Anniversary of a great divide in this nation's history

Next Monday will be the 20th anniversary of the night Sir Robert Muldoon called the snap election which changed this country. His slurring words that night spelt the end of his government and an era.

To view Muldoon now is to peer across one of the great divides in this country’s history, a gulf between the last British generation and the first truly local one.

The world in which Muldoon grew up in was one of uncertainty and insecurity: a father disabled by one war, an economic depression and a second war in which Muldoon fought. The world that bade him goodbye was one of confidence and indulgence.

It was to his generation’s pursuit of the certainty and security lacking in its youth that Muldoon faithfully geared his policies as Finance Minister for 14 years from 1967 and Prime Minister from 1975.

Those policies were his strength and his undoing. “We felt safe with you,” a devotee wrote to him after he was felled from the leadership late in 1984. But he made an unsafe economy.

The export mainstay, agriculture, was made uneconomic by massive subsidies to compensate farmers for wages kept artificially high and jobs kept in uncompetitive industries swaddled in protection from imports. Yet unemployment rose anyway. The exchange was fixed too high and the balance of payments was grossly out of kilter.

So was the Budget, with huge deficits which he tried to stem with tax (a 66 per cent top personal rate), then desperately borrowed to cover. The deficits fuelled inflation which he tried to banish by edict, regulating prices, wages, rents, interest rates and even directors’ fees. By the time he called the election, the economy was in crisis and leaking through his controls.

In his defence, Muldoon could point to a one-third plunge on his watch in the terms of trade — export prices against import prices. There were two savage oil shocks. Inflation swept the western world and this country could not escape that whirlwind.

But instead of adjusting the economy to these shocks, Muldoon tried to shield the “ordinary bloke”, his talisman, from them. That delayed the reckoning and made it worse when it came.

Of course, the adjustment did not have to be so sudden and rough as Sir Roger Douglas and Co made it after 1984. Farmers did it very hard when their subsidies evaporated. A wide swathe of workers lost their jobs when loss-making state trading departments were commercialised and when manufacturing contracted as protection was lifted, interest rates rocketed and the exchange rate bounced around. Beneficiaries got whacked in 1991 when Ruth Richardson cut loose in the following National government.

In defence of Douglas and Co, they found an economy so unbalanced and distorted that delicacy was not a credible option. Nor, after Muldoon’s obsessive regulation, was more or even different regulation.

But nothing prepared the country for what 1984 unleashed. Those of us who had tracked the debate in the inner circles of the major parties, the Treasury and the lobby groups knew there would be deregulation. None of us expected it to go as fast and as far as it did. This, after all, was sleepy New Zealand and Douglas was in a Labour government.

The reason lies at least in part in a transit of generations from Muldoon’s, the last to call Britain “home”, to one that could and did unselfconsciously write, sing, dance and paint as truly local New Zealanders. It had “indigenised”.

So what had been building up in the last years of Muldoon and erupted when he lost power was this country’s “independence” revolution. It was a powerful assault on long-held colonial-era values. In that heat it was unsurprising that every policy area was changed, most of them radically.

The usual focus is on the economic changes. They had the greatest immediate impact. But no policy was changed more than Maori policy. The change there was deeper and its impact more lasting.

Muldoon’s New Zealand would have found it inconceivable to call the Treaty of Waitangi the nation’s founding document. Yet one of his disciples, Winston Peters, persuaded the National party to do exactly that at its 1989 conference.

Muldoon’s New Zealand would have found it inconceivable to require widespread consultation of Maori on elements of public policy and to channel public service delivery through iwi agencies. The National party in the 1990s did just that.

That gave legitimacy and recognition to the “reindigenisation” of this country — the recovery by Maori of their culture and status and their assertion of a place in the power structure.

The challenge for the next 25 years as the post-Muldoon generation of the power elite gives way to the generation now in its 20s and 30s, is to reconcile these two parallel and at times competing “indigenisations” — that is, to make us all indigenous.

Muldoon could not have comprehended the issue, let alone devised a response. That we now know we must is a measure of how far we have journeyed since that fateful night in 1984.