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Roger Douglas: Visionary Leader

15 December 2006,

Roger Douglas: Visionary Leader

By Roger Kerr

Last month's Deloitte/Management magazine awards included for the first time a category of 'visionary leader'. The award went to Sir Roger Douglas, finance minister from 1984 to 1988 in the reforming Lange-Douglas government.

Two things about the award are of immediate interest.

First, when Douglas's name was put forward to the judging panel there was apparently unanimous support for it.

Second, the announcement to the audience of 800 was met with warm and prolonged applause.

Such a reception 10-15 years ago would have been unthinkable - more likely there would have been hisses and boos.

Douglas, in the opinion of the judges, is the politician who, in the past two decades, has had the most impact on the business community and the country.

They cited as among his achievements the dismantling of external trade barriers, the floating of the dollar, the establishment of a framework for stable monetary and fiscal policies, internal deregulation to force more competition into the New Zealand economy, and the reform of the public sector (including the corporatisation and privatisation of many state-owned businesses).

"In their earlier incarnation a huge drain on the taxpayer", said the judges, "they are now virtually all profitable, taxpaying, dividend-paying, standalone enterprises."

Douglas's reforms, complemented by stronger fiscal discipline and the freeing up of the labour market in the early 1990s, produced today's more efficient and flexible economy.

Instead of the high inflation, stagnant growth, mushrooming public debt and growing unemployment of the 1970s and early 1980s, New Zealand has enjoyed until recently a lift in its productivity growth rates that has matched Australia's, low inflation and unemployment, a high credit rating with prudent levels of public debt, and widespread improvements in per capita incomes.

The changes were painful for many businesses and families, and the reform programme was far from perfect - for example, the Labour government's failure to free up the labour market due to union resistance unnecessarily increased unemployment.

But perfection is an unrealistic standard in democratic politics; on any reasonable measure, New Zealand's reforms score highly for both their conception and execution.

According to the judges, Douglas gave the country something that was "in line with a vision that most people - in fact more and more people - look back on now thankfully.

"Many people opposed his policies, whether they were farmers or in corporations. Only a few leaders of companies said that they would back him."

Contrary to claims that the changes were forced on an unwilling electorate, the inconvenient truth is that the Labour government was returned in 1987 with an increased majority. It campaigned on a promise to finish the job. David Lange's subsequent abandonment of Douglas put an end to policy coherence, weakened business confidence and the economy, and ultimately led to the fall of the Labour government.

"What was extraordinary about [Douglas] was that his vision transcended political parties", said the judges. "The fallout from that has changed the political face of New Zealand as well."

One measure of the change is the shift in the policies of all political parties, reflecting changes in public opinion. In the early 1980s almost all our political parties espoused policies similar to those of the former Alliance. In the 2002 election the Alliance disappeared, winning just 0.7% of the vote.

Some have not appreciated the extent of this shift. The Christchurch Press recently editorialised that Don Brash's retirement from politics marked the "last gasp of Rogernomics". How absurd. Those who would dismantle Douglas's legacy today - Green activist Nicky Hager is possibly one - are on the political fringes.

The true test of a political leader is what they did to make the country a better place, not how long they stayed at the top of the greasy pole of politics.

Keith Holyoake was a prime minister of long standing, but his term of office is now seen as largely a time of lost opportunities, as the country avoided change and drifted into economic difficulties while the rest of the world moved on.

This lesson should not be forgotten. Although there is plenty to criticise about the Howard government's economic management, this year it has gone beyond New Zealand in some ways in freeing up its labour market, cut taxes significantly, fully privatised Telstra and foreshadowed the deregulation of the single desk for wheat exports.

Nothing comparable has happened in New Zealand. The country is clearly not on a path to getting back into the top half of the OECD income rankings; the government no longer even talks about trying to achieve what was once its 'top priority' goal.

In his modest but tireless way, Douglas wanted to be in politics to make a difference. His honourable place in the New Zealand history books is assured. Few politicians since his time seem likely to be able to claim that status.

*********

Roger Kerr is the executive director of the New Zealand Business Roundtable.

ENDS

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