Finance Minister Wants Spending Curbed

Press, Volume CIV, Issue 30768, 4 June 1965, Page 14

Finance Minister Wants Spending Curbed

With the demand for goods and services still strong, suitable curbs on spending were needed to avoid further upward pressure on internal prices, said the Minister of Finance (Mr Lake) in an economic review issued yesterday. In addition to restraints applied to internal demand, shortterm supplementary finance might be obtained from the Internation Monetary Fund to minimise the fall in New Zealand’s overseas exchange reserves, Mr Lake said.

The value of goods exempted from import licensing was about doubled in the 1965-66 import-licensing schedule compared with last year, said Mr Lake. This meant that about a third of private imports was exempt. The goods now free included a wide range of raw materials for manufacturing. Manufacturers could expect another good year, but com petition might become more intense, particularly if there was a tendency for consumer demand to tighten. The Government itself had recognised the need for the planning of public expenditure to ensure the maximum

i benefit from the resources used by Government authorities. Mr Lake said. I “Research has already been made into departmental expenditure estimates for the next three years,” he said. New Zealand's balance-of-payments position was likely to deteriorate because of reduced prices for wool, butter and cheese, Mr Lake said. To minimise this fall in overseas exchange reserves, re- . straints must therefore con- , tinue to be applied to internal demand. I In addition to possible shortterm supplementary finance ; from the 1.M.F., the Govern- * ment must carefully evaluate r New Zealand’s long-term growth needs to try to ensure 1 that steps taken to resolve » balance-of-payments fluctua- • tions would not interfere i seriously with the country’s

development and its essential capital investment programme. “The Government must be prepared to borrow overseas to meet the situation, if warranted, to permit sound and steady growth to be mainmained,” said Mr Lake. On capital investment, Mr Lake said that total capital formation in 1965-66 was likely to be higher than in the last financal year because of prospective outlays in the building, construction and manufacturing sectors of the economy. “Together with a level of total export income about the same as for last year, new capital investment in 1965-66 should produce a high level of economic activity, and a continuing heavy demand for labour and materials,” MiLake said.