Feature
Days of thunder
by Jane Clifton
Twenty years on, what did Rogernomics really mean for New Zealand?
The 1984 Labour government has found an almost mythological niche in New Zealanders’ consciousness.
Once upon a time there was the wicked King Muldoon, who was vanquished by the valiant Prince David and his brave knights, Sir Roger, Sir Mike, Sir Richard, Sir Jonathan et al. Prince David brought much freedom and joy to the land. But somewhere in most people’s telling of the tale, brave Sir Roger somehow morphs into a sort of bad teddy bear, and Prince David’s freedom and joy turn to ashes in his mouth.
And since this is living history, we all still like to write our own ending. By some accounts, New Zealand was blighted forever; the prince and the teddy righteously banished. Other
orators have it that the pair are still celebrated today as our saviours.
Although they all sat down to a commemorative feast last Thursday night, (King Muldoon no doubt present in a Banquo sense), no one has yet attempted the ending “… they all lived happily ever after”.
Fashionable though it is to revile the excesses of the 80s, and Roger Douglas among them, it’s still a fascinating question: what would have happened if David Lange had not had a contemplative interlude and banned Douglas’s totemic flat-tax package? What would have happened had we continued with Sir Roger’s agenda?
Today’s Minister of Finance Michael Cullen – in those days a junior Cabinet minister – says it’s simple. We would have run out of money.
“The flat-tax package could never have gone ahead because there was a great big hole in the government accounts,” he says. “That would no doubt have been filled for the time being by a more aggressive state-asset sales programme, and Roger even wanted to privatise health and education, though who we might have found to purchase them is another question.
“We would have seen even more deterioration in support for the government, and in Labour’s traditional voting base, and an even bigger defeat in 1990, where at least we hung on with most Cabinet ministers intact.”
Cullen says that Sir Roger never knew the meaning of “enough”, always believing that more was better. The bonfire of subsidies, regulation and tariffs was revitalising. But he says that Sir Roger’s drive to turn more and more of the state’s traditional work over to the private sector had a fatal flaw: markets weren’t perfect. Many – for electricity, for instance – didn’t even exist, and creating or trying to improve them is a feat that Cullen reckons no government anywhere has ever managed. Just witness our ongoing ructions over the electricity “market”, and the last National government’s quiet shelving of an early proposal to create a competitive health-funding market.
“And there’s no reason why you should assume that because something owns something privately, it’s going to be any better run. Private businesses make mistakes, too.
“You would have ended up with a funny sort of government. It would have had far less ownership and stewardship of things, dramatically reduced income and dramatically increased responsibility for certain other things, like the non-market-fixable fag-end of health, education and welfare.”
Economic analyst Gareth Morgan argues that Sir Roger never intended to finish his agenda and was amazed that he got through as much of it as he did. Like Lomu in his heyday, he ploughed ahead, waiting for someone to stop him.
“He was a crash-through merchant: seize the moment, that currency crisis, and get through as much of your reform agenda as you can. Sort out all the supporting details later.
“You need that approach every now and then. It’s a sort of cleansing. Because most public policy is just a patch over an existing policy, and another patch over that. To fix anything, you always run the risk of getting bogged down in committees and objections, and a little bit gets done here and a little bit there … and what you’re left with is soup. Nothing really gets fixed.”
Douglas’s downfall, Morgan reckons, was his impatient faith that details could be worked out later. If there was pain, it could be bandaged later. Wait till you had the bandage ready, and the whole reform opportunity would be suffocated by nervous nellies. This seeming indifference to transitional consequences gave Rogernomics a bad name, and never more so than in the state-owned enterprise-privatisation firmament.
Morgan recalls that economist Brian Easton, for one, was always arguing that the sequencing of corporatisation and privatisation was all wrong. “And he was right. You have to make sure that you have the capacity for fair competition first – that new entrants can get into the marketplace. That there is a marketplace. Then you corporatise/privatise. But that wasn’t done.”
Instead, Morgan says, the “privilege” of a state monopoly was simply transferred – either to private companies like Fay, Richwhite, or a whole new aristocracy, the state-owned enterprise (SOE) honchos, who got to run monopolies, and pay themselves princely sums. The public was revolted by the SOEs’ antics.
That’s the worst legacy of Rogernomics, Morgan reckons – the “fat cat” polarisation of public opinion around the notion of “left” and “right”. “You can’t talk about private-sector involvement in anything the government does any more, without being branded a ‘right-wing (insert rude epithet here)’.”
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