Fourth Government (1984–1990) and opposition New Zealand Labour Party

when fourth labour government came power uncovered fiscal crisis had been largely hidden outgoing third national government. government debt skyrocketing, due largely costs of borrowing maintain fixed exchange rate. when result of election became clear lange asked muldoon devalue dollar, refused do, resulting in constitutional crisis , precipitating of changes in constitution act 1986.

throughout first term of fourth labour government, cabinet remained largely unified behind radical financial, economic , policy reforms enacted. in 1987 labour won first-past-the-post election last time (the mixed member proportional system introduced in 1996). not until second term, increased labour s majority , won on of anti-nuclear stance, considerable divisions on economic policy began arise within cabinet. minister of finance, roger douglas, supporter of free market theories, , sought implement sweeping reforms ( rogernomics ) economy , tax system. others within party, however, saw betrayal of party s left-wing roots. party criticised council of trade unions.

opposition douglas s reforms remained strong – eventually, labour mp, jim anderton, left establish newlabour party, forming basis of left-wing alliance. @ same time, douglas pressing onwards, proposing flat tax rate. finally, david lange forced douglas resign, , shortly afterwards resigned himself.

lange replaced geoffrey palmer. palmer, however, unable counter widespread discontent among labour s traditional supporters, , few months before 1990 election, palmer replaced mike moore. labour party suffered worst defeat since first took office in 1935.

major pieces of legislation include constitution act 1986, codified important constitutional conventions, , new zealand nuclear free zone, disarmament, , arms control act 1987, declared new zealand nuclear-free zone.

moore replaced helen clark, led party in opposition national party government of jim bolger. during period in opposition, party made measured repudiation of rogernomics, although has never returned original strong left-wing stance (its contemporary position left-of-centre). when 1996 election, first conducted under mmp electoral system, gave balance of power centrist new zealand first party, many believed labour return power, in end new zealand first allied national party. coalition unstable, however, , collapsed, leaving national party govern minority government.