The Press THURSDAY, FEBRUARY 4, 1971. Treating symptoms, not causes

Press, Volume CXI, Issue 32522, 4 February 1971, Page 10

The Press THURSDAY, FEBRUARY 4, 1971. Treating symptoms, not causes

When the Minister of Labour, Mr Marshall, commented on yesterday’s inconclusive talks on wages and prices, he said that if agreement could not be reached with employers’ and employees’ representatives the Government “must take steps “to bring about greater stability If the Government had taken steps to bring about greater stability—even as recently as December —it might not now be pleading with employers and trade unions to reach agreement on wages and prices. Even if they were so minded, the representatives of the Federation of Labour could not give undertakings on behalf of all the autonomous unions within the federation, let alone those which are not members. It is unreasonable to expect the federation to agree to any kind of voluntary wage pause or restraint which it has no power and no mandate to enforce. It is equally unrealistic for the Government to suppose that the employers’ spokesmen at the meeting can promise concerted action on their side of industry. The most the Government might expect from consultations is some assurance that the leaders on both sides of industry would do their best to encourage an understanding of any plan put forward by the Government to curb price rises. Apart from the financial and taxation measures already imposed by the Government, and the promise of restricted State spending, there is no sign that the Government has formed any plans for further action. It is the Government’s responsibility to deal with the root causes of inflation. Too much time and effort have already been wasted on attempts to suppress the symptoms.

The extended price freeze has brought a breathing space for many people; for others it has been damaging. No remedy is to be found in it. The same must be said of the price justification scheme: it will not remove inflationary pressures. The Government should take determined action on import controls, credit restraint, and taxation to maintain a reasonable balance between the supply of goods and services on the one hand and purchasing power on the other. The result might be a temporary balance-of-payments deficit, some electoral displeasure over tax rates, and disappointment at a slower rate of growth. The lesson of the last year is, surely, that New Zealanders have found the price increases unacceptable and would bear, willingly enough, action that would put an end to the spiral.