Prebble was originally a member of the Labour Party and stood as its candidate for the Auckland Central electorate in the 1975 election. His candidacy was successful. Soon after his election, owing mainly to Labour's drastic reduction in MPs in their 1975 defeat, he was made Labour's spokesman for race relations and the environment. Following the 1978 election he was given the more prominent portfolio of justice by Labour leader Bill Rowling. From 1978 until 1980 he was additionally the Labour Party's junior whip. In 1979 Rowling decided to create a separate shadow cabinet above the caucus. Prebble was given a seat in the shadow cabinet, but was displeased at the change in portfolio allocations in which he lost justice and was instead given immigration, regional development and the environment. As a result, he refused to join the shadow cabinet to protest his allocation of portfolios he did not want. Colleagues described the move as petulant, with Prebble countering by saying "The difference in opposition to being in a shadow cabinet and being a backbencher is only in name. It's a shadow rather than a substance." From 1975 to 1984 Labour was in opposition, and Ross Meurant recalled that:
Government
When the Fourth Labour Government was formed after the 1984 election, Prebble aligned himself with Roger Douglas, the controversial Minister of Finance, and was an associate finance minister. Douglas, Prebble and David Caygill 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.
New Zealand switched to the mixed-member proportional representation electoral system in 1996. Roger Douglas established the ACT New Zealand party, and was joined by Prebble. In March 1996, Douglas stepped down as the new party's leader, and Prebble took over.
Prebble was re-elected as a list MP and leader of ACT in the 2002 election.
Retirement
Prebble was replaced as ACT leader by Rodney Hide in 2004, and did not stand in the 2005 election. Prebble's book, Out of the Red, was released on 23 October 2006.
Publications
Prebble's contribution was the paper: "New Zealand: tenth by 2010."
Prebble's contribution was the paper: "Old values, new ideas."
* The second edition of this book is entitled Now it's time to act.
* This is the second edition of I've been thinking - containing additional material.
Prebble's contributions are the papers: "Why I do not vote National"; ''and "Lessons of freedom and choice."