The reinvention of Act did not only involve stylistic change through a moderated image and new leader. The main part of Act’s re-launch was in fact a substantial re-evaluation and overhaul of the party’s programme. In April 1996 the party leadership launched a new manifesto shorn of the party’s initial radicalism. The name of the manifesto – ‘Commonsense for change’ – was indicative of the new approach: less experimentalism and more orthodoxy. The new Act manifesto was most striking for the fact that it omitted two of Act’s most radical and defining policies: its voucher scheme and the zero income tax policy. At the launch, new party leader Richard Prebble stated that such policies made Act appear as ‘loopy’ and rightwing. [Read more below]
Both policies had proved controversial and so they had to go. As a replacement for the zero income tax policy, Act resurrected the old Fourth Labour Government’s caned flat tax policy – in this case, set at 19.5 cents in the dollar for both individuals and companies – and promoted the highly-interventionist policy of compulsory superannuation saving.
The new more moderate tax policy was still promoted by the party and opponents as a ‘radical’ measure. However, in reality the rates were not totally dissimilar to the National Party’s tax policies. National, too, was promising to cut the then 24 cent personal income rate to 19.5 cents as part of its programme of tax cuts. Moreover, as Prebble admitted, Act’s new tax rate would not radically affect high-income earners, as ‘the rich already quite legally avoided paying tax so its proposals would be "of marginal benefit to them" ’ (Herbert, 15 April 1996: p.5). Rodney Hide also stressed the orthodoxy of Act’s prescription saying they were ‘no different to what the OECD is saying, the IMF is saying, the international ratings agencies are saying' (quoted in Clifton, 27 Jun 1998: p.37).
The shift to the flat-tax policy was, according to Fraser and Zangouropoulos, ‘overwhelmingly endorsed by the [Act party] membership' (Fraser and Zangouropoulos, 1998: p.48). This is probably quite true, as Prebble had won the contest for the leadership on an explicit programme of overturning the zero income tax policy.
Act also began to give up on defining and identifying themselves as a party of economic reform and innovation. As with the other political parties, Act no longer found the area of the economy one in which the party can make much political headway. Furthermore they realised that the continuing economic slump was only going to bring further unpopularity for Act. Continuing his role as the party’s policy guru, Roger Douglas looked for some calamity other than an economic one to propel Act to power. Douglas, now focusing on social policy, began talking of ‘The Coming Social Crisis’, and his belief that Act has the radical policies needed to cure the crisis. However, most of Act’s social policy was just an intensification of the current policies, rather than a radical new shift in direction.
Next blog post: Rebranding Act
