If National can adapt to change, why can't Labour? 

Once upon a time National was a party dominated by farmers and their rural base. Its first townie leader, Sid Holland, had to have a farm bought for him in the 1940s, to maintain his status in the party. It was such a country party that there was a view in the 1960s that as New Zealand urbanised National would lose voter share because Labour was so much stronger in the cities. National continued with its rural roots – about half of the Bolger cabinet were farmers and others had been in rural servicing. Yet National slowly inched its way into the cities – especially Auckland, where it won more seats in this election than Labour and more list votes than Labour and the Greens together. The next Key cabinet, like his earlier ones, will have far fewer of those who have a rural background. 

This successful renewal of the National Party forms a background to the self-examination that the Labour Party is undergoing. Why has Labour not been able to hang onto its urban advantage and renew itself too?

Its parallel with farmers is trade unionists. In 1951, 17.4 percent of the labour force were in farm occupations, and 36.8 percent of it in unions. Today farmers are down to 4.7 percent and trade unionists are 16.6 percent. These declines are international trends reflecting different forces.

Interestingly, the Labour Party abandoned its unionists earlier than National its farmers. There was but one in the 1984 Lange cabinet, ranked 15th, and Stan Rodger came from the white collar PSA. There remain unionists in its caucus today – the most senior is Andrew Little, previously secretary of the largest private sector union, the EPMU (Engineers, Printers, Manufacturers).

The question of the role of the union movement in the Labour Party is a contentious one, but I don’t want to review that directly here. What I want to ask is why has Labour not been able to renew itself in the way that National has, whose success may reflect its organisational structure? Its local branches responding to their changing social circumstances and, as the country urbanised, they rebalanced becoming urban too. 

There was a push to extend Labour’s coverage to a ‘rainbow’ coalition. It had recruited Maori in 1938 and its recent success in south Auckland suggests it has been successful with Pasifika, although Asians are more pro-National. Women were markedly involved in the Labour Party earlier than in National (tea and scone making aside), but while there remains an imbalance, National is steadily making up its women’s deficit. Similarly gays joined Labour earlier (open gays of course, National has long had closet ones) but they are beginning to appear in other parties. So while Labour may be proud of its rainbow leadership, it no longer has an exclusive franchise.

Another dimension of the rainbow is the young. Labour seems to think it can reach out to them with young politicians (who sometimes have spent all their adult lives in politics) but often they seem as disconnected from younger generations as their elders. 

In the late 1980s Labour tried to connect with the equivalent of the Kim Dotcoms. Rich businessmen were an important source of funding the 1987, they fled in 1990. 

Admittedly, following the political debacle of Rogernomics, Labour has made a lot of effort to re-incorporate the dissatisfied who fled to New Labour, the Alliance and political withdrawal. Has the energy required there prevented Labour from reaching out elsewhere? 

However I was struck just how feeble was the previous Labour government’s thinking about social welfare. The world moved on but it seemed stuck in a pre-1972 nostalgia. (Don’t tell me that Working-for -Families represented progress, but that is for another time.) 

Then there is the curious story of the Greens, who first appeared as the Values Party in 1972. Labour has had some successful environmental policies but it never really tried to reach out to environmentalists even though they include people with the energy and commitment which in different times would have contributed to the renewal of the party. It is too late now; under MMP the Green Party is likely to be around for some time.

Perhaps the last two paragraphs are a part of the explanation of the difficulty Labour has had with its renewal. It has been too often backward looking. Perhaps understandably, given that Rogernomics forced it to defend the values on which the party was historically based, but so much so that they did not think about how to apply them to the evolving world, and certainly not to thinking about the new challenges that, say, the environment poses. (There are caucus members who do, notably David Parker.)

These are but preliminary observations, but it is important that the analysis does not get so obsessed with the particularities of Labour that is cannot learn from the success of National.

A final thought. National’s shift to becoming an urban party has led to a lot of discomfort in the countryside. I regularly see articles in farmer newspapers advocating the establishment of a Country Party. It is not impossible given MMP. I almost wish it would, so I could watch how National would deal with the challenge. Smoothly is my guess. 

Comments (17)

by Alex Stone on October 07, 2014
Alex Stone

Good day Brian -

Thank you for your interesting post - though in the nature of these things, I can't agree with you on every score.

You say Labour has "too often been backward looking." How do you reconcile this with the fact that Labour's policy package for the 2014 election had more new ideas than National's? While National was happy to go with the 'no new ideas approach', Labour was brave enough to be forward-looking, and consider capital gains tax (which surely we must adopt sometime?), have innovative ideas for bolstering Kiwi Saver, an energy policy strongly geared to transition to cleaner fuels (rather than more mining of coal, and digging for oil as National advocates - chasing 100-year-old dirty products), NZ Inc, NZ Power, Kiwi Build - and in the previous election the 'no GST on fruit and vegetables' (which I think they should have stuck with).

Also your contention that there's "a lot of discomfort in the countryside" seems at odds with National voters' unthinking acceptance of candidates of dubious quality foisted on them. Please explain how Todd Barclay, a 23-year-old tobacco industry activist with no real useful employment history, was gifted a safe seat in Clutha-Southland, and why he won with such a comfortable majoirty over a clearly far more appropriate candidate from that country community (Liz Craig, a respected doctor working in children's health for 25 years)? I think the real story is how little National supporters are thinking...


Alex Stone

by Chris de Lisle on October 07, 2014
Chris de Lisle

@ Brian Easton: I find your comments on Labour and the Greens very illuminating. I'm a bit unclear on how you think National has accomplished its renewal (other than "successfully"). Is there a structural dimension to their different rates of change?

@ Alex Stone: You clearly have a horse in this race, but that horse will never win, so long as you attribute your opponents' success to ignorance and apathy rather than real concerns (mistaken or not).

by John Hurley on October 08, 2014
John Hurley

What Dr Greg Clydesdale said in the political establishment's version of Lady Chatterly's Lover:

 There is a danger that a sector of the economy is being augmented that is totally reliant on a small domestic economy. Not only do these industries have limited potential for per-capita  growth but ‘deriving growth via factor inputs such as labour places pressure on infrastructure  such as transport and land supply, and ultimately have a further negative impact on growth (ARC 2005). Finally, as the sector gets larger, it gains in lobbying/political strength and can lobby for immigration regardless if it is the best interests of the economy as a whole. This could be seen in Canada where the development industry has lobbied hard for high sustained immigration levels (Ley and Tutchener 2001).

Pavletich pleased with progress on affordability

by Chris Hutching

 Property researcher Hugh Pavletich has good reason to feel pleased with his lobbying of political and industry players about housing affordability.

Only four years after his first annual Demographia survey many of the basic premises have now become an accepted part of the lexicon used by political leaders, property players and researchers.


 With assistance from the left (including selective media coverage):

Jan Logie

Let me say clearly now: the housing crisis is not the fault of recent migrants





by Lee Churchman on October 08, 2014
Lee Churchman

If National can adapt to change, why can't Labour? 

Short answer: because Labour tends towards being part of the reality based community, and we all know what happened to them.

Example: in reality the property bubble, reliance on dairy, and keeping the retirement age at 65 are problems. More generally, the abject failure of the policy community to predict and to properly deal with the long recession (admittedly not so much of a problem in NZ) is a significant problem. Let's keep pretending that the Emperor is clad, and see what happens.

by Charlie on October 08, 2014

Hi Alex

Some responses to your points regarding Labour's "new ideas".

Ignoring for the moment the specific policy statements in the recent election, the wider issue for Labour is that they're stuck in the 1950's. In the 1980's the centre of gravity of the political world moved Right. Those nations that successfully liberalised their economies benefitted enormously. (For NZ, bear in mind that the Muldoon government was actually isolationist/socialist with high taxes, high tarrifs and state control of almost everything) Thus Rogernomics saved NZ from becoming the Albania of the South Pacific. Today, the reality of things is that our economic prosperity depends on us continuously improving our efficiency and running a lean & mean government with low taxes and government inteference. It's a race between nations. If you're of the Left persuasion, you may not like to hear this, but that is how the world works at the moment.

Back to Labour's specific policy proposals in the recent election:

Firstly, they showed an incredible lack of attention to detail. For example if you're going to propose a CGT which excludes "the family home" but can't define what a 'family' or a 'home' is, then in open debate you're have no chance. In retrospect, National didn't even need to rub their noses in it - it was transparently clear to the average voter they were hopeless and voted accordingly.

Secondly, if Labour could introduce new taxes that were genuinely fiscally neutral (ie they cut other taxes so as not to increase the overall tax burden) then there is some merit in their proposal but I suspect few voters believed this: Labour has a nasty habit of stealing our money and just using it to fatten the bureaucracy because it thinks it knows what's best for us (but clearly doesn't)

The sad irony in all this is that Labour invented neo-liberalism in NZ!

Whilst the Rogernomics phenomenon was happening, Helen sat in the corner with her arms folded and lips pursed, biding her time. When she got her chance, she purged the talent out of the Labour party and the result is what we see today.

by tussock on October 09, 2014

Today, the reality of things is that our economic prosperity depends on us continuously improving our efficiency and running a lean & mean government with low taxes and government inteference.

Someone should tell all those scandanavian countries. Somehow they've stumbled into prosperous industry powered by renewable energy, cleaning up their environment and maintaining low-cost living for low-hour high-paid workers with high tax rates on the rich. Like we had back when we had high taxes on the rich, and the US had when they had high taxes on the rich. Weird, that.

It's almost like high paid secure workers and high taxes make wealthy empoyers invest their capital in productive outcomes, rather than taking it home and gambling it all on the housing bubble.

by Charlie on October 09, 2014

People always quote Scandinavia...having never been there.

Norway is entirely propped up by its massive oil revenues whilst Denmark and Sweden have a steadily increasing welfare class consisting largely of 3rd world immigrants.

Sweden’s Social Democrats experimented with high marginal tax rates to support an entitlement state from the 1960s to the early 1980s. Sweden then reversed course when their economy crashed. Today Sweden is run by a centre right coalition.

Tax rates in Finland are lower than ours.

You still don't get it: Socialism is the system that impoverished half the globe in the latter half of the 20th century. So no, we don't want to give it "just one more go".


by Stephen on October 09, 2014

Whilst neo liberal capitalism impoverishes the other 90% of the planet. 

by Charlie on October 09, 2014

Stephen - catchy phrase but it's simply not true.

Show me a truly impoverished nation and I'll show you variously, a lack of democracy, a corrupt bureaucracy, heavy handed regulation and often a lack of private ownership of assets, particularly land.

Sure they all blame some conspiratorial combination of racism, capitalism, imperialism or colonialism. But it's not true.

(I've worked in the 3rd world for about 25 years so I know my stuff)



by Andrew Geddis on October 09, 2014
Andrew Geddis

Today Sweden is run by a centre right coalition.

No. It isn't. It's run by a Left-Green Party minority coalition, after the voters rejected the centre-right Alliance government.

Tax rates in Finland are lower than ours.

No. They aren't. The income tax paid to the Finnish State may be lower, but in addition to this, "municipal and church taxes and the health insurance contribution will be collected at 18-26%". So the effective tax rate on earnings of more than 100,000 Euro is 57.75%.

In addition, the standard rate for VAT (their GST) is 24% (albeit that this is reduced for some things like foodstuffs).

by Charlie on October 09, 2014

OK Sweden has just had an election. (I pity the poor Swedes that will have to suffer under this new regime.)

As for Finland: You including church tax is a stretch - it's a voluntary donation. Their 'municipal tax' and health levy are the equivalent of our rates bill and ACC. Thus I maintain - their taxes to central government are likely lower. Certainly not a high tax regime.

So the point remains: Scandinavia is no socialist paradise, as some would have us believe.


by Brian Easton on October 09, 2014
Brian Easton

As is the nature of blogging, some of comments on my contribution have moved on to other matters. Here I respond to those focused on the column.


Chris de Lisle says he is ‘a bit unclear on how [I] think National has accomplished its renewal.’ I am unclear. I was hoping for some help. I am writing a history of New Zealand from an economic perspective. I am confronted that the National Party and its predecessors has dominated our political system ever since we have had representative government despite the huge changes to the economy and society.

            If I had to make a hypothesis, Chris, is that the more decentralised structure of the National Party (at the electorate level) has given them greater flexibility.


That makes Alex Stone’s remarks about what happened in the Clutha electorate so interesting. I know nothing about this particular episode but as I understand it the ‘foisting’ on the electorate of, what Alex says was, an unsuitable candidate was a decision by the local National Party branch. It is not impossible that Head Office cringed when they heard of him.

            Once the party had made the decision the electorate followed. As under WTA a party can put up a donkey and the loyalists will vote for him.

            Which leads to the following question. Does anyone know of an electorate where the quality of the candidate affected the outcome? I do not include Napier or any other electorate where a significant third party had an impact.


Alex contests my view that too often Labour has been backward looking. I am not denying that they had some good policies in the last election but sometimes one despairs at others especially when it has ongoing consequences.

            To give one example: I have a lot of respect for the achievements of the Clark-Cullen government but on social security it was stuck in the past. Not in the 1950s as Charlie says, but with the framework of the 1972 Royal Commission on Social Security. As anyone who has followed my writings will know I have enormous respect for its wisdom and humanity and its achievement at consolidating the existing system. But society moved one: more mothers went out to work, unemployment levels rose, part-time work became more common, Maori moved into the cities, families became more fluid... The last Labour government failed to face up to such challenges; too many of its advisers were looking towards 1974. I don’t agree with everything National is doing but their failings in this area largely arise out of trying to cope with these changes without the sympathy for the underlying system I’d expect from a Labour government.

            There are numerous other examples which can be dealt with in the future. In the interim, and coming back to an earlier comment to Chris, I wonder if Labour is not coping with the decentralisation which is going on in New Zealand.


Ian Churchman says that there was an ‘abject failure of the policy community to predict and to properly deal with the long recession’ (he is referring to the international one). Some economists did predict it. The interesting question is why they have so little credibility in the rest of the policy community. (Why have those who correctly predicted the long Rogernomics recession so little credibility here?)


I am not sure about the discussion of the Scandinavia achievements. Of course we should look to them to learn – it is a pity we are so heavily dependent on Anglo-American thinking. But arguing about whether Scandanvia is a ‘socialist paradise’ seems silly. Of course it is not – there is no capitalist paradise either. But we can progress. That takes renewal

by Andrew Geddis on October 09, 2014
Andrew Geddis

As for Finland: You including church tax is a stretch - it's a voluntary donation. Their 'municipal tax' and health levy are the equivalent of our rates bill and ACC. Thus I maintain - their taxes to central government are likely lower. Certainly not a high tax regime.

OK - take the Church Tax 1-2% out of the equation if you wish (although this is collected by the State from all people who are members of the State Churches, which cover over 75% of the population). But saying the "municipal tax" and "health levy" aren't really taxes is cheating. Or, to put it another way - if your income tax paid to the IRD fell by 2%, but your local council imposed a new 5% income tax on you and you had to pay an extra 1 cent-per-dollar earned ACC levy, would you say you were more or less taxed as a result? And that's without considering VAT ... or is that not really tax either?

And so, according to the Index on Economic Freedom, Finland's overall tax burden is 43.4 percent of GDP, while New Zealand's overall tax burden equals 31.7 percent of gross domestic income.

by jack on October 09, 2014

This whole argument is not really true. While most people ponder why Labour did so bad, yes they had some bad moments especially the man apology thing, National did not reinvent themselves. They are trolling on doing the same thing they have done in the past. I found this campaign remarkable for one reason, the MSM. They protected Key and National. The hard questions may have been asked but only so slightly and then buried. Key was protected by the likes of the Herald, TV3, Tv1, and Stuff. I astounded with the vengence they had attacked Cunliffe while Key just goes on his merry way.  National has raked up a 85 billion dollar debt, nothing mentioned about that during the campaign.  Mike Hoskings attacked Nicky Hagger making Steven Joyce look like an angel and Mike's logic was, sorry to say, extremely moronic.  Key hid behind the media and it is the media that picks the winners since they have been bought by foreign investors.

by Charlie on October 10, 2014

Brian: Does anyone know of an electorate where the quality of the candidate affected the outcome?

On election night I was amazing to see electorates where the Labour MP was elected with a large majority but most of the party vote went to National (don't ask me to remember which ones - on the West coast maybe?). It looked to me like a lot of voters put a tick in the local candidates box and then gave their party vote to National. To me that is a clear indication of high regard for an individual rather than a political system. So candidate quality does count.

by Charlie on October 10, 2014

Brian:  If I had to make a hypothesis, Chris, is that the more decentralised structure of the National Party (at the electorate level) has given them greater flexibility.

Isn't the opposite true within Labour? Whilst National is a free-standing political party with the ability to evolve over time, the Labour Party is seen by some of its members as just the political wing of the union movement. The recent changes to the Party constitution underline that - a block vote for the election of leader by the unions ensures that they get the candidate they want. That makes it hard for the Party to adapt to a reality where (according to the Herald) only 16% of working people are union members.


by Brian Easton on October 11, 2014
Brian Easton

Chris: Your first post. You have to think in terms of leftish voters choosing a Labour candidate (or not) in the WTA race, and then splitting their list vote between Labour and Greens in the MMP race. So your analysis only really works when the Labour-Green list total is below the National list total, and yet the electorate voted in a Labour candidate.


I know of one ‘anomaly’. Grant Robertson won Wellington Central, but the Green list vote was higher than the Labour one. This must partly reflect a personal respect for Grant (but possibly also an incumbency effect – leftish voters go for the leftish incumbent whatever their quality).


It is interesting that Robertson, when announcing his candidature, talked openly about Labour’s relations with Greens.


Your second post. That Labour is over-centralised is a reasonable hypothesis, Chris that needs to be explored. For my tuppence-worth, economists have a predilection for decentralised systems being more sensitive to economic, social and technological change. There is less agreement among us on the degree to which a decentralised system responds better.

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