Ruthanasia, a portmanteau of "Ruth" and "euthanasia", is the pejorative name (typically used by opponents) given to the period of free-market policies conducted during the first term of the fourth National government in New Zealand, from 1990 to 1993. As the first period of reform from 1984 to 1990 was known as Rogernomics after the Labour Party Minister of Finance, Roger Douglas, so the second period became known as "Ruthanasia", after the National Party's Minister of Finance, Ruth Richardson.
Background
Ruthanasia and Rogernomics can be viewed as complementary reform packages implemented by successive governments which were aimed at liberalising the New Zealand economy. The packages came after a period of intense protectionism and fiscal control, particularly under the administration of Sir Robert Muldoon's National government between 1975 and 1984. Muldoon's protectionism had culminated in a three-year wage and price freeze imposed by Muldoon, who simultaneously held the posts of Prime Minister and Minister of Finance, in an attempt to suppress rampant inflation.
Conflict with manifesto
Ruthanasia was controversial as the National Party had fought the 1990 election on a manifesto promising "The Decent Society" and implicitly repudiating the radicalism of the Fourth Labour Government.
The Prime Minister, Jim Bolger, defended the move on the grounds that he had been badly misled in the run-up to the 1990 election as to the actual state of the New Zealand economy. He was told by officials on Sunday afternoon, the day after the election, of two unrelated financial crises: the country's broke .... and the largest bank .... was bankrupt. Bolger said that his "electoral honeymoon lasted seventeen hours". So he immediately summoned Don McKinnon, Bill Birch and Ruth Richardson to Wellington. The partly state-owned Bank of New Zealand required an immediate injection of capital to avoid insolvency as a result of the poor performance of a NZ$2.8bn loan portfolio in Australia. The bank held 40 per cent of the commercial paper (loans to businesses) in New Zealand.
Secondly; the outgoing finance minister David Caygill's projection of a modest fiscal surplus was inaccurate, and the country instead faced a fiscal deficit of NZ$3.7bn (4.8%) for 1991–92 if current fiscal policies continued. Current net public debt was 52% of GDP (43% after Telecom sale).
Focus
Where Roger Douglas had deregulated the industrial, financial, fiscal and agricultural sectors of the New Zealand economy, Ruth Richardson, under the auspices of a National (predominantly conservative) administration, was able to focus on social services and labour relations. These were sensitive areas which the preceding Labour administration had not been willing to reform in light of its traditional working class constituency.
Richardson and the then Minister of Social Welfare, Jenny Shipley, immediately reformed the Social Welfare programme in the "Mother of all Budgets" by reducing available unemployment, sickness and welfare benefits across the board. In 1991, the National government enacted the Employment Contracts Act (ECA), which effectively demolished New Zealand's post-war industrial relations framework, replacing collective bargaining and compulsory union membership in many sectors with the concept of the individual employment contract. Whilst the ECA did not directly address unions, the practical effect of removing the requirement for employees to be members, and allowing those employees who did want union membership to choose which union they wished to join, dramatically reduced the bargaining position of the unions in the New Zealand economy. This reform of labour laws had already been outlined in the 1990 National manifesto.
Ken Douglas, then president of the New Zealand Council of Trade Unions, recalled in the 1996 documentary Revolution:
Roger Douglas, minister of finance in the preceding fourth Labour government, said (after his retirement from politics):
"Ruthanasia" came to an end after the 1993 election, when National's majority was reduced from 18 (out of 99 seats) to 1. Jim Bolger responded by replacing Richardson with Bill Birch. Bolger then acknowledged both the benefits and unpopularity of Ruthanasia in his televised announcement of Richardson's removal:
Long-term consequences: 1993–2008
Internal party ideological tensions also led to the secession of Winston Peters from the National Party caucus and the formation of New Zealand First in 1993. Peters was viewed as an acolyte of Rob Muldoon's protectionist economic policies and had a substantial support base amongst New Zealand's senior citizens and their related lobby organisations.