Minister Does ‘Best He Could’

Press, Volume CVI, Issue 31088, 17 June 1966, Page 1

Minister Does ‘Best He Could’

The Minister of Finance (Mr Lake) has done the best he could in the face of a very difficult economic situation for which he and the Government must bear the major responsibility, says Professor B. P. Philpott, professor of agricultural economics at Lincoln College, in his Budget comment.

The Government’s very commendable liberalisation of import control without the introduction of firm if unpopular measures to reduce the demand for imports has led to the very worrying current balance of payments situation, on which Mr Lake commented, giving as his estimate an overseas deficit of £59 million for the current year.

There is no sign of this being reduced significantly over the coming year and the position is all the more worrying because of the extreme difficulty the Government will experience in raising overseas loans to finance it A situation such as this demands tough measures and Mr Lake's budget goes only part of the way.

This year Mr Lake Is budgeting for a current account surplus of £8 million and this turn-round of £lB million, representing a withdrawal of purchasing power from the community, will be of assistance in meeting the situation, as will also the other measures such as the rise in taxdeductible insurance premiums and in interest rates aimed at increasing personal saving or at least diverting it into the hands of the Government, which, it is hoped will sterilise the funds obtained. The deferment of taxation on livestock increases will be a useful incentive to farmers, especially if they are in the development stage. The prohibition on the sale of overseas securities or overseas currency for New Zealand currency looks like an attempt to eliminate the blackmarket devaluation of the New Zealand £ by simply saying that it is illegal. Like all attempts to stamp out black markets I think this too will fail for the premium wilT show itself in some other way. The Government prides itself cm having accepted all the recommendations of the Monetary and Economic Council except the ones on taxation. Possibly it might have been better for the

country (and indeed for the Government in November) if the tax recommendations had been the only ones implemented.

Mr J. R. Maddren, president of the Manufacturers’ Federation.—While this is not a budget to cause anyone to throw his hat in the air it is by no means a gloomy document. The federation has advocated a thorough review of the taxation system to devise a system with a positive approach to promotion of production and economic welfare. It should also tackle the heavy incidence of personal tax on those In the middle income groups, and the income level at which the maximum tax rate applies. Manufacturers regret the suspension of the investment allowance for new plant and machinery which was already only half the rate allowed in Australia.

Mr B. J. Drake, president of the Canterbury Chamber of Commerce. —The Minister had to face problems and pressures of overseas funds, demands for increased Government expenditure, pressure by economists for increased taxation to reduce internal demands, and clamour for reduced taxation from

many quarters. He must be commended for facing these problems and resisting these pressures. We welcome the proposed review of taxation. A major policy item of the Chamber of Commerce has been to reduce the high level of direct taxation but the time for this was not opportune. The recent emphasis on increased export income is maintained by a more effective export incentive to manufacturers; the export income from the primary producer should be enhanced by the livestock tax concessions. Albeit the problem of Inflation is still with us. Mr R. A. Hill, president of the Canterbury Trades Coun-cil.—-Tonight’s budget will certainly rank as one of the most uninteresting ever presented to a New Zealand Parliament. As far as any concessions to workers or housewives are concerned, there is nothing. Out of the mass of figures produced by Mr Lake, we find ourselves after six years of administration by a National Government, in one of our worst financial crises —this faced by a country enjoying unprecedented prices for its exports. Mr R. H. Bedford, presi-

dent, North Canterbury Federated Farmers. The budget has not given the relief to the farmer we hoped for. The retention of the fertiliser transport subsidy, in particular, is to bo commended. The concession for increased livestock is worth while. Although it will have only limited application to the established farmer it will be a great help to the younger man who is developing his property. Perhaps the biggest disappointment is the lack of real incentive by the failure of the Minister to raise the amount at which maximum rates of tax are reached, and to make adjustments within that scale.