The Listener and Danyl McLauchlan
14/07/2024
The Listener in its issue 13-19 July 2024 carried a careless article by the usually slightly more reliable Danyl McLauchlan about events following the 1984 election. It was perfectly clear to me that he had not consulted my book "Working with David: Inside the Lange Cabinet" or, for that matter, the other books with detail about the aftermath of the election. The book written by my wife Judith Bassett and me entitled "Roderick Deane: His Life and Times" has full detail about the devaluation crisis and about Robert Muldoon's attempt to hi-jack the later parliamentary inquiry. It hasn't been consulted either. I wrote the letter below to the Editor of the Listener. It is published in the issue of 20-26 July 2024 in considerably changed form. Reference to McLauchlan's carelessness is deleted at two points. This is evidence of the sloppy standards at the Listener these days....
Editor,
New Zealand Listener,
Listenerletters@aremedia.co.nz 7 July 2024
The fortieth anniversary of the election on 14 July 1984 followed years of borrowing, over-expenditure, inflation and controls. They contributed to a foreign exchange crisis where $1.39 billion left the country during the election campaign. The defeat of Robert Muldoon's National government was immediately followed by a devaluation crisis before the swearing in of David Lange's government on 26 July. It is important that the sequence of events that we are remembering right now between the election and the installation of the new ministry, is explained correctly. Danyl McLauchlan gets several steps wrong in the Listener of 13-19 July. In Chapter 6 of my book Working with David: Inside the Lange Cabinet, which McLauchlan seems not to have consulted, I explain what, precisely, occurred.
The Reserve Bank sought Muldoon's permission on Friday 13 July to close the foreign exchange market because of a run on the dollar. That day $180 million flowed out of the country. Muldoon refused the request. On Sunday 15 July when Muldoon refused to see officials from the Reserve Bank, Treasury, and his own department, and had his phone off, they decided independently to stem the huge outflow of money because it was perceived to be grossly over-valued by the fixed exchange rate. Officials closed the market that night and kept it closed until the question of whether to devalue had been decided. On Monday 16 July the incoming and outgoing prime ministers tersely debated on TV the merits of devaluation that was favoured by officials, Muldoon still refused to agree to devalue, despite the convention that an outgoing administration, in such circumstances, implements instructions from the new. Jim McLay, Muldoon's deputy, was assured by the Governor General, Sir David Beattie, that he would replace Muldoon as interim Prime Minister if he continued to refuse instructions from the newly-elected Prime Minister. When Muldoon was informed on the Tuesday morning of his pending humiliation, he backed down and agreed to implement what Lange's new ministry instructed.
New ministers were elected by a caucus meeting of 56 Labour MPs that day. They met the following morning, Wednesday 18 July, even though not yet officially in office. After hearing from Reserve Bank Governor Spencer Russell and his deputy Roderick Deane, the incoming ministers agreed to a devaluation of the dollar by 20%, and to revoke several regulations. Muldoon's price freeze would continue for another three months. With a bad grace, Muldoon accepted instructions to this effect from Lange. International trading of the New Zealand dollar resumed later that Wednesday morning.
It is important that commentators stick to the facts rather than invent their own sequences of events.
Michael Bassett
5/10 Shelly Beach Rd,
St Mary's Bay
Auckland 1011
021-440-410
Michael Bassett, a professional historian, was a member of Lange's incoming ministry.