Jim Anderton 'saved' the Labour Party, NZ - Matt McCarten

Former Alliance Party president Matt McCarten has spoken out about the late Jim Anderton, describing him as the "toughest politician I've ever known" and "the saviour of the Labour Party".

The two had a major falling out over the party's position on the Afghanistan War, which led to a split in 2002 and the formation of Mr Anderton's Progressive Party.

Mr McCarten says while they never made up, he is extremely proud of Mr Anderton's achievements.

"New Zealand owes him a gratitude, which will never be met, because people don't understand the significant role he played in getting rid of the new right in this country," he told Newshub.

In protest over the Rogernomics reforms of the fourth Labour Government, Mr Anderton formed New Labour in 1989 with Mr McCarten as president. New Labour later merged with several other left-wing parties to form the Alliance in 1991.

"No one could have withstood the venom and the attacks that Jim endured, from the same people who're praising him today. Oh the irony," says Mr McCarten.

"But Jim just couldn't bear the fact that Labour had been taken over by the neo-right so he never wavered."

Mr Anderton's "toughness" was both his biggest asset and his biggest flaw, according to Mr McCarten.

"He didn't take disobedience well. You were allowed to have a different view as long as the decisions were clear, so that led inevitably to tensions.

"You've got to remember, he was a pragmatist that was leading a coalition of five left-wing parties, but despite what some think he was never far-left.

"That tension came to a head over the Afghan War. That blew it, and I tried to converse with him and say, 'Look, the left doesn't vote for war, doesn't vote for the occupation of other countries.'

"Jim felt very hurt that the party revolted about that."

After splitting from the Alliance, the Anderton-led Progressive Party continued to support Labour until 2011 when he retired from Parliament.

"Jim's role brought Labour back to the centre and I have no doubt that if Jim hadn't been around that Labour would have stayed on the right, driven by the likes of Roger Douglas," says Mr McCarten.

"I think his legacy is mainly in social reforms. If you ask anyone in Labour now what they're most proud of from Helen Clark's Government, no one talks about Kiwibank; they talk about paid parental leave and its social policies.

"These are policies that Labour at the time opposed, and I know the fights we had with them to get these things done."

Jim was right - Sir Michael Cullen

Former Finance Minister for Ms Clark's Labour Government, Sir Michael Cullen, admits Mr Anderton was crucial in getting Labour back to the centre-left.

"That's a debt of gratitude I think today's Labour Party can say it owes Jim Anderton" says Sir Michael.

He also acknowledges the foresight of Mr Anderton's advocacy of establishing a New Zealand-owned bank, Kiwibank, which he and Ms Clark originally opposed.

"Firstly, with its success and the number of people who joined, but the second and most crucial event was the Global Financial Crisis from late 2007-onward.

"The Australian banks demonstrated that, when there was a real shove going on, the interests of their Australian owners would be paramount over the interests of New Zealanders.

"Kiwibank was actually, for a period, the principle lender in the mortgage market."