Ruth Richardson - Minister of Finance

Minister of Finance

When National came to power in the 1990 elections, Richardson had enough support within the party to be made Minister of Finance, a role Bolger would rather have given to Bill Birch. Many people believed that the National Party would adopt more cautious, conservative policies than the radical Labour government. On coming to office, however, the new Government was confronted with a much worse fiscal and economic position than the out-going Government had disclosed. In particular, the government-owned Bank of New Zealand required a multi-million dollar recapitalisation. The forecast budget surplus was quickly revised, upon National coming into office, to a large budget deficit. In response, the new Government announced significant cuts to social welfare benefits, and reversed National's 1990 election promise to remove the tax surcharge on superannuation.

Whilst employment law reform had been expressed in the 1990 manifesto, many National Party supporters, and some of its parliamentary caucus, were disappointed at the continuation of the policies established by Douglas. Richardson's first Budget, which she had jokingly dubbed "the mother of all budgets" – a term that would haunt her political career—compounded this unpopularity, as it significantly cut state spending in many areas as an attempt to bring deficits under control. As a result of the policies, which were widely known as 'Ruthanasia', Richardson became one of the most disliked politicians in the country.

While she remained Finance Minister for the whole three year term of the first Bolger government, this was a period marked by increasing tension within the Cabinet. Tax policy was an area where Richardson and the more moderate members of the Cabinet often failed to agree even the basics.

Although National was re-elected in the 1993 election, it was by the narrowest of margins (1 seat) and many people within the party believed that Richardson's presence was damaging to the party. In addition, Bolger and his allies had still not been reconciled with her. In order to partially reflect the strong discontent in the electorate with the reform process (National arguably only won because the opposition vote was split between three parties) Richardson lost her role as Minister of Finance, and was offered the role of Minister of Justice. Richardson refused, preferring to take a role on the backbenches then called a by-election. She was replaced by Bill Birch, Bolger's original preference.

Though her period as Finance Minister was comparatively short, Richardson’s legacy in subjects such as Fiscal Responsibility and Economic Liberty is large. Many of the reforms she championed have endured.

Perhaps most importantly, no future New Zealand government will be faced with the fiscal shock that the Bolger government experienced in 1990. The Fiscal Responsibility Act (now part of the Public Finance Act) requires the Treasury to disclose the fiscal risks facing an in-coming government prior to every election.