Traces of Rogernomics remain
Back in the mid-1980s, when Sir Roger Douglas was finance minister and laying waste to farming subsidies and tariffprotected manufacturers, it was commonplace for distressed lobbyists to turn up in his office to warn him of the terrible mistakes he was making.
They would argue he didn’t understand their industry, that he was destroying value, and how could he be so cavalier?
Fast-forward 30 years and imagine the scenes in ministers’ offices today when they meet with, say, the oil and gas industry, the mining sector, irrigators or sections of the agricultural lobby worried about facing polluter-pays taxes.
As in the mid-’80s, their pleas are having little or no impact for one simple reason: For all that Labour has airbrushed the Rogernomics era out of its history, the 1984-87 government had a transformative agenda, and so does the 2017-20 coalition. In that sense, they are very alike.
At the heart of the current transformative agenda is Economic Development Minister David Parker, who displays much the same certainty about being right that Douglas did, and relies on the enormous popularity of his prime minister to advance that agenda.
A new generation of corporate leadership is starting to support key elements of that agenda, also similar to Douglas’ experience. In the 1980s, support from financial markets countered the gloom among industries undergoing painful change. In 2018, businesspeople willing to embrace the profit potential of a low-carbon economy are getting on board and finding a Government eager to hear corporate voices that challenge the traditional.
There, however, the analogy ends. First, this Government cites Douglas’ favoured ‘‘crash through’’ approach to economic reform as the opposite of its ‘‘just transition’’ plan.
Second, Douglas reforms sought to deal with fairly orthodox problems created by unrestrained interventionism in the Muldoon era. In contrast, this Government has inherited a whopping Budget surplus and low debt while its economic priorities focus on the threat of climate change and domestic challenges created by letting promarket settings create problems of their own. In other words, dairy conversions degrading freshwater resources, a housing market that doesn’t build affordable homes, and rapidly widening income gaps.
And unlike Douglas, this Government is interventionist: waving a stick at fuel retailers, banning offshore oil exploration, using the Crown balance sheet to build its way out of the housing crisis, and pouring billions into a regional growth fund.
The Government is assuming a mandate to intervene because hands-off economic policy has lost its critical minimum of appeal. It looks, for example, at New Zealand’s 85 per cent renewable electricity and sees it is underpinned by 20th-century hydroelectricity developments that no private developer would ever have built.
This reversal is not without irony. Consider, for example, that the Think Big methanol plants in Taranaki were derided in the Douglas era as economic deadweight. One generation later, and sold at a knockdown price to private owners, they’re a big economic contributor facing value destruction, this time by a Labour-led Government determined to curtail fossil fuel use, rather than a Labour-led Government determined not to pick industrial winners.
Pattrick Smellie was a press secretary for Sir Roger Douglas from late 1985 to early 1988.