Reflecting on Jim Anderton

I have a pleasant memory of the only time I met Jim Anderton. One of his daughters was in the same class as me at Remuera Intermediate, and at the end of the year the Andertons hosted a class barbecue at their home just up the street from the school.   I was a youthful political junkie and Jim Anderton was running for Mayor of Auckland.  It was a pleasant evening and he seemed to be a lively and engaged parent (later struck by the awfulness of the suicide of another daughter).

Accounts suggest that Anderton did a good job of helping to revitalise the Labour Party organisation in the late 1970s and early 1980s.  He was, for the time, a moderniser, instrumental in helping reduce the direct influence of the trade unions in the party, and promoting the selection of some able candidates who hadn’t served time in the party (eg Geoffrey Palmer).  Various tributes talk of a personal, and practical, generosity.

I don’t suppose either that there was any doubt that he pursued causes he believed in, and that those causes were, more or less, what he regarded as being in the best interests of New Zealanders (perhaps especially “ordinary working New Zealanders”).   Probably most politicians do.  Sometimes they are mostly right about the merits of the causes they pursue, and sometimes not.    In Anderton’s case, even if one agreeed with the sort of outcomes he might have hoped for, his views on the best means seem –  perhaps even more so with hindsight than at the time –  to have been pretty consistently wrong.   And for all the public talk in the last few days about Anderton’s contribution to New Zealand, few (if any) of the things he opposed in the 1980s have been unwound/reversed, and few of the things he championed when he served later as an effective senior minister have done much for New Zealanders.

Take the 1980s when, upon entering Parliament in 1984, Anderton quickly isolated himself in caucus.  Even before that election, he’d opposed the CER agreement with Australia, and opposed Roger Douglas’s talk of a need for a devaluation and a reduction in the real exchange rate.  Even after the 1984 election, in circumstances of quasi-crisis, Anderton still opposed the by-then inevitable devaluation –  and in league with Sir Robert Muldoon sought to use a select committee to run a kangaroo-court inquiry, to undermine the choices his own government had made.   He was opposed to GST, and he was opposed to creating SOEs for state-trading operations.   He opposed privatisations, whether small or large.   Of the large, there was vocal opposition to the sale of the BNZ and of Telecom.  I suspect the list of reform measures, not subsequently unwound, that Anderton did enthusiastically support would be considerably shorter –  perhaps vanishingly so –  than the list of those he opposed.

As a pure political achievement, to have survived resigning from the Labour Party – in a pre MMP period –  was worthy of note.  But then Winston Peters did much the same thing –  and he’d had the courage to resign his seat and win a by-election to return to Parliament.  And the distinctive Jim Anderton party has long since disappeared, as Anderton returned to the Labour fold.

And what causes did he champion as a senior minister (for a time, deputy prime minister, in the fifth Labour government).   Probably the institution that will be always associated with Anderton’s name is Kiwibank: it certainly wouldn’t have existed without him.  But to what end?   Has Kiwibank changed the shape of New Zealand banking?  Not in ways I can see.  It remains a pretty small player, operating in segments of the market where there has always been plenty of competition.  It hasn’t come to a sticky end –  as many state-owned banks have here and abroad –  but we’ve never had the data to know whether, even on strictly commercial grounds, the establishment of the bank was a good deal for taxpayers (but the fact that no private new entrant has tried something similar suggests probably not).   If simply promoting competition in banking had been the goal, perhaps it would have been preferable to have prevented the takeover of The National Bank by the ANZ?

There has been talk in the last few days of Anderton’s contribution to “revitalising the regions”.  I’m not sure what this can possibly mean –  even allowing for a few government offices being decentralised (at some cost) around regional centres.   Generally, the real exchange rate mattters much more for the economic health of the regions than direct stuff governments do.   Anderton was Minister of Economic Development.  In that role, he was keen on using taxpayer money to subsidise yacht-building (which didn’t end well), and a champion of film industry subsidies.   In tributes this week, there has also been the suggestion that Anderton was one of those responsible for the creation of the New Zealand Superannuation Fund, something I hadn’t heard before.   If so, I guess he deserves some partial credit for the fiscal restraint the then Labour government exercised in its first few years.  Beyond that, what was created was a leveraged speculative investment fund –  not a model followed, as far as I can tell, in other advanced economy –   with returns that over almost 15 years now really only seem to approximately compensate for the high risks the taxpayer is being exposed to.  No doubt Anderton opposed the decision in 1989 or 1990 to start raising the NZS eligibility age from 60 to 65, and the same opposition to any further increase in the age beyond 65 –  even though it is a step many other advanced countries have taken, as life expectancies improved –  was presumably behind any involvement he had in the creation of the NZSF.  In so doing, once again his hand was involved in holding back sensible gradual reforms, and keeping New Zealand a bit poorer than it need be.

I suspect many of the tributes of the last few days are mostly a reflection of Anderton’s part in the Labour reconcilation.  The prodigal son returned –  having been one of the leading figures in fomenting the civil wars in the first place, before walking out of the party.   They were tumultuous years, and few things are nastier than civil wars.  Anderton doesn’t ever seem to have been a team player, but by the end of his career he seem to have found his place back alongside the team he started with.

But from a whole-of-nation perspective, what did Anderton accomplish?     If the reforms of the 1980s and 1990s haven’t produced the results the advocates hoped for –  we still drift, more slowly, further behind other advanced countries – that wasn’t for the sorts of reasons Anderton advanced.  Had we followed his advice, we’d most likely now be poorer still –  and many of the issues around equality and social cohesion that he worried about might have been no more effectively addressed.     In the end, Anderton is perhaps best seen as a belated figure from the New Zealand of the 1950s and 60s.  There was a lot to like about the New Zealand of those years –  some of the best living standards in the world then – for all the increasingly costly distortions to our economy.   There are parallels to Muldoon –  who famously told a TV interviewer of his goal to leave New Zealand no worse than he found it –  both in the genuineness of their concerns, and the wrongness of too many of their policy stances.  Both seemed to back very reluctantly into the future, with all too much willingness to trust our fortunes to the state, and the possible winners identified by politicians and officials, rather than to the market.

16 thoughts on “Reflecting on Jim Anderton

  1. Jim Anderton is praised on the left as the man who stood out against “Rogernomics”.
    I lived through “Rogernomics” . I went from a freezing works to driving tour buses. The union at the freezing works had a negative attitude, the union rep started his speech with “I have spoken to ____ I don’t like him!” After the works I drove tour buses just at a time they deregulated the labour market. I could see that you wouldn’t get a leg in if some crusty old blokes had their way (you would get a bit of work and wait and wait).

    If I look about today I see highways being built, snaking over prime agricultural land. Over the years Mountain Scene (Queenstown) was all about property developers. Today FIT travellers (rental cars) are pushing out tour operators). Real wage rates have fallen by about one third (my estimation) and thanks to the social goals of the labour government (1987 Immigration Act) every other bus has a Chinese or Korean driver.
    As far as I can see the new roads are for the FIT’s and new residents. I have yet to see any new industries which have broken a barrier. The New Zealand story seems to stop in the 1980’s with Kenneth Cumberland’s Landmarks. Since then New Zealand has been off the air (so to speak).

    That 4th Labour Government got up to radical stuff that isn’t talked about and one thrust of policy now is covering for the error (bashing dissent – Susan Devoy is a product of East Germany).

    The immigration policy review in 1986 was part of a much larger agenda for change in New Zealand (Bedford 1996)
    It was a deliberate strategy, based on a premise that the “infusion of new elements to New Zealand life has been of immense value to the development of this country to date and will, as a result of this Government’s review of immigration policy, become even more important in the future”
    (Burke 1986:330).
    This became primary because it could not be achieved without (assuming we need ) a bigger population.


    For much of the twentieth century it was assumed that the state operated on behalf of a single nation that the two (the nation and the state were indivisible) The state represented all New Zealanders. It deserved their undivided loyalty and in return the state was neutral with respect of the ethnic identity of it’s citizens. The identity politics of Maori challenged all of these elements. The nation was made up, it was argued, of two groups and the operation of the state ought to recognise the particular circumstances and the rights of Maori. Something which it had not done previously. In fact the state had seemed to operate in ways that had directly disadvantaged Maori. The state was hardly neutral. According to Ranginui and others the state preserved Pakeha interests even if it continued to claim universality and neutrality. It was a radical rethinking of what the nation state of NZ ought to be. It required a de coupling of the nation now defined as Maori and Pakeha or Moari and the Crown and required the state to operate in new and different ways. A new understanding and a new social contract needed to be established . But of course there was no compulsion for the state to acknowledge these new expectations. It was left to the good sense and sensitivities of some key players: Maori, Pakeha and representatives of the state to explore what this means.
    The above is just a warm up for multiculturalism where ethnic groups have personal bureaucracies who define an identity (walkway up te Mata peak must go). It’s them against us.


    • The good ol days when freezing workers could earn as much as professionals just for cutting up meat – and went on strike every season. The days when anything imported cost a fortune and NZ made substitutes were often shoddy quality! I don’t miss those days at all!


      • You miss the point: deregulating the labour market was undermined by immigration. Land owners benefited; we have a larger economy but lower average incomes; resources are flowing into low value services and the environment is a shocker. The internationalist left “would not privilege a fellow citizen merely because of a border” and the right like the cheap labour and rising land prices (risk management).
        “Elites don’t suffer the consequences of the Utopian dream” -Victor Davis Hansen


      • and it will have consequences as it will be harder and harder for a growing section of the community to save for their old age (especially with policies that benefit land owners). In the worst case scenario we could finish up an unstable economic basket case.


  2. The un-asked and un-answered question is

    Did Muldoon leave New Zealand a better place than he found it?

    My reading of history is he almost bankrupted the country which resulted in the election of Lange and Douglas and precipitated their ruthless actions. What would have happened is they had not done so and instead Anderton had had his way


    • Muldoon probably had the toughest period to govern in the last 75 years – our terms of trade were at their weakest, and the squeeze continued to come on access to EU markets etc, unemployment was becoming an issue after decades of full employment. I don’t argue that he did particularly well – Think Big in particular was an unmitigated disaster – but I think it was more of a mixed record than many are willing to recognise. Even at the end, public debt as a share of GDP was far lower than it is now in the US, UK, or France (let alone Japan), and a lot of the crisis-rhetoric was around liquidity pressures rather than solvency (a bit like the UK devaluation of 1992). And there was a reasonable, if inconsistent, record of liberalisation – enthusiastic or grudging. CER was, after all, done under Muldoon’s watch.

      In a way the crisis atmosphere of 1984 – never a real sustained crisis – probably wasn’t of long-term help. At the time, it seemed like a gift – huge amounts got done in a very short time – but plausibly we’d have been better off long-run (we might for example have avoided MMP and – more importantly – the erosion of trust in the political process) if things had been taken more slowly and deliberately, taking the rest of the Labour Party with the govt. The constant comparison at the time was between reform in NZ and in Australia.


      • Having experience of both FPP and MMP there is absolutely no doubt in my mind that MMP is better. In the UK I thought my vote did not count but in NZ my vote does make a difference. The argument about the clarity of FPP forgets that it has produced coalition and minority governments. Give me MMP every time (although it could be tuned better).


      • All sorts of pros and cons. I’m not particularly worried about coalitions or minority govts (see the UK since 2010), but MMP strengthens parties at the expense of individual MPs – the waka-jumping bill would be inconceivable under FPP – and reinforces the rise of political operatives and of people who have never themselves faced voters directly in their lives (eg Tim Groser, Chris Finlayson – and their equivalents on the left). It is interesting that the UK, Canada, and the US remain with FPP, Ireland has a constituency-based more-proportional system, and Aus has PR only in the Senate. We ended up with a system explicitly designed for Germany post-war, and – for better or worse – wouldn’t have made the change had it not been for 3 elections in succession where govts did very different, more radical, things than they had explicitly promised in the previous election (in 1987 in fact, Labour published its manifesto the week after the election).


      • A fair assessment – regarding the severity of the crisis – but remember the “1975 Australian constitutional crisis” was still fresh in everyone’s mind and the simple cause of which was (again) one of liquidity – but boy – the crisis that caused and the stench of which has only just gone away with repeated threats of a referendum on a Republic – Gough Whitlam and John Kerr and the dismissal

        On the matter of using the term “bankruptcy” it is interesting to note Rod Oram offers the following opinion which is surprising considering he didn’t migrate to NZ until 1997 so this must be second hand – but is reflective of the current views of some insiders

        “Today, agriculture in New Zealand is bankrupt, as it was in 1985. Then it was an economic failure, particularly in the sheep industry. The sector was propped up by $1.2 billion of taxpayer funding under the Supplementary Minimum Price (SMP) regime, most of it paid out in just two years to 1984. Adjusted for inflation, that would be $4b today. The Lange Labour government swept away SMP and other bureaucratic encumbrances to farming. This was not deregulation. It was a radical shift to a superior market system backed by regulations on farming and food to ensure quality and to safeguard New Zealand’s reputation


      • What few people recognise is that Muldoon had announced a termination of SMPs in the last few weeks of his term. In part, the SMPs had been a response to the reluctance to let the exchange rate fall – part of his ill-fated strategy to get inflation under control.

        Interesting point about the 1975 dismissal and comparisons with our 1984 “crisis”


      • When I grew up they used to say “if you pinned a Labour rosette on a donkey it would have a reasonable chance of being elected as an MP in a South Wales mining constituency” which is much the same as your “rise of political operatives and of people who have never themselves faced voters directly in their lives”. For me the pros still out weigh the cons and some of those cons could be diminished with a little tinkering.


  3. I always thought the NZ Super Fund mitigates *against* risk through diversification.

    If our pensions are paid out partly from international shares, rather than entirely by the taxpayer, then the system ends up being more resilient to shocks to the New Zealand economy. It’s a hedge against bad times down under, in the same way it might be prudent for a private investor to spread their investment between overseas and local investments. No?


    • The scale of effective diversification is pretty small. Most severe downturns we face are global in nature, and in that climate global share prices will fall sharply (and NZSF hedges back to NZD so we don’t even benefit from the typical fall in the exch rate in a severe global event). Also, NZSF as it now stands is pretty small, relative to the scale of NZS liabilities.

      I have no particular problem with a low level of net government debt (and to the extent NZSF helped deliver that I welcomed it at the time) but it was mostly intended to help keep the NZS age at 65 which still seems to me a bad goal (as life expectancies have lengthened).


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