The Press WEDNESDAY, NOVEMBER 2, 1966. Labour’s Policy Of Steady Does It

Press, Volume CVI, Issue 31206, 2 November 1966, Page 16

The Press WEDNESDAY, NOVEMBER 2, 1966. Labour’s Policy Of Steady Does It

The Labour Party does not wish to rock the boat; it merely wants tighter control over the crew. This would seem to be the message of the party’s election manifesto. It proposes more control over imports, more detailed Ministerial control over broadcasting, and complete Government control over all creditissuing institutions; and it mentions eight new State corporations, councils, and authorities to administer Government policies. The party would invest the Reserve Bank with power to control loan finance at all levels; yet a clear indication is given that one purpose of this policy will be to lower interest rates. As if this prospect were not disturbing enough in an economy already suffering the ills of inflation, the Labour Party promises that the State will create and use credit “at the cost of issue”—presumably the cost of printing the money—“for purposes of ap- “ proved capital development Clearly the inflationary effect of such an expedient could be limited only by the capacity of the Minister of Finance to resist the demands of the party’s clamant supporters. It is a prospect that should cause electors to think carefully.

The Labour Party’s ideas on tax-free saving plans and lower interest rates will no doubt appeal to many who borrow to finance development and to many who wish to save for their own investment purposes. It will not appeal to those who save to spend later. To encourage saving Labour offers a scheme similar to the present farm development incentives. Individual taxpayers are offered a development bond scheme for tax-deductible savings, without interest on five-year bonds and with a maximum tax saving of 5s in the £. A tax saving of £25 on £lOO invested in bonds may be well calculated to appeal to small savers who are not concerned with margins of profitability. The scheme would cost a Government less in forgone tax than would interest on ordinary Government stock. The investor would forgo at least £3O in interest on a tax-paid investment in Government stock—a net loss of at least £s—and he would forgo the facility to convert his investment to cash at will. This emphasis on saving is commendable, but the correction of present economic problems will depend largely on the willingness of the next Government to withhold savings from recirculation except when they must be spent on the most important development projects. Labour’s intentions in this field can only be inferred from other elements in the manifesto. The Labour Party’s distaste for private overseas capital, the commitment to an undiminished, if not extended, works and electricity programme, and the intention to construct more houses and public buildings, all suggest that Government expenditure would increase, perhaps heavily increase, under a Labour Government. If the party’s ill-considered flirting with Social Credit ideas could be ignored, it would deserve praise for the restraint of its appeal to electors. It has made no rash promises; but this very restraint has in fact fashioned a policy which offers few alternatives, except in detail, to present Government policies. This will have the advantage of encouraging electors to distinguish between the two parties according to their judgment of party leadership and according to their assessment of basic party attitudes to the role of government in managing the nation’s affairs. Other distinctions should not be' overlooked.

Labour’s proposed tax concessions are quite unlike those of 1957. “ The wider aims of Labour’s “ taxation policy may well take more than three years “to attain ”, says the manifesto. Adjustment of personal exemptions and the modification of the rates of tax would have to await higher productivity and the growth of real income. Without a rise in incomes the proposed personal exemptions imply a more steeply graded tax scale. The manifesto does not mention the expected incomes policy. Unlike the British Labour Government, the New Zealand Labour Party apparently does not intend to relate changes in pay rates to the importance and productivity of specific sectors of the economy. The manifesto promises general wage increases related to the increased productivity of the whole economy—hardly a policy calculated to give rewards where they are most deserved. Taxpayers are invited to subsidise the rates of persons on low incomes. The Development Finance Corporation is expected—perhaps justifiably—to meet the losses of a State shipping corporation which would work unprofitable routes to develop export markets. This will not alter New Zealand’s dependence on overseas shipping lines. The repeal of the News Media Ownership Act has always been a rather empty promise because all industries would become subject to the same kind of legislation. The party would write a more specific formula to determine the living costs of social security beneficiaries, which no doubt is needed; but the manifesto does not say how far the State would go to meet these costs. Labour’s defence policy will not commend itself to anyone who faces realistically the perils of the present international scene. The best that can be said is that the party’s intentions are good, its thinking either muddled or evasive.