The Second World War saw an unprecedented expansion of government control over the lives of New Zealanders. Under the pragmatic leadership of Prime Minister Peter Fraser, the Labour government introduced military conscription, industrial manpowering and a comprehensive economic stabilisation system. It also established a Waterfront Control Commission (later the Waterfront Industry Commission) to run the wharves, which were vital to the war effort.
New Zealanders generally accepted the hardships and restrictions of the war years as necessary in the fight against fascism, but after the war many began to demand a greater share in the spoils of victory. Relations between the government, waterfront employers and the New Zealand Waterside Workers’ Union, led by Harold (Jock) Barnes, Toby Hill and Alexander Drennan, were especially tense. As the Cold War between the western powers and the Soviet Union intensified in the late 1940s, government ministers denounced the wharfies’ leaders as ‘communist wreckers’ (although neither Barnes nor Hill was a member of the Communist Party).
Discontent spread beyond the waterfront. The Public Service Association (PSA), led by the capable Jack Lewin, was also pursuing pay demands with increasing militancy. In November 1948 Cecil Holmes, a National Film Unit (NFU) documentary maker and PSA activist, had his satchel snatched from his car outside Parliament, apparently by a member of the prime minister’s staff. The bag contained Holmes’s Communist Party membership card and correspondence about a planned stop-work meeting at the NFU in which he brashly suggested that Lewin should ‘Butter the buggers up a bit’.
The contents found their way to influential union leader Fintan Patrick Walsh, a close ally of Fraser. Walsh sensed an opportunity to embarrass his militant rivals. At Walsh’s urging, the acting prime minister, Walter Nash, released the documents to the press, successfully tainting the PSA and Lewin with the communist smear. Holmes was suspended from the NFU. Although later reinstated, this talented film-maker left for Australia, never to return.
In February 1949 the Labour government responded to another industrial dispute by controversially deregistering the communist-led Auckland Carpenters’ Union, an ally of the watersiders. Cold War tensions were heightened in August, when the government held a national referendum on the introduction of Compulsory Military Training. Despite the bitter opposition of many in the labour movement, this proposal was comfortably approved by voters.
Labour's 14 years in power ended at the general election in November 1949, when Sidney Holland’s National Party won a sweeping victory. National promised to ease post-war restrictions and confront militant unionism head on.
As unrest mounted on the wharves and elsewhere, the labour movement was divided. In April 1950 the Waterside Workers’ Union and other militant unions quit the Federation of Labour (which was controlled by Walsh) and formed a breakaway organisation, the Trade Union Congress. The stage was set for a dramatic showdown with employers and the National government.