Roger Kerr: Always a few steps ahead

'No one has been more important to the economic liberalisation of the past quarter century' than Roger Kerr. Photo / Mark Mitchell

No one was more important to New Zealand's economic liberalisation than Roger Kerr, writes John Roughan

News of Roger Kerr's death came well down TVNZ's evening bulletin last Saturday, just after renovations to the Bolshoi Theatre in Moscow. It did not lead the Sunday papers. It made Monday's business pages.

Kerr was for 25 years executive director of the Business Roundtable - not an organisation that ever asked to be taken to the nation's heart. It made its appeal to the head.

But everyone who knew Roger Kerr - and that means everyone who has been seriously engaged with New Zealand's public affairs - knew the quality of the man, the power of his mind, the pleasure of his company and the intensity of his care for the country.

No one has been more important to the economic liberalisation of the past quarter century.

Government does not happen at the level of elected bodies alone. Beneath the decisions of politicians and the advice percolating to them from departments, there needs to be a well of independent thinking about what is happening and what is possible.

New Zealand's "think tanks" were largely confined to its universities until the Roundtable hired Kerr in 1986. The Roundtable had been a shadowy club of the country's top corporate figures who tried to keep its discussions - indeed its very existence - out of the public eye.

But after the fearsome power of Muldoon was removed in mid-1984 the lions of business were ready to roar. Chairman Ron Trotter agreed to lead David Lange's economic summit conference.

At that time Kerr was at the Treasury, with others who were to play leading parts in the economic reform. The briefing papers they wrote for the summit contained a thorough analysis of the economy's chronic weakness.

The country had a notably low return on overall investment and just about all of that investment had been made in response to Government subsidies, regulations, taxes, licensing and import barriers.

The answer was to strip it all away, expose the economy to world prices, let competition replace restrictive licensing in all sectors and let investment go where honest unsubsidised returns might be found.

The dollar was floated and reforms had started before Kerr arrived at the Roundtable at the beginning of 1986. But he soon made his presence felt.

Newspapers and other channels of political discussion began to receive mail-outs of well-written, finely reasoned speeches and carefully researched reports on industries and public services.

The material set a new standard of public debate. Kerr's thinking was clear, it was grounded in consistent principles and and he wrote in simple elegant sentences. It was more compelling in every respect than the polemic we were accustomed to receiving from universities.

Kerr's style was highly civilised. He had been a diplomat before he went to the Treasury and he retained the ability to argue without animosity. At least one ideological opponent this week had the grace to acknowledge that.

"He played the issues not the person," said Green Party Co-leader Metiria Turei. "We disagreed with most of his views but he was prepared to debate them openly and frankly."

Roger Kerr was born in 1945, third and youngest child of Nelson dairy farmers. By all accounts, his mother taught him to read, write and count before he started school. His father set an example of hard work.

At Waimea College his school certificate marks topped the country in 1960. At Canterbury University he majored in French, English and mathematics. Economics came later.

With first class honours in French he joined the Ministry of Foreign Affairs and was posted to Brussels. It was the early 1970s, when Britain was negotiating to enter the European Community and New Zealand was trying to preserve some export quotas, remnants of a colonial economy.

Married with three children, Kerr did not seek another overseas posting. In 1976 he transferred from Foreign Affairs to the Treasury where economic policy was turning away from the post-war Keynesian consensus under the pressures of oil crises and stagflation. Monetarism and markets were the coming solutions.

Treasury advice was largely ignored by Muldoon who stalled inflation with wage and price controls and eventually a complete freeze. By 1984 the pressure of suppressed inflation was straining the fixed exchange rate and a snap election triggered a run on the currency. The crisis put the incoming Labour Government on its course of rapid reform.

When Kerr was hired by the Roundtable, a new Labour MP, Peter Nielsen - fresh from the Treasury himself - sent Kerr his congratulations, adding, "I hope you can convert them to capitalism."

Business in New Zealand was accustomed to protection and licensed market shares. Competition was considered "cut-throat". Kerr's job was to explain to them that the national interest was not the sum of their self-interest, that a competitive economy build on a level playing field would be of more value than any selective favours they were accustomed to seeking from governments.

Lobbying in the usual sense was over. The Roundtable "lobbied" in public, publishing papers and submissions on policies it advocated for the good of the economy overall.

Thanks to the Roundtable, noted former Act MP Stephen Franks this week, "essential reforms in New Zealand were made immeasurably easier by the relative absence of intractable opposition from vested business interests."

In the years of reform, Kerr was always a few steps ahead. He found the Lange Government's programme deeply flawed by its failure to the labour market. Union bargaining and national awards still dominated annual wage rounds when Labour lost office in 1990.

The National Government wrote the Employment Contracts Act permitting individual and workplace bargaining.

While Ruth Richardson was at the financial helm, National also cut welfare spending and ended a long era of deficit budgets.

Surpluses through the rest of the 1990s brought down public debt and allowed tax rates to be reduced - but Kerr had ceased celebrating.

The only reliable tax cut was a spending cut, he said, and after Richardson's dismissal, spending was rising again.

Nevertheless, the economy grew strongly from 1993 to 1997, faltered over the Asian currency crisis in 1998, then resumed steady growth until 2008. For 15 years the budget was in surplus and the public debt dropped to negligible proportions.

Meanwhile employment grew to a point that the economy suffered a labour shortage.

But Kerr continued to worry about the inexorable rise in government spending, even when doctors, teachers and other branches of the public sector were constantly complaining about "cuts".

When Labour came back to power Helen Clark made a point of excluding him from her economic conferences. But she could not exclude his influence. The "knowledge wave" did not dare pick winners.

The 2008 recession vindicated his warnings about rising public spending. The Budget went deep into deficit and the present Government has been borrowing the difference.

Kerr was diagnosed with metastatic melanoma a year ago, "a pretty deadly cancer" as he described it. In this year's Queens Birthday honours he was made a Companion of the New Zealand Order of Merit, "for services to business".

He was never in the service merely of business, he served the national interest as he saw it. He saw it more clearly and consistently than perhaps anybody else. He was a rock for navigators of governments. They wanted to keep their distance from the disciplines he advocated but they took their bearings from him.

His influence will live on in good public policy, good manners in debate, courage to stand up for unpopular principles, the efficient allocation of economic resources and care for the country he loved.