Page 224 - Constructing Craft

Hugh Templeton and Robert Muldoon, CER press conference, October
1982. Photo: New Zealand Herald.

Responding to Change

In 1984 the fourth Labour Government was elected to office in a snap election. The

Minister of Finance, Roger Douglas, who had been formulating a plan since 1981 to

stifle wage demands and reduce government spending, now had an opportunity to
implement what he called ‘reforms’, but that others have called a ‘revolution’ and
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some a ‘tragedy’. The government’s policy was, according to its supporters, to
encourage the best use of New Zealand’s resources ‒ a euphemism for letting the

market decide which businesses would succeed and which would fail. It was a
dramatic move away from previous policies which supported businesses that

advanced the government’s economic plans – disparaged by its opponents as

‘picking winners’. As a component of this policy the government allowed the
exchange rate of the dollar to be determined on the international money market –

called floating the dollar – and instigated a policy of borrowing rather than using its
power to create money to cover deficits. Interest rates had to be increased to attract

lenders and imports decreased in price as the dollar rose in value internationally.
There followed a marked increase in business ventures that employed loopholes in

tax laws; that speculated on the value of the dollar; and used the share market to

raise capital. Many of those involved in these activities appeared to have become
very wealthy in a very short time and looked to the art world to validate their new

Constructing Craft