Caygill was a councillor of Christchurch City Council from 1971 to 1980. On 29 April 1974, he became the city's youngest ever acting Mayor for a period of five days.
Caygill was first elected to Parliament in the 1978 elections as MP for the Christchurch electorate of St Albans. He served for six terms.
Lange Ministry (1984–1989)
When the Fourth Labour Government was formed after the 1984 elections, Caygill aligned himself with Roger Douglas, the controversial Minister of Finance. Douglas, Caygill, and Richard Prebble were together dubbed "the Treasury Troika", and were responsible for most of the economic reform undertaken by the Labour government. The "Rogernomics" reforms, which were based on free market economic theory, were unpopular with many traditional Labour supporters, but Caygill managed to avoid the worst of the condemnation directed towards Douglas and Prebble. When the two became founding members of the ACT New Zealand political party in 1994, Caygill chose not to join them. Caygill was appointed Minister of Trade and Industry, and Minister of National Development, on 26 July 1984. The Prime Minister at that time was David Lange.
Minister of Finance (1988–1990)
When Douglas was fired by Prime Minister Lange, Caygill was appointed Minister of Finance in his place. After Lange himself had resigned, Caygill retained his position under both Geoffrey Palmer and Mike Moore, Lange's short-lived successors as Prime Minister. In his last budget as Minister of Finance, Caygill lifted the quarantining of rental losses on investment property, allowing an investor to offset losses on their investment property against their other taxable income.
Opposition (1990–1996)
In 1991, a year after the Labour Party had lost office, Caygill was replaced as finance spokesperson by Michael Cullen, who was more moderate in his economic policies. Caygill continued to hold a senior position in the Labour Party, however, and when Helen Clark became leader in 1993, Caygill replaced her as deputy leader. At the 1996 elections, Caygill retired from Parliament. He was replaced as deputy leader by Michael Cullen.
Life after politics
After leaving politics, Caygill returned to his original occupation, law. For some time, he was a partner at Buddle Findlay, a prominent law firm. He also worked for a number of government bodies, and was chair of the Accident Compensation Corporation. He chaired a ministerial inquiry into the New Zealand electricity market in 2000, and was appointed chairman of the Electricity Commission in 2007. He is a board member of the Energy Efficiency and Conservation Authority. He is the chair of the Education New Zealand Trust. From 2010 to 2019, Caygill was one of the commissioners at Environment Canterbury appointed by the National Government. He held the role of deputy chair. Caygill was appointed, in December 2010, as the Chair of the 2011 NZ ETS Review Panel.
