Roger Douglas
Sir Roger Owen Douglas is a retired New Zealand politician, economist and accountant who served as a minister in two Labour governments. He is most recognised for his key involvement in New Zealand's radical economic restructuring in the 1980s, when the Fourth Labour Government's economic policy became known as "Rogernomics", which implemented neoliberal economic policies.
Douglas served as a Labour Member of Parliament from 1969 to 1990. During his time as Minister of Finance, the government floated the New Zealand dollar, introduced corporate practices to state services, sold off state assets, and removed a swathe of regulations and subsidies. Some Labour Party supporters regarded Douglas's economic policies as a betrayal of Labour's left-wing policy-platform, and the moves became deeply unpopular with the public and with ordinary party members. His supporters defended the reforms as necessary to revive the economy, which had been tightly regulated under National's Robert Muldoon. As a result of his flat tax proposal, Douglas came into conflict with Prime Minister David Lange, and he eventually resigned as Finance Minister; when Douglas was re-elected to Cabinet in 1989 Lange himself resigned as Prime Minister, signalling the demise of the Labour government.
In 1993, Douglas and Derek Quigley founded the Association of Consumers and Taxpayers as a means to further his policy ideas. Douglas returned to Parliament as an ACT backbencher in 2008 before retiring in 2011.
Early life and background
Douglas was born on 5 December 1937. His family had strong ties with the trade-union movement, and actively engaged in politics. His grandfather, William Theophilus "Bill" Anderton,, was a left-wing Methodist local preacher and small business owner in Birmingham, England, who migrated to New Zealand with his wife in 1921. Anderton served as MP for Eden from 1935–1946, then as MP for from 1946–1960. He was Minister of Internal Affairs in the 1957–1960 Second Labour Government, establishing the Arts Council.Roger Douglas's father, Norman Vazey Douglas,, a former trade union secretary, served as MP for from 1960–1975, and as opposition spokesman for labour, education, and social security from 1967–1972. Roger's brother Malcolm Douglas was briefly Labour MP for 1978–1979. Douglas grew up in a state house in Ewenson Avenue, One Tree Hill, Auckland. He attended Ellerslie Primary School, excelling in arithmetic and sports. Douglas attended Auckland Grammar School between 1950 and 1955, where he was a prefect and an avid cricket and rugby player.
Douglas had a summer job at the Auckland accounting firm Mabee, Halstead and Kiddle, accepting a job there at the end of 1952. He gained a degree in accountancy from Auckland University College in 1957. Afterwards, he was hired by Bremworth Carpets in South Auckland as company secretary. He married Glenis June Anderson and moved to Māngere in 1961, becoming President of the Manukau Labour Electorate Committee. He began to run the Bremworth division individually after the company's sale to UEB in the mid-1960s. He also served as campaign manager for successful Labour candidate Colin Moyle in 1963.
Political career
After some experience in local body politics as a member of the Manukau City Council between 1965 and 1969, where he had been instrumental in the plans to purchase the land where the Manukau City Centre now stands, Douglas began his career in national politics in 1969 when he won election to parliament as the Labour Member of Parliament for Manukau. He gave his maiden speech in the Address-in-Reply debate on 7 April 1970. He devoted the greater part of his speech to the case against foreign investment in the domestic economy. His case for external protection of the domestic economy and government involvement in investment was characteristic of the Labour Party of the time. Douglas became involved in the party's policies on industry and economics. He served as the MP for Manukau from 1969 to 1978, and then for Manurewa from 1978 to 1990.Cabinet Minister (1972–1975)
Labour under Norman Kirk won the 1972 election, and the Labour parliamentary caucus elevated Douglas, then aged 34, to Cabinet rank. Thus, Douglas became the youngest Cabinet minister in 50 years. His father, and parliamentary colleague, Norman Douglas, then 62, failed to win a place in the ballot for Cabinet, and did not hide his bitter disappointment. On the day of the ballot, Kirk was so concerned by the extremity of Norman Douglas's reaction, and its effects on his son, that he called Douglas's mother to enlist her help. Kirk told his secretary, "It should have been the best day of Roger's life but instead it was the worst".During the Third Labour Government, Douglas served as Postmaster-General and Minister of Broadcasting until the unexpected death of Kirk in 1974. Kirk's successor Bill Rowling appointed Douglas Minister of Housing. He remained Minister of Broadcasting until 1975, when the portfolio was disestablished. Douglas was Minister of Housing and Minister of Customs until Labour's defeat by the National Party under Robert Muldoon in the 1975 election.
Douglas was the most junior member of Cabinet, but soon earned a reputation for hard work and competence. His appointment as Minister of Housing in 1974 marked him publicly as a talent in the Cabinet. It was a significant and, in political terms, a sensitive portfolio.
As Minister of Broadcasting, Douglas devised an administrative framework to allow for the introduction of a second television channel. It replaced the monopoly New Zealand Broadcasting Corporation with two competing publicly owned television channels, Television One, and Television Two a corporation to manage public radio, Radio New Zealand, and a new Broadcasting Council. After public consultation, the scheme was implemented on 1 April 1975. However, the government of Muldoon merged the three broadcasters into a single Broadcasting Corporation of New Zealand in 1977, with the two television channels being merged into Television New Zealand in 1980.
Douglas was an early and enthusiastic promoter of the government's plans for a compulsory contributory superannuation scheme that would supplement the old age pension. In 1972, while still in opposition, he introduced a private member's bill that provided for a form of compulsory superannuation. In Cabinet, Rowling, who was then Minister of Finance, and Douglas were largely responsible for a 1973 White Paper setting out the government's proposals for superannuation. As well as augmenting individual provision for retirement, the scheme was intended to be a source of capital for investment in the domestic economy. The scheme became law in the form of the New Zealand Superannuation Act 1974.
Douglas was among the designers of the Dependent Minders' Allowance, which was part of Labour's platform in the 1975 election. Originally intended as a means of compensating women whose absence from the workforce reduced their superannuation contributions, the scheme offered a cash payment to women on the birth of their first and second children, or the first two children born after the election. It was immediately dubbed the "baby bonus" by Muldoon.
Margaret Hayward, who was Norman Kirk's private secretary, notes that during the Third Labour Government,
Conversely, Douglas did not attempt radical reform of his other ministerial responsibility, the Post Office, except for an attempt to make the Post Office 'market' two of its businesses – the Philatelic Bureau and the yellow pages. However, he had little opportunity to do anything else as he was elevated into the role of Minister of Housing after the death of Norman Kirk in 1974.
Opposition (1975–1984)
Douglas was critical of Labour's performance in government between 1972 and 1975. Labour's defeat in the 1975 election was the greatest electoral reversal since 1928. A Labour majority of 23 seats in a parliament of 87 members became a National majority of the same number. The Third Labour Government attempted to cushion economic contraction by borrowing abroad, but while it held unemployment to the level it had inherited, the rate of inflation trebled to an annual rate of 15 per cent and a surplus in the balance of payments became a deficit, exacerbated by the 1973 oil crisis. Labour lost credibility as an economic manager by 1975.A series of scandals and misadventures, incompetence among some ministers, and Rowling's inability to counter Muldoon's populism contributed to the defeat. The nature of the defeat widened a division that already existed between the older and younger members of the Labour caucus.
In opposition after 1975, Douglas became successively Labour's spokesperson on housing, special projects, consumer affairs and transport. In 1980, he published a series of proposals for future economic development under the title an "Alternative Budget". The proposals were not Labour policy and their publication was seen by the party leader Rowling as a challenge to his authority. Rowling demoted Douglas from the parliamentary front bench and he lost his responsibility for transport. In 1981, he became spokesperson for trade and industry.
Douglas argued that the Labour Party's approach to economic policy was fragmented and based on unrealistic promises. He also believed that the party leadership should be revitalised, and supported David Lange's unsuccessful bid for the leadership in 1980. In informal Labour caucus politics, Douglas became a member of the so-called "Fish and Chip Brigade", which included Rowling's leading caucus opponents. He identified his closest colleagues as Richard Prebble, Mike Moore, and Michael Bassett.
The failure of Lange's leadership bid, continuing dissatisfaction with Labour's approach to economic policy, and his difficult relationship with leading figures in the party led Douglas to declare his intention to retire from Parliament at the 1981 general election. Lange was among those who persuaded him to reconsider. Lange believed that Douglas was a moderniser. He saw Douglas as sometimes obstinate and limited, but in Lange's view he had drive, and the ability to break from the traditions that had kept Labour so long in opposition. In March 1983, after Lange became leader of the Labour Party, he made Douglas the Labour spokesperson for finance.
At the time of his appointment, Douglas had a reputation as a radical but his thinking on economic issues remained within the boundaries of Labour's Keynesian approach to economic management. By the end of 1983, his thinking had shifted markedly to the economic right.
In late 1983, Labour's Caucus Economic Committee adopted a paper that Douglas named the economic policy package. The committee's support was not unanimous. The Douglas paper polarised opinion in the caucus. Several members of the caucus presented an alternative draft economic policy to the Labour Party's Policy Council.
The Policy Council was divided. Its members could not agree on the party's economic platform. When disagreement became increasingly a matter of public knowledge, and the 1984 general election drew closer, the party's deputy leader Geoffrey Palmer drafted a compromise proposal that combined elements of both sides of the argument. Lange doubted that Palmer's paper satisfied either side. When Muldoon unexpectedly called an early election, the Palmer document became part of Labour's election policy platform.
A critical element of Douglas's economic policy package, but not the Labour Party's policy document, was a 20 per cent devaluation of the New Zealand dollar. This was a sensitive subject. If it was widely known that an incoming government would devalue the dollar, dealers would seek profit by selling the dollar at its higher price before the election, and buying it back at its lower price afterwards. The difference, which might amount to hundreds of millions of dollars if there was a run on the currency, would be met by the taxpayer. Soon after Muldoon called the election, Douglas held a public meeting in his electorate and distributed copies of his economic policy package, which made the case for a 20 per cent devaluation. Muldoon obtained a copy and released it to the news media, intending to embarrass the Labour Party. Douglas acknowledged that devaluation was not part of Labour policy and accepted responsibility for the mistake. Although Lange believed that the error cast doubt on Douglas's judgement, he did not accept Douglas's resignation because he did not wish to appoint a new finance spokesperson so close to the election.