1. NZ Asset Sales - The Heist That Keeps On Giving

Political Showcase Aotearoa - 13th November 2025

Rogernomics, Ruthanasia and the original smash-and-grab

Once upon a time, in a small, smugly prosperous country at the bottom of the world, we had almost no foreign debt, close-to-full employment and state assets coming out our ears. Then in the late 1970s and early 1980s we did our level best to wreck it.

Robert Muldoon tried to run the entire economy from his desk. Wage and price freezes, heavy overseas borrowing, “Think Big” projects, a fixed and overvalued dollar held up with sheer stubbornness and IOUs. It worked, right up until it didn’t.

By 1984 we had a nasty mix - a current account deficit, a government deficit, rising public debt and a currency that everyone knew was overvalued. Markets expected a big devaluation if Labour won. Muldoon, never one to back down, called a snap election, refused to move the exchange rate and dared the world to blink first.

The world did not blink.

Money fled. Traders dumped the New Zealand dollar. There was a full-blown run on the currency. Officials begged Muldoon to devalue. He refused. The foreign-exchange market was literally shut down for days. We did not just have an economic crisis, we had a constitutional one. An outgoing Prime Minister refusing to act, an incoming government without formal power yet, and a currency collapsing in between.

When Labour finally took office, David Lange and his incoming team walked into Treasury briefings that described a fiscal and external crisis in technicolour. The new government promptly devalued the dollar by 20 percent, opened the books and told New Zealand that things were far worse than anyone had admitted.

They were not wrong about the mess. But this is where the story bends.

What we actually had was a very real currency and balance-of-payments crisis, layered on top of Muldoon-era fiscal stress. What we then got sold was a much bigger narrative - that the entire post-war economic model was broken, that the state itself was the problem, and that the only cure was radical surgery with a chainsaw.

Enter Roger Douglas, Treasury’s favourite son, with a plan that made the IMF look timid. Instead of carefully fixing the structural problems – tax, productivity, governance of state assets – we drove the car off a cliff and sold the wreckage for parts on the way down.

They called it reform. We called it Rogernomics. Overseas they called it “the New Zealand experiment”. When economists describe you as a “laboratory”, it usually means somebody forgot to label the poison.

The script was beautifully simple.

Step one - declare that we are broke, not just in trouble. Emphasise the deficits, underplay the assets. Talk about crisis in a way that makes everything negotiable. If people are frightened enough, even selling their own furniture can be reframed as “tough but necessary”.

Step two - corporatise everything that moves. Government departments that had once been about service were rebadged as State-Owned Enterprises and told to behave like private firms. Railways, Post, Forestry, Electricity. The New Zealand we grew up in was put on a conveyor belt and processed into saleable units.

Step three - sell.

Between 1984 and 1999 we flogged off roughly $19 billion of public assets. Per person, we privatised more than Thatcher’s Britain or Reagan’s America. We did not just sell the family silver. We sold the cutlery drawer, the table, the chairs, the roast recipe and the house, then took out a mortgage with an Australian bank to rent the kitchen back.

The sales were marketed like a cross between a patriotic duty and a Lotto draw. “Mum and dad investors” were invited to buy shares in what they already owned.

The problem was that most mums and dads were still dealing with mortgage shocks, job losses and interest rates in the high teens. Funny how they forgot to mention that in the prospectus.

The people who did have spare cash – brokers, finance houses, corporates here and overseas – did just fine.

Meanwhile, on the ground, “efficiency” meant whole towns were wiped off the map.

Railway workshops closed. Forest workers were let go in their thousands. Clerks, linesmen, depot staff, maintenance crews – the people who kept the country physically functioning – were given a cardboard box and a pep talk about opportunity.

Entire communities were told to reinvent themselves as tourist stops or artisan cheese hubs. Some did, many did not. The rest joined the new underclass we politely called “long-term unemployed”.

Then Ruth Richardson arrived with the Mother of All Budgets and a helpful nickname - Ruthanasia. If Rogernomics had been the experimental surgery, Ruthanasia was the bit where the anaesthetist walks out halfway through to save money on gas.

Richardson’s 1991 budget combined brutal welfare cuts with another wave of asset sales and labour law changes. The theory was “labour-market flexibility”.

The reality was that people whose jobs had already gone now had their benefits cut and their bargaining power smashed. Child poverty spiked, foodbanks became normal, and somehow this was all sold as “getting the incentives right”.

The original crisis – the run on the dollar, the closed FX markets, the ugly numbers in the Treasury briefings – became the all-purpose justification.

Yes, Muldoon’s mess needed cleaning up. But not every clean-up requires burning the house down and selling the section to the nearest speculator.

We were told asset sales would slash debt, increase efficiency and lower prices. What they actually did was shift a vast chunk of wealth from public to private hands. We traded steady dividend-paying monopolies for one-off cheques, then watched the new owners extract profits for decades.

America, running its own Reaganomics experiment, kept Amtrak, strategic oil, much of its power grid and key social programmes. Britain kept the NHS and the BBC and has spent the last decade dragging bits of water and rail back into public control.

We sold our airline, our rail tracks, our forests, our strategic gas and most of our banks. In return we got… still-significant public debt, higher prices and a Masters-level course in regret.

But the damage was not just economic. We went from being citizens with a shared stake in essential systems to “customers” buying services from companies whose logos kept changing. Some of those companies we used to own. Now we get a loyalty card and a helpdesk chatbot instead.

By the late 1990s voters had had enough. Labour was thrown out in 1990. National got hammered mid-decade. There were protests, riots in Wellington, demonstrations up and down the country. Then the fog settled.

Helen Clark and Michael Cullen came in promising a kinder, more decent politics. And to be fair, they did soften some edges – Working for Families, investment in health and education, a bit more money at the bottom. But the asset sales themselves. Those stayed sold.

Around 95 percent of the Rogernomics/Ruthanasia programme was left intact. Cullen’s famous surpluses were, in part, dividends from the assets National had tried but failed to privatise.

It is hard to unwind a heist when both major parties are now living comfortably in the renovated house.

That is why the 1984 “fiscal crisis” matters so much to this story. Yes, there was a genuine shock. Yes, Muldoon left a booby-trapped economy. But the crisis became more than a moment. It became a permanent state of mind.

A story we were told about ourselves - that we were reckless children who had to be disciplined by markets, that we could not be trusted with our own assets, that the adults in Treasury and the Beehive would handle things from now on.

Forty years later we are still paying the bill from that framing. The decisions made in the name of that crisis still shape your power bill, your rent, your bank fees and your kids’ prospects.

We were told it was medicine. Turns out it was just the rich picking our pockets while we were distracted by the monitor beeping in the corner.

The crisis ended. The heist did not.

Part 2 tomorrow.

Please join the conversation. There’s a lot to talk about and I’d love to hear your perspective, even if it differs from mine.

john.luxton@regenerationhq.co.nz l +64 275 665 682 l www.regenerationhq.co.nz/contact