Former National Party leader and New Zealand's ambassador to the United Nations Jim McLay today revealed more details around Plan B to deal with the economic caused by Sir Robert Muldoon in 1984.
It involved the cabinet deposing him.
It also involved the getting Governor General Sir David Beattie to appoint himself, Mr McLay, as a temporary Prime Minister in order to carry out the requests of the incoming Labour Government.
Straight after the snap election in 1984, but before the Labour Government could be sworn in, Reserve Bank and Treasury officials advised Sir Robert to immediately devalue the New Zealand dollar to address the pressure on the currency that had been building.
Their advice had the support of Labour leader and incoming Prime Minister David Lange.
Sir Robert refused, much to the astonishment of Mr McLay, who was his Deputy and outgoing Attorney General.
Speaking at a conference at Parliament today (Tues) on constitutional issues, Mr McLay said he found no precedent for the situation but he could see only one way forward: Muldoon had to comply or be replaced.
After Sir Robert told the cabinet he wasn't budging on devaluation, four senior ministers met in Mr McLay's office - himself, Sir William Birch, Jim Bolger and Hugh Templeton according to Mr Templeton's book All Honourable Men.
They agreed to contact Sir Robert to clarify his stance and to make it clear they would "immediately force the issue with the cabinet".
"If he still refused, then, as his deputy, I would advise the Governor General that Muldoon no longer had the confidence of Cabinet, that he should be dismissed, that I should be appointed as Prime Minister for the few remaining days of the National administration, and that we'd undertake no new policies and would implement any wishes of the incoming Government.
"Here were four senior ministers prepared to seek the removal of the Prime Minister who'd led their party for 10 years - but to do so for constitutional rather than the more political reasons."
Mr McLay told the conference it was "a chilling moment".
It would split the National Party and Sir Robert's many loyalists would decry it as "constitutional coup 'd'etat".
He said his own career would have been at end - (Mr Bolger deposed him in 1986 and he retired in 1987).
He said it had been incorrectly reported that had Sir Robert stood firm that the cabinet had planned to resign en masse.
"That was never an option," he said. "No Labour MP could be appointed until final results declared them elected to parliament so a mass resignation would leave Muldoon as the only Minister - able to do - or refuse to do - as he wished."
"That certainly would have given us a constitutional crisis."
Mr Mclay tracked down the Secretary of Treasury and the Reserve Bank Governor at a Bankers' Association dinner and they agreed that Sir Robert had to comply or be replaced.
Conversations were held in the men's toilets of the restaurant.
Mr McLay said he also telephoned the official secretary of Governor-General asking him to tell Sir David that Sir Robert's colleagues were prepared to act to ensure that the wishes of the incoming Government were respected.
He said he did not speak directly with Sir David but he had told Mr McLay at a later time that he would have acted on his advice.
Mr McLay went to see Sir Robert at 8am the next day and had a conversation of about 15 minutes that was "very unpleasant".
He said there was a constitutional convention that the outgoing Government was only there as "caretakers" and must act as requested by the new Government.
"I told him that if he didn't respond, we'd have to force the issue."
In the cabinet shortly after their meeting, Sir Robert accepted the devaluation but presented it as his own decision to act on Mr Lange's advice and that Mr McLay had explained the constitutional position.
Mr McLay told the conference that he issued a press statement outlining what became known as the "Caretaker Convention" - that having been defeated in an election an outgoing Government should undertake no now policy initiatives, and it should act on the advice of the incoming Government on any matter of great economic or constitutional significance that could not be delayed.
Mr Mclay said there in fact had been no such established convention or clear rules because the issue had never previously arisen.
"My constitutional advice' was based on common sense and propriety."By Audrey Young Email Audrey