When it governed from 1984 to 1990, Labour's emergent neoliberal faction had a strong influence; the party broke precedent and transformed the economy from a protectionist one through extensive deregulation.

The founding of the New Zealand Labour Party, on 7 July 1916 in Wellington,[12] brought together a number of earlier socialist groups advocating proportional representation, the abolition of the country quota, the recall of members of Parliament, as well as the nationalisation of production and exchange.

[25] In 1905 a group of working-class politicians who were dissatisfied with the Liberal approach established the Independent Political Labour League (IPLL),[26] which managed to win a seat in Parliament in the 1908 election.

[29] This established the basic dividing line in New Zealand's left-wing politics – the Socialists/IPLL tended to be revolutionary and militant, while the moderates focused instead on progressive reform.

[32] The movement split over supporting or opposing the radicals, and in the end, the conservative Reform Party government of William Massey suppressed the strike by force.

Gradually, however, the differences between the Social Democrats and the ULP Remnant broke down, and in 1915 they formed a unified caucus – both to oppose Reform better and to differentiate themselves from the Liberals.

The party strongly opposed conscription,[35] and several leading members – Peter Fraser, Harry Holland, Bob Semple and Paddy Webb – were jailed and expelled from Parliament for their stand against the war.

Several of the early Labour Party stalwarts were Australian-born: Alfred Hindmarsh, Harry Holland, Michael Joseph Savage, Bob Semple, Paddy Webb, Bill Parry and later Jerry Skinner, Mabel Howard, Hugh Watt, Jim Edwards and Dorothy Jelicich.

[47] It would be some time before Labour would return to power; Nash lacked the charisma of his predecessors, and National won considerable support for opposing the "industrial anarchy" of the 1951 waterfront dispute.

[49] This resulted in the highly unpopular 1958 "Black Budget" of Arnold Nordmeyer, the new minister of finance, which raised taxes on alcohol, cigarettes, cars, and petrol.

Bill Rowling replaced him, but did not have the same electoral appeal – in the 1975 election, Labour was heavily defeated by the National Party, then led by Robert Muldoon.

This led to a very heated debate on New Zealand's electoral system, and precipitated the introduction of mixed-member proportional representation (MMP) fifteen years later.

The minister of finance, Roger Douglas, supported neoliberal theories, and sought to implement sweeping free-market reforms (dubbed "Rogernomics") to the economy and to the tax system.

Throughout its first term (1984–1987), the Labour government remained largely unified behind the enacted radical financial, economic and social policy reforms, but early signs of dissension began to appear before the 1987 election.

The government's second term (1987–1990), with an increased Labour majority won on the back of Lange's anti-nuclear stance, saw emerging divisions over economic policy arising within Cabinet.

Despite Moore's ascension somewhat salvaging poll-ratings, Labour suffered its worst defeat since it first took office in 1935 (losing twenty-eight seats) as voters flung it into the political wilderness in a massive landslide.

During this period in opposition, the party made a measured repudiation of Rogernomics, although it has never returned to its original leftist roots (Labour's contemporary position is left-of-centre).

After the 1999 election, a minority coalition government of Labour and the Alliance took power, supported by the Green Party with Helen Clark becoming New Zealand's second female prime minister.

[74] The foreign policy of the Fifth Labour Government strongly reflected liberal internationalist doctrine, with a particular emphasis on promoting democracy and human rights, advocating for antimilitarism and disarmament, and encouragement of free trade.

His replacement, Andrew Little (2014–2017), then resigned in 2017 following new polling showing the party sinking to a record low result of 24%, with internal voices hoping that rising star Jacinda Ardern would take over in his stead.

[17] On 19 October 2017, New Zealand First leader Winston Peters announced that his party would form a coalition government with Labour,[88] citing changing international and internal economic circumstances as the reasoning behind his decision,[89] coupled with a belief that a Labour government was best-placed to handle the social and economic welfare of New Zealanders in a global environment that was undergoing rapid and "seismic" change.

[90] Notable policies, programmes and legislation during the 2017–2020 term included scrapping the previous National Government's national standards in schools and charter schools, the KiwiBuild affordable housing programme, restricting oil and gas exploration, banning semi-automatic firearms, restoring voting rights for prisoners serving less than three years and decriminalising abortion.

[109][110][111] On 20 October, Newshub reported that Ardern was not intending to forge a formal coalition with the Green Party but was exploring the possibility of a lower-level support arrangement due to Labour's large parliamentary majority.

[124][125][126] Following a major COVID-19 outbreak in August 2021,[127] the Labour Government abandoned its elimination strategy and gradually eased lockdown, border restrictions, vaccine mandates and masking requirements between 2021 and 2022.

[153] In February 2024, two Labour MPs questioned whether New Zealand should be entering the non-nuclear component of the AUKUS, with foreign affairs spokesperson Phil Twyford describing it as an "offensive warfighting alliance against China.

"[155] The New Zealand Labour Party's founding 1916 policy objectives called for "the socialisation of the means of production, distribution and exchange", including state ownership of major parts of the economy, and increased rights for workers.

In the aftermath of World War II, Labour prioritised national unity over societal divisions, but after their defeat in 1949, many party members perceived the socialist objective as outdated and a hindrance to electoral success, leading to its abolition in 1951.

[11][10][156] By the late 1980s, the Labour Party had undergone significant ideological changes, leading to policies that frequently conflicted with the goals and interests of the union movement.

[157] The party's constitution and platform programme maintains its founding principle as democratic socialism,[158][9] while observers describe Labour's policies as social-democratic and pragmatic in practice.

The modern party's core support base lies among young people, urban workers, civil servants, and minorities (particularly the Māori and Pasifika communities).