Until 1973, New Zealand had close economic ties with Britain, enjoying preferential access to the British market for exports of its lamb and dairy products. This was abruptly ended by British entry into the European Community, and New Zealand was forced to look to the neighbouring Asia Pacific region for export markets. In 1985 New Zealand concluded a Closer Economic Relations (CER) Agreement with Australia, and has also participated in the Asia Pacific Economic Cooperation (APEC) forum, hosting its meeting in 1999.

The Asia Pacific region has also increasingly displaced Britain as a source of immigrants. Traditionally, New Zealand has regarded itself as “bicultural”, composed of those of European descent (pakeha), and Maori, rather than “multicultural” like Australia or Canada. While cultural ties with Britain are still strong, with most pakeha overwhelmingly being of British origin, even they no longer regard it as “home” or “the mother country”. However, when National Prime Minister Jim Bolger suggested in 1994 that New Zealand should follow Australia in severing links with the British monarchy and becoming a republic, this enjoyed little popular support, although his Labour successor Helen Clark has also expressed support for such a move.

In recent years the government has sought to address long-standing Maori grievances. Parliament established a Waitangi Tribunal in 1975 to hear claims of official violations of the Treaty of Waitangi, and in 1985 the Tribunal gained the right to consider Crown actions dating back to 1840. A programme of widespread economic de-regulation and privatisation of public enterprises undertaken by the Labour government of 1984 - 1990 continued under its National Party successors.

The Constitution Act of 1986 severed the last remaining ties to the British Parliament. The act repealed and replaced the New Zealand Constitution Act and the Statute of Westminster and removed the ability for the British parliament to pass laws for New Zealand, a legal possibility that had remained in theory but had only been exercised once (the New Zealand Constitution (Amendment) Act back in 1947).

In 1993 the majority of New Zealanders decided to change the electoral system from the British system of single member constituencies elected by ‘first past the post’, to a form of proportional representation called Mixed Member Proportional (MMP).

In October 1990, the National Party again formed the government, for the first of three, three-year terms. In 1996 New Zealand elected its first MMP Parliament. The system was designed to increase representation of smaller parties in Parliament and appears to have done so. Since 1996, neither the National nor the Labour Party has had an absolute majority in Parliament, and for all but one of those years, the government has been a minority one. The current Labour government followed its November 1999 election success by outpolling National 41 per cent to 21 per cent in the July 2002 general election. Labour formed a coalition, minority government with Jim Anderton’s Progressive Coalition, a left-wing party (subsequently named “Progressive Party”) which holds two seats in Parliament. The coalition has a loose consultative agreement with United Future New Zealand, a small religious conservative party.

New Zealand was featured as the setting for “Middle Earth” in the renowned early 21st century trilogy of films based on Tolkien’s Lord of the Rings books. It has brought an additional interest in tourism to the nation.