Stronger Economic Measures Possible

Press, Volume C, Issue 29621, 18 September 1961, Page 12

Stronger Economic Measures Possible

(New Zealand Press Association) WELLINGTON, September 17. “New Zealand was living beyond its and if present trends continued the Government might have to take stronger measures to protect the economy, the Prime Minister (Mr Holyoake) said today, opening the Dannevirke Fair Week. The Government has been at pains to deal with this situation with steady pressure rather than by hasty adjustments,” the Prime Minister said.

"Since the beginning of the year Government expenditure has been restrained, credit has been tightened, the import licensing period has been extended six months, and we have raised two ini ternal loans amounting to . £2B million and an overseas loan of £2O million. I "The response has been sluggish. We must be prepared to apply firmer measures. “Inflationary pressure must be reduced. This can be done voluntarily—but. a small per capita reduction in spending, by increased savings, by. not using overdraft facilities to the full, by deferring projects not immediately esisential. and bv concentrating on works that will increase ■ production.” | If the level of internal deI mand and expenditure could ,be reduced further remedial measures by the Government | would not be necessary, he I said. But if inflation could | not be controlled through | voluntary effort, then it was the duty of the Government Ito make what adjustments ; were necessary.

“Individuals and business firms should be making provision from income now for the payment of tax due next year. Overdraft facilities nave been called on too heavily for this purpose.” Mr HoNoake said. “The Reserve Bank has warned that reduced trading bank advances are an essential feature of the disinflationary policy that is necessary, and that next year advances will not be available to cover tax payments." he said "We have snent. and are spending, much more over-

seas than we are earning," he said. “There have been £6O million worth of imports more than we can afford to pay for.” Mr Holyoake said a lot of money had had to be created through advances from the trading banks to finance those exports. This in turn had created pressure on labour and has maintained a strong demand for goods. “If prices for our exports were showing prospects of an upward trend, the present position would not appear so serious. But prices are down, and staying down. Butter, the most seriously affected, had stayed at 250 s for the last six months. Lamb and wool prices are also below last year.” Mr Holyoake said.