Today in History 01 April 1987: State Owned Enterprises are Born in New Zealand

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The sale of state-owned election assets to a new state-owned enterprise was celebrated by the symbolic handing over of a cheque for $6.3 billion to Minister of State-owned Enterprises Richard Prebble and Finance Minister Roger Douglas. Electricorp chair John Fernyhough is on the right.

Today in History: The key provisions of NZs State-owned Enterprises Act 1986 – took effect on 1 April 1987.

It heralded a major overhaul of New Zealand’s state sector. A number of government departments became commercially oriented organisations with an emphasis on efficiency and profitability.

The SOEs were a cornerstone of ‘Rogernomics’, the dramatic liberalisation of the New Zealand economy which followed the election of the David Lange-led Labour government in 1984.

The name derived from Minister of Finance Roger Douglas, the main driving force behind the controversial initiatives.

The move included ths sale of electricity services. Electricorp was easily the largest of the state-owned enterprises created in the late 1980s when state-owned electricity assets were sold to a new state-owned enterprise, the Electricity Corporation of New Zealand (Electricorp or ECNZ), in April 1988.

It was celebrated by the symbolic handing over of a cheque for $6.3 billion to Minister of State-owned Enterprises Richard Prebble and Finance Minister Roger Douglas. Electricorp chair John Fernyhough is on the right of the photograph.

The sale of state-owned election assets to a new state-owned enterprise was celebrated by the symbolic handing over of a cheque for $6.3 billion to Minister of State-owned Enterprises Richard Prebble and Finance Minister Roger Douglas. Electricorp chair John Fernyhough is on the right.

For decades governments had used the state sector to minimise unemployment. But the new SOEs were to be run along private-sector lines, which in many cases meant drastic cuts in staff numbers.

These were painful times and things got worse following the October 1987 sharemarket crash. By then David Lange and Roger Douglas were at odds over the pace of change in economic policy.

When Lange famously recommended ‘pausing for a cuppa’, Douglas insisted that the crisis was an opportunity to move even faster. Eventually Lange sacked Douglas and his key ally Richard Prebble.

When caucus invited both men back into the fold in August 1989, David Lange resigned as NZ Prime Minister. Just over a year later, Labour suffered its worst election defeat since 1931 as the National Party swept back into power.

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