Return of Roger Douglas an Act of terminal desperation for a party that like its founder, has had its day

Jump to Comments

Roger Douglas has had his day. It was a very important day. It was also a very long time ago, and it is bizarre to see him emerge from the mists like a ghost of Christmas past and announce he will be standing as a candidate for the Act Party. His candidacy makes an even bigger joke of the party he co-founded 14 years ago, when New Zealand was another country.

Sir Roger’s day was so long ago that many New Zealanders won’t even remember it and many who do, especially those in the present Labour Party, wish it had not dawned. That is a crying shame, because the “Rogernomics” policies he was responsible for made New Zealand a stronger, better place, and however much they have been disowned by politicians of all hues who have come after him, those policies are still in place.

For those too young to remember, Roger Douglas was the Finance Minister in David Lange’s Labour Government elected in July 1984. Lange often said, accurately, that when he became prime minister, “New Zealand was run like a Polish shipyard under communism.” This was a reference both to the stifling socialist regimes in the Soviet-bloc countries of Eastern Europe at the time, and to the state of New Zealand’s economy after nine years of Robert Muldoon as its authoritarian prime minister and finance minister.

Lange inherited a country shackled by red tape and state controls, in which the government owned large sections of the economy and dictated what happened in everything else, a nation in which unemployment, inflation and public debt were soaring out of control.

Labour was elected in an economic crisis of Muldoon’s creation, with the dollar collapsing, which forced the Reserve Bank to close the currency markets the day after the election. Lange unleashed Douglas on the economy, which has never been the same since, thank god. Douglas devalued, deregulated and floated; he abolished the crippling array of industry protection and subsidies, built up over decades but made monstrous under Muldoon; and generally turned the economy inside out and upside down into something resembling normality. Muldoon’s 66 per cent marginal tax rate was cut to 33 per cent, GST replaced a bewildering array of sales taxes, Muldoon’s financially disastrous “national superannuation” state pension was reined in and a start was made in putting the government’s finances on a sound basis.

After the years of stultifying Muldoonism, Rogernomics was a hurricane of fresh air, yet even many of those who recall those tumultuous days may not remember that the combined actions of the Lange Government (which included other major changes such as the anti-nuclear policy) were so popular that at the 1987 election, Labour got a bigger share of the vote than it did in its landslide victory three years earlier, and it took three more seats off National.

Had Douglas not taken the 1987 result as a mandate to unleash even bigger reforms, such as selling off just about everything the government owned and introducing a 21 per cent flat tax rate for all wage and salary earners that would have crippled the Government’s ability to deliver the health, education and welfare services that Lange had promised for his second term, then Douglas and Lange would probably be remembered as two of the greatest political figures in our history.

“My government stands or falls alongside Roger Douglas,” Lange had declared to a Labour Party conference in 1986, when ordinary party members were questioning the free-market policies Douglas had unleashed in place of Muldoon’s iron-fisted socialism. But in early 1988, while Douglas was out of the country, Lange, alarmed at the implications of the flat tax policy announced only a month before, unilaterally announced it was “time for a cup of tea.” Flat taxes were out. Douglas was outraged.

The two men, for years close friends, became bitter enemies. By year’s end, Douglas was dumped from the cabinet, as was the arch Douglas ally Richard Prebble, who publicly questioned Lange’s sanity. Lange himself resigned in 1989 when the Labour caucus voted Douglas back into the cabinet. The party fell apart and lost heavily to National at the 1990 election. On election night, Labour activists all over New Zealand cheered and celebrated each time a Labour-held seat was lost, so strong was their hatred for the government and particularly for Rogernomics.

The Labour Party had split into three. The Far Left marched off behind Jim Anderton in 1989 to form the New Labour Party, which became the Alliance in the early 1990s. The Right fell in behind Douglas, forming first the Backbone Club (which did much to undermine Labour after Douglas’s dumping), then Vision 2020 in 1991-92, a political action group formed to carry on the Rogernomics torch (which was actually still blazing in Parliament in the form of National’s 1990-93 finance minister, Ruth Richardson).

Vision 2020 became the Association of Consumers and Taxpayers, some of whose members were involved in raising large sums to oppose the 1993 referendum on whether to adopt the MMP electoral system. When their shadowy campaign failed, they brazenly decided to use MMP to get into Parliament, and the Act Party was launched. Its co-founders were Roger Douglas and Derek Quigley, the latter a free-market former National MP sacked as a cabinet minister by Muldoon in 1982 for opposing Muldoon’s disastrous “Think Big” policies. The new party’s chief organiser was one Brian Nicolle, who had helped to organise the Backbone Club and then the campaign against MMP (more recently he was noted for resigning from John Banks’s 2004 Auckland mayoral re-election campaign over an anonymous pamphlet that was circulated).

Douglas became Act’s first leader, but more the figurehead of a party which had some serious money backing it from the Auckland New Rich who had done so well out of deregulation and privatisation. Millions of dollars poured into its coffers to fight the 1996 election, but Douglas was far from being a popular public figure. Richard Prebble, who in 1993 had lost the Auckland Central seat he’d occupied for Labour since 1975 to the Alliance, became Act’s new leader before the 1996 election and stood in Wellington Central, which he won. The Act Party won eight seats including Prebble’s, far from the dozens the New Rich enthusiasts were counting on, and they gradually withdrew their support.

National’s unpopularity with right-leaning voters meant Act remained strong enough to win nine seats at the 1999 election that brought Helen Clark’s Labour Party to power, and again in 2002. Those elections were Act’s high water mark. The tide has been going out since. Act was torn apart internally with battles between those who wanted the party to publicly campaign on Roger Douglas’s “Unfinished Business” agenda of high-velocity free market reforms, and those who supported winning seats through the more populist policies being promoted by Richard Prebble and “perkbuster” Rodney Hide.

Prebble quit as leader before the 2005 election and was replaced by Hide, and Act survived electorally only through Hide managing to win the Auckland seat of Epsom from National, with just enough of the party vote to keep number two on the list Heather Roy in Parliament with him. Since then, the party has been a joke, with Hide engaging in such ridiculous antics as going on Dancing With The Stars and other stunts that have made him almost invisible in Parliament and a source of amusement for the media. Heather Roy, who could do much better, has been notable for little more than joining the Territorials and a bizarre claim that Wellington’s electric trains produce more greenhouse gases than a diesel bus and should thus be scrapped.

The return of Roger Douglas looks like an act of terminal desperation. Hide might keep the Epsom seat and if he does, carry Douglas into Parliament (it is being reported he could be number one on the list, ahead of both Hide and Roy), but then what? The party has no credibility any more. Like Douglas, it has had its day. Like the Alliance, it is destined to become a curious footnote in the history books, a party started with great promise, but ending a disappointment.

7 Comments

Filed under Politics

Tags: ACT Party, Roger Douglas