Government Action To Restore Economy

Press, Volume C, Issue 29523, 26 May 1961, Page 7

Government Action To Restore Economy

The Government’s achievements in bringing New Zealand’s economy back to a sound footing were more important than what was still needed to be done, said the Minister of Finance •'Mr Lake* to the annual meeting of the Canterbury-Westland division of the National Party, according to a supplied report. Action had been taken without imposing drastic and arbitrary restrictions which would disrupt the economy and make the path to recovery even more difficult, Mr Lake said. When the Government took office there was a deficit of £27m in the overseas balance of payments. Although export prices were dropping, a bigger volume of imports had been authorised under the Labour Government’s import licensing system and overseas reserve funds were falling. There had been what the Minister described as a ‘‘fantastic’’ rate of increase in Government expenditure. As a result of the inflationary economic and monetary policies which had been operating, the stage had been set for an extraordinary increase in trading bank credit from £177,100,000 in March. 1959. to £233.300,000 in March. 1961, he said. There had been a serious rise in the cost of living as a result, and an acute shortage of labour was developing. The National Government had not only been “tidying up the wreckage” left by the

Labour Government in the economic field, but had made considerable progress in carrying out its long-term policy. Government expenditure could not be reduced overnight. In some cases the Government was faced with finding more money to meet commitments made by the previous Government. About £BOO.OOO was needed to meet the second stage of pay increases for State employees, and the introduction of equal pay for women in the Public Service involved about £lm this year and £4m when it became fully operative in three years’ time. "We are making a real attempt to hold Government expenditure in check, and we are caling a halt to the excessive increases which have occurred in the last three years.” the Minister said. “We have taken steps to stop the drain on overseas funds and to curb inflation within New Zealand, and we shall progressively introduce incentives to increase production and step up overseas earnings and so lay a firm foundation for more rapid economic growth.”