It was election year in 1984, and Robert Muldoon decided to go to the polls early, on 14 July. This was due largely to the decision by Marilyn Waring, a National Party Member of Parliament, to withdraw her support for the National caucus on June 14. She had been savagely attacked by Robert Muldoon for supporting the Labour opposition's Nuclear Free New Zealand Bill the previous day.
Labour campaigned against nuclear propulsion and weapons, but not against ANZUS. Labour leader David Lange had tried to work with the Americans, but their 'neither confirm nor deny' policy made a middle ground virtually impossible to find.
In the election Labour swept to power, and it immediately made clear its intention to pursue policies that would establish New Zealand as a nuclear-free country. This was a popular stand, and by the end of the year nearly 40 towns and boroughs had declared themselves nuclear-free. Labour announced its decision to ban ships that were either nuclear-powered or armed. The United States maintained its position, and stalemate was quickly reached.
Five days after his defeat in the election, the outgoing prime minister, Robert Muldoon, met the United States secretary of state, George Shultz, in Wellington for an ANZUS council meeting. David Lange labelled this 'a calculated attempt to embarrass the new Labour Government' and declared that the council communiqué was 'intellectual dishonesty which allowed the representatives of a defeated government to put their country's name to a document that all who signed it knew did not represent the views of the country's future government'.
David Lange, in seeking a softening of Labour Party policy on this issue, found that there was little room to move; party activists were unwilling to draw distinctions between nuclear propulsion and nuclear weapons. The mood of the nation was also against such political manoeuvring. David Lange may well have hinted to George Shultz that the policy could change, but George Shultz had convinced himself that he had an assurance that David Lange would overturn Labour's policy. He later claimed that he felt betrayed by the way things unfolded.
The United States decided to test the new government's resolve in late 1984 when it requested a visit by the guided missile destroyer USS Buchanan. The Buchanan was an older ship, and the Americans hoped that public suspicions that it was not nuclear armed would be enough for it to slip under the political radar. 'Near-uncertainty was not now enough for us,' David Lange recalled. 'Whatever the truth of its armaments, its arrival in New Zealand would be seen as a surrender by the government.' He hoped that the Americans might offer to send something less ambiguous, but it was the Buchanan or nothing.
On 4 February 1985 the government said no. Within a matter of days Washington severed visible intelligence and military ties with New Zealand and downgraded political and diplomatic exchanges. George Schultz confirmed that the United States was no longer willing to maintain its security guarantee to New Zealand, although the ANZUS treaty structure remained in place.
One of the concerns of the United States over the ships row was that other countries might follow New Zealand's lead. David Lange had effectively become the 'pin-up boy for nuclear disarmament', and this was demonstrated on 2 March 1985 during the widely televised Oxford Union debate. David Lange competed against the right-wing evangelist Jerry Falwell, and his performance in arguing the proposition that 'nuclear weapons are morally indefensible' was masterful. The quick-witted David Lange drew thunderous applause with his now famous reply to a young conservative: '... hold your breath just for a moment. I can smell the uranium on it as you lean toward me!' Briefly, New Zealand had taken the centre stage.
In 1987 Labour passed the New Zealand Nuclear Free Zone, Disarmament, and Arms Control Act. In a largely symbolic act, the United States Congress retaliated with the Broomfield Act, downgrading New Zealand's status from ally to friend. David Lange stated that if the security alliance was the price New Zealand must pay to remain nuclear-free, 'it is the price we are prepared to pay'. In 1989, 52% of New Zealanders indicated that they would rather break defence ties than admit nuclear-armed ships. By 1990 even National had signed up to anti-nuclearism.