Wage-price trouble ‘throughout West’

Press, Volume CX, Issue 32431, 19 October 1970, Page 1

Wage-price trouble ‘throughout West’

(From Our Own Reporter)

WELLINGTON, October 18.

The wage-price trouble being experienced by New Zealand is merely part of an international malaise which is affecting every country in the Western financial world.

This is the finding of the Minister of Finance (Mr Muldoon), who arrived back in New Zealand today after a fiveweek tour of financial centres.

Mr Muldoon attended the World Bank and International Monetary conferences in Copenhagen, spent some time in London, where he met Ministers and financial authorities on both sides of the United Kingdom Parliament, and then went to Europe and the United States. His conclusions, although they embodu no quick answers for New Zealand, ere reassuring, because they imply no quick and drastic action either. Mr Muldoon found that

The New Zealand internal position is no worse than that of other countries, and considerably better than some. According to the latest figures of overseas transactions, New Zealand is not “nose-diving to disaster,” but is rapidly climbing up again. The figures for the 12 months > ending September 30 show exports at a record $1,169*,000,000 and a surplus of exports over imports of $29,200,000. New Zealand’s problem is an internal rather than an external one, for which there is no universal panacea. New Zealand’s credit, ‘particularly in Europe, stands in the highest bracket. This is definitely so in the very select money market of Switzerland, both on medium and long-term loans. Mr. Muldoon would not be drawn on what New Zealand would do to improve its position, nor would he admit that action would necessarily be taken. Talking generally on the subject of a mini-budget, he suggested that consideration on this, or on whether one would be necessary, would have to wait on the results of the general wage order application. No drama Of the Copenhagen conferences he said that whereas there was not the sense of drama of the previous year, there was a stirring sense of excitement about inflation. The key subject was un-

doubtedly how to combat this. Individual countries, even Germany and Switzerland, reported the problem, Germany for the first time.

The I.M.F. staff was asked , to consider the fact and make ; a report which might be of universal interest on mea- ■ sures to combat the wage-. prices spiral. The key to the situation,, Mr Muldoon believed, might be in stabilising the United States situation and in establishing the real value of the United States dollar. “If the United States can only settle its problems, this would have an important bearing,” Mr Muldoon said. The World Bank loan policy, he said, seemed to be towards agriculture, education and population control. This could come down to the control of monopoly prices and the providing of econmic access to markets. Credit high Mr Muldoon emphasised that New Zealand’s, credit on the international market was the highest it had ever been. “It is evident that in Europe New Zealand is recognised as one of the few stable creditworthy countries,” he said. “There is no doubt that we are a very acceptable borrower on the Swiss market today.” The Government must decide wether it would ask for a loan on the European market. New Zealand loans were coming to maturity next year and in succeeding years. High rates of interest must be expected, but at the moment there was a slight easing. Mr Muldoon thus hinted that he is likely to commend the Government to go for a loan in Europe now. “We are looking to pick up money . wherever we can get it on I reasonable terms,” he said. Railways loan He predicted that New Zea- . land will negotiate a World i Bank loan for railways soon, i Negotiations on this were : well forward, he said, and I could be made final next i month. The amount has not been fixed, but will be between slom and slsm. The climate js also right for a development loan, which will probably be taken out next year. “We have a ; very comfortable Tange of projects of a type which ; appeal to the World Bank,”

he said. "The tourist industry is one of these.” Of United States conversations he said little, except on arrangements concerning the purchase of Douglas DCIO aircraft. “I went to Douglas,” he said with a grin. “There is such an aircraft as the DCIO, and it flies. On the noise question I saw some impressive figures, and apparently ! it makes less noise than the Boeing 747 or the DCB.” December report Asked about the New Zealand economy, and possible measures to be taken, Mr Muldoon said that he had been travelling with the secretary of the Treasury (Mi* Lang) and had received figures constantly. He would have to check on some matters before reporting to the Cabinet. Committees were also studying the relevant facts, and the Targets Advisory Committee would report in December. The result of the application for a general wage order would have an important bearing on what was decided. Asked about the possible 1 ending of the parliamentary : session before a decision was ’ reached, Mr Muldoon said: “I don’t think the Prime Min- ’ ister has any fixed tiine for the ending of the session, be- ’ yond the thought that ending is when we get round to it. “In any case, Parliament ! may be called together or kept together as required.”