1882 - 1968
From National’s point of view, the single-term
Labour government led by Walter Nash between 1957 and 1960 was nothing more than
a pesky interruption to what could otherwise have been a continuous hold on
power for their own party from 1949 to 1972. More objectively, the Nash ministry
has been seen by historians as an anti-climactic post-script to the
ground-breaking first Labour government of Savage and Fraser (1935-1949). It was
an attempt to retain the same social agenda despite changing times. Nash made a
sincere attempt to manage difficult financial circumstances without penalising
workers and his broader political support base. But he faced a severe balance of
payments deficit due partly to the preceding Holland government’s determination
to maintain full employment but due also in no small measure to the years of
high government spending on social security by the first Labour government in
which he was finance minister. Now, as prime minister, Nash had no choice but to
take drastic measures to balance the books. It led to the infamous 1958 Black
Budget – an event with which his three-year term will be forever associated.
Under Peter Fraser, Nash was appointed NZ’s
first minister to the United States and his reputation as an international
statesman was maintained when he travelled widely as prime minister.
Domestically he was respected for his honesty and his moral principles, based on
a life-long commitment to Christianity.
Walter Nash was born on 12 February, 1882 at
Kidderminster near Birmingham, England. As a child his proficiency in maths
manifested itself early and as a young adult he showed a good grasp of economics
which he studied at night classes. His early jobs were modest and mainly
clerical but he expanded his knowledge by reading authors such as John Ruskin,
agreeing with his thoughts on capitalism with a social conscience. He was also
influenced by Birmingham MP Joseph Chamberlain who believed that the state
should be a positive force in many aspects of life. It was clear which side of
the political divide he was heading for.
Nash married in 1906 and three years later
aged 27 emigrated to New Zealand, attracted (as was Fraser) by the liberal
policies of Seddon and Ward. His fingers were burned twice when the firm he
worked for and had invested his own money in collapsed, on both occasions in the
tailoring profession. But he recovered with steady work as a commercial
traveller and after the second collapse got back on his feet through loans from
family and friends. He established a bookshop in Wellington specialising in
socialist literature which was eventually taken over by the Labour party.
In 1911 Nash assisted the newly established
original Labour party in its election campaign in Wellington. It had been formed
in 1910 from the earlier Independent Political League, changed its name to
United Labour and in 1916 combined with the Social Democratic party to form
present day Labour. He met Peter Fraser around the time of the 1913 waterfront
strike and both were attracted to Labour from its 1916 formation although Nash
was opposed to the extreme left-wing policies of some of his contemporaries. His
other passionate interest was the church – he became involved in Anglican
affairs from his earliest days in Wellington and by the 1920s had become keenly
interested in international relations, a subject closely linked with his
pacifism and his concern for the world's poor.
He worked in Palmerston North and New Plymouth
before returning to live in Lower Hutt where he and his wife Lotty spent the
rest of their lives in the same house.
Nash was keen to study the relationship
between socialism and economic growth and made a trip back to England where he
conferred with the finance minister in the Labour government of Ramsay
Macdonald. Back in New Zealand his commitment to the Labour party was
consummated and he stood as a Labour candidate for the New Plymouth Borough
Council. He was unsuccessful but he had been recognised already by the party as
“an unusually stable person”. At the 1919 conference he was elected to the
national executive and in 1922 by a plebiscite of all members was appointed
national secretary, a position he had been offered in 1919 by party leader Harry
Holland but turned down in favour of his planned trip to England.
Nash soon became the “go to” person on
fundraising, statistics, membership, economics, pamphleteering, history and
foreign policy. A number of membership surges occurred during his stewardship.
Although not yet in parliament he was a true functionary of the party. To become
an MP he had to unseat local representative Thomas Wilford, a Liberal party
survivor and eventual (short term) leader of the United party. Two attempts in
the 1925 and 1928 general elections failed but when Wilford was moved “upstairs”
to London as High Commissioner in 1929 Nash narrowly won the Hutt seat in the
resulting by-election.
He held it until his death nearly 39 years
later.
Nash showed his skill as a debater and quickly
became Labour’s front bench spokesperson on finance. Joseph Ward’s United party
was in power but within six months of Nash’s arrival the ailing Ward had been
replaced by George Forbes just as the country was poised to face the full fury
of economic depression. Nash was confronted by a dilemma in challenging the
government’s handling of the early depression years. It should have been a feast
of opportunity for an opposition but, like everybody else, Nash was at a loss
when it came to proposing a solution. He did not support the retrenchment policy
adopted by the government but was cautious about advocating increased spending.
Nonetheless his debating skills on financial matters shone in the volatile
environment and he was able to meticulously support his technical arguments. And
when Labour came to power in 1935 his financial expertise was fully utilised.
The turbulent years from 1929 to 1957, especially Nash’s 14 years as finance
minister under Savage and Fraser, are covered in previous articles. But it needs
to be acknowledged here that his financial dexterity in implementing, and
somehow paying for, the social security policy and wide range of government
interventions have stood out as a much more significant contribution to NZ
politics than his single term as prime minister. Fraser appointed him deputy
leader in 1940 and, in a rare move, he was made a Privy Councillor in 1946.
While Nash had been part of the inner circle
along with Savage and Fraser throughout the term of the first Labour government
he was not an automatic choice for leader after the respective deaths of Savage
(1940) and Fraser (1950). After Labour’s election loss in 1949 the ailing Fraser
had expressed a preference for 49 year old Arnold Nordmeyer to succeed him
rather than Nash who by 1950 was 68. When Fraser eventually died in December,
1950 Nash, as his deputy, became acting opposition leader and was able to force
an early vote – winning the leadership in January 1951. The early vote was
controversial within the party as Nordmeyer had lost his seat in the 1949
election but was expected to re-enter parliament in the by-election to replace
Fraser. Nash’s decision to take a vote before the by-election was approved by a
narrow majority in caucus. This rendered Nordmeyer ineligible and the only other
candidate, Jerry Skinner, withdrew in support of Nash who was therefore elected
unopposed.
Despite his age, Walter Nash remained leader
for 12 years.
An early mistake in Nash’s career as Labour
leader was his equivocation over the 151 day waterfront strike in 1951 when he
publicly stated he was neither for the watersiders nor against them. Both sides
of the dispute felt let down and he paid the price when he led Labour to a heavy
defeat in the 1951 snap election called by Sidney Holland. As the 1954 election
approached there were moves to have him replaced as leader by Nordmeyer (it
actually went to a leadership vote which Nash won narrowly) but with the
National government retaining many of Labour’s financial controls and enthusiasm
for Holland cooling, Labour gained ground and won 5,000 more votes than National
in 1954. Despite this, National was returned for a third term with more
electorate seats. But Labour sensed the tide was turning and by-elections in
1956 and 1957 reflected a continued swing in their favour. Walter Nash
demonstrated a jovial revival of energy during the 1957 campaign and voters were
tempted with an enticing array of election promises. Family benefits would
increase and could be capitalised, 3% loans were offered for new houses,
superannuation rates were to be lifted, school textbooks would be free on loan
and most significant of all, a £100 tax rebate would be paid to compensate
taxpayers saddled with a double tax bill after the introduction of PAYE.
With such a mouth-watering list of Christmas
goodies and clear signs Labour’s fortunes were rising it was a hard election for
Labour to lose. Little had been said about where the money required to fund
these promises was coming from but Nash had assured the electorate there would
be no extra taxation “given normal circumstances”, a useful escape clause which
would be fully utilised in the 1958 budget.
Labour won the 1957 election with a two-seat
majority, reduced to one after the appointment of the speaker. Walter Nash,
nearing the age of 76, was now prime minister. His deputy was Jerry Skinner and
Arnold Nordmeyer was finance minister.
Nash proved to be a somewhat disorganised
prime minister and an extremely difficult one to get access to for parliamentary
colleagues and government officials alike. But it was an onerous job. He (with
Nordmeyer) had to face the task of raising finance to fund the multiple
promises; deal with falling prices for wool and dairy products; introduce a
domestic policy of “manufacturing in depth” (producing new products locally that
were previously imported – a policy advocated by left-wing industries and
commerce secretary WB Sutch) which created jobs but, without competition,
elevated prices. Multiple overseas and domestic trips added to the huge workload
which could have been reduced with a little delegation but he appeared to thrive
on the long working hours, seven days a week.
He was well served by a team of ministers,
notably Hugh Watt, Phil Holloway, Bill Fox and, especially, finance minister
Nordmeyer. The team was relied on to implement a raft of domestic industrial
projects: a steel mill, cotton mill, bauxite plant at Tiwai Point, and a surge
in state house construction. Plans were also unveiled for new universities in
Hamilton and Palmerston North.
But from the moment the Labour party became
the government its main concern was addressing the larger than expected, and
rapidly growing, balance of payments deficit. The cabinet collectively resolved
that strict import controls and centralisation had to be fully restored after
their partial dismantling by National. Then came the task of funding the wide
range of costly election promises. While the so-called “Black Budget” has been
forever associated with Arnold Nordmeyer, Nash was equally responsible if not
more so. He laid down his requirements and it was left to Nordmeyer to find a
way to meet them. He started pre-budget by liquidating assets in London;
borrowing twenty million pounds at 6%; securing a Reserve Bank of Australia
advance and tightening domestic trading bank lending. Only then did he call on
the tax-payer. The 1958 budget raised income tax, reduced tax breaks for
farmers, doubled sales tax on motor vehicles and increased duties on tobacco and
alcohol. All this after the campaign promise not to raise taxes “given normal
circumstances”.
The budget destroyed the second Labour
government. Many commentators saw it as an overreaction to the needs of the
time. The opposition leader Keith Holyoake attacked it mercilessly. Despite
moderate achievements both domestically and internationally, Labour never
recovered. Some of the 1958 measures were relaxed in the 1959 budget but with a
bad result in a Hamilton by-election that same year and falling membership
Labour faced almost certain defeat in 1960.
As the government’s term neared its end it
passed up a chance to exercise its social conscience when the NZ rugby union
sent a non-Maori team to South Africa in 1960. Despite wide protest, especially
by Labour supporters, Nash refused to intervene, seemingly not wishing to expose
Maori to the bitter racism that existed in South Africa.
National won the 1960 election by 46 seats to
34 – taking seven seats off Labour including Rotorua, previously held by cabinet
minister Ray Boord. It was the end of a government long remembered for the wrong
reasons. Without the 1958 budget it would have remained one of New Zealand’s
quickly forgotten administrations.
Walter Nash was uninspiring when he returned
to the house as opposition leader, a position he retained until March, 1963 when
he was finally replaced by Nordmeyer. He died in 1968 aged 86 while still an MP.
As prime minister, Nash, despite his
tremendous energy, was something of a disappointment. He had been a remarkably
innovative and meticulous minister of finance in the first Labour government and
was the engine-room behind the social reforms (state housing and health in
particular) introduced by Savage and maintained by Fraser. He also had to
conduct a difficult financial balancing act during the war years. Long before
1957 he had cemented his reputation as a brilliant debater with a firm grasp of
complex financial matters, and as a scrupulously honest politician with strong
moral ethics. His contribution to New Zealand’s international reputation was
remarkable but achieved almost exclusively during his fourteen years as finance
minister under two prime ministers whose impressive respective reputations have
eclipsed his own.
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