The time that Roger Douglas was right

Written By: - Date published: 10:30 am, May 21st, 2022 - 39 comments
Categories: act, Media, roger douglas, superannuation - Tags:

Brian Gaynor died this week.  He was a quite exceptional reporter and writer.  He has this very clear way of expressing himself and analysing complex situations.  He was a business reporter rather than a political reporter but his writing covered issues of wide interest.

Patrick Smellie said this about Brian:

His columns on a Saturday morning were required reading for every investor and for anyone who wanted an investor’s money.

He was the small investor’s champion, a campaigner for a fairer but also more vibrant investment environment, and very often the scourge of the top end of town for expressing views that were often unpopular, iconoclastic and emphatically expressed.

Brian was a man whose preference was to call a spade an extremely poor shovel.

There was rarely any doubt about where you stood with him. His standards were as high as his generosity to the people, causes and businesses he decided to back.

Gaynor presented a business focused view of the world but it was presented in such a community centric way.  If business served community then it was doing the right thing.

Through Twitter I stumbled on this column that Brian wrote in 2008 where he talked about the repercussions of the 1975 election and the dismantling of the Roger Douglas (yes him) Superannuation scheme.  His analysis was exceptional and very clearly expressed.

https://twitter.com/bex_stevenson/status/1527430613304676352

In the article Gaynor said this:

Sir Robert Muldoon painted Labour’s fledgling super scheme as a step on the way to turning New Zealand into a Soviet clone.

A dreadful political decision, announced on December 15, 1975, transformed New Zealand from the potential Switzerland of the Southern Hemisphere into a low-ranking OECD economy.

Without this decision we would now be called “The Antipodean Tiger” and be the envy of the rest of the world. We would have a current account surplus, one of the lowest interest-rate structures in the world and would probably rank as one of the top five OECD economies.

And what would have happened?

We would still own ASB Bank, Bank of New Zealand and most of the other major companies now overseas-owned. Our entrepreneurs would have a plentiful supply of risk capital and would probably own a large number of Australian companies.

Most New Zealanders would face a comfortable retirement and would be the envy of their Australian peers. The Government would have a substantial Budget surplus and we would have one of the best educational and healthcare systems in the world.

Roger Douglas was an early supporter and cheerleader of the scheme.  In fact it could be claimed that he was the scheme’s instigator.  His Wikipedia entry says this:

Douglas was an early and enthusiastic promoter of the government’s plans for a compulsory contributory superannuation scheme that would supplement the old age pension. In 1972, while still in opposition, he introduced a private member’s bill that provided for a form of compulsory superannuation. In Cabinet, Rowling, who was then Minister of Finance, and Douglas were largely responsible for a 1973 White Paper setting out the government’s proposals for superannuation. As well as augmenting individual provision for retirement, the scheme was intended to be a source of capital for investment in the domestic economy.[14] The scheme became law in the form of the New Zealand Superannuation Act 1974.

Muldoon killed the scheme.  National campaigned using dancing cossacks and obscure claims that worked on scaring the population.  It worked and a National Government was returned although in the days of FPP a well performing Values Party did not help.  I have not witnessed such mass electoral gullibility since then although I am worried about the current situation because National is displaying the same ideological refusal for the state to do anything.  And the same use of anger and opposition to the Government doing anything.  Progressives campaign best using hope.  For conservatives the best campaign techniques involve anger and fear.

Since 1975 National has followed a similar approach to the collective provision of security.  They opposed the introduction of Kiwisaver and the formation of the Cullen Fund.  Thankfully rather than destroying these schemes they have weakened them.  Ideologically they refuse to accept that the state has a role to look after as many of us as possible.

Douglas obviously started off as a decent human being but then degenerated.  It happens.  But for the reasons that Gaynor provides there was one occasion where I wished policy that Douglas had a huge role in introducing had been protected and sustained.

39 comments on “The time that Roger Douglas was right ”

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  1. SPC 1
    21 May 2022 at 10:39 am

    And then there was an original intent in 1983 – that the reforms implemented 1984-1987 would include an assets tax (he preferred this to CGT).

    Without a CGT, or assets tax, the reform was imbalanced and led to speculative buying rather than investment in the economy. It went even worse when National removed the estate tax (and gift duties on early dispursement) later.

    Of course the best option is a CGT, wealth taxation and estate taxation (which is common in the first world OECD nations).

  2. RedLogix 2
    21 May 2022 at 11:33 am

    When TOP launched a more sophisticated and developed scheme to achieve all of this – the left threw a big fat tribal tantrum.

    Frankly I am beginning to think the best thing we could do for NZ politics getting rid of political parties altogether.

    • pat 2.1
      21 May 2022 at 11:54 am

      I used to hold that view (still do in many respects) but always struggled with how policy would be formed….a lot a time and resources needed.

    • mickysavage 2.2
      21 May 2022 at 12:03 pm

      The right would have a field day. Just look at what is happening in Australia if you allow "ideology free" politics to operate.

    • KJT 2.3
      21 May 2022 at 12:05 pm

      "The left threw a big fat tribal tantrum".

      What is "The left". You keep talking about?

      Some on the left criticized it. Fairly in my view.

      Morgan's heart is in the right place. But his solutions are coloured by a rather conventional economics perspective.

      Parties, I.E. associations of people who want to get certain policies enacted will always coalesce together. Regardless of what you call them.

      Of course actually having Democracy would make parties less relevent.

      • Incognito 2.3.1
        21 May 2022 at 12:17 pm

        Parties, I.E. associations of people who want to get certain policies enacted will always coalesce together. Regardless of what you call them.

        Do we like or want ‘political cartels’ in the House of Representatives and have ‘political oligopolies’ dominating debates & decisions?

        Party structures are embedded in NZ Parliament and intrinsic to how it operates. Is that a good thing?

        • KJT 2.3.1.1
          21 May 2022 at 12:59 pm

          I don't think it is a good thing.

          But. It is going to happen regardless.
          Like minded groups always club together to get what they want.

          More democracy tends to ameliate the effects somewhat..

          • Incognito 2.3.1.1.1
            21 May 2022 at 1:47 pm

            Ok, but what does “more democracy” mean? Does it mean more transparency, more accountability, more consultation, more referendums, lower party vote threshold, more participation, or something else? In other words, tweaking & tinkering with the current system or a more fundamental structural difference?

        • AB 2.3.1.2
          21 May 2022 at 2:23 pm

          Parties are coalitions of similar real-world interests. We can try to pretend these interests don't exist – as we did for years in local body politics and still do to a lesser extent. When someone claims to be "independent" in local body politics it is necessary to parse their usually inane and badly-written 'bios' looking for keywords and phrases that indicate a left or right disposition. There are trigger words that indicate that "this guy's a Nat", for example. It is bad for democracy and essentially deceitful.

          A party label gives a sense of the general underlying worldview of an individual. I vote (or don't) for people based on what I take to be that background worldview – and can't make satisfactory decisions about individuals I don't know without a party label. I am not swayed by them having a nice smile or great hair. (Though to be fair, if someone has no hair combined with an ideology I detest, then the no hair does becomes an additional 'thing'.)

          Unless we are talking some form of direct democracy where we don't elect representatives at all, I think parties are on balance better than the pretense that coalitions of interests don't exist.

          • pat 2.3.1.2.1
            21 May 2022 at 3:24 pm

            "A party label gives a sense of the general underlying worldview of an individual"

            It may have once crudely…Labour the party of workers, National the Party of business, NZ First the party of nationalists, Maori Party the party of Maori interests, Greens the party of the environment, ACT the party of minimalist government.

            With the exception of perhaps the Maori Party they are now all parties of the conflicted….they are all however one thing, parties that seek power over the populace.

          • Incognito 2.3.1.2.2
            21 May 2022 at 6:24 pm

            Thanks, that’s a good comment I can do something with.

            I dread the Local Elections because I have to wade through numerous individual ‘mini-manifestos’, which are often next-to-useless to make an informed decision. I never vote for candidates with unclear ambiguous wishy-washy profiles and what they might be standing for.

    • Incognito 2.4
      21 May 2022 at 12:11 pm

      Frankly I am beginning to think the best thing we could do for NZ politics getting rid of political parties altogether.

      I have often wondered too about an alternative for party politics in so- called representative democracies and parliaments. Banding/grouping together based on ‘personal traits’ or ideologies, assuming mutual interests, comes natural to people. However, by definition this results in in- and out-group behaviour and attitudes, which also come natural to people, which, in my view, leads to artificial division between groups and polarisation of ideas and thus of rhetoric as well. Et cetera.

      MPs seem to be representing their respective parties first and foremost rather than representing the true stakeholders in a democracy, who are the people, of course; are they in it for themselves, for their respective parties (and careers within those parties), or for the people that they supposedly and allegedly represent? Same question can be asked of and about the parties: why do they (still) exist, what genuine purpose do they serve, and what real impact do they make on society that could not have been achieved otherwise and without them?

      For example, in NZ Parliament or rather in the New Zealand House of Representatives, do we have 120 MPs or do we have 5 Political Parties?

      Heresy to ask these sort of questions on The Standard?

      Fodder for OM or another Post angel

      • SPC 2.4.1
        21 May 2022 at 2:02 pm

        You could achieve it by replacing the head of state with an elected head of executive government … and thus have competent people in ministerial office and MP's operating on their Select Committees.

        • Incognito 2.4.1.1
          21 May 2022 at 2:51 pm

          “thus”?? I don’t follow the logic here, please elaborate.

          • SPC 2.4.1.1.1
            21 May 2022 at 3:17 pm

            It's fairly obvious that the talent pool is larger outside a party caucus than within it.

            • Incognito 2.4.1.1.1.1
              21 May 2022 at 3:31 pm

              It may be fairly obvious to you what you mean in both your comments, but not to me, it isn’t.

              You seem to suggest that electing a President (?) will somehow (??) result in having “competent people in ministerial office and MP's operating on their Select Committees.”

              What talent pool are you talking about? Inside a political Party or in the overall population? Are you suggesting that lack of talent in a Party caucus is the sole reason why we may not “have competent people in ministerial office and MP's operating on their Select Committees.”? If so, how would “an elected head of executive government” improve this?

              I don’t think your replies are clear at all, so please explain your reasoning.

              • SPC …
                21 May 2022 at 3:48 pm

                Surely the practice of nations with an elected head of executive government is no mystery?

                Such Presidents can choose anyone to act in Cabinet office.

                In those environs, the parliamentary MP's role (relative to the executive power) becomes that of Select Committee checks and balances on the executive. That, at its best, can result in MP's working across party lines together to hold the executive to account and formulate legislation.

                Which is what you were calling for, MP's working together rather than being divided by party political contest for executive power.

                Which is nice in theory, but apparently some things become harder than they should be ….

                • Incognito …
                  21 May 2022 at 5:07 pm

                  The ‘mystery’ was what you were talking about and what you meant unless you expect mindreading.

                  I’m not aware of examples of such political system and would never have guessed what you were going on about. I still don’t know which or whose theory this is, e.g., is it yours?

                  Can you provide real-world examples?

                  Least of all I follow how the choices & decisions of that one elected person, i.e., of the President, does lead to those alleged improvements.

  3. Anne 3
    21 May 2022 at 12:17 pm

    I have not witnessed such mass electoral gullibility since then although I am worried about the current situation because National is displaying the same ideological refusal for the state to do anything.

    Which is why I, along with many other long-in-the-tooth voters, are so exercised by recent political shenanigans. We can see similarities between the Muldoon regime and today's crop of closed minded, ultra conservative disciples of right-wing strategic thinking straight out of the Muldoon playbook.

    I remember around 6am on the morning after the 1975 election, sitting alone atop of one of Auckland's volcanic cones reflecting on what we had just lost – an assured future. I knew we were going to be the poorer under a Muldoon government. The worst aspect was the fact Muldoon threw out every progressive policy the Kirk/Rowling Govt. enacted and for no other reason than political expediency.

    His MO was to smear everything, and with the help of The Press (the word Media hadn't been invented), to demonise the Labour Govt. every-which -way. And to ensure victory, he promised a totally irresponsible superannuation scheme to every citizen from the age of 60 which was to cripple the country's economic outlook for years to come. Indeed we are still paying the price today!

    Everyone likens Luxon to John Key. He's not a JK clone. He's a re-incarnation of Rob Muldoon but without Muldoon's bombastic characteristics.

    • KJT 3.1
      21 May 2022 at 1:05 pm

      Wasn't it that election, or the next one, where Muldoon gerrymandered into power, on electoral roll votes, despite a minority of the vote.

      • Anne 3.1.1
        21 May 2022 at 2:28 pm

        I think that was 1978 KJT. There were electoral boundary changes prior to that election and the Electoral Commission (not sure it was called that at the time) chose to realign the boundaries of key seats in favour of the National Party. Whether or not Muldoon played a role was never proven, but he was a bully and public servants in particular often found themselves on the sticky end of his disapproval. It was widely believed at the time there had been 'interference' but no inquiry was undertaken to my knowledge and even if it had been, there is no way it would have found against Muldoon and his merry band of bandits – including John Slater who is Cameron Slater’s father.

        Accordingly Labour won the overall vote but did not become the government. It was to take another 15 plus years before MMP was introduced.

      • mosa 3.1.2
        21 May 2022 at 7:15 pm

        Muldoon's landslide in 1975 gave him a majority of 23 which he lost in 1978 and he held only 10.

        His last win in 1981 was tight and he retained the treasury benches with a majority of one after a recount in several seats.

        He limped on to the schnapps election after governing with the assistance of Social Credit and Kirk an independent MP.

        Marilyn Warring’s withdrawal of her vote was his excuse to go to the country early on Bastille day.

    • Sacha 3.2
      21 May 2022 at 2:59 pm

      I have not witnessed such mass electoral gullibility since then

      We have never removed Muldoon's bribe that now swallows over half of the annual welfare budget.

      https://twitter.com/SachaDylan/status/1527426966999035904

  4. Ross 4
    21 May 2022 at 1:33 pm

    I am worried about the current situation because National is displaying the same ideological refusal for the state to do anything.

    National doesn't want the State to do anything? When Luxon talks about changing tax brackets – likely preventing minimum wage earners from paying more tax via a higher tax bracket – that is doing nothing? Or how about gradually increasing the age of eligibility for superannuation? Ironically, it's Labour that doesn't want the State to intervene here.

    • Mike the Lefty 4.1
      21 May 2022 at 2:18 pm

      National talks a lot about what they WOULDN'T do but not much about what they WOULD do – besides cutting income tax and building roads, that is.
      Probably because they wouldn’t actually do anything.

  5. Mike the Lefty 5
    21 May 2022 at 2:28 pm

    The 1972 NZ Super Scheme had one thing substantially different from Kiwisaver – it was government operated and government guaranteed. And that was both its biggest strength and weakness. Its strength was that the profits would stay in NZ and people would not have to worry about what type of fund to choose, where the money was invested, etc. which is beyond the comprehension of a good many Kiwisaver investors.

    But it was also its downfall as it made it easy prey for the National Party conspiracy theory machine which claimed the Labour government was going to buy up all the land – the farms, the factories – mass nationalisation – COMMUNISM!.

    And the sheep believed it all.

    But I hardly share the nostalgia about Roger Douglas (I won't refer to him as "sir" because he doesn't deserve it). He wasn't the only one who advocated it and you can be sure as hell he would have sold it off to overseas interests in the 80s had it still been operating to pay off his and the former government's high debts.

    • pat 5.1
      21 May 2022 at 3:42 pm

      And I believe another difference was the contributions were not personalised….i may stand to be corrected….the projected outcomes may also be somewhat overstated…Norway, despite its oil/gas riches being the bulk of its SWFs is not considered a 'tiger' nor is it the wealthiest country per capita, indeed Ireland ranks higher, and we know about recent events in Ireland.

      Having said that, I think the Rowling option was probably better than Muldoon's, in the long run…..but then I have the benefit of hindsight.

      • Patricia Bremner 5.1.1
        21 May 2022 at 6:55 pm

        We were paid back our personal contribution.

        Pat I once saw Muldoon speak to his wife in the most nasty way. He had a belligerent impatient snarky manner, and he thought he was humorous.

        He tried to control everything, which made a mockery of those ads about cossacks.

        The Right despised him because they saw him as strong on benefits (super), and weak for going cap in hand to borrow from the World Bank.

        The poor were hurt by Britain dropping us for Europe's food basket. He did try to mitigate that, but his austerity mates undermined his price freezes and other efforts.

        However his megalomania grew and became the stuff of Legends.

        The failure to pass the treasury and other tools of Government to the Lange Government, meant a devaluation of 30% was announced by Douglas, was delayed long enough for money to go off shore and then be returned by the well heeled!!.

        It was a total mess.

        • pat 5.1.1.1
          21 May 2022 at 7:14 pm

          I am well aware of the history Patricia….its my life….the questions are around the motivations and outcomes….on reflection I think Muldoon's motivations were better than presented,( at the time I was as anti as most) ….the outcomes were an unfortunate result of timing and circumstance…that dosnt absolve his personality deficiencies.

  6. Ad 6
    21 May 2022 at 4:53 pm

    Australia is now our great wealth alternative history.

    • Blazer 6.1
      21 May 2022 at 7:20 pm

      Australias wealth is reliant on digging it up and selling it….mining!…a U.S satellite that should be renamed..Ausmerica.

    • mosa 6.2
      21 May 2022 at 7:26 pm

      AD very sad but true. What might have been.

  7. Hunter Thompson II 7
    22 May 2022 at 12:55 pm

    Sad to lose Brian Gaynor, as he made a massive contribution to business journalism.

    I always liked his writing for the Herald, where he often exposed the dubious financial dealings of NZ's corporate wide boys. Good too that he wasn't afraid to front them in court.

    If he said shareholders in Company X Ltd were in for an exciting ride, he was really providing a clear warning to would-be investors in carefully coded language.