Rogernomics

Rogernomics featured market-led restructuring and deregulation and the control of inflation through tight monetary policy, accompanied by a floating exchange-rate and reductions in the fiscal deficit.

Rogernomics represented a sharp departure from the post-war political consensus that emphasised heavy interventionism, protectionism, and full employment.

Instead, it embraced principles of small government, balanced budgets, and free market policies influenced by the Chicago school of economics.

While proponents argued that Rogernomics brought about positive changes such as single-digit inflation and reduced tax rates, critics highlighted social challenges, including rising poverty and unemployment.

He framed his chief concern as the deep-seated problems in the structure of the economy that had contributed to deteriorating economic performance, and a standard of living that was slipping in comparison to that of other developed countries.

In 1980, he described New Zealand as a country living on borrowed money, unable – in spite of the record efforts of its exporters – to pay its own way in the world.

[12] Alongside far-reaching proposals for reform of taxation and government spending, it advocated a twenty per cent devaluation of the dollar to increase the competitiveness of exports.

His colleague Mike Moore claimed that there was a public perception that Labour policy sought "to reward the lazy and defend bludgers".

[16] Douglas's case for a radical approach was strengthened by the belief among many of his parliamentary colleagues that the economy's deep-seated problems could only be solved by extensive restructuring.

[17] At the same time, many economists were arguing for the greater use of competition as a tool of policy, and expressing concern about excessive or inappropriate regulation of the economy.

[19] Although Douglas was innovative in his approach, and his open disregard for Rowling had earned him a reputation as a maverick, he remained within the mainstream of economic thinking in the parliamentary Labour Party.

The key proposal was a 20 per cent devaluation of the dollar, to be followed by the removal of subsidies to industry, border protection and export incentives.

As the 1984 election drew closer, Labour's deputy leader Geoffrey Palmer drafted a compromise that contained elements of both proposals.

[30] When Muldoon unexpectedly called an early general election, the Labour Party adopted Palmer's paper as its economic policy.

The announcement of the snap election immediately provoked selling of the dollar by dealers who anticipated that a change of government would lead to a substantial devaluation.

Both crises were soon settled when accepted that he had no choice but to devalue after Muldoon's National Party colleagues threatened to approach the Governor General to dismiss him.

[36] Douglas claimed in his 1993 book Unfinished Business that speed was a key strategy for achieving radical economic change: "Define your objectives clearly, and move towards them in quantum leaps, otherwise the interest groups will have time to mobilise and drag you down".

[37] Political commentator Bruce Jesson argued that Douglas acted fast to achieve a complete economic revolution within one parliamentary term, in case he did not get a second chance.

[38] The reforms can be summarised as the dismantling of the Australasian orthodoxy of state development that had existed for the previous 90 years, and its replacement by the Anglo-American neo-classical model based on the monetarist policies of Milton Friedman and the Chicago School.

[40] New Zealand's leap into the neoliberal global economy exposed both businesses and the wider workforce to the unregulated practices of private capital – this led to a decade of insignificant (and sometimes negative) growth with the "economic miracle" being experienced by only a relatively small proportion of the population.

[37] The new state-owned enterprises created from 1 April 1987 began to shed thousands of jobs adding to unemployment: The newly unfettered business environment created by the deregulation of the financial sector, David Grant writes, left New Zealanders "easy targets for speculators and their agents",[44] exacerbating the effects of the October 1987 stock market crash.

Lock-outs were not uncommon; the most spectacular occurred at a pulp and paper mill owned by Fletcher Challenge and led to changes to work practices and a no-strike commitment from the union.

Beginning with the Mother of all Budgets, the National Government expanded these policies by drastically cutting spending, deregulating labour markets, and further asset sales.

[63] Much like Tony Blair in the United Kingdom, Clark assumed a compromise solution to social exclusion and poverty, combining advocacy of the open economy and of free trade with greater emphasis on fighting the consequences of neoliberal policies.

[64] The ACT Party, co-founded by Roger Douglas in 1993 to participate in the 1996 MMP election, is the heir to Rogernomics and continues to advance free-market policies.

[65] In 1990s New Zealand, advocates of radical economic policies were often branded as "rogergnomes" by their opponents, linking their views to Douglas's and to the supposed baleful influence of international bankers, characterised as the "Gnomes of Zurich".