Economic Council Says H.P. Curbs Undesirable

Press, Volume CVIII, Issue 31856, 7 December 1968, Page 48

Economic Council Says H.P. Curbs Undesirable

The Monetary and Economic Council considered the Government’s new restrictions on hire purchase an uridesirable method of controlling demand, said Dr G. B. Battersby, the council’s chairman, yesterday.

Dr Battersby said such changes in the regulations were very expensive and annoying to retailers, who had to get to work on new sign-writing and stationery.

The likely effect of the changes was that demand would be diverted to other goods. Dr Battersby said the coun cil was opposed to the Government’s hire purchase curbs because-such a policy was ineffective. - “The need for these measures," said Dr Battersby. “indicates that Government spending has been increasing faster than it should. But in this respect it’s easy to,stand on the sidelines and criticise. There are a lot of in-built factors such as staff salaries that have caused it." Timing Approved He said the 5 per cent wage increase had built demand, and as a country New Zealand had to learn to live within its income. He approved of the timing of the Government’s economic curbs. “If the Government is to keep things stable through to the next election, now is tbe time to do it—there is not enough time if it is left until the Budget in May.” This had been a failing of the Government in the past —it had always been too late. “One of the main points.” said Dr Battersby, “is that next year is election year, and it will be to the very great credit of the Government if it can get through next year with balance - of - payments equilibrium. Election Year “This is something that hasn't been done for 20 years. The fact that election year has always been a boom year makes people expect it to happen again. This is an in-built de-stabilising factor. “People speculate that a new Government may clamp down import controls again, and they take the view that if they build up their imports they'll be entitled to a bigger Quota on the reinstatement of licensing. This is the situation the Government is in.” Dr Battersby said the higher sales tax on such things as cameras, watches and diamonds gave importers the message that the Government was not going to restore import licensing, but was going to let the market sort out the demand. The message was that if importers were going to bring in excessive quantites of such goods they would burn their fingers. “There has been a very substantial—even excessive—increase in imports of these items,” Dr Battersby said. “The curbs are only on imported luxury items and 1 don’t think there will be any general consequences." “The furniture industry has been singled out again and penalised for something for which it is not in any way responsible,” said Mr G. S. Robertson, president of the New Zealand Furniture Manu-

facturers' Federation. in Christchurch yesterday. “The furniture industry cannot be blamed for over-: importing.” said Mr Robert-) son. "In fact, the opposite: is the case. The industry has) been suffering from a severe) shortage of mahogany timber.) imports of which have been) progressively cut back in re-)

cent years. The position today is acute. “The furniture industry is only just starting to recover from a severely depressed position. The recovery has come from the easing of the Hire Purchase Regulations announced by Mr Muldoon earlier this year after strong! representations from the industry. “Not Fair” ! “New penalties imposed at this stage are unwarranted) and unfair. Government poli-) ties in the last two years have® kept the furniture industry de-) pressed, and the new re-) . straints will continue to post-) t j pone the recovery of a normal trading position. ;) “The public share in the

i frustration and disruption | s caused by this stop-go action. ! i) which has an immediate ! ■ 'effect on the level of sales. •'The Government appears to * r regard the purchase of furni- ' >)ture by the public as an eco- ‘ gnomic tap which can be ‘ ,) turned off or on at will, re- 4 ilgardless of the harm to the ■ industry. The industry can- i i not accept this." < 1 t Indirect Charges | I It was obvious from the t i measures introduced by the s I Minister of Finance (Mr Mui)doon) that the Government . was shifting its emphasis on ' tax from direct charges to in- ' ) direct charges on the people, ' Mr R. J. Tizard (Lab.. Paku- j )ranga) said in Parliament yesterday, the Press Association reports. Speaking during the third reading of the Land and Income Tax Amendment Bill (No. 3), Mr Tizard claimed that the income tax concessions provided for in the bill were taken back by the Government in the announcement of increased sales tax and curbs on hire purchase. The bill amalgamates the) social security and income taxes. “Excess Imports'” The economic curbs were what could be expected if import licensing was removed ' too rapidly and imported . consumer goods become readily accessible, said the presi- . dent of the’ Manufacturers’ ! Federation (Dr H. C. Holland) . Excessive imports of some ) commodities in the last few ) months had been obvious, so i the measures did not come as ,)a surprise. However, they ) ! should not be regarded as isolated or temporary, said Dr ) Holland. I The president of the Public ' Service Association (Mr R. F. 1 .; Hannan) described the latest , I)financial steps as an indica- , ■tion of the basic unsoundness * > of the monetary and fiscal ' •) measures taken by the Gov•I eminent. , -1 “The measures are discrim- . Itinatory for they in no way ' penalise those on higher in- 1 ■ comes who will be able to con- i

tinue to afford items from the range of goods affected." he said.

The chairman of the Home: Appliance, Radio and Television Retailers' Federation) (Mr J. D. Berry) said the home appliance industry had been severely restricted. for the last 18 months and the reduction of the maximum credit period would depress an already struggling retail sector. The federation could not understand why consumers of durable items should be penalised when consumers of many other products which had as high or higher import content should be allowed to spend-without restraint. The chairman of the New Zealand Finance Association :(Mr R. A. Beck) said that it was a pity the country had to suffer from “on-off” regulations. He did not think the restrictions would have much effect generally on hirepurchasing.