Roger Douglas on Rogernomics and the reshaping of New Zealand's economy

what happened

Sir Roger Douglas, New Zealand's former finance minister, reflected in an interview with 1News on the reforms of the mid-1980s known as «Rogernomics». He recalled that in 1984 the country was close to bankruptcy, and David Lange's government began changes right after the election. The New Zealand dollar was floated, markets were deregulated and state assets were sold.

In 1986 a goods and services tax (GST) was introduced at a flat rate of 10%. Douglas defended the tax, arguing it allowed income taxes to be cut. The reforms carried a cost, with many industries disrupted and jobs lost, and in 1988 Lange dismissed Douglas as finance minister. Douglas himself says the changes were only half completed.

He later helped found the ACT Party in 1994 and said he would like to do more for the country's economy.

why it matters

For markets this is mainly historical: the piece contains no new decisions, data or forecasts. It helps explain why the liberal economic model and the floating currency of New Zealand remain part of the long-term background for assessing the New Zealand dollar.

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