Roger Douglas: Speaking Out

Roger Douglas released: 

ACT’s Founding Principles Have Been Abandoned: Why I Feel The Need To Speak Out Again:

Forty-six years after being sacked from Labour’s front bench, I am speaking out again — this time about the party I helped establish in 1993.

In 1980, Bill Rowling sacked me from his front bench. My crime? I had published a paper outlining my views on economic policy, some of which differed from Labour’s policies at the time.

Why did I do it?

Because speaking out about the policies I believed were vital to New Zealand’s long-term interests was more important than holding a position within the Labour Party.

Forty-six years later, in 2026, I feel exactly the same way.

I cannot sit on my hands and watch the party I helped establish in 1993 threaten New Zealand’s future by abandoning the principles and policies on which it was founded.

The issues at stake today are every bit as important as those that prompted me to speak out in 1980. Now, at 88 and fast approaching 89, I feel the same responsibility to speak up. I will have done everything I can to defend the economic future I believe New Zealanders deserve.

The founding vision of ACT

In 1993–94, alongside Derek Quigley, I helped establish a new political party: ACT.

We believed we had developed a set of principles and policies that could once again make New Zealand one of the wealthiest countries in the world, while improving the lives of New Zealanders across all income levels.

Our vision was clear. As we said in 1994–95:

“It is a new way of thinking, a new way of looking at the relationship between the state and individuals, the state and families. It is a way that will make all New Zealanders of whatever income bracket, racial origin or educational background — all of us — better off.”

We believed these policies could help New Zealand escape a dangerous economic spiral and deliver lasting benefits for individuals, families and future generations.

To see ACT, first under Richard Prebble and now under David Seymour, move away from those founding principles and policies is deeply devastating.

I believe the consequences for New Zealanders deserve to be openly debated.

ACT’s founding principles 1993— and the choices facing New Zealand

The principles on which ACT was established in 1993 included:

• Independence over dependence: Independence makes for a strong society; dependence does the opposite. Prebble (2000) moved Act’s policies of ’independence in the welfare area’ to one of dependence on the government. (At least 50%+ of government spending)
• Long-term thinking: Make decisions for New Zealand’s future, not simply for the next election.
• Responsible public spending: Stop taxing and then spending billions of dollars on people who do not need government assistance. (Wasting billions of dollars on govt administration in the process)
• Welfare reform: Put an end to what I have described as the welfare con game.
• Intergenerational responsibility: Stop accumulating enormous amounts of new debt each year (70billion dollars + this year) and placing the burden on our most vulnerable citizens — our children and young people — at the expense of their rights and futures.
• Competition in government: Competition is just as important in public services (health, education, and welfare) as it is in the private sector.
• Honest public accounting: End the practice of governments exempting themselves from sound accounting principles and misleading the public about their financial obligations.

These were not minor policy preferences. They represented a fundamentally different way of thinking about the relationship between the state, individuals and families.

I believe ACT has moved away from those principles and that vision, and I intend to explain why.

What ACT’s original policies could deliver

The policies Derek and I advocated in 1993–94 were designed to improve living standards, strengthen personal financial independence and address New Zealand’s long-term fiscal challenges.

Among the benefits I believe Act’s 1993 policies could still deliver are: (Act’s current position noted)

• A tax-free income threshold of at least $60,000 a year (inflation proofed). –( Act opposed)
• A credible way to address New Zealand’s substantial debt and unfunded liabilities. - -( Act opposed to policies required to do this).
• A transition to welfare paid in advance, building financial provision for all New Zealanders rather than leaving future generations with unfunded obligations. –(Act/ David Seymour strongly opposed to policies needed to do this).
• A pathway for more than 85 per cent of New Zealanders to retire with savings equivalent to $5 million in future dollars — approximately $1.3 million in today’s dollars — within the next 50 years. – (Act/ David Seymour/Richard Prebble opposed to policies required to do this).
• Increasing retirement savings alongside government superannuation during the transition.
• A gradual reduction in the top personal and company tax rates to no more than 10 cents in the dollar by around 2070. (Act/ Seymour/ Prebble opposed to policies needed to do this).
• A more responsive education system through greater competition within government. ( Act happy with one or two charter schools)
• The elimination of hospital waiting lists through competition in and between the public and private sectors. --Act silent.
• A substantial reduction in poverty through lower personal taxation and greater personal savings. (Act opposed to required policies needed to do this).

These outcomes remain achievable, provided politicians have the honesty, determination and willingness to think beyond the next election and take politics out of superannuation, education, health, and welfare as Act advocated in 1993/4.

However, with ACT, under Richard Prebble’s /David Seymour’s leadership, moving away from Act’s original policies and the very policies that could help us achieve the above goals, nothing much is likely to happen.

These differences deserve scrutiny, particularly as the next election approaches.

ACT’s current policy under David Seymour versus ACT’s original policies: You decide

New Zealanders should have the opportunity to examine the policies, consider the differences and decide for themselves which approach offers the better future.

The first issue is personal taxation.

Act’s 1993 Principle - New Zealanders first responsibility is to provide for themselves and any dependents they have.  They should only pay personal income tax on income over and above what they need to do this.

My policy has always been simple and straightforward:

Working New Zealanders aged 16–65 should pay no personal income tax on their first $60,000 of annual income, with a higher threshold for those with dependants.

Using the figures in my policy calculations, the current income tax saving would be $10,200 a year, plus approximately $1,200 in ACC levies — a total potential saving of $11,400 annually.

The loss of government revenue would be addressed through reductions in government expenditure, including, the use of income generated by the superannuation fund, means testing in specified health, welfare and ACC-related areas, tertiary education funding and various government privileges.

The tax savings would then be directed towards greater personal independence:

• Retirement savings: $6,000 annually, supplemented by an employer contribution of $1,200, giving total annual retirement contributions of $7,200.
• Health savings: $1,200 annually, supplemented by an employer contribution of $600, accumulating with interest if not spent and available for future healthcare needs.
• Income protection and catastrophic healthcare: $4,200 annually, together with relevant employer ACC contributions, to help cover periods out of work and major healthcare costs beyond 6%.

The objective is to give New Zealanders greater control over their own financial futures while reducing dependence on government-funded support.

David Seymour’s Policy No. 1: Opposition to any tax-free threshold

In ACT — The Haps, David Seymour's position is presented as follows:

“It’s a policy ACT once supported by ACT but no longer, and here is why ... a tax-free threshold has to be made up with higher tax rates on higher income.”

Wrong, as outlined above, and as you will see when examining my detailed savings approach, in my next paper, out soon.

I believe a properly designed tax-free threshold, combined with expenditure reform and a system of advance-funded personal provision, can deliver significant benefits to working New Zealanders while addressing long-term fiscal obligations.

My concern is that ACT now opposes both tax-free thresholds and the indexation of tax brackets — measures I regard as essential to achieving the broader benefits of my original policies.

ACT’s current tax and welfare policies. deliberately place a disproportionate burden on lower-income New Zealanders while benefiting those on higher incomes.

That is a significant departure from the party I helped establish.

The long-term benefits of the original ACT policies

In comparison, if implemented today, the policies I advocated in 1994 could, in my view, still provide a pathway towards the following outcomes:

• A fairer tax system: A tax-free income threshold of at least $60,000 a year.
• Sustainable public finances: A pathway towards eliminating unfunded liabilities by 2050.
• Greater retirement security: Retirement savings of around $5 million ($1.25 million or more in today’s dollars for New Zealanders over time).
• Better education: A more responsive education system built on competition across public and private provision.
• Timely healthcare: The elimination of hospital waiting lists through greater competition and more effective service delivery.
• Reduced poverty: Lower personal taxation combined with substantial retirement savings and greater financial independence.
• Sustainable welfare: Billions of dollars in potential savings, alongside the elimination of unfunded welfare liabilities.
• Lower tax rates: A pathway towards a maximum personal and company tax rate of 10 per cent by 2068.

These are long-term goals, not overnight promises. Their achievement would depend on sound policy design, implementation and the willingness to make difficult decisions today for the benefit of future generations, as the Lange Labour Government of the 1980’s did in the economic area. (See my next paper for details).

But that is precisely the point: governments must be prepared to think long term.

The cost of abandoning principle

ACT was established to challenge conventional political thinking, improve the relationship between the state and the individual, and build a more prosperous and independent New Zealand.

I believe the party’s departure from those founding principles since 2001 represents a serious loss of opportunity for the country.

My disagreement is not simply about personalities or political positioning. It is about the economic future of New Zealanders — the taxes they pay, the services they receive, the savings they accumulate, and the debts passed on to their children.

At this stage of my life, I have little to gain personally from speaking out. But I believe I have a responsibility to do so.

In 1980, I was prepared to risk my political position because I believed the policies at stake mattered more than my place on the front bench.

In 2026, I am prepared to speak out again because I believe New Zealand’s future matters more than political loyalty or personal comfort.

ACT’s founding principles and policies deserve to be debated openly. New Zealanders deserve to understand what has changed, why it has changed, and what those changes mean for their future, and why a vote for Act today will not deliver what people want.

I invite New Zealanders to examine the evidence, compare the alternatives and decide for themselves. (Full details, will be in my next paper covering the 50years 2026-2076).

Sir Roger Douglas, as the Labour Government Minister of Finance, was the driving force responsible for the reform of the country's economy from 1984 to 1988. Sir Roger was the founder of ACT NZ and re-entered Parliament in 2008. Altogether he spent 24 years as an MP.