First term: 1975–1978 during an official visit to the United States, 1977 Muldoon was sworn in as New Zealand's 31st Prime Minister on 12 December 1975, at the age of 54. A
populist, he promised to lead "a Government of the ordinary bloke". His government immediately faced problems with the economy; a
recession from June 1976 to March 1978 caused New Zealand's economy to shrink 4.1% and unemployment to rise 125%.
Superannuation and Fitzgerald v. Muldoon One of Muldoon's first actions was to issue a press release stating that he would advise the
Governor-General to abolish Labour's superannuation scheme without new legislation. Muldoon felt that the dissolution would be immediate, and he would later introduce a bill in parliament to retroactively make the abolition legal. The
Bill of Rights 1689 was then invoked in the case of
Fitzgerald v Muldoon and Others, The
Chief Justice, Sir
Richard Wild, declared that Muldoon's actions were illegal as they had violated Article 1 of the Bill of Rights, which provides "that the pretended power of dispensing with laws or the execution of laws by regal authority...is illegal." Ultimately Muldoon, as a member of the executive branch, was acting beyond his prescribed powers, as only parliament has the power to make and unmake laws. Therefore, Muldoon's actions were not only illegal, but unconstitutional, as they violated the rule of law and the sovereignty of parliament. This is encapsulated in Sir Richard Wild's judgment, in which he stated that "The Act of Parliament in force required that those deductions and contributions must be made, yet here was the Prime Minister announcing that they need not be made. I am bound to hold that in so doing he was purporting to suspend the law without consent of Parliament. Parliament had made the law. Therefore the law could be amended or suspended only by Parliament or with the authority of Parliament." Economics correspondent Brian Gaynor has claimed that Muldoon's policy of reversing Labour's saving scheme cost him a chance to transform the New Zealand economy. The National superannuation scheme was one of Muldoon's 1975 election promises: it was described as a "generous" policy, and was effective in realigning Muldoon's support from elderly voters. However, the high cost of the scheme had an immense impact on the budget; Margaret McClure determined that the scheme's superannuation was substantially higher than that of similar policies elsewhere in the world. The United States' superannuation for a married couple was effectively 49% of the average wage rate, and 40% in Australia and 38% in Britain; however, New Zealand's was set at 80%. Therefore, by 1981 the spending on this scheme had doubled, and made up 17.3% of the government's budget. This resulted in other social policy programs, particularly education, being deprived of funds during this period. Justice
Stephen Kós has also stated that the "increase, without contribution, was utterly unsustainable." , Wellington, September 1976
Economic challenges Muldoon's government inherited a number of economic and social challenges. During the late 1960s and early 1970s, New Zealand's economy had significantly declined due to several international developments: a decline in international wool prices in 1966, Britain joining the
European Economic Community in 1973 (which deprived New Zealand of its formerly most important export market), and the
1973 oil crisis. The "Muldoon Years" were to feature Muldoon's obstinate and resourceful attempts to maintain New Zealand's "cradle to the grave"
welfare state, dating from 1935, in the face of a changing world. Muldoon had remained National's Finance spokesman when he became party leader, and as a result became his own Minister of Finance when National won power in 1975—thus concentrating enormous power in his hands. He is the last to hold both posts . In his first term (1975–1978) Muldoon focused on reducing expenditure, but struggled with the growing cost of his own superannuation scheme, partly due to the many tax rebates and exemptions he passed for lower income earners. By March 1978 the economy was growing again, Muldoon's government accelerated and increased the Kirk government's police raids against Pacific overstayers. These operations involved special police squads conducting
dawn raids on the homes of overstayers throughout New Zealand. Overstayers and their families were usually deported to their countries of origin. The Dawn Raids were widely condemned by various sections of New Zealand society, including the Pacific Islander and
Māori communities, church groups, employers and workers' unions, anti-racist groups, and the opposition Labour Party. The raids were also criticised by elements of the
New Zealand Police and the ruling National Party for damaging relations with the Pacific Islander community. At the time, Pacific Islanders comprised only one third of the overstayers (who were primarily from the United Kingdom, Australia, and South Africa), but made up 86% of those arrested and prosecuted for overstaying. Homosexual activity between men
was illegal in New Zealand at the time. After changing his story several times, Moyle resigned from Parliament. He later said that he had not been obliged to resign, but had done so because "the whole thing just made me sick". It has been suggested that Muldoon saw him as a leadership threat and acted accordingly. In a 1990 interview, Moyle said that the scandal had made him a "sadder and wiser person". The subsequent was won by
David Lange, and the attention that this got him helped propel Lange to the leadership of the Labour Party and his landslide victory over Muldoon in the
1984 election.
Appointment of Holyoake as Governor-General (third from left) with West German President
Walter Scheel (fourth from right), pictured in the conservatory at Government House Wellington in October 1978 As prime minister, Muldoon had the sole right to advise
Elizabeth II,
Queen of New Zealand, on whom to appoint as governor-general. With the term of Sir
Denis Blundell as Governor-General coming to an end in 1977, a new appointee was needed. Muldoon sent a message to the Queen on 15 December 1976 putting forward former prime minister Sir Keith Holyoake as his appointee, which the Queen approved. The announcement was made by the Queen at the end of
her tour of New Zealand on 7 March 1977, from the
Royal Yacht Britannia in
Lyttelton Harbour. This choice was controversial because Holyoake was a sitting Cabinet minister. Both opponents and supporters of Muldoon's government claimed that it was a political appointment; a number of National MPs, including his deputy, disagreed with the precedent of having a politician as governor-general. The Leader of the Opposition, Bill Rowling complained that he had not been consulted on the appointment, and then stated that he would act to remove Holyoake as Governor-General should the Labour Party win the
1978 general election. As a result of the appointment, Holyoake resigned from Parliament, resulting in the
Pahiatua by-election of 1977. He was succeeded in his seat by
John Falloon.
1978 election A month before the general election Muldoon remained the preferred prime minister, though his support slipped from 60% to 48% while Rowling's rose 8 points to 38%. At the election, held on 25 November, National lost three seats and it dropped 7.9 percentage points in the vote. Although the party had been returned to office with a majority of seats, it had lost the popular vote to a resurgent Labour Party. National Party President
George Chapman argued National struggled at the election because of the many boundary changes and issues with the electoral roll, contrary to Muldoon's claims that the media going against National had caused the decline in support.
Second term: 1978–1981 's tour of New Zealand in October 1981; Muldoon is seated on the Queen's right
Taxation Muldoon initially opposed
indirect consumer taxation on the basis that it would penalise poor people and increase inflation due to compensatory wage increases. However, in May 1979 he attempted to increase tax revenue by levying 10% to 20% taxes on a wide range of goods, including petrol, lawnmowers, caravans and boats. The taxes were criticised for being discriminatory, ineffective, and a "quick fix" that precluded necessary fundamental reform of the taxation system (as there were no income tax cuts to reflect the shift to indirect taxation). The boat and caravan levies, in particular, crippled both industries, as potential buyers could not afford the 20% tax on top of the construction costs, resulting in additional unemployment as workers were laid off.
Communism and the Soviet Union As with other conservative governments during the
Cold War, Muldoon adopted an anti-Soviet stance. As a long-time National Party activist, Muldoon rejected
Communism as an "alien" collectivist philosophy. During the television programme
Gallery in the later 1960s, he also rebuked left-leaning clergymen who had criticised
apartheid in South Africa for failing to oppose Soviet communism. Muldoon was critical of Communist influence in New Zealand's trade union movement. He also viewed the Moscow-aligned
Socialist Unity Party (SUP), a break-away faction from the
Communist Party of New Zealand, as a Soviet
fifth column that was trying to subvert New Zealand and the South Pacific island states. In various speeches and press releases, he would accuse the SUP and other Communist groups of instigating strikes and organising protests against US naval visits and New Zealand's sporting contacts with South Africa. As prime minister, he accepted both the American and Chinese views that the
Soviet Union was an aggressive power with hegemonic ambitions in the South Pacific. Muldoon would also join the United States President
Jimmy Carter and other Western leaders in condemning the
Soviet invasion of Afghanistan in 1979 and boycotting the
1980 Summer Olympics. However, his government did not participate in the US-led trade boycott against the Soviet Union because it would have hurt New Zealand's predominantly agricultural export economy. In 1980, the National government also expelled the Soviet Ambassador, Vsevolod Sofinski, for providing funding to the SUP. Despite his antagonism towards the Soviet Union and domestic Communist movements, Muldoon's government still maintained economic relations with the Soviet Union.
Arthur Allan Thomas After
David Yallop drew Muldoon's attention to the case of Arthur Allan Thomas, twice convicted for the murders of farming couple
Harvey and Jeannette Crewe, Muldoon asked Robert Adams-Smith, a
QC, to review the case. Adams-Smith reported 'an injustice may have been done', and Muldoon pushed through a royal pardon for Thomas. A subsequent Royal Commission of Inquiry exonerated Thomas and recommended he be paid $950,000 as compensation for the time he served. , in November 1977. Despite an abrasive personality, the Prime Minister was known for his eccentric behaviour – including an unexplained affection for
Mickey Mouse.
East Coast Bays by-election Muldoon's appointment of
Frank Gill as
New Zealand's ambassador to the United States led to a by-election in Gill's seat of
East Coast Bays. Muldoon's favoured candidate was
Sue Wood, at the time National's vice president and later party President. National selected the economically liberal
Don Brash, a future Governor of the
Reserve Bank of New Zealand and later leader of the National Party, as its candidate. Brash lost the by-election to Social Credit's
Gary Knapp, a major upset and a blow for Muldoon's leadership. Muldoon blamed Brash and the party organisation for the defeat, but was strongly rebuked by the party for this stance. The loss of the by-election provided the catalyst for growing opposition within the National Party to Muldoon's leadership.
Colonels' Coup Following the loss of the East Coast Bays by-election, Muldoon faced an abortive attempt in October–November 1980 to oust him as leader. Known as the Colonels' Coup after its originators—
Jim Bolger,
Jim McLay and
Derek Quigley—it aimed to replace Muldoon with his more economically liberal deputy,
Brian Talboys. Muldoon, who was overseas at the time, saw the plotters off with relative ease, especially since Talboys himself was a reluctant draftee. No other serious challenge to his leadership occurred in his years as prime minister until after the 1984 election.
Springbok Tour Professing a belief that politics should not interfere with sport, Muldoon resisted pressure to bar the 1981 tour by the
Springboks, the national
rugby union squad of
apartheid-era South Africa. By allowing "the Tour", Muldoon was accused of breaking the 1977
Gleneagles Agreement (to form a common policy on sporting with South Africa amongst the
Commonwealth, signed after the boycott of the
Montreal Olympics in 1976). Muldoon noted, however, that the Gleneagles Agreement had been amended and, in an article in
The Times, that he had not broken the Gleneagles Agreement because "New Zealand and subsequently other countries made it clear that they could not subscribe to an agreement which required them to abrogate the freedoms of their sportsmen and prohibit sporting contacts". "The Tour", as it has become known, provoked massive public demonstrations and some of the worst social schisms New Zealand has ever seen. Muldoon came down firmly on the pro-Tour side, arguing that sport and politics should be kept separate. He argued that his refusal to ban the Springboks was anti-authoritarian, leaving it up to individual consciences whether to play sports with representatives of
apartheid. He also argued that allowing their rugby team to tour did not mean supporting apartheid.
Think Big (agricultural centre) in
Rotorua, November 1980 The
Iranian Revolution had led to the
second oil shock of 1979. Economic growth in New Zealand had only just begun to recover from the 1976–78 recession when the oil shock hit. In response, Muldoon introduced his Think Big strategy, in which the government borrowed heavily to invest in large-scale industrial projects, predominantly energy-related. The Clyde dam, which generated electricity to be used to manufacture aluminium for export, was typical of Muldoon's efforts to shelter New Zealand from the troubles of the rest of the world. Despite Muldoon's promise before the 1975 election to erase debt, the already high levels of debt remained.
Economic recession and wage and price freeze With Think Big failing to deliver on its promise, Muldoon imposed an
incomes policy: a freeze on wages and most prices (items excluded included fresh meat, frozen meat, items sold at auction and "women's fashion clothing other than standard lines"), interest rates and dividends across the country in April 1982. In the
British House of Commons,
Margaret Thatcher responded by saying that "The New Zealand Government and people have been absolutely magnificent in their support of this country, of the Falkland Islanders and of the rule of liberty and the rule of law. I shall gladly convey that to Mr. Muldoon, who, only yesterday, reminded me 'Don't forget. In New Zealand, we are still a member of the same family.
Closer Economic Relations , meeting in 1978 in Sydney. It was an open secret that the two men did not get along, and even hated each other – largely due to Muldoon's rudeness towards Fraser.
Nuclear ships policy and the snap election of 1984 Ultimately, the end of Muldoon's government came following a late-night clash with National backbencher
Marilyn Waring over highly contentious Opposition-sponsored
nuclear-free New Zealand legislation, in which Waring told him she would
cross the floor (giving the Opposition a victory). On 14 June 1984, a visibly drunk Muldoon called
a snap election for 14 July that same year; historians noted the unfortunate coincidence with
Bastille Day. A journalist commented that a one-month election campaign would not give Muldoon much time to which Muldoon replied, audibly slurring his words, "It doesn't give my opponents much time to run up to an election, does it?". Six days before the election, a televised leader's debate was held between Muldoon and
David Lange where Muldoon, irritated by Lange's magnanimous closing words to him, sarcastically finished the debate by saying "I love you, Mr Lange". Muldoon was heavily defeated by Lange's resurgent Labour Party, which won 56 seats to National's 37 with massive
vote splitting caused by the
New Zealand Party in particular. Muldoon's drunkenness when announcing the election date led to it being humorously called the "
schnapps election".
Relationship with foreign leaders Muldoon had several close relationships with foreign leaders, such as British prime minister
Margaret Thatcher, American President
Ronald Reagan, Philippine dictator
Ferdinand Marcos, and Australian prime minister
Malcolm Fraser. These ranged from being positive to being stricken with deep animosity. Despite both being from conservative parties (the
Liberal Party of Australia and the
New Zealand National Party), the relationship Muldoon had with Malcolm Fraser was unusually poor; largely due to Muldoon, they never got along. This paralleled the mutual dislike previous left-leaning Prime Ministers
Gough Whitlam (
Australian Labor Party) and
Norman Kirk (
New Zealand Labour Party) had for each other. Whitlam and Kirk had both become prime minister in 1972 after a lengthy period of conservative rule, but their governments lasted just 3 years, between 1972 and 1975. Both Fraser and Muldoon became prime minister in 1975, returning right-wing governance to
Australasia. With their ideological preferences notwithstanding, the two men did not like each other from very early on, and grew to loathe one another to an undiplomatic degree. This was likely entirely caused, and then exacerbated, by Muldoon's animosity toward Fraser. understood that giving him a hostile welcome would be a poor decision. Arguing that it would not look good and could likely provoke New Zealand, he agreed to move the meeting place to the back entrance. Doing so moved Fraser, other leaders and the media away from the original entrance, where that night, a bomb exploded in a bin that was being emptied, killing two rubbish collectors and a policeman. Malcolm Fraser and others theorised that the bomb was planted out the front to assassinate Indian Prime Minister
Morarji Desai (although this was never proven) and that if he had walked down to greet Desai as he exited his vehicle at the original entry point, the bomb would likely have been triggered, exploding and killing them both. He later told
The Australian in 2009: "I really believe to this day that, in a weird way, Morarji Desai and I probably owe our lives to Robert Muldoon." After nine years, Muldoon's stewardship of the nation and its economy ceased. The newly elected neo-liberal and unexpectedly pro-free market Fourth Labour Government embarked on a series of fundamental free-market reforms known (after Labour's finance minister
Roger Douglas) as
Rogernomics, and which were then continued from 1990 to 1994 by the succeeding National government's policies known as (after National's finance minister
Ruth Richardson) as
Ruthanasia, which marked a fundamental break with the more interventionist policies of Muldoon's era. ==Later life==