Fifth Labour Government of New Zealand - Overview

Overview

The fourth National government, in power since 1990, was widely unpopular by 1999, with much of the public antagonised by a series of free-market economic reforms, and was bedevilled by weakness and instability. In the general election of that year, the Labour Party led by Helen Clark defeated National easily, becoming the largest single party in the House of Representatives. Labour formed a minority coalition government with the left-leaning Alliance, supported by the Green Party.

During this first term, the government pursued a number of reforms. The controversial Employment Contracts Act was repealed, replaced by an Employment Relations Act more friendly to unions and collective bargaining; a state-owned bank, Kiwibank, was created at the behest of the Alliance; the struggling national airline, Air New Zealand, was nationalised; and the public health sector was reorganised with the re-establishment of partly elected District Health Boards. More controversial was "Closing the Gaps", an affirmative action strategy pitched at Māori, which was widely criticised as showing favouritism to Māori at the expense of other equally disadvantaged groups.

With the disintegration of the Alliance in 2002, Helen Clark called an early election, even though she still had the confidence of the House. Labour handily won the election. The Alliance failed to return to parliament, although a rump returned as Jim Anderton's Progressives. Labour formed a coalition with the Progressives, and turned to the centrist party United Future for confidence and supply. This second term was notable largely for its social and constitutional legislation, with the Government establishing a Supreme Court and ending appeals to the Privy Council, decriminalising prostitution, and providing for civil unions, the latter two changes in particular supported by the Green Party and opposed by United Future. The Government was also faced in this term with the foreshore and seabed controversy. While Labour, in cooperation with the New Zealand First party, eventually resolved the legal dispute by vesting foreshore and seabed title in the Crown, a dissident Labour minister, Tariana Turia, formed the Māori Party, while on the other side of the spectrum a resurgent National Party, now under former Reserve Bank governor Don Brash, became considerably more popular. Going into the 2005 election, the Government was returned with a slim margin on the strength of the Working for Families assistance package and financial assistance to students, benefiting also from mistakes in National's campaign.

Helen Clark was obliged to move even more to the centre, enlisting support for her Government from both New Zealand First and United Future. Almost immediately, the Government parties became involved in a protracted funding scandal, having apparently used public money for party political purposes during the election campaign. A heavy-handed attempt at campaign finance reform later in this term also harmed the Government, which by now appeared tired and at a loss for direction, although it did succeed in implementing a wide range of social and economic reforms during its time in office. In the 2008 election, the Labour Party lost convincingly to National, and the government was succeeded by the National Party led by John Key as Prime Minister.