Michael Joseph Savage’s Labour Party (1935–49) kick-started the social welfare system, building state houses and improving access to education and health care. Soon, New Zealand living standards were among the world’s highest. But by the 80s, the ‘welfare state’ was criticised as unaffordable, and governments began cutting state services and assets.
- ‘I want to see humanity secure against poverty, secure in illness or old age.’
- Michael Joseph Savage, New Zealand Prime Minister, 1938
First Labour Government
In 1935, New Zealand was just emerging from the depths of the Great Depression. The Labour Party won the general election, taking over from the Coalition Government, which many people saw as ineffectual.
The new government, led by Michael Joseph Savage, promised to protect New Zealanders from the suffering they’d experienced in the Depression. It aimed to provide everyone with a reasonable standard of living. ‘We intend to begin where Richard John Seddon and his colleagues left off,’ Savage said, creating a prosperous ‘nation of free people in the southern seas’.
To protect jobs, the government sought to insulate the local economy from overseas price fluctuations. With the 1938 Social Security Act, a more comprehensive, ‘cradle-to-grave’ welfare state took shape, buoyed by public support.
Gradually, suburban state houses replaced inner-city slums, allowing all New Zealanders to raise their families in good conditions. Education and dental care became free to secondary-school level. From 1946, all married mothers were given the Family Benefit to help feed and clothe their children. The elderly received more generous pensions.
Highest living standards in the world
In the 1940s and 50s, living standards in New Zealand were among the highest in the world.
For 30 years, successive governments had the resources and public support to expand the welfare state. The system was affordable because of low unemployment, which all political parties favoured. Restrictions on imported products continued to protect local manufacturing jobs.
Welfare state under fire
But by the early 1980s, many New Zealanders saw the state as cumbersome and invasive. The New Zealand economy was in trouble, and welfare costs were widely thought to be unacceptably high. There were also concerns about long-term ‘welfare dependency’ among beneficiaries.
Another Labour government spearheaded radical reform.