Restraint Policy “Open Question”

Press, Volume CIV, Issue 30643, 8 January 1965, Page 7

Restraint Policy “Open Question”

Although there is wide-spread agreement that present trends call for spending restraint, whether current policy will achieve this result is an “open question,” says the A.N.Z. Bank in its quarterly survey.

“By definition, rejection of ‘harsh’ measures means little impact on attitudes towards spending or saving—particularly in a community which has enjoyed uninterrupted prosperity since the war years. “There has been some expression of disappointment that the official announcement failed to include any definite target for reduction in Government outlays. “Rising prices, a chronic labour shortage and a high volume of imports are evidence of, and the major problems developing from, the present high level of spending in New Zealand. “Domestic industry and resources are fully employed and present trends, if permitted to continue, could only weaken the economy. “The reasons for the current strain on resources are well known.

“Both Government and private spending have been permitted to rise substantially. “In the private sector, outlays on vehicles and television receivers have reached high levels and, at year end, the construction industryled by a boom in commercial building—was very buoyant. “Increased spending has been encouraged by the climate of prosperity engendered by high farm and company incomes and by the

boost to wage and salary earnings which followed the 6 per cent increase in the basic wage award which became effective on September 10, 1964, and overtime payments. Expansion Problem “Trends toward rising domestic costs and prices have coincided with a period when considerable attention is being devoted to the problem of achieving a long run expansion in exports of primary products. “Because rising costs directly reduce the balance of farm income available for investment—a major prerequisite for an expansion in production—a failure to curb excessive spending would have serious long-run consequences,” the survey adds.