The Labour Party was returned to power in the general elections of November 1957. Its accession coincided with the onset of the economic crisis that was to colour the 1960s—a crisis owing in part to a decline in export earnings. The National Party returned to power in 1960 under the leadership of Prime Minister Keith Holyoake. Balance of payments difficulties and inflation led the Holyoake government to retain many of the economic controls imposed by Labour.
Early in 1972 Holyoake retired. In elections held in November, the Labour Party swept back to power, under the leadership of Norman Kirk, who became prime minister. In 1973 Kirk and Australian prime minister Gough Whitlam agreed to increase economic cooperation between the two countries. This was, in part, a response to the United Kingdom’s membership of the European Community, which became effective at the start of the year. In the same year New Zealand established diplomatic ties with the People’s Republic of China.
When Kirk died in 1974, Wallace Rowling succeeded him. In 1975 the National Party returned to power under Robert Muldoon; it won re-election by a narrow margin in 1978 and 1981, and tried with limited success to cope with New Zealand’s worsening economic problems. The elections of July 1984 returned control of parliament to the Labour Party, led by David Lange. Under his premiership, major reforms of the economy were initiated, reducing government controls and trade barriers. Although many of its measures were unpopular, the Labour government won re-election in 1987. Citing ill health, Lange resigned in 1989 and was replaced by Geoffrey Palmer.
In September 1990 internal disputes within the party and the declining popularity of the government caused Palmer to resign in favour of Michael Moore. In an October election, fought mainly over economic issues, Labour was ousted by the National Party headed by James Bolger. Bolger’s administration took the reform process even further, extending privatization of state industries and imposing heavy reductions in welfare-state services. There was strong opposition to many of these policies and, in 1992, New Zealanders voted in a referendum to change the electoral system to a mixed-member-proportional system that would increase the power of the country’s smaller parties. The change was confirmed in a 1993 referendum held at the same time as the general election. Bolger’s administration survived, but with its overall majority reduced to one. A junior member of the government left the National Party in September 1994 to set up the Right of Centre Party. He retained his place in the administration, however, as Bolger was forced to enter an immediate coalition with the new party to preserve his parliamentary majority. In June 1995 seven National Party and Labour Party MPs formed the United New Zealand Party. A coalition was agreed between the National Party government and the United Party in February 1996, which gave the government a majority of one vote.
The International Court of Justice refused a request by the New Zealand government, in September, to reactivate a case brought before the Court in 1973 seeking to ban France from conducting nuclear tests in the Pacific. Australia and New Zealand had earlier been accused by the French of conspiring to “get France out of the Pacific”.
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