It was election year in 1984, and Robert Muldoon decided to go to the polls early, on 14 July. This was due partly 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. The Americans' 'neither confirm nor deny' policy, however, would make it difficult for a Labour government to reconcile these two aims.
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. 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'.
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 turning against such political manoeuvring. David Lange hinted to George Shultz that a compromise could be reached, and Shultz believed that he had Lange's assurance that Labour's policy could be changed. He later claimed that he felt betrayed by the way things unfolded.
Following confidential discussions over the selection of an acceptable ship, in late 1984 the United States requested that the ageing guided missile destroyer USS Buchanan visit New Zealand. The Americans hoped that public suspicions that it was not nuclear armed would be enough for it to slip under the political radar, and believed they had Lange's agreement. But on 4 February 1985 the government said no. 'Near-uncertainty was not now enough for us,' Lange later explained. 'Whatever the truth of its armaments, its arrival in New Zealand would be seen as a surrender by the government.' In response Washington severed visible intelligence and military ties with New Zealand and downgraded political and diplomatic exchanges. George Schultz confirmed that the United States could no longer 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, undermining the Western alliance. 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 an American student: '... 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.