1988 New Zealand Labour Party leadership election
A leadership election was held for the New Zealand Labour Party on 21 December 1988. The incumbent leader David Lange was re-elected with 72% of the vote. To date it is the only instance when a sitting Prime Minister has been challenged for leadership. Causes. After the 1987 New Zealand election, an increasing rift opened up in the governing Labour Party between Prime Minister David Lange, and Minister of Finance Roger Douglas. Troubled by Douglas' idea of a flat tax and further Rogernomics reforms after the stock market crash, Lange unilaterally put  a halt to them while Douglas was out of the country in a press conference where he called for the nation to "have a cup of tea". In December 1988, Douglas wrote to Lange to tell him that he intended to tell the Labour caucus he could no longer serve in a government led by him. Lange construed this letter as a resignation. Douglas was sacked as Finance Minister, and he and his allies brought a leadership challenge to Lange, whom they regarded as in a weak position, having alienated both the left and right wings of the Labour Party . Caucus brought forward the vote from early 1989 to 21 December. Result. Even though many Labour MPs supported the reforms, most weren't prepared to replace the charismatic and witty Lange for Douglas, who was a wooden speaker lacking the common touch. This resulted in Lange defeating Douglas by a wide margin of 38-15. Lange commented that he never felt threatened that Douglas would defeat him and as expected, only the most loyal of Douglas' following supported him, such as Richard Prebble and Trevor De Cleene (The two of them with Douglas would later become known as the Three  Musketeers). Lange's victory can be summed up by a quote from Geoffrey Palmer who said that he regarded both as essential to the government's well-being. Aftermath. However, shortly after this election, the caucus re-elected Douglas to the cabinet. Feeling that this served as a motion of no-confidence on his continued leadership, and feeling that he could no longer work with Douglas in cabinet, Lange resigned in August of that year to be replaced by Geoffrey Palmer. After his resignation, Lange served as Attorney General and remained a backbencher until retiring from Parliament in 1996. Douglas  chose not to contest the 1990 election, and instead co-founded with former National Party MP Derek Quigley the Association of Consumers and Taxpayers which would go on to become ACT New Zealand. Douglas returned to parliament again in 2008 and stood down in 2011.