Damien Grant: Roger trumps dodgers

Sir Roger Douglas unleashed a series of transformational economic reforms on New Zealand. File photo / NZ Herald

Opinion

In 1984, the country was circling the economic drain when Sir Roger Douglas firmly grasped the nettle and unleashed a series of transformational reforms.

Douglas floated the dollar, scrapped tariffs, abolished agricultural subsidies, established the independence of the Reserve Bank, introduced GST, slashed the top rates of marginal tax and established the SOE model that would lead to privatisation.

He would have done more if David Lange hadn't lost his nerve and stopped for that cup of bromide-laced tea.

John Key's shameful public distancing of Douglas endorses an accepted perception that Douglas wrecked a perfectly good system and inflicted needless pain and misery in pursuit of some puritan ideology.

The reverse is true. We were brought to the brink of ruin by the economic Stalinism of the Muldoon administration, which reached its pinnacle of lunacy with a two-year wage and price freeze.

Our financial infrastructure was rotten, agriculture was in a shambles, productivity was declining and getting a car in East Berlin was only marginally more difficult than obtaining one in New Zealand.

Farmers were being paid no matter what they produced, workers in state enterprises were being paid not to work and who knows what the teachers were being paid to do.

For Douglas, this mess was an opportunity and he took it. Six years later, Ruth Richardson used the collapse of the BNZ and a $5 billion hole in the national accounts as an excuse to extend Rogernomics to the labour and social welfare sector.

And since then, nothing. We have been living off the fruit of Douglas and Richardson's reforms and allowing our national debt to slowly grow while our relative productivity gradually declines.

Today's problems are not as dramatic as the crisis that faced Douglas, but the opportunity is as great - if only this Government had the same courage and vision to spend the enormous political capital it has gathered.

The current administration has been a crushing disappointment of missed opportunity. The recession and Canterbury earthquake are reasons for bold action, not excuses for inactivity.

Government expenditure has not been cut and government debt is spiralling upwards. The health, education and social welfare industries remain untouched by competitive pressure and the superannuation problem has been left for a more courageous government to tackle.

The Government's solution to all problems is economic growth that will magically happen without any hard choices being made. Pixies at the bottom of the garden, no doubt, will deliver it.

Sir Roger remains in Parliament for a few more months at least. The current Government would be well-served to remember his legacy, and ask themselves if in 25 years anyone will praise them for their courage and vision.