Cabinet Minister

In Parliament, McLay was known as one of the more liberal members of the National Party, and had a particular focus on reforming laws that related to women's rights. In 1978, Prime Minister Robert Muldoon appointed McLay to the posts of Attorney General and Minister of Justice.^[9]

In October and November 1980 McLay was a leading member of 'the Colonels' (alongside Derek Quigley, Jim Bolger and George Gair) who attempted to oust Muldoon as leader.^[10] In what became known as the Colonels' Coup after its originators it intended to supplant Muldoon with his deputy, Brian Talboys, who was more economically liberal and in tune with traditional National Party philosophy than Muldoon. The Colonels waited until Muldoon was out of the country before moving against him. However, Talboys was reluctant to challenge and the ploy failed with Muldoon remaining leader.^[11]

Deputy Prime Minister

In early 1984, following the retirement of Duncan MacIntyre, McLay became deputy leader of the National Party, and thus Deputy Prime Minister.^[9] He defeated fellow cabinet ministers Jim Bolger and Bill Birch for the position, receiving a majority in the first caucus ballot.^[12] His elevation to the deputy leadership was thought to be a reflection of his youth and stance as a social and economic liberal which was seen as key at the time to blunt the growth of the incipient New Zealand Party which was making serious inroads among National's traditional support base. Likewise it placed him as the most likely person to inevitably replace Muldoon as leader.^[13]

Leader of the Opposition

When National lost the 1984 election, there was widespread desire in the party for a leadership change. This desire came mainly from the younger and less conservative wing of the party, which saw Robert Muldoon as representing an era that had already passed. Muldoon, however, refused to leave the position voluntarily, thereby forcing a direct leadership challenge. The two main candidates in the leadership race (apart from Muldoon himself) were Jim McLay and Jim Bolger. McLay, in distinct contrast to Muldoon, promoted free market economic policies and a relatively liberal social outlook. Bolger, meanwhile, was seen as a more traditionalist and pragmatic candidate but less conservative as Muldoon. McLay won the caucus vote with slightly over half the votes.^[14][15]

McLay's first major challenge was Muldoon himself. On his defeat, Muldoon refused to accept any portfolios offered him, thereby becoming a backbencher.^[16] McLay's attempts to give Muldoon an "elder statesman" role within the party were rebuffed, with Muldoon insisting on an active role. The relationship between McLay and Muldoon deteriorated further, as McLay outlined a major departure from Muldoon's interventionist economic policies. Muldoon's hostility was to prove a major problem for McLay's leadership, and undermined all attempts to promote unity within the party. Later, when Muldoon made a strong public criticism of the entire party leadership, Muldoon (along with loyalist Merv Wellington) was demoted to the lowest ranking within the National caucus.^[17]

Muldoon, apparently realising that there was little chance of him regaining the leadership, threw his support behind Bolger, who remained opposed to McLay. There was considerable media speculation that McLay would be deposed before the end of 1985. The rumoured challenge, however, failed to happen, and McLay remained leader. In early 1986, however, McLay made a fatal mistake: in an attempt to "rejuvenate" the party's upper ranks, he demoted George Gair and Bill Birch, both of whom were highly respected for their long service.^[18]

Gair and Birch had earlier been opponents of McLay's in the 1984 leadership election before they withdrew. Both of them, who were among National's most experienced politicians, quickly allied themselves with Bolger. From then on, McLay's fall was almost guaranteed.^[19]

Ousting

On 26 March, Gair, Birch, and party whip Don McKinnon presented McLay with a letter signed by a majority of MPs in the National Party caucus asking him to step aside. Bolger received a clear majority in the resulting caucus vote, ending McLay's leadership of the National Party.^[1] After his defeat he was appointed by Bolger as Shadow Minister of Justice and Shadow Attorney-General but given the relatively low caucus rank of 10 (below Muldoon at 8).^[20][21] This prompted him to retire at the 1987 election.

McLay is one of three leaders of the National Party (along with Simon Bridges and Todd Muller) who neither became Prime Minister nor led the party to an election.

Permanent Representative to the United Nations

In July 2009 McLay took up the role of New Zealand's Permanent Representative to the United Nations.^[1] On 16 October 2014, McLay led New Zealand to victory in the United Nations Security Council election for a temporary seat on the United Nations Security Council winning in the first round of voting with 145 votes out of a possible 193 beating both Spain and Turkey.^[23] McLay took up New Zealand's seat on the United Nations Security Council on 1 January 2015.

Representative to the Palestinian Authority

On 20 February 2015, it was announced that McLay is to finish his role as Permanent Representative after the end of his second term. McLay is set to become New Zealand's Representative to the Palestinian Authority, as well as being a special advisor to Minister of Foreign Affairs Murray McCully and, when required, a Prime Ministerial special envoy.^[24]