How New Zealand’s most radical & reviled finance minister made peace with the past
Architect of Rogernomics, co-founder of the ACT party, Sir Roger Douglas remains, even after his final departure from national politics in 2011, a divisive figure. Known primarily for his radical economic policies while finance minister in the Fourth Labour Government, Douglas is both lauded and vilified by those across the political spectrum.
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Serving as the Labour Member of Parliament for varyingly Manukau and Manurewa from 1969 to 1990, Douglas was elevated to cabinet at the age of 34 in 1972. He was awarded the portfolio of finance minister when, after nine years in opposition, Labour reclaimed Treasury benches under the leadership of David Lange in 1984.
What followed was a rapid departure from Labour’s—and indeed, the country’s—interventionist approach to economic management. Douglas devalued the dollar, reduced income taxes while introducing the GST, removed tariffs and subsidies and corporatised a number of state-owned enterprises.
Change was not welcomed by all, and the unorthodox policies Douglas pursued still provide cause for argument to this day. While some commentators regard him as the country’s saviour, others have called for him to be jailed for economic treason.
Salient spoke to the man behind the plan—now 75 years old—to find out how he has dealt with decades of criticism.
Can you tell us about your time as finance minister, and your principles for making difficult choices?
If I think back in terms of principles for dealing with criticism, it is that you can only afford to make quality decisions. Only quality decisions will deliver an outcome that will satisfy the public at the end of the day.
The second thing you need to recognise, and I think too often politicians don’t do this, is that there is a deep well of realism and common sense among the community, and that, in the end, they want politicians with guts and vision, not just poll-watchers.
Looking back now, which of those decisions that took time to gather public support are you most proud of?
The removal of subsidies, the dismantling of import licensing, the lowering of tariffs—all of those opened New Zealand up for a better future.
Just getting rid of some of those regulatory things so that you could actually just sit on the footpath and have a coffee; they would probably seem a small thing, but today nearly everybody sits on the footpath if the weather is fine and has a coffee, and there is a lot of business done.
There are a lot of things; some small, some big.
If you wanted to summarise what we did between ’84 and ’88, it was that we removed privilege. We removed privilege wherever it was.
How did it feel when the Labour Party—the party who you were once a minister for—criticised you?
Well, you know, that’s politics. I believe we made quality decisions that improved the productivity—and therefore the welfare—of the country. People wanted to go back and talk purely on behalf of vested interests, that was their business, but I was never going to support that.
Who did you see yourself as representing when you were in Parliament?
Every New Zealander. A lot of people say, “how can you do that?” The Labour Party at the moment would claim that it was against working people. Well, it wasn’t. Working people were, as a result of the changes, able to own a motor car when they were too expensive before. Televisions are a fraction of the price that they used to be.
At the time you would have heard a lot of personal stories about how people were affected in the short-term by the changes—
—when you remove privilege, it’s going to impact upon some people more harshly than others. If I was a farmer and owned a farm that had been in my family for 120 years, and I had no debt, then the changes I made might have impacted a lot on [my] income in the short term, but it didn’t impact on [me] greatly. But if I bought a farm the day before the subsidies were taken away then I would have been adversely impacted by the drop in land prices—I probably would have been underwater for a while.
So how did you deal with the knowledge that there were in fact some who were adversely impacted in the short-term?
What you’ve got to keep in mind is this: is it good for New Zealand as a whole? That is your responsibility. While you might try to help those in difficulty, you can’t go too far.
But there’s always a trade-off. It’s like with taxis. When we opened it up and allowed new people to come in, it enabled a whole lot of people who didn’t have a job to find work in the taxi industry. Now, the issue was, did you compensate existing taxi drivers? You can, but the problem with that was that the benefits that would flow from what you were doing wouldn’t be as large.
Do have any regrets from that period?
Oh, probably that I didn’t do a bit more.
What stopped you from doing more?
At the end of the day, Lange decided that he didn’t want to go any further. But if you think about what’s not working in NZ, it’s essentially the same things that weren’t working when I left office in 1988; health, education and welfare. The problem was that Lange felt that he was not prepared to make those reforms. And the country is worse off because of it.
Looking back on those difficult decisions, when did you find it most difficult to pursue what you thought was right? What was your darkest hour?
Well, I suppose when Lange decided we weren’t going to do any more. It was over to some extent, wasn’t it?
Once we started to fight amongst ourselves… You can’t do that. You can’t really have the Prime Minister not being on board. It’s pretty hard to win a rugby test against South Africa when Dan Carter and Richie McCaw decide to play for South Africa.
Can you describe that time emotionally for yourself?
You know, these things happen in politics. I think the worst moment for me was when I went and saw Lange with Palmer and with Prebble, and said to him, if he didn’t want to go ahead with the package in December ’87 then we shouldn’t announce it and we would all meet later and decide what to do. And he said, “no, no, no, I want to go ahead.” We announced it, but three weeks later after that, he scuttled it. For me, I was overseas at the time and it was hard to forgive, to be honest. The one principle I had essentially was do what is in the best interests of New Zealand. But there you are.
Do you think Lange was betraying those interests?
He probably didn’t think he was. But I believe he was.
You returned to Parliament in 2008. Why did you come back?
Oh, I don’t know. That’s a good question. I guess I was mad. That was an experience going back, I can tell you. In a way, you always hope that you’re going to be able to do something to help, and the truth is I enjoyed it, but I soon realised I didn’t have a significant part to play. I quickly realised not much of it was going to be implemented under a socialist National Party.
When you did return a number of commentators, particularly those associated with the left, said a number of disparaging things about you. Is that the response you were expecting?
They were saying it long before I went back. They were saying things in the ‘90s—as soon as I formed ACT. But it never worried me. It never worried me because I believed what I was advocating was right, and that what they were saying was either wrong or stupid. They have been advocating certain policies in health, education and welfare for 50 years, and I ask you, is health, education and welfare better than it was 50 years ago? The answer is no. Unless NZ does something about that we’re in a really deep problem.
During the years when you were out of Parliament, did you think that Labour and the left would start to view your policies differently?
No, no, no. I knew they would never come round. And the reason for that is that they are really a much narrower bunch of people than they ever were when I was there in the ‘60s, ‘70s and ‘80s. They’re essentially controlled by the trade union movement, which has always been strong in the Labour Party. But the teachers and the nurses and some of those interest groups don’t actually represent the average person in NZ. They represent the teachers’ union. They don’t represent students.
How do you feel that you and your policies will be remembered 20 years from now?
Probably that they saved New Zealand. The only danger is with this mob, and even with the Labour Party, is that we’ll get back to a situation worse than that we had in 1984. It could well happen. Watch this space.
What is your advice to young people for staying happy while facing severe criticism?
Surround yourself with the very best people. Too many surround themselves with people who always say, “that’s right, Jack,” or, “well done,” when really you want quality people who tell you if you’re wrong.
And be true to yourself. If you believe in what you are doing—if you believe it’s right—then stick by it. Have the guts to do what’s right. What you believe to be right. You probably will be right if you passionately believe it.
In the end you have to provide leadership and you have to have guts to back yourself to do what’s right… Initially you mightn’t get a positive response, but at the end of the day you know it will produce a good outcome. Then you’ll win… Consensus does not arise before decisions are implemented, but progressively after they are taken and are shown to work.
Looking back across your life in the public eye, do you think that you’ve lived a good life?
Yeah, sure. The things I enjoy… What do I enjoy in life? Actually, I have this flu today and it was the first game of rugby I’ve missed of my grandson’s this year. He was playing for his school on Wednesday afternoon. So if you want to know what I really enjoy, I enjoy watching him play rugby and my other grandson playing soccer. So, you know, that is a good life. ▲