# Case Study: New Zealand reforms (1984–1994) Back to [[Economic Freedom and Prosperity]] · [[Post Analysis - Handre on Economic Freedom Case Studies (2026-10-23)|Post analysis]] · People: [[People/Roger Douglas]] **What the post says:** from 1984 to 1991 NZ slashed tariffs, privatised, deregulated finance and abolished farm subsidies that had "consumed 40 percent of farm income." After short-term pain came a competitive, diversified economy. ## What the record shows | Item | Finding | Source | |---|---|---| | Who | The Fourth **Labour** Government (1984–90), Finance Minister Roger Douglas ("Rogernomics"). The National government continued from 1990 (Ruth Richardson's 1991 budget) | ◻ | | Finance | NZ dollar floated March 1985. Financial controls removed | ◻ (and @Handre, [Jul 15](https://x.com/Handre/status/2077468370979463453)) | | Farm subsidies | In 1984 nearly 40% of the average **sheep-and-beef** farmer's gross income came from subsidies. Almost all were removed from 1984. The predicted mass exit of farmers did not happen | ✔ [Frontier Centre](https://frontiercentre.org/pdf/lifeaftersubsidies.pdf); [Purdue PAER](https://ag.purdue.edu/commercialag/home/paer-article/getting-the-government-out-of-agriculture-lessons-from-new-zealand/) (via search summary) | | Trade | Import licensing removed 1984–92. Tariff cuts from 1986–87, a phased programme 1988–92, more cuts 1993–96. Average tariff 28% (1981) to about 5% (1999) | ✔ [Te Ara](https://teara.govt.nz/en/spending-in-the-economy/page-3); [WTO TPR 1996](https://www.wto.org/english/tratop_e/tpr_e/tp043_e.htm) (via search summary) | | Short-term pain | Unemployment peaked near 11% in 1991, 11.1% in March 1992 | ✔ [Te Ara](https://teara.govt.nz/en/economic-history/page-11) (via search summary) | | Long run | GDP per capita was almost 110% of the OECD average in 1970 and 79% by 2010. The two steps down were in the late 1970s (labour productivity) and the late 1980s–early 1990s (hours worked). It has been stable at about 20% below average since the early 1990s, and labour productivity "continued its long slow decline" relative to the OECD | ✔ [Conway & Meehan 2013](https://www.treasury.govt.nz/sites/default/files/2024-05/pc-rp-nzpc-conway-meehan-productivity-by-the-numbers.pdf) (pp. 23–24, opened) | ## Reading The reforms ended a real crisis (Muldoon's "Think Big" programme and the 1982–84 wage-price freeze ◻) and stopped New Zealand's relative decline. They did not deliver the catch-up their advocates expected, which economists call the NZ "productivity paradox." The farm-subsidy story is a well-documented success. "Diversified" is doubtful given New Zealand's continued reliance on dairy and other commodities ◻.