Ruthanasia
Encyclopedia
Ruthanasia, a portmanteau of "Ruth" and "euthanasia
", is the pejorative name (typically used by opponents) given to the period of free-market
economic reform conducted during the first term of the fourth National government
in New Zealand
, from 1990 to 1993. As the first period of reform from 1984 to 1990 was known as Rogernomics
after the Labour Party
Minister of Finance
, Roger Douglas
, so the second period became known as "Ruthanasia", after the National Party's Minister of Finance, Ruth Richardson
.
Ruthanasia and Rogernomics can be viewed as complementary reform packages implemented by successive governments which were aimed at liberalising the New Zealand economy after a period of intense protectionism and fiscal control, particularly under the administration of Sir Robert Muldoon's National government between 1975 and 1984. Muldoon's protectionism had culminated in a three year wage and price freeze imposed by Muldoon, who simultaneously held the posts of Prime Minister and Minister of Finance, in an attempt to suppress rampant inflation.
Ruthanasia was controversial as the National Party
had fought the 1990 election
on a manifesto promising "The Decent Society" and implicitly repudiating the radicalism of the fourth Labour government
. The Prime Minister, Jim Bolger
, defended the move in his memoirs on the grounds that he had been badly misled in the runup to the 1990 election as to the actual state of the New Zealand economy. Upon winning the 1990 election, Bolger and Richardson quickly became aware of two unrelated financial crises: firstly, that the Bank of New Zealand
required an immediate injection of capital to avoid insolvency as a result of the poor performance of a NZ$2.8bn loan portfolio in Australia, and secondly that the outgoing finance minister David Caygill
's projection of a modest fiscal surplus was inaccurate, and that the country instead faced a fiscal deficit of NZ$5.2bn if action were not taken immediately.
Where Roger Douglas had deregulated the industrial, financial, fiscal and agricultural sectors of the New Zealand economy, Ruth Richardson, under the auspices of a National (predominantly conservative) administration, was able to focus on social services and labour relations, sensitive areas which the preceding Labour administration had not been willing to reform in light of its traditional working class constituency.
Richardson and the then Minister of Social Welfare, Jenny Shipley
, immediately reformed Social Welfare programme by reducing available benefits and allowances across the board, and in 1991 the National government enacted the Employment Contracts Act (ECA), which effectively demolished New Zealand's post-war industrial relations framework, replacing collective bargaining and compulsory union membership in many sectors with the concept of the individual employment contract. Whilst the ECA did not directly address unions, the practical effect of removing the requirement for employees to be members, and allowing those employees who did want union membership to choose which union they wished to join dramatically reduced the bargaining position of the unions in the New Zealand economy. This reform of labour laws had already been outlined in the 1990 National manifesto.
Ken Douglas
, then president of the Council of Trade Unions, said:
Roger Douglas, minister of finance in the preceding fourth Labour government, said (after his retirement from politics):
Ruthanasia came to an end after the 1993 election
, when National's majority was reduced from 18 (out of 99 seats) to 1. Bolger responded by replacing Richardson with Bill Birch
.
from the National Party caucus and the formation of New Zealand First
in 1993, which would be represented within Parliament for the next fifteen years. Peters was viewed as an acolyte of Rob Muldoon's protectionist economic policies and had a substantial support base amongst New Zealand's senior citizens and their related lobby organisations.
Peters' erstwhile prominence was due to the other consequence of Roger Douglas and Ruth Richardson's New Right economic policies, which fuelled a movement for electoral reform in New Zealand
after Sir Geoffrey Palmer
convened a Royal Commission on the Electoral System
in 1985-86. In two electoral reform referenda, the general public endorsed the Mixed Member Proportional electoral system as a response to what they perecived as an unaccountable New Right government.
Despite Richardson's resignation, internal tensions continued to wrack the National Party. Several MPs seceded to form non-viable centre-right satellite parties before the New Zealand general election, 1996
. After that election, the Bolger administration went into coalition with Winston Peters and New Zealand First. It proved unpopular, and party rightists launched a coup against Jim Bolger
in 1998. As a consequence, Peters abandoned the National/New Zealand First coalition, splitting his party- National then governed for a further year, with the support of post-split ex-New Zealand First MPs, but the New Zealand general election, 1999
saw Helen Clark
lead a centre-left coalition to victory. She would remain Prime Minister for most of the next decade, as National was paralysed by factional infighting over ideology and direction. When National won office again after the New Zealand general election, 2008
, it was reconfigured as a centrist political party, disavowing the 'radical' New Right
industrial relations and welfare state
and public sector
retrenchment of the nineties.
As for Richardson herself, she became a member of ACT New Zealand, her philosophical successors.
Euthanasia
Euthanasia refers to the practice of intentionally ending a life in order to relieve pain and suffering....
", is the pejorative name (typically used by opponents) given to the period of free-market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
economic reform conducted during the first term of the fourth National government
Fourth National Government of New Zealand
The Fourth National Government of New Zealand was the government of New Zealand from 2 November 1990 to 27 November 1999. Following in the footsteps of the previous Labour government, the fourth National government embarked on an extensive programme of spending cuts...
in New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
, from 1990 to 1993. As the first period of reform from 1984 to 1990 was known as Rogernomics
Rogernomics
The term Rogernomics, a portmanteau of "Roger" and "economics", was coined by journalists at the New Zealand Listener by analogy with Reaganomics to describe the economic policies followed by Roger Douglas after his appointment in 1984 as Minister of Finance in the Fourth Labour Government...
after the Labour Party
New Zealand Labour Party
The New Zealand Labour Party is a New Zealand political party. It describes itself as centre-left and socially progressive and has been one of the two primary parties of New Zealand politics since 1935....
Minister of Finance
Minister of Finance (New Zealand)
The Minister of Finance is a senior figure within the government of New Zealand. The position is often considered to be the most important Cabinet role after that of the Prime Minister....
, Roger Douglas
Roger Douglas
Sir Roger Owen Douglas , is a New Zealand politician who formerly served as a senior New Zealand Labour Party Cabinet minister. He became arguably best-known for his prominent role in the radical economic restructuring undertaken by the Fourth Labour Government during the 1980s...
, so the second period became known as "Ruthanasia", after the National Party's Minister of Finance, Ruth Richardson
Ruth Richardson
Ruth Richardson served as New Zealand's Minister of Finance from 1990 to 1993, and is known for her strong pursuit of free-market economic reforms .-Early life:...
.
Ruthanasia and Rogernomics can be viewed as complementary reform packages implemented by successive governments which were aimed at liberalising the New Zealand economy after a period of intense protectionism and fiscal control, particularly under the administration of Sir Robert Muldoon's National government between 1975 and 1984. Muldoon's protectionism had culminated in a three year wage and price freeze imposed by Muldoon, who simultaneously held the posts of Prime Minister and Minister of Finance, in an attempt to suppress rampant inflation.
Ruthanasia was controversial as the National Party
New Zealand National Party
The New Zealand National Party is the largest party in the New Zealand House of Representatives and in November 2008 formed a minority government with support from three minor parties.-Policies:...
had fought the 1990 election
New Zealand general election, 1990
The 1990 New Zealand general election was held on 27 October to determine the composition of the 43rd New Zealand parliament. The governing Labour Party was defeated, ending its controversial two terms in office...
on a manifesto promising "The Decent Society" and implicitly repudiating the radicalism of the fourth Labour government
Fourth Labour Government of New Zealand
The Fourth Labour Government of New Zealand was the government of New Zealand from 26 July 1984 to 2 November 1990. It enacted major social and economic reforms, including reformation of the tax system. The economic reforms were known as Rogernomics after Finance Minister Roger Douglas...
. The Prime Minister, Jim Bolger
Jim Bolger
James Brendan "Jim" Bolger, ONZ was the 35th Prime Minister of New Zealand from 1990 to 1997. Bolger was elected on the promise of delivering a "Decent Society" following the previous Labour government's economic reforms, known as Rogernomics...
, defended the move in his memoirs on the grounds that he had been badly misled in the runup to the 1990 election as to the actual state of the New Zealand economy. Upon winning the 1990 election, Bolger and Richardson quickly became aware of two unrelated financial crises: firstly, that the Bank of New Zealand
Bank of New Zealand
Bank of New Zealand is one of New Zealand’s largest banks and has been operating continuously in the country since the first office was opened in Auckland in October 1861 followed shortly after by the first branch in Dunedin in December 1861...
required an immediate injection of capital to avoid insolvency as a result of the poor performance of a NZ$2.8bn loan portfolio in Australia, and secondly that the outgoing finance minister David Caygill
David Caygill
David Caygill, CBE is a former New Zealand politician. After being New Zealand's youngest city councillor at 22 , he was an MP from 1978 to 1996, representing the Labour Party...
's projection of a modest fiscal surplus was inaccurate, and that the country instead faced a fiscal deficit of NZ$5.2bn if action were not taken immediately.
Where Roger Douglas had deregulated the industrial, financial, fiscal and agricultural sectors of the New Zealand economy, Ruth Richardson, under the auspices of a National (predominantly conservative) administration, was able to focus on social services and labour relations, sensitive areas which the preceding Labour administration had not been willing to reform in light of its traditional working class constituency.
Richardson and the then Minister of Social Welfare, Jenny Shipley
Jenny Shipley
Dame Jenny Shipley, DNZM , served as the 36th Prime Minister of New Zealand from December 1997 to December 1999, the first woman to hold this office and the first, and to date only, woman to serve as parliamentary leader of the National Party of New Zealand.-Early life:Shipley was born as Jennifer...
, immediately reformed Social Welfare programme by reducing available benefits and allowances across the board, and in 1991 the National government enacted the Employment Contracts Act (ECA), which effectively demolished New Zealand's post-war industrial relations framework, replacing collective bargaining and compulsory union membership in many sectors with the concept of the individual employment contract. Whilst the ECA did not directly address unions, the practical effect of removing the requirement for employees to be members, and allowing those employees who did want union membership to choose which union they wished to join dramatically reduced the bargaining position of the unions in the New Zealand economy. This reform of labour laws had already been outlined in the 1990 National manifesto.
Ken Douglas
Ken Douglas
Ken Douglas, ONZ is New Zealand's best known contemporary trade union leader.As President of the New Zealand Council of Trade Unions until 1999 Douglas led the union movement in New Zealand for over fifteen years. His union career started in the Driver's Union...
, then president of the Council of Trade Unions, said:
- Ruth Richardson was very clear, very blunt, very honest about (the ECA's) purpose. It was to achieve the dramatic lowering of wages, very quickly, by allowing the high levels of unemployment to pull the cost of labour down; that the market would determine and an oversupplied market would reduce the price. The other reason, of course, was to de-unionise and that's why the government is in trouble with the International Labour OrganizationInternational Labour OrganizationThe International Labour Organization is a specialized agency of the United Nations that deals with labour issues pertaining to international labour standards. Its headquarters are in Geneva, Switzerland. Its secretariat — the people who are employed by it throughout the world — is known as the...
because the ECA doesn't enhance or promote collective bargaining.
Roger Douglas, minister of finance in the preceding fourth Labour government, said (after his retirement from politics):
- I think the labour market changes in 1990 were first class. I think, unfortunately, Caygill and the Labour party had let the fiscal situation slip from where it was in 1988 and Ruth put that back on the road."
Ruthanasia came to an end after the 1993 election
New Zealand general election, 1993
The 1993 New Zealand general election was held on 6 November 1993 to determine the composition of the 44th New Zealand Parliament. It saw the governing National Party, led by Jim Bolger, win a second term in office, despite a major swing back towards the Labour Party. The new Alliance and New...
, when National's majority was reduced from 18 (out of 99 seats) to 1. Bolger responded by replacing Richardson with Bill Birch
Bill Birch
Sir William Francis Birch, GNZM , usually known as Bill Birch, is a former New Zealand politician. He served as Minister of Finance for several years in the fourth National government.-Early life:...
.
Long-term consequences: 1993-2008
However, internal party ideological tensions also led to the secession of Winston PetersWinston Peters
Winston Raymond Peters is a New Zealand politician and leader of New Zealand First, a political party he founded in 1993. Peters has had a turbulent political career since entering Parliament in 1978. He served as Minister of Maori Affairs in the Bolger National Party Government before being...
from the National Party caucus and the formation of New Zealand First
New Zealand First
New Zealand First is a political party in New Zealand that was founded in 1993, following party founder Winston Peters' resignation from the National Party in 1992...
in 1993, which would be represented within Parliament for the next fifteen years. Peters was viewed as an acolyte of Rob Muldoon's protectionist economic policies and had a substantial support base amongst New Zealand's senior citizens and their related lobby organisations.
Peters' erstwhile prominence was due to the other consequence of Roger Douglas and Ruth Richardson's New Right economic policies, which fuelled a movement for electoral reform in New Zealand
Electoral reform in New Zealand
Electoral reform in New Zealand has, in recent years, become a political issue as major changes have been made to both Parliamentary and local government electoral systems.- Parliamentary Electoral Reform :...
after Sir Geoffrey Palmer
Geoffrey Palmer
Sir Geoffrey Winston Russell Palmer, KCMG, AC, SC , served as the 33rd Prime Minister of New Zealand from August 1989 until September 1990, leading the Fourth Labour Government...
convened a Royal Commission on the Electoral System
Royal Commission on the Electoral System
The Royal Commission on the Electoral System was formed in New Zealand in 1985, and reported in 1986. The decision to form the Royal Commission was taken by the Fourth Labour government, after the Labour party had received more votes, yet won fewer seats than the National Party in both the 1978 and...
in 1985-86. In two electoral reform referenda, the general public endorsed the Mixed Member Proportional electoral system as a response to what they perecived as an unaccountable New Right government.
Despite Richardson's resignation, internal tensions continued to wrack the National Party. Several MPs seceded to form non-viable centre-right satellite parties before the New Zealand general election, 1996
New Zealand general election, 1996
The 1996 New Zealand general election was held on 12 October 1996 to determine the composition of the 45th New Zealand Parliament. It was notable for being the first election to be held under the new Mixed Member Proportional electoral system, and produced a parliament considerably more diverse...
. After that election, the Bolger administration went into coalition with Winston Peters and New Zealand First. It proved unpopular, and party rightists launched a coup against Jim Bolger
Jim Bolger
James Brendan "Jim" Bolger, ONZ was the 35th Prime Minister of New Zealand from 1990 to 1997. Bolger was elected on the promise of delivering a "Decent Society" following the previous Labour government's economic reforms, known as Rogernomics...
in 1998. As a consequence, Peters abandoned the National/New Zealand First coalition, splitting his party- National then governed for a further year, with the support of post-split ex-New Zealand First MPs, but the New Zealand general election, 1999
New Zealand general election, 1999
The 1999 New Zealand general election was held on 27 November 1999 to determine the composition of the 46th New Zealand Parliament. The governing National Party, led by Prime Minister Jenny Shipley, was defeated, being replaced by a coalition of Helen Clark's Labour Party and the smaller Alliance...
saw Helen Clark
Helen Clark
Helen Elizabeth Clark, ONZ is a New Zealand political figure who was the 37th Prime Minister of New Zealand for three consecutive terms from 1999 to 2008...
lead a centre-left coalition to victory. She would remain Prime Minister for most of the next decade, as National was paralysed by factional infighting over ideology and direction. When National won office again after the New Zealand general election, 2008
New Zealand general election, 2008
The 2008 New Zealand general election was held on 8 November 2008 to determine the composition of the 49th New Zealand parliament. The conservative National Party, headed by its Parliamentary leader John Key, won a plurality of votes and seats, ending 9 years of government dominated by the social...
, it was reconfigured as a centrist political party, disavowing the 'radical' New Right
New Right
New Right is used in several countries as a descriptive term for various policies or groups that are right-wing. It has also been used to describe the emergence of Eastern European parties after the collapse of communism.-Australia:...
industrial relations and welfare state
Welfare state
A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those...
and public sector
Public sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
retrenchment of the nineties.
As for Richardson herself, she became a member of ACT New Zealand, her philosophical successors.