M.P.s Dispute Amount Of Overseas Debt

Press, Volume CIII, Issue 30393, 18 March 1964, Page 18

M.P.s Dispute Amount Of Overseas Debt

Mr Walker, M.P. for St Albans, was incorrect when he repeated his statement in “The Press” yesterday, that £6.5 million was the total of New Zealand’s annual commitment in respect of overseas indebtedness said Mr N. E. Kirk, M.P. for Lyttelton, in a supplied statement last night

“Emboldened by bls discovery of an isolated reference to a sum of £6.5 million for interest payments in the tables to the last Budget, Mr Walker repeats his Incorrect assertion,” Mr Kirk said.

“Unfortunately for Mr Walker’s specious argument, this figures relates only to a section of New Zealand's overseas indebtedness. The total cost to our overseas exchange earnings of servicing the country’s external debts is £26,000,000 a year and this sum is still growing. “If Mr Walker would only read the report of the Monetary and Economic Council he would learn that this amount is not principal, as he calls it, but the servicing cost of debt Also he would learn that the council is not satisfied that the huge increase in our overseas debts—£ll3,ooo,ooo in the last three years—has promoted a faster rate of growth. In fart, the council goes so far as to suggest that the proportion of capital investment going to fanning and manufacturing has actually declined.

“Furthermore our liability in respect to debts incurred overseas has increased at a greater rate than the rate of growth in our exports. In 1960 the servicing of our overseas indebtedness took 3.7 per eent of our export receipts. By 1963, because of the tremendous increase in New Zealand's overseas debts, debt charges took 8.5 per cent of our export receipts. "This trend demonstrates

how costly our increasing dependence on overseas borrowing at a time of record income has become. Should export receipts fall—a not improbable risk—the effect of this increasing debt burden would be even more serious.

Mr Lake Cited

“Because Mr Walker either will not or cannot see this, or see that New Zealand needs to increase rapidly its export income, I would suggest that he study last year's

Economic Survey prepared by Mr Lake. There he will see that his own Minister of Finance said “The need to increase the rate of growth of export receipts remains the most pressing economic problem,’ thus confirming what I have been saying and what Mr Walker has been denying.

"The annual rate of growth in export receipts has been less than 3 per cent, whereas reliable economists can show that a growth rate of 5 per cent, at least, is necessary to preserve the status quo.

“And, of course, as every one, but apparently Mr Walker, knows, the status quo is a situation in which imports are rationed, and overseas borrowing increases at a time of record income.

“To get on the road to a sound economy New Zealand needs to achieve an even better growth rate than the 5 per cent suggested. It is unlikely to do this while members of the Government remain as impervious as Mr Walker to the need and are so devoted to the enervating principle of passive Micawberism,” Mr Kirk concluded.