Balancing acts
Some credit Sir Roger Douglas with single-handedly saving New Zealand from financial ruin. Others blame his policies for causing a huge gap between the rich and the poor, one that still exists today.
Love him or loathe him, when he took over the country’s books in the 1980s, the man changed New Zealand history with his economic reforms. Bridget Gourlay interviews the outspoken MP about Rogernomics and what he’d do if he controlled the country’s finances today.
The family
Roger Douglas was born in 1937, a year before the welfare state legislation was famously enacted by Michael Joseph Savage. Douglas’ family, dedicated lefties, would have been overjoyed.
While he sits on the opposition end of the political spectrum now – John Key has steadfastly refused to give him a Ministerial role because of his far-right views – Roger Douglas comes from a long line of Labour-ites. His father and grandfather were both New Zealand Labour MPs. His grandmother biked around villages in England to tell people about the new humanitarian movement, meeting abuse for her views.
Like his family, Roger (and his brother Norman) followed them into the Labour Party and won the Manurewa seat for the party in 1969.
The reforms
Fifteen years later he was leftie David Lange’s right-hand man. Sir Roger was appointed Minister of Finance after years of Muldoon’s Think Big projects. Although he’d inherited a mess, he wasn’t shocked. He just knew he had a big task ahead.
“You may have not been responsible for the mess that New Zealand’s in but when it’s your job to do something about it, you better get on with the job. And it wasn’t as if we weren’t aware of the fact that New Zealand was in considerable difficulty.”
He immediately set about enacting a series of reforms now known as ‘Rogernomics’ – deregulation, market-led restructuring and a tight monetary policy to control inflation. Instantly, New Zealand became part of a global economy, with all the good and bad that came with it. Serious money was made as the markets de-regulated. Serious poverty was caused as factories around the country shut down.
David Lange summed up the reforms in 1996. “For people who don’t want the government in their lives… this [Rogernomics] has been a bonanza. For people who are disabled, limited, resourceless, uneducated, it has been a tragedy.”
Obviously, Sir Roger disagrees. Today, he says New Zealand would be a third world country without his reforms.
The recession
It may have been 25 years since he was Minister of Finance, but Roger Douglas is still an MP, coming back into Parliament in 2008 for ACT, the party he set up in the 1990s. And he’s still got ideas on how the country should be run.
Sir Roger thinks we’re surviving the recession “averagely”. He says the amount of borrowing the Government is doing will mean we will suffer later, when the taxpayer pays interest on it. If he were Minister of Finance at the last Budget he would have given tax cuts but not raised GST. Instead, he would have cut the equivalent 1.5 billion from Government expenditure, something he says would be an easy task.
“I believe there’s a lot more than that in terms of waste within Government. Government expenditure has increased enormously in the last 10 to 11 years, I would cut out the sufficient waste. At the end of the day, people wouldn’t even notice. We subsidise industries by over two billion dollars. Getting rid of it could have improved competition.”
Sir Roger thinks the country has been going downhill since the late 1990s, describing Winston Peters’ stint as Minister of Finance as “when the rot set in”. Australia has risen economically in the last decade, and Sir Roger blames our subsidisation of industries, low productivity levels and increased Government spending for our competitive decline.
“We’ve got to get our incentives right,” he enthuses. He would like to see a switch away from the Government spending to stimulate the economy to individual New Zealanders being taxed less and thus able to spend more themselves.
“At the moment if you look at our total government expenditure plus our SOE expenditure, the Government is spending one dollar in two. It means whereas six years ago the Government was only spending 46 cents in the dollar, it’s now 50 cents in dollar. That increase, which has been going on for quite some time now, I think has been killing New Zealand in specific ways.”
What he thinks we need is simple; more skilled workers, an investment in technology and getting rid of the red tape surrounding business.
The welfare state
Sir Roger claims he has never lost sight of helping the poor and wishes ACT wasn’t portrayed as a rich white person’s party (all five of ACT’s MPs are exclusively Pakeha and upper class.)
But he says socialism has failed the poor, and if Michael Joseph Savage were alive today he’d agree. Sir Roger has his own ideas – most of which involve the philosophy of letting the private sector do what the public sector struggles with.
Firstly, he proposes that everyone is given the choice between continuing to pay tax and getting looked after by the state if anything goes wrong, or not paying tax until they earn about 30 thousand dollars and instead taking out a number of insurance covers to protect them in case of injury or unemployment.
For pensioners it would be the same – enrol in your own private retirement fund, instead of paying taxes which go to the nationwide pension.
The minimum wage
One such way he thinks will help the poor is to re-introduce youth rates – where employers can pay young people less than the minimum wage.
Sir Roger says uneducated school drop-outs are essentially unable to read or write, making them unemployable for the minimum wage – approximately $510 a week. He argues they could be employed for $300 a week as a kitchen hand or a farm worker.
“What we’re doing is by saying they have to earn at least $510 we’re actually saying – you’re going to go on the dole. If they don’t have a productive value of $510 a week no one will employ them …so we tell them you’ve got to go on the dole for $160 a week…maybe if you want to supplement your income join a gang or get pregnant, then we’ll give you $400 or probably a house. I mean this country is nuts!”
The argument for a universal minimum wage is that young people who work should get paid enough to live by – to pay for housing, food, clothing and other basic needs. Sir Roger’s opponents would argue that training or further schooling for young people searching for a job would be better than allowing them to work for money they cannot subsist on.
The future
Sir Roger says he has not made up his mind whether or not he will stand as an ACT MP at the next election, which will take place sometime around his 74th birthday. He says he is unwilling “to do a Jim Anderton”. I tell him I can’t see him as a man who will ever fully retire.
“I won’t fully retire! I’ll be a commentator, an agitator. But on the other hand I’m also realistic enough to say; a, do I want to do it and; b, am I capable? I would hope that I’ve never been a passenger. Some people are happy to come here and not do an awful lot and you can do that as an MP. But that’s never been my style, I don’t think. I’m too inclined to get myself into trouble.”
Roger Douglas timeline
1937– Douglas is born. His family has strong ties with the trade union movement, and is actively engaged in politics. His father and grandfather were both Labour politicians.
1950 (approx)– Douglas received his secondary education at Auckland Grammar School.
1957 (approx) –Gains a degree in accountancy from the University of Auckland.
1969– Becomes the MP for Manukau
1972– Labour under Norman Kirk wins the election, and the Labour parliamentary caucus elevates Douglas to Cabinet rank. He serves as Post-master general, Minister of Broadcasting, Minister of Housing and Minister of Customs.
1974– Kirk dies unexpectedly.
1975– National win the election, Douglas becomes an opposition MP
1983– David Lange becomes Opposition Leader, and makes Douglas the Labour spokesperson for finance.
1984– Labour wins the election, Douglas becomes Minister of Finance. He enacts a number of financial reforms which journalists at the Listener start calling “Rogernomics”.
1985– Receives Euromoney Magazine Award for Finance Minister of the year
1987 – Labour is re-elected. After the stockmarket crash, Lange dampens down Douglas’ reforms and a conflict breaks out between the two. Lange dismisses Douglas’ supporter Richard Prebble in November 1988 and forces Douglas to resign his ministerial positions.
1989– The Labour caucus voted to return Douglas to Cabinet and Lange resigns. Lange’s successor Geoffrey Palmer does not give Douglas the finance portfolio.
1990 – Retires from Parliament. Becomes a consultant on privatisation and structural reform for companies around the world, mainly the World Bank.
1991– Is knighted and becomes Sir Roger
1993– Founds Association of Consumers and Taxpayers, the ACT party
2004– Steps down as a patron of ACT, wanting to be free to criticise the party’s direction
2008– Endorses ACT, is entered as third on the list. Becomes a backbencher MP when National wins the election and forms a coalition government with ACT. Douglas is an MP again for the first time in 18 years.
