EJANZH: Davis Article

After its election in 1984, the New Zealand Labour Government of David Lange inspired the ALP Left, bitterly resentful of the Hawke Labor government’s abandonment of the party’s anti-nuclear policies, by its refusal to accept potentially nuclear American warships. Later the same government’s ‘Rogernomics’ helped to encourage the new ALP economic rationalists. After 1991, however, when the New Zealand Labour government had fallen to the more extreme economic rationalists of Jim Bolger’s National government, the New Zealand GST and industrial legislation was used, with some success by Paul Keating in 1993, to show reluctant Labor voters in Australia the dire consequences of a local Liberal-Country Party government.

There is nothing new in this intimate link between Australia and New Zealand, where New Zealand precedents on both the left and the right enliven Australian Labor politics. In the past New Zealand precedents almost invariably supported the Australian left. New Zealand Labour at its inception was heavily dependent on imported Australian leaders. On the belated accession to power of Michael Joseph Savage’s Labour government in 1935 New Zealand took some initiatives not yet achieved by the administratively more experienced ALP. The New Zealand Labour > boasted in 1937 that ‘affairs in New Zealand are now claiming a great deal of attention in Australia’. When New Zealand conservatives quoted Australian criticism of the Dominion government, the > contrasted depression, slave camps and budget deficits across the Tasman, with full employment, intense business activity and a healthier exchequer under Savage. In an illustrated article headed, ‘Never slums like these Before’, it depicted the shanty life of Sydney’s unemployed, child malnutrition and totally inadequate food relief. Surprisingly, the Australian left did not reject so humiliating an analysis. [1]

Documentation already exists of the almost hypnotic influence of New Zealand radical precedents, in both the early 1900s and late 1930s, on Tasmania, Australia’s smallest and poorest state.[2] But was this an aberration by Australia’s least characteristic unit, or a symptom of a Commonwealth-wide tendency? A cross section of the mainland ALP press provides some answer. In the short but significant period, 1939-40, as in the 1980s, a New Zealand Labour administration, while facing considerable external pressure, appeared to the ALP to be setting vital precedents. But the New Zealand reality may not have been synonymous with the perception of it by enthusiastic supporters in Australia.

Keith Sinclair and Erik Olssen, in their biographies of Walter Nash (prime minister, 1957-60) and John A. Lee, a radical Labour MP and novel. focussed attention on the painful clash between Labour Prime Minister, M.,. Savage, and the articulate Lee. The latter’s > was a brilliant, if tendentious, expose of intra-party feuding.[3] Olssen sees Lee as a genuine socialist, while Sinclair considers him more a Douglas Credit crank, tilting vainly against the common sense economic conservatism of Savage and his prime ministerial successors, Peter Fraser and Walter Nash. The debate is important as it was the views of the politically marginal Lee, expelled from the party in 1940, which seemed to Australian Labor to epitomise New Zealand achievement. Ironically, the ideological influence of New Zealand in the late 1930s was the antithesis of its influence in the late 1980s.

Insular Tasmania proved something of an ideological bridge between New Zealand and the vastly different environment of continental Australia. As argued elsewhere, the eccentric Irish journalist, Edmund Dwyer Gray, was probably the most ardent and consistent Australian propagandist for New Zealand precedents. Treasurer of Tasmania, with a short interlude as premier in 1939, from 1934 till his death in 1945, Gray also controlled the > newspaper. He used New Zealand as a theoretical model justifying the implementation of a modified Douglas Credit, and a practical example of high social service funding, useful when demanding increased finance from the Australian Grants Commission. Gray was particularly impressed by the New Zealand government’s control over the Reserve Bank, low interest loans for state housing, a higher unemployment benefit, a relatively generous national insurance and health scheme, and better education. He visited New Zealand himself in early 1939, depicting the country as ‘already a Worker’s Paradise’. His successor as premier, Robert Cosgrove, had, as minister for agriculture, already travelled to New Zealand in April 1936 to investigate, inter alia, the new marketing system and the guaranteed price for dairy products. [4]

Gray completely misinterpreted the clash between Savage and Lee. The > continually quoted Savage as an ardent believer in social credit, Gray assuming that it was only after Savage’s death in February 1940 that the new Fraser-Nash regime adopted ‘prehistoric financial orthodoxy’.[5] Ben Chifley, treasurer in the war-time Australian Labor government, was duly warned against following Nash’s financial policies. In 1944, Tasmanian Labor Senator Richard Darcey, long an advocate of national credit,[6] annoyed Peter Fraser by speaking in New Zealand from the platform of one of the expelled Lee’s ‘Democratic Labour’ candidates.[7]

In early 1939, far from the small-scale politics of Hobart, New South Wales Labor was riven by a bitter conflict between the former premier, Jack Lang, and his ‘Industrial Lab or’ opponents, fighting to oust him from the leadership by forming a popular front with the Communists. All Labor factions appeared determined to appeal to trans-Tasman precedents. They asserted, like their counterparts in Victoria, that New South Wales endured continuing unemployment under the tottering coalition government of Bertram Stevens (United Australia and Country Parties). Meanwhile, a stream of hut workers was lured across the Tasman by the New Zealand government’s extensive state housing scheme. Based on cheap credit from the Reserve Bank, the scheme was initially administered by John A. Lee as a parliamentary under-secretary .

New Zealand was an issue in the important New South Wales by-election at Hurstville in early 1939. Lang Labor backed J.F. McGrath, who also had the moral support of Dwyer Gray, the Tasmanian treasurer, the Tasmanian premier, Albert Ogilvie, and John Curtin, the federal leader. Ranged against them were the UAP, currently holding the seat, and Clive Evatt (brother of H.V. Evatt), the ‘Industrial Lab or’ candidate, backed by the future premier, John Heffron. When Evatt at a public meeting capitalised on the support of a speaker claiming to represent the New Zealand Labour party, Lang immediately secured a telegram of repudiation from the New Zealand party secretary. Evatt nevertheless won this important trial of strength against both Lang and the UAP.[8] According to the Communist > and > – discussed current New Zealand issues, such as the exchange crisis of mid-1939, the division in the Labour caucus, the attitude of the government to the outbreak of World War II and the implications of the expulsion of John A. Lee by the March 1940 conference. Interspersed with these issues was miscellaneous exhortation to follow various New Zealand precedents and the dissemination of favourable comments from Australians visiting or working in New Zealand.[12]

Few other Australians showed the ideological certitude of Dwyer Gray that New Zealand was on the verge of ending the Depression and establishing the millennium by incorporating into their legislation the best features of the Douglas system of community credit; Sydney papers had little interest in the subject. The > probably devoted most space to New Zealand, sometimes supplementing a regular column with additional news. Savage’s photograph appeared at least 25 times between January 1939 and his obituary issue in early April 1940.

Before the advent of TV, readers probably knew the features of the New Zealand prime minister better than any other Australasian Labor leader. Appropriately the > eulogised Savage’s government for ‘formulating more effective legislation implementing Lab or’s policy than any other Labor Government in the British Empire’, and never compromised Labor principles.[13] At the other end of the spectrum, the Communists were critical, while taking up the cudgels against New Zealand Labour as capitalist enemies. Lang identified the pressures on Savage with those on himself as premier of New South Wales, before his startling dismissal by Governor Sir Philip Game in 1932.

The New Zealand exchange crisis was well advertised in New South Wales. The Left, like its counterpart in the 1980s which endorsed Lange’s repudiation of US nuclear ships, portrayed M.J. Savage as a heroic David confronting the terrifying Goliath of world bankers and financiers. This image contrasts remarkably with John A. Lee’s jaundiced picture of ‘Old Zero’ Savage as an absurd, witless megalomaniac, endeavouring to crush caucus opposition by pathetic threats of physical violence. Lee’s view of Savage bore more than a passing resemblance to radical New Zealand Labour’s vision of Lange in opposition as not only economically reactionary but, under US and Australian pressure, likely to compromise his party’s anti-nuclear policy.[14]

Lange did stay firm on nuclear ships, but critics correctly anticipated ‘Rogernomics’. In 1939 Australian observers were also correct in their insistence that New Zealand Labour, attempting import and exchange controls as an antidote to the flight of capital and the run down of overseas reserves, was in a parlous condition. Jack Lang recalled a similar experience in 1931 as premier of New South Wales: led by Montagu Norman, governor of the Bank of England, the bankers (anticipating the action of the future World Bank and International Monetary Fund), ordered New Zealand to curtail its expenditure on social services or ‘walk the plank’. This amounted to the imposition of a type of ‘Premier’s Plan’ on New Zealand, in resisting which Lang had been sacked by his governor in 1932. Lang also identified the current newspaper campaign, attacking the Savage government as extreme, divided, and unpopular, with the treatment he had received from the media in 1931-2. He fully supported New Zealand’s ‘drastic prohibition of imports’, aware that it would hurt Australian as well as British interests.[15] The Bank of New South Wales was seen as one of New Zealand Labour’s most ruthless opponents. Inside the New Zealand cabinet, Lee’s diaries indicate a fear that Finance Minister Nash was manoeuvring it ‘into the position Lang was placed in, i.e. a chance of default’. In public, the party’s > warned New Zealand against the Australian example. Obviously referring to the ‘Premiers’ Plan’, it claimed that ‘British money monopolists’ had ‘plunged’ Australia into an economic abyss’.[l6]

The Communist complained that the City of London had been discreetly canvassing for the abrogation of New Zealand’s constitution, as had been done against Newfoundland in 1935, while British businessmen campaigned against the Savage government in New Zealand. [18l

The reality, as Keith Sinclair demonstrated, was not quite so dramatic. Finance Minister Nash, under great pressure from the British government and bankers, who objected to New Zealand maintaining a higher rate of social services than either Britain or Australia, eventually signed a partial capitulation in London before obtaining the necessary loan. The Lee faction was furious; Savage, however, resisted the demolition of import controls. Ironically, it was Neville Chamberlain and Montagu Norman who saved Nash from total humiliation.[19] At the time, Lang’s > suggested that Savage had been able to ride his external crisis because the British government had proved more sympathetic than the ‘Molochs of Finance’. The situation, it felt, though patched up, was, like Mahomet’s coffin, still suspended in midair. [20]

The outbreak of World War II in September 1939 and New Zealand’s reaction distracted interest from the financial crisis. The issues were linked, first, by the Lee group’s radical demand for war finance through debt-free Reserve Bank credit. Though this proposal was ignored, Dwyer Gray in Hobart, the > in Melbourne and the > seemed to accept it as an accomplished fact and belaboured Menzies and subsequently Curtin for not following suit in Australia. The Queensland > was also impressed by the strategy.[21] Secondly, Lee, though a disabled World War I veteran, eventually came out against conscription for overseas service. Earlier, the New South Wales Communist and Langite sources had feared that New Zealand might prove an unfortunate precedent for Australia by rushing into conscription. In Brisbane, however, the > was most impressed by the alacrity with which both the government and the New Zealand Labour party had demonstrated full support for the British war effort and the preparations already made.[22]

In Tasmania Dwyer Gray agreed with the official voice of Queensland Labor, applauding Savage’s all-the-way-with Britain approach as an example to the more sceptical John Curtin. The latter, as federal opposition leader, believed with Savage that ‘if Great Britain goes down, we go down’, but also considered that ‘the danger to Australia will come before Great Britain goes down.'[23] If, however, Lee is correct, Savage vacillated pitiably in private over the moral justification for the war.[24]

Australian Labor was also divided on the wisdom of New Zealand’s all-party war cabinet. Dwyer Gray originally believed that New Zealand Labour had a more positive attitude to the possibility of a war coalition than its Australian counterpart; Maurice Blackburn, the stormy Labor MHR for Bourke, rejected this precedent as irrelevant to Australian conditions.[25] New Zealand Labour members ensured that the coalition was nominal only, an :1 Australian Labor remained free of such entanglements.

The clash between the Lee faction and the New Zealand Labour left (which Sinclair, though not Lee’s biographer, Erik Olssen, sees basically dispute between a group of dissident New Zealand MPs confronting the expatriate Australian or English leaders) came to a head at the Easter conference of 1940.[26] Savage, known to be dying of cancer since an abdominal operation in August 1939 [27], was indirectly ridiculed in December by a celebrated magazine article by Lee denouncing mentally sick political leaders. Lang’s >, now smarting at the Communist-supported Heffron group’s part in the deposition of its proprietor from New South Wales Labor leadership, dismissed the suggestion that Savage ‘had gone mental’ as a typical Communist white-anting tactic.

The attempt to put ‘skids under’ the New Zealand government was, it appeared, similar to the tactics of the new South Wales Communists against the Lang mini sky in 1930. Lee it regarded as a Communist satellite and stool-pigeon, popular also with the right-wing press. For his part, Lee later denounced Lang’s Savage-like dictatorship in New South Wales, while approving of his monetary policy. In 1939 the > claimed that wholesale support of Communists for the New Zealand caucus rebels harmed the latter.[28] At the other end of the spectrum, after the Molotov-Ribbentrop Pact, the Communist Sydney > showed some sympathy for Lee’s opposition to conscription, but not his advocacy of voluntary recruitment.[29] Similarly, New Zealand Communists lined up behind Lee till his support for the war, which emphasised like Curtin in Australia the defence of the Pacific, became obvious.[30]

The > disagreed with Lee on the monetary issue, dismissing him as an ally of Douglas Credit. His book, >, demonstrated ‘no comprehension of the class struggle and of working class power’. Though New Zealand Labour, which had achieved some overdue reforms and even progressed beyond Australia in some instances, was mortally sick, Lee was regarded by a writer in the > as an inadequate physician.[31] Thus the > would agree with Sinclair’s assessment of Lee rather than Olssen’s.

Though the > published the facts of Lee’s expulsion with relative impartiality, emphasising the monetary issue,[32] and the Langite > demonstrated that Lee had obtained too large a conference vote for the issue to be finally settled,[33] there seemed relatively little sympathy for the dissident New Zealander in the New South Wales press. In Australia, as in New Zealand, Savage, whatever his private failings, personified the achievement of New Zealand Labour.

That Savage’s popularity was general in Australia is indicated by the influential Melbourne >. The New Zealand prime minister’s photograph was again familiar to the paper’s readers,[34] and no appreciable information was given about the conflict with Lee. The Melbourne Trades Hall delegates stood in silence at Savage’s death.[35] There is no reason to doubt that Victorian Labor was as interested in New Zealand as that of New South Wales and Tasmania.

The Victorian Labor leader and future premier, John Cain, senior, was aware of New Zealand.[36] He was impressed by its social security and stabilisation plan for primary produce, and relative lack of unemployment (8,000 to Victoria’s 30,000 to 40,000). On the other hand, Cain felt the. Victoria’s housing scheme was better than New Zealand’s, and that the latter country had a relatively easy road to social reform without the complication of a federal system and conflicting state laws.[37] In the 1980s when John Cain, junior, was Victorian premier, his efforts to maintain the state as a nuclear free zone came close to the policy of Lange in New Zealand.

In 1939 P.J. Clarey, a Victorian MP subsequently president of the ACTU, was more eulogistic than the elder Cain, believing that there was much in the claim that ‘New Zealand had the best socialistic laws in the world.’ Like Cain senior, Clarey emphasised social security and the guaranteed price system, adding the 40 hour week, compulsory unionism, control of the Reserve Bank, currency reform, but also, unlike Cain, housing.[38]

The > supported the New Zealand government’s import and monetary controls to achieve insulation from the slump and equated them with the unsuccessful efforts of the Scullin federal Labor government in 1929.[39] The > said relatively little on social credit; the Queensland >, however, was quoted on New Zealand’s rebellion against ‘bloodsucking’ banks.[40] But the Melbourne >, a paper founded by B.A. Santamaria, whose ‘Movement’ and National Civic Council have played such a controversial role in modern Australian politics, took up this issue.[41] Like Dwyer Gray it advocated national control of credit. It was also glad to see New Zealand cutting herself adrift from the shackles of international finance, but regretted that the process was incomplete.[42] This was, in fact, the , believed, for example, that Australian state governments were an obstacle to equalling the New Zealand achievement.[57] The lack of checks and balances also meant that New Zealand could implement the program of the radical right more quickly than Australia.

The foregoing discussion should demonstrate that, in a particularly important period, Australian Labor politicians were distinctly less coy than Australian historians in tacitly accepting the existence of an Australasian identity. Clearly, this identity needs further exploration for the mutual advantage of both countries. In the 1980s and 1990s, unlike the 1890s and 1930s, New Zealand is no longer a social laboratory of experimental legislation inspiring collectivist radicals throughout the world. Its radicals now reject the Savage Fraser governments as agents for exploiting workers on behalf of capitalists.[58] Ironically, the Lange and Palmer Labour ministries made a bonfire of financial controls and the insulation policies of the first Labour government in an unprecedented exhibition of monetarist ideology, taken up and extended by the National government of Jim Bolger. New Zealand, after its government worked on parallel lines with the Hawke government of the 1980s, is now election propaganda for Australian Labor parties intent on scaring voters away from the Liberals.[59]

The abandonment of exchange controls in 1984 has been contrasted with the Savage government’s celebrated import restrictions of 1938. Moreover, the radical New Zealand economist, Wolfgang Rosenberg, equated David Lange with John Scullin, the Australian Labor prime minister who accepts deflationary Premiers’ Plan in 1931 and incurred the opposition of Premiere Jack Lang in New South Wales.[60] After 1984 the New Zealand ports were closed to nuclear warships, but the economy was thrown wide open to the ruthless operations of financial superpowers. Though Lange appeared a Jekyll and Hyde to domestic opponents, New Zealand temporarily gained the David-versus Goliath image of a tiny nation courageously dissociating herself from a great power nuclear arms race. Cartoonists have portrayed both Savage and Lange governments uneasy without umbrellas, economic or nuclear.[61] Though the issues of the 1930s and the 1980s are almost reversed, some common factors emerge in the hero worship, now turned to savage reprobation, of New Zealand by Australian and other radicals, the overwhelming external pressure against New Zealand’s attempted ‘insulation’ from world crisis, the ambivalent attitude of Australian governments, and the success of New Zealand government propaganda in obscuring, for a time, internal party divisions. Ultimately, as is argued on the New Zealand Labour left, economic and nuclear policies must be congruent or New Zealand will be pitifully vulnerable to outside destabilisation.[62] Nevertheless, whatever the outcome, New Zealand has again shown political daring which Australian radicals long to emulate.[63]


1. C. Connolly and L. Richardson, ‘Kiwi and Kangaroo: Teaching Australian History to New Zealanders’, >, No. 15, June 1978, pp. 7-10. In this essay New Zealander Labour will be distinguished from Australian Labor. >, Wellington, 30 March, 11 May, 1 June and 27 July 1939.

2. R.P. Davis 10. “New Zealand Liberalism and Tasmanian Labour, 1891-1916” > (Canberra), No. 21, November 1971, pp. 24-35, and “‘A Real and Quite Unique Affinity’: New Zealand and Tasmanian Labor, 1934- 1949”, >, No. 40, May 1981, pp. 68-76. For a similar study in a Canadian province, see Davis, “New Zealand Liberal Legislation and Manitoba Labour, 1894-1916”, P.S. O’Connor and Cl.A. Wood, et. al., >, (University of Otago Press: Dunedin, 1973, pp. 169-183 and 289-294.

3. See Keith Sinclair, Walter Nash, Auckland, 1976 and The Lee-Sutch Syndrome: New Zealand Labour Party Policies and Politics, 1930-40′, >, Vol. 8, No. 2, October 1974, pp. 95-117, and Erik Olssen, ‘The Impact of John A. Lee’s Expulsion upon the Labour Party’, >, Vol. 12, No.1, April 1978, pp. 34-49. See also Olssen, lohn A. Lee, Dunedin,1977 pp. 114-115 and 210, and John A. Lee, >, Auckland, 1963.

4. >, Launceston, 21 April 1936.

5. >, Hobart, 21 October 1944.

6. See Darcey’s Senate speech, quoted in >, Brisbane, 7 January 1940, in which he quoted a Canadian authority in favour of national credit to finance the War.

7. >, 22 August 1944.

8. >, Melbourne, 2 March 1939.

9. According to Lang’s >, Sydney, 3 March 1939, more than 2,000 skilled building tradesmen in Sydney were applying to the New Zealand government for work on its home building scheme. See Daily News, Sydney, 21 March 1939, for a farewell to the local member of the Builder’s Union. For analysis of Lee’s crowning achievement, see Olssen, >, pp. 92-113.

10. , 5 May 1939 and Daily News, 1 April and 30 June 1939. This issue was also emphasised in ALP-ruled Queensland, see >, 15 August 1939.

13. >, 5 April 1940.

14. Lee, >, p. 59 ff. For Lange’s support for ANZUS and acceptance of nuclear-powered ships, see P. Rasmussen in > (hereafter NZMR), June 1983 (255); for economic conservatism, see J.A. Stewart, >, May 1983 (254); for possibility of sellout after election, see Stewart, >, August 1984 (268); for pride in Lange’s stand against nuclear ships, see G.G. Walker, >, September 1984 (269).

15. >, 23 June and 3 February 1939. For New Zealand cabinet, see John A. Lee, >, Christchurch, 1981, p. 148. >, 6 July 1939.

16. >, 20 January 1939.

l7. , Sydney, July 1983.

39. >, 19 January 1939.

40. >, 16 March 1939.

4l. >, Melbourne, 5 November 1938. Santa maria, though less involved in the paper after 1937, did not leave the editorial board till 1941. See B.A. Santamaria, >, Melbourne University Press, 1981, p. 19.

42. >, 5 March 1938.

43. >, 30 April 1938.

44. >, 3 September 1938. 45. >, 2 July 1938.

46. >, 1-2 September 1990.

47. Brian Carroll, William Forgan Smith: Dictator or Democrat?’, in Denis Murphy, Roger Joyce and Margaret Cribb, et.al., >, University of Queensland Press, 1990,p.409.

48. >, Brisbane, 1 August 1939.

49. >, 25 July 1939.

50. See Senator L.S. Collings in >, 13 February 1940. See also, ‘Progress of New Zealand Under Labor’, >, 15 August 1939. The article emphasised the wiping out of unemployment, the considerable increase in wages, the five-day 40 hour week, the guaranteed price for farmers, the liberalisation of social services (including education, health and pensions), ‘sweeping banking reforms’. The budget had, moreover, been balanced and both production and the standard of living significantly improved.

51. >, 4 September, 26 December, 24 October 1939, 6 February 1940.

52. >, 5 February 1939.

53. , 25 January 1940, 2 March 1939, 23 February 1939 and , February 1985 (273), pp. 9-11.

61. See Lurie cartoon, reproduced by the >, Melbourne, 9 March 1985 (Uncle Sam’s umbrella leaks over NZ), and >, April 1985 (275), and compare Minihinnicks cartoon, Dominion, Wellington, 1 March 1938 (Savage without umbrella).

62. See interview between Helen Clark, MP, and Jim Falk, >, Melbourne, May 1985. Clark, like Lee, insisted on control of banking. The same general point was made by ‘Criticus’ in the >, October 1984 (270).

63. The economic interaction between the Hawke-Keating government and the Lange-Douglas NZ administration on summits, consumption taxes (eventually dropped), etc., is another story.