loss of access to natural resources that had occurred since 1840.

In 1975 theTreaty of Waitangi Act established a tribunal to examine and make recommendations on Māori claims of crownbreaches of the treaty principles. A 1985amendment to the act permitted claims for historical breaches and opened the way for many more claims. The Waitangi Tribunal investigated the claims and made recommendations to the government. Beginning in the early 1990s, the government approved substantial financial, land, and resource compensation for past injustices. Among the more notable awards were a 1998monetary settlement with theSouth Island’sNgāi Tahu tribe that at the time was the largest and oldest land claim in the country’s history, and a 2008 land exchange with a group of sevenNorth Island tribes. The government also apologized for the suffering and injustices inflicted on Māori and made plans to settle all historical grievances within a short period of time.

In the late 20th and early 21st centuries thediversity of New Zealand’s population increased greatly. Immigration increased markedly in the early 1990s, with the introduction of a points-based immigration system that rated applicants on a combination of skills, education, age, offers of employment, and qualifications. Under that system many applicants could qualify to gain residency fairly easily. There was a marked shift in the immigrants’ countries of origin, from traditional sources such as Great Britain to Asia, particularlyTaiwan,China, andSouth Korea. Such growing diversity was accompanied by a debate as to whether New Zealand was still a bicultural country or should be more properly seen as amulticultural society.

In September 2010 a strongearthquake struck Christchurch and its surrounding region; although there were no fatalities, the city suffered extensive damage to buildings andinfrastructure. In February 2011Christchurch was struck by another, far more-damaging earthquake whose epicentre was located just a few miles from the city’s central business district. The quake killed 185 people and devastated the city centre. The rebuilding of the city centre and repairs to damaged housing and roads throughout the city were expected to take several years to complete.