Loyalty, Labour Saving, and the minor legacy of Michael Cullen

One of Murray Webb’s portrayals of Dr Michael Cullen

Dr Michael Cullen was the finance minister and Helen Clark’s deputy during the fifth Labour Government in New Zealand, elected in late 1999, which had three terms in office. He recently died of lung cancer just as his successors plunged the country into another draconian lockdown. His might have been a rather large funeral in his adopted home in the Bay of Plenty. But the pointlessly harsh restrictions on funeral attendance meant no traditional send-off.

Dr Cullen has been portrayed as a kind of MVP (most valuable player) for the recent incarnations of the New Zealand Labour Party. He was certainly a competent Cabinet minister, a good orator, and one of the great debaters in Parliament, something he had no modesty about claiming. However, I suggest his policy legacy is more modest than other commentators think, and he was more of a continuity figure in terms of public finance, essentially working within the existing parameters defined by the so-called ‘neo-liberalism’ of the 1980s and disastrous fourth Labour Government in which he played a minor part towards its deserved end.

Cullen’s career in politics is written about at length in his recent memoir called Labour Saving. I would have perhaps got to review it in the past, but decided to buy it instead. Like many other political memoirs it does not cover a lot of new ground, and, while more readable than most, it does not provide as many insights as one would expected from one of the few intellectuals in recent Parliaments. This is a point in itself, as there have many former academics like Dr Cullen that have pursued a political career, and just as most did not actually have a PhD, they also did not seem to have much of an intellectual approach to policy, nor a philosophical basis for their practice. Most MPs seem to be just career opportunists, and the political philosophy has come from more highly educated public servants who often have PhDs from American universities.

Michael Cullen had a private school education, studied history at Canterbury University, before getting a PhD in a Scottish University. I had been expecting that he might discuss his policy views in Labour Saving within an intellectual tradition, even if this was primarily British such as Fabian Socialism, but he doesn’t do this. Indeed, he doesn’t even discuss his general political philosophy until page 168 in the book, in a ‘brief excursion into basic beliefs’. Other than quoting Shakespeare, he doesn’t pay homage to any Labour figure as inspiration, and refers to something called social democratic philosophy but doesn’t explain it. He is no socialist of course, but does believe in equality, security and opportunity. So did the first Labour Government, but they were hardened trade unionists and agitators who still advocated for socialism in practice.

The brief excursion into basic beliefs does come at an interesting stage of the book, however, just as Cullen discusses becoming finance spokesperson in the Labour rump that emerged from the 1990 landslide. Dr Cullen replaced the former finance minister, David Caygill, a man who presided over the biggest financial disaster in New Zealand history, involving two financial institutions that the State had nominally owned but had gone off the rails badly (DFC and the BNZ). Apparently this was not Caygill’s fault, nor was the rapidly rising rate of unemployment at the time. But Caygill was still close to the Business Roundtable, a lobby group made up of the richest men in New Zealand who were determined to maintain their control over policy.

Anyway the richest of them was brewing magnate Douglas Myers, who it seems was close to the then leader Mike Moore, and they had decided that Cullen could become the finance spokesman if he agreed to study political philosophy in the USA for a while. Certainly, Dr Cullen states that Doug Myers did pay for him and his wife to attend the Aspen Institute course in Maryland during 1991. Presumably Myers would not have paid the fees unless he thought that Cullen would be appreciative of his largesse in the future. Cullen really did not have to mention this minor point at all in the book, unless he also felt the need to assure readers that he was not held sway by the kind of right wing philosophies that had captured the institutions and policymaking of the previous government.

In any case Labour had been replaced by the more naturally conservative National Party in the 1990 election landslide, and the new government was led by a former farmer, Jim Bolger. Some parts of the Bolger ministry were obviously captured by the ‘new right’ philosophy, and the Business Roundtable saw all sorts of opportunities for privatisation in the previously sacrosanct areas of health and education. More importantly Bolger saw through legislation (the Employment Contracts Act) that decimated the trade union movement, at least in the private sector. It also sought to put downward pressure on wages through making swingeing cuts to the unemployment benefit, and all other transfer payments. Dr Cullen made a grand speech at time, I remember it well, but when he became the finance minister in 1999 he did not restore the basic benefit rate, and that would have to wait until the 2021 Budget, delivered by his anointed successor Grant Robertson of Dunedin.

One of the other unusual parts of the book is in Cullen’s comments about Jim Bolger, who got many plum governmental positions and appointments after retiring from Parliament. This includes becoming the chairman of the new State-owned bank, called Kiwibank, that Dr Cullen had to accept as part of a coalition with something called the Alliance. Not only was this an odd situation, because the State had only just dispensed with owning banks like the BNZ; but that bank had also been part of controversy about tax evasion. Strange that, a State-owned bank being involved in things like tax evasion and money laundering, and also that the privatisation of the Bank of New Zealand had come just after a massive injection of capital by the government.

Bolger had also been on record as saying that there had been no evidence that the BNZ had been involved in tax evasion and fraud. He must have known that the BNZ’s operations in Australia had been dismantled, and managers fired, because of dodgy corporate deals. This all came out in something called the Winebox scandal in the 1990s, which included a royal commission of inquiry that Bolger eventually acquiesced in. Anyway, if one thought that accountability and honesty were going to be important in the new State-owned bank, after the failures of the BNZ and DFC, then it was rather odd to put someone like Bolger in charge.

Mr Bolger has since gone on to have something of a trip to Damascus experience, and come to denounce the excesses of his government, as if he was under the spell of neo-liberalism. Of course, most of the appointments made by one of the two major parties when they are in office are respected by the other party, and they wait for terms to end before finding one of their own people for plum jobs. Another version of this scenario is simple cronyism: i.e. there are networks of people in certain jobs who just bide their time before becoming political candidates, or a ‘safe pair of hands’ for appointments to boards in government agencies. Dr Cullen’s ability to take on governance roles was not in doubt, but the overall process is rather dodgy. Labour’s problem is that it usually relies on insiders who don’t always have deep understanding or knowledge of a policy area, and this explains recent policy failures like ‘Kiwibuild’. But as Dr Cullen highlights in his book, loyalty is highly prized in the Labour Party now. Indeed, what he means by ‘Labour Saving’ refers to being a safe brand in electoral terms. The leader made certain electoral promises and then he found the money to implement them, usually against constant pressure to turn his hard won fiscal surpluses into yet more income tax cuts.

Cullen obviously saw the need to steer away from the 1980s path of Labour as the party of the ‘new right’, as it was known at the time. He says: “continuing in that direction implied a kind of Faustian pact in which our political position would become that of another right-wing party, simply favouring a low tax, small government State…[p.106]” Obviously his own economic position, which he calls ‘muddy Keynesianism’, was something of an alternative to neo-liberalism (which he prefers to call the ‘neo-classical’ dream, a more accurate reference to the underlying economic theory). I don’t think it much of an alternative in the circumstances, nor consistent with the founding values of Labour over 100 years ago, as Cullen seems to think. It might have saved Labour as an electoral brand, but did not save the urban base of the party from outright poverty, or the low wage economy dominated by international finance.

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