NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Economy

Sir Roger Douglas: Our rock-star economy faces the music

By Sir Roger Douglas
NZ Herald·
24 Sep, 2018 05:00 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

We are going to have to make choices in increasingly difficult economic circumstances and we need to put the country before politics.

We are going to have to make choices in increasingly difficult economic circumstances and we need to put the country before politics.

Opinion

COMMENT: The New Zealand economy under John Key was once described as a rock star. If that was ever right (and it wasn't), then the rock star is tottering around on stage and in danger of falling off it altogether.

Government debt to the retired and existing workforce exceeds $700 billion for income and health. The real cost of healthcare is expected to rise from today's $18b a year to $108b in 40 years. As well, retirement pensions are likely to increase from $14b today to more than $50b.

Unless productivity growth increases at twice its present rate over the next 40 years (a nice thought but it's not going to happen), future governments will have to make massive reductions in other areas, including education, to avoid bankruptcy.

So what can we do? The answer is relatively simple but requires enormous courage.

A good starting point would be to reduce government expenditure by $8b-$10b. Achieve this, and we have the money necessary to reform the welfare system in New Zealand. All we have to do is get rid of the privileges and bribes our most recent leaders - Clark, Key and Ardern - have bestowed on affluent New Zealanders at the expense of low-income earners.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

Among those privileges are corporate welfare (to Peter Jackson etc), tertiary education (interest-free loans, subsidies, free tuition), Shane Jones' slush fund, KiwiSaver subsidies and a NZ Super Fund that is no longer needed. Throw in an excessive emissions trading system and pensioners' power subsidies and we have unnecessary expenses in the region of $10b.

We can also adopt much better ways to allocate welfare spending in a number of significant areas, including $9b currently spent on health and unemployment, the $4.5b individuals put into KiwiSaver and health and the $10.5b employers have to spend on ACC, KiwiSaver and other super payments as well as taxes that are too high.

Make this spending available and we free up $32b-$34b for the kind of reform that would really make a difference. Here is a brief summary of what we can do, followed and assessment of social and economic outcomes.

Instead of the KiwiSaver scheme, it is proposed that 12c in every dollar of earned income up to $54,000 a year (indexed to inflation) goes into a retirement savings account. For someone entering the workforce aged 20 or below, this would produce $1m ($2m for a couple) at retirement.

This would deprive the Government of an estimated $11b, ie one third of the money available from doing away with those excessive expenses.

Discover more

Economy

Fears of big crash as global debt soars

03 Sep 10:36 PM
Official Cash Rate

The ugly truth about our household debt

17 Sep 07:06 AM
Business

NZ annual current account deficit widest in nine years

18 Sep 11:27 PM
Economy

Experts: Next recession will be 'worse than Great Depression'

24 Sep 03:34 AM

It would be interesting to see what voters would prefer - $1m plus today's pension for them on retirement, or stay with the bribes Clark, Key and Ardern have in place for the rich.

For health, a complete overhaul of existing policy is required. One approach would be for every working New Zealander to receive up to $8750 per annum (indexed). This money would be placed in a personal dedicated health account, out of which payments would be made for insurance covering health costs of up to $20,000 (indexed) a year and a contribution to a chronic illness fund.

Advertisement
Advertise with NZME.

This would cost the government budget $14b a year. New Zealanders who did not fall chronically ill could be expected to retire with $150,000 or more in their health and care account after 25 years in the workforce.

Healthcare productivity under that system would be likely to increase by 40 per cent over 20 years given Singapore's experience with a similar approach.

We should also set up individual out of work accounts, covering sickness, accident or unemployment, replacing existing benefits. Individuals could receive up to $4250 (indexed) a year. Any balance in their fund at the date of retirement would be transferred to their health and care fund. The cost to the government budget is estimated at $7b a year.

For eduction, we could issue a tax credit for every child equal to the current cost of public education. These could be spent at any approved public or private school, giving children and their families much greater choice. Schools would have a significant incentive to innovate, creating curriculums that not only meet the needs of their clientele but also the shifting demands of living in the 21st century.

We have to decide as a nation what we are going to do. What we have done before is not important. We are going to have to make choices in increasingly difficult economic circumstances and we need to put the country before politics.

Our overall objective should be to promote and protect the freedoms and welfare of all New Zealand citizens. I believe that with courage and an open mind we can do this.

Advertisement
Advertise with NZME.

• Sir Roger Douglas was a Labour MP and Finance Minister from 1984-88.

Save

    Share this article

Latest from Economy

Premium
Retail

Winter chill boosts spending as Kiwis go clothes shopping

Premium
Business

Emails reveal Willis wanted Budget lock-up to be more restricted

Premium
OpinionSasha Borissenko

Sasha Borissenko: Is gig work freedom or friction?


Sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

Advertisement
Advertise with NZME.

Latest from Economy

Premium
Premium
Winter chill boosts spending as Kiwis go clothes shopping
Retail

Winter chill boosts spending as Kiwis go clothes shopping

Consumers splashed out on winter apparel in June, but hospitality spending fell.

14 Jul 12:32 AM
Premium
Premium
Emails reveal Willis wanted Budget lock-up to be more restricted
Business

Emails reveal Willis wanted Budget lock-up to be more restricted

13 Jul 05:00 PM
Premium
Premium
Sasha Borissenko: Is gig work freedom or friction?
Sasha Borissenko
OpinionSasha Borissenko

Sasha Borissenko: Is gig work freedom or friction?

13 Jul 12:01 AM


Solar bat monitors uncover secrets of Auckland’s night sky
Sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

06 Jul 09:47 PM
NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP