Govt last unified a year ago

Press, 17 December 1988, Page 8

Govt last unified a year ago

By PATTRICK SMELLIE It is a year to the day since the Lange Labour Government last looked truly unified. Seven Cabinet Ministers stood together on the podium at the Beehive on December 17, 1987, and announced a package of wide-ranging measures — the centrepiece of which was a flat tax rate and a new low-income support package to be called Guaranteed Minimum Family Income. Yesterday, the architect of that tax package, the sacked Minister of Finance, Mr Douglas, was still making the same speech he was

making a year ago to try and sell the package to the public. The tax reforms were announced as the forefront of a “world-wide movement to restructure tax on a fairer and more humane basis which greatly increases the incentives for job creation and economic growth.” They were represented as “far and away the most important changes in the structure of taxation in New Zealand that we have seen in this century.” The package was Mr Douglas’s last big dream. He would have retired happy had it been imple-

mented. The plunge in business confidence caused by the sharemarket crash gave him the opportunity to act, while his fear of costly or impractical recommendations by the Royal Commission on Social Policy drove him to try to dominate social policy in Labour’s second term. But even as the Ministers took the stage, the seeds of Mr Douglas’s sacking were sown. Key Ministers, including the Minister of Health, Mr Caygill, and the Minister of Social Welfare, Dr Cullen, were angered by Mr Douglas’s intrusion without consultation into their portfolio

areas. Despite his promise to the Minister of Finance to come back after Christmas and sell the package, the Prime Minister, Mr Lange, also harboured deep reservations, which led him to unilaterally stop the tax and income maintenance proposals. What was intended to be the boost to confidence the country needed, combined with more impotant economic reforms, turned into what a year later looks like the issue which could be the end of the fourth Labour Government.