page_title: Roger Douglas
section_title: Lange and Douglas (1984–1989)
hierarchical_section_title: Roger Douglas / Political career / Lange and Douglas (1984–1989)
caption_attribution_description: English: Prime Minister David Lange posts a letter, at the opening of the new Foxton Post Office, 1980’s
context_page_description: Sir Roger Owen Douglas, a retired New Zealand politician, served as a minister in two Labour governments. He became arguably best known for his prominent role in New Zealand's radical economic restructuring in the 1980s, when the Fourth Labour Government's economic policy became known as "Rogernomics".
  Douglas served as a Labour Member of Parliament from 1969 to 1990. During his time as Minister of Finance, the government floated the New Zealand dollar, introduced corporate practices to state services, sold off state assets, and removed a swathe of regulations and subsidies. Some Labour Party supporters regarded Douglas's economic policies as a betrayal of Labour's left-wing policy-platform, and the moves became deeply unpopular with the public and with ordinary party members. His supporters defended the reforms as necessary to revive the economy, which had been tightly regulated under National's Muldoon.
context_section_description: The conflict between Lange and Douglas mirrored the inconsistency at the heart of the government. Lange's talk of consensus and inclusiveness during the 1984 general election campaign echoed Labour's social-democratic history. Douglas personified radical change.
  Lange strongly supported the 1984 budget, and promoted it to party and public. Douglas and Lange were a formidable political combination, both in Cabinet and in public, where Lange's humour and rhetoric complemented the determination and single-mindedness embodied in Douglas's commitment to economic restructuring.
  Lange valued Douglas's doggedness in the government's first term of office, when "urgency was needed and boldness was at a premium", but believed he was limited by an inability to accept or understand interests that were not in tune with his. In 1986, the two took opposing sides in Cabinet debates about the establishment of a royal commission on social policy, which Lange saw as an intellectual counterweight to Treasury. At the beginning of 1987, relations between the Douglas and Lange offices were strained when Douglas and his ally Richard Prebble persuaded Cabinet to reject Lange's wish to accept the resignation of the Minister of Māori Affairs, Koro Wētere, following the Māori loan affair.
  Douglas shocked Lange in April 1987 by telling him that his preferred option for the 1987 budget included a rise in GST from a rate of 10% to 15%, the extension of user charges in public health and education and the sale of most government assets, and the eventual achievement of a flat rate of income tax at 15 per cent. Lange wrote that "it was an unaccustomed addition to the burdens of office to have the finance minister take leave of his senses". After discussions with Lange and senior colleagues, Douglas did not pursue his proposals.
  In the 1987 election campaign, Douglas underlined the need for continuing radical reform, while Lange said that radical economic reform was largely complete. Douglas's appeal to commercial interests was reflected in the large amounts of money (including $250,000 given by Auckland businessman Alan Hawkins) he collected for the campaign from the business community. He did not convey the money he raised to the Labour Party organisation, but chose to manage it himself, allocating funds for purposes like television advertising.
  Lange's campaign was lacklustre, and Douglas appeared to have contributed more to Labour's victory in 1987. Mike Moore, then a senior member of Cabinet, said that Lange had won the 1984 election, but Douglas won in 1987. Labour increased its parliamentary majority. Votes swung to Labour in National's safest seats and swung to National in seats that traditionally voted Labour.
  Immediately after the election, Lange reshuffled the Cabinet without consulting Douglas. He wrote later that he no longer trusted Douglas and wished to use the reallocation of portfolios to put some restraints on him.
  Douglas continued to work on the radical proposals he signaled earlier in 1987. A worldwide fall in share markets in October 1987 gave his work greater urgency. In December 1987, the Cabinet agreed, in spite of Lange's reservations, to a statement of principle that supported a flat rate of income tax and a new form of income assistance called guaranteed minimum family income (GMFI). GMFI was a Douglas initiative and for reasons of urgency he did not inform colleagues of Treasury advice that the proposals were a fiscal risk.
  The announcement on 17 December 1987 of the government's intention to introduce GMFI and a flat rate of income tax marked the high tide of Rogernomics but did nothing to settle growing tension between Douglas and Lange. Douglas refused to accept Lange's contention that his proposals were unworkable. Douglas was in Europe in January 1988 when Lange told a press conference that officials had been unable to resolve the practical difficulties of the flat tax/GMFI proposals and that the government would have to reconsider them. Douglas, believing that he had the support of a majority of Cabinet, immediately return
caption: Labour leader David Lange (pictured) was an early supporter of Douglas's reforms, but became unsettled by the mounting social cost of Rogernomics
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