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The energetic Liberal government led by John Ballance, which took office in 1891, accelerated the process of change. It opened more land (much of it bought from the Māori), established farmers on perpetual state leaseholds, provided credit for land purchase and improvements, and built roads. So came into existence great dairying and meat-producing areas, especially in the North Island. Prices for dairy and meat, as well as for wool, rose about 1895 and stayed generally high until about 1920.

This economic stimulus was not limited to farmers. Urban distress had been serious in the 1880s, for many recent immigrants had been townspeople who had stayed in New Zealand towns on arrival. The ultimate cure for their distress was for the towns to share in the farmers’ high prices. Urban New Zealand depended on the prosperity of the country. But other remedies were considered, and some of them were applied. In the 1880s there was serious discussion of insurance against sickness, poverty, and old age; the Old Age Pensions Act of 1898 was the first measure of social security. Tariff protection to foster industrial employment was halfheartedly applied in the late 1880s. Revelations of oppression in industry led in the 1890s to a labour code to protect workers.

The chief Liberal industrial policy, however, formulated by William Pember Reeves, minister of labour from 1892 to 1896, was to encourage trade unions and to introduce, in the Industrial Conciliation and Arbitration Act of 1894, a conciliation and compulsory arbitration system intended to end industrial unrest and give the unions the means of protecting their members. The growth of unions was stimulated by the fact that only through them could the workers use the system. Reeves’s act, amended and occasionally suspended but still essentially his own handiwork, remained in effect until the late 1960s. It enabled the worker in good times to resist wage cuts and to press for increases, but it did not manage to prevent cuts and unemployment when falling overseas prices brought depression to New Zealand. It was not strikingly radical in effect; employers and governments used it to break strikes, such as that of miners at Waihi in 1912. It built up the power of those majority elements in the unions that preferred coming to terms with capitalism to any effort to destroy it. Some occupations, such as transport, cargo handling, meat processing, and mining, fostered unions keen to relinquish arbitration for direct action, but they were in a minority and were seldom successful in the long run.

The Liberal era, from 1891 to 1912, transformed political life. Previously politics had not been marked by neat party divisions. Local advantage had determined political behaviour in the development period during and after the 1870s; voters had argued over the scope and details of policies and had advanced the claims of locality and province for a proper share of largesse. Acute economic depression ended development and with it the politics of local advantage. In 1890 the Liberals began to act as a more or less unified party. But perhaps the most significant political change was the winning of the franchise by women in 1893 after a campaign of more than two decades.

The Liberals’ 20 years in office, the success of their land and labour policies, and the formidable qualities of leadership discovered in Richard John Seddon, premier from 1893 to his death in 1906, welded the Liberals into a fairly coherent parliamentary and popular party. Seddon was a portent of a new age. In 1893 this energetic goldfields-trader-turned-politician provided a sharp contrast to the gentlemanly premiers who had preceded him. But his crudeness assisted rather than hindered his popularity. He was devoted to political success and skilled in the manipulation of the means of success—parliamentary procedure, patronage, and party organization. By the time of his death, he had established a kind of elective despotism over the country.