HEADS TOLD TO TIGHTEN UP

Press, Volume CIV, Issue 30677, 17 February 1965, Page 1

HEADS TOLD TO TIGHTEN UP

(New Zealand Press Association) WELLINGTON, February 16. The Prime .Minister (Mr Holyoake) has urged permanent heads of Government departments to give a lead in keeping the 1965-1966 Estimates down to “an essential minimum.”

Mr Holyoake met about 50 permanent heads and other senior departmental officers in Parliament Buildings today.

He said he had emphasised the urgent need to slow down and defer Government spending, and the effectiveness of this policy as a balancing

factor to ease pressures on the economy.

“One of the major problems in formulating economic policy is to maintain a balance between internal demand, the availability of manpower, goods and services,” he said.

“In past years, fluctuations in economic activity have sometimes been intensified by sharp changes in Government spending. “During an upward phase, government spending has often increased unduly—so adding to the pressure on costs and prices,” he .told permanent heads. . “Similarly, a drop in econo-

mic activity has sometimes been accelerated by restraint in government spending. “In both these cases, an unnecessary strain has been placed on our ability to maintain reasonable stability and a steady rate of growth,” he said.

“The Government considers •it a vital point of policy that fluctuations in activity should be evened out by a more positive and common-sense approach to Government spending,” said the Prime Minister.

Mr Holyoake said in an inflationary period such as that at present, less essential projects must be deferred until the economy was ready to take up the slack again. “This involves more precise forward planning and greater co-ordination. “The fullest co-operation by departments is essential to get the maximum benefit and I am sure this will be forthcoming,” he said.