Douglas on Lange: ‘We’re not sure where he’s going’

Press, 28 December 1988, Page 12

Douglas on Lange: ‘We’re not sure where he’s going’

Oliver Riddell,

of our Parliamentary office,

presents a second extract from the dossier prepared by the former Minister of Finance

WHEN Mr Roger Douglas was sacked as Minister of Finance on December 14, it was the culmination of a year in which his relationship with the Prime Minister had begun badly and got worse. Mr Lange canned Mr Douglas’ flat tax and income support proposals on January 28, so overturning the economic package of December 17, 1987, which was to be the cornerstone of the continuing charge towards economic reform.

On November 7, after the sacking of his closest ally — Mr Richard Prebble — from the Cabinet, Mr Douglas tabled a 115-page dossier for his Cabinet colleagues. The parts of this dossier “The Press” has obtained, show that as early as January 21, Mr Lange was threatening to sack Mr Douglas if he did not concur with changes to the December 17 package. As the relationship between them grew worse during the year so did Mr Lange try to restrict Mr Douglas. Another part of the dossier compiled by Mr Douglas shows how this had progressed by mid-year. The following presents extracts from that part of the dossier:

August 29: Mr Lange to Mr Douglas “I have been giving careful consideration to the allocation of responsibilities within Cabinet. “I would like you to relinquish the post of Minister of Finance and appoint you to a newlycreated position of Minister of Economic Affairs. That Minister will have the responsibilities of the Minister of Trade and Industry, and in due course the responsibilities of the Minister of Commerce.

“There will, in addition, be responsibility for the New Zealand Debt Management Office of the Treasury and for the work of an augmented Economic Development Commission.

“What this would mean, in effect, is a separation of the advice and implementation functions of economic policy. “The appointment will allow you to act as the catalyst of economic policy, in which role you have undoubtedly been responsible for the Government’s most substantial achievements. It is due recognition of your contribution to the standing of the Government.”

(The next week-end — from September 2-5 — the Labour Party’s annual conference was held in Dunedin. It was a personal triumph for Mr Lange. (He got the president of his choice against the more Leftwing Mr Jim Anderton, and with the help of Right-wing as well as Centrist delegates he was able to turn back the tide of Left-wing policy where he wanted to. He

returned to Wellington with his position as Prime Minister strengthened.) September 5: Mr Lange to Mr Douglas “I wanted to let you know that I intend to announce the reallocation of Cabinet portfolios by noon tomorrow. I would like you to accept the offer I made to you (in the August 29 letter). “It seems to me, as I made plain to the conference, that there are great opportunities ahead of the Government. I am certain that your appointment as Minister of Economic Affairs would be an essential element in the measured, reflective approach to economic management of which I spoke at the conference.

“I am of course aware that you may decide that you will not serve in the Cabinet in any post other than that of Minister of Finance.

“I would naturally, if regretfully, abide by your decision but I remain hopeful that it will not come to your resignation. “I believe you have the character and the commitment not to walk away from the Government of which you are so much a part, nor by your departure appear to put your own position ahead of the interests of the Government and the economy as a whole. To do so would be to put at risk the achievements with which your name will always be so closely linked.”

September 5: speech notes prepared by Mr Douglas for Cabinet on September 6 “What I want to say to you is not what I have been forced to say to the Prime Minister. Very simply, I think the situation we are in represents a monumental blunder. It should not have happened. “I am quite angry because I

think I have been manipulated. You have been manipulated; the conference last week-end has been manipulated — for ends none of us want. “Take the conference. Who won the vote for David Lange against Jim Anderton? The ordinary branch members who have supported all of us and supported me right through this four years.

“The Prime Minister made a speech that endorsed everything we have done. I give him credit — he did not back away from anything we have done. “He made his grand speech on our backs as a Cabinet, on the work we have done. But he is not claiming the victory as ours; he is claiming it as his. He is not consolidating on what he achieved (at the conference), he is tearing it apart.

“It does him no credit whatsooever that he planned the strategy of that speech, not to achieve a unified party, which he seemed to want, but to give him a position from which he thought he could safely do this today. (Then follow six paragraphs which have been crossed out and which Mr Douglas may not have delivered at the Cabinet meeting).

“The Prime Minister has not ever cleanly confronted us with what he is on about. He has never been up-front on what he wants or where he is going. Instead, you wake up in the morning and find his staff have been leaking again, undermining confidence in us and our policies.

“Some journalist comes and tells you there is a strategy running that is going to put a bomb under you next week — the 5... is going to hit the fan, the markets are going to be upside down again. “You send in your advisers to help keep the damage out of the speech. Nobody listens. Cabinet is never told, never consulted, until after it’s happened when it’s too late. We daren’t try too hard to mop up the damage because it might put us in conflict with the Prime Minister. “We’re not sure where he’s going because he does not spell out clear targets or objectives. Instead, in an election, he launches a major social policy initiative when he hasn’t got a social policy (but) just a gut feeling that people want to hear about social policy. “He insists on a Royal Com-

mission which nobody wants, so that none of us Labour Ministers can come to grips with social policy because it might pre-empt the Royal Commission. A year later the Royal Commission dumps a tombstone on us and we still haven’t got a social policy.

“He announces out of the blue that what New Zealand wants is a breather and a cuppa tea. Can the meat industry with its problems stop for a breather, and where does that leave the farmers?

“Suddenly the Prime Minister is saying the level of unemployment is unacceptable. Well, great. But has he got a better policy? No. The fact is, we know if we want investment and employment we have to hold the ship steady through this rough patch.

“We have to go through the storm and bring people out the other side. We can do that only if we continuously give them the confidence to hang in there. They will not and cannot have confidence if the captain keeps jumping over the side because he thinks the ship is sinking. That scares half the passengers into jumping overboard too. “You may think that confidence is low in the country and in business right now. But let me tell you, if we do what he is proposing, you ain’t seen nuthin to the mess you will see. “I am not personally ambitious. I do not want to be Prime Minister. But I have a responsibility to a whole lot of people whose livelihood and whose jobs are on the line if we stuff it up. “If you think there are better policy ideas, let’s face that as a Cabinet and thrash it out. I am not dogmatic in the face of evidence, or if the Cabinet wants to tell me I am wrong. We can work through that if we need to. I don’t have a problem with it.

“But what we have in this letter is not good Government. It’s not even good comic opera. It’s just the wackiest way to do things that I ever saw come onto a Cabinet table.” (“The Press” has learned that at the Cabinet meeting on September 6 those speaking notes were prepared for, Mr Lange offered a compromise. Mr Douglas would become Minister of Economic Policy and Mr David Caygill would become Minister of Revenue and Expenditure. Mr Caygill said he would agree if Mr Douglas agreed. Mr Douglas would not agree. (So Mr Douglas continued as Minister of Finance until December 14, when he wrote to Mr Lange saying he would not serve any more as long as Mr Lange was Prime Minister, upon which Mr Lange sacked him from the Cabinet altogether.)