22 Sep 2016

Whatever happened to Think Big and Rogernomics?

From Jesse Mulligan, 1–4pm, 2:22 pm on 22 September 2016

Forty years ago New Zealand was being rocked by external economic forces.

Clyde Dam

Clyde Dam Photo: Wikicommons

Once one of the richest nations in the world, the collapse of wool prices, oil price shocks and Britain’s entry into the European Common Market had left the country’s economy reeling.

So how did the government respond to these existential crises? It thought big.

Geoff Simmons, economist at the Morgan Foundation assesses some of the economic policies of the past and asks how do they look with the benefit of hindsight?

New Zealand was a different world in the 1970s. The government was more heavily involved in the economy.

You couldn't import goods or take money overseas without permission and the top tax rate was 66 percent – unemployment was very low however.  

But New Zealand was struggling to pay its way in the world, its exports were not earning enough to pay for what the country needed.  

Think Big was a response to that.

One of its main aims was to reduce the country’s dependency on expensive foreign oil.

In the late 1960s offshore gas was discovered in Taranaki and by the 1970s New Zealand had more gas than it could possibly use.

Think Big gave the nation methanol plants, petrol plants, the Marsden Point Oil Refinery, the electrification of the main trunk railway in the North Island and the Clyde Dam on the Clutha River.

After Think Big came Rogernomics and the ‘Mother of All Budgets’ - how do those monetarist policies of the 1980s and 1990s look now?