Mr Kirk says Budget “fuelling inflation”

Press, Volume CXI, Issue 32634, 16 June 1971, Page 18

Mr Kirk says Budget “fuelling inflation”

(New Zealand Press Association)

WELLINGTON, June 15.

The Government’s seven Budgets in the last five years had all been failures, and the eighth showed no changes in policy, said the Leader of the Opposition (Mr Kirk) in Parliament tonight.

Mr Kirk opened the Budget debate with an hour-long speech which accused the Government of fuelling the fires of inflation. But the Prime Minister (Sir Keith Holyoake) said that Mr Kirk had failed to provide any constructive proposals of his own, and had delivered merely a “lot of words and claptrap.” Mr Kirk said that the Minister of Finance (Mr Muldoon) had held out wage and salary earners to be the “villains” and the Government was trying to make this section the scape-goats for its policies. Sir Keith Holyoake replied that Mr Muldoon was the best Minister of Finance New Zealand had ever had, and the Opposition’s continued personal and political attacks on him were unwarranted and unjustified.

The Opposition was angry and disappointed because it had forecast a Budget of “gloom and despair” which had failed to materialise, Sir Keith Holyoake said.

Same policies Speaking before a moderately full public gallery, Mr Kirk said that New Zealanders might have expected to see some substantial tax concessions and changes in policy to curb inflation, but the Budget only “fuelled the fires.”

The weaknesses which had failed the country time and time again had been produced again. If New Zealand was to have built into its economy policies for improving productivity, people had to know exactly where they stood, said Mr Kirk.

“If they are going to put their money into an industry they have to know that it has a future, and not be subject to stop-go policies,” he added. One of the worst parts of the Government’s policy was having an indefinite number of Budgets. This was called flexibility by the Govemment, Mr Kirk said, but it

created a state of uncertainty for the taxpayer. It was a hand-to-mouth, chop-and-change policy. Mr Kirk said that between December, 1966, and December, 1970, food prices had risen 29 per cent and the allgroups index 27.9 per cent. If Government policies were working, one would expect these to be retarded. Inflation rate The Budget had indicated an inflation rate of 6 per cent, Mr Kirk continued. Already, indications were that prices would show a bigger increase this year rather than a slowing, Mr Muldoon’s Budget stated that nominal wage rates increased 22.6 per cent in the last year. But effective wage rates —purchasing power—had risen only 11.65 per cent, Mr Kirk said. Average weekly earnings between October, 1969, and October, 1970, had gone from $45.05 to ssl.l6—an increase of 13.6 per cent or roughly seven per cent less than Mi Muldoon claimed. Stability moves Discussing the Government’s decision to invoke the mandatory clauses of the Stabilisation of Remuneration Act, Mr Kirk said that in the Budget the Minister said there was some evidence that the wage-price spiral might be slowing. He asked why, four days later, the Government invoked the mandatory provisions.

“Four days after the Budget the Government took a step which can only be de scribed as provocative in the extreme,” Mr Kirk said.

However, although the Opposition had opposed the legislation, it was now the law of the country and could only be changed by constitutional means. Equal share Mr Kirk said that at this time when Britain was on the eve of critical decisions on E.E.C. entry, all New Zealanders had a vested interest in pulling together in curbing inflation.

The Opposition had no objection in principle to stabilisation so long as all shared equally. If there was a case for restraint on fanners and on wage and salary earners, why not a case for restraint on landlords, moneylenders and companies? “If there is a case for people who work in an industry, why not a case for restraint on those who own them?”

There was something almost hypocritical in telling wage and salary earners that anything over 7 per cent was disastrous while companies could make large net profits. The Opposition was pleased to see that social security beneficiaries had been helped in the Budget. The increase, together with one towards the end of last year, amounted to $2.25 a week for single persons and $4 for a married couple. But, he said, when Mr N. J- King (Lab., Birkenhead) brought in a bill last year seeking increases of $2.50 for single people and $4 for couples, the Government had said it would be the ruination of the country. Farm policies On the Common Market negotiations, Mr Kirk said that while permanent proposals for assistance to farming could not be formulated until the negotiations’ outcome was known, it was important that some policies should be prepared That way, when the outcome was known, farmers would not have to wait five or six years before they were implemented.

There was no difference between National and Labour

f on the basic principles of s New Zealand’s position in - the negotiations, he said, and he called for New Zealand- ’ ers, publicly and privately, - to stand firm for their coun--1 try’s claims. Anything less than the pro- ■ tection of the present trade ' in New Zealand’s primary ‘ produce would be “unsatisfactory and injurious to the land,” Mr Kirk said. The Budget had proposed a 1 committee of inquiry into r farm lending, but this was ■ simply an attempt to post- - pone and procrastinate on a 1 problem that should be grapr pled, with now. A mortgage guarantee ' scheme had been proposed to - attract further Investment to ’ farm finance, Mr Kirk said, ' but he asked how more funds : could be drawn into this area ’ without further restricting the money available for housing.

Wards closed

Mr Kirk charged that social services were being eroded—increases made for hospital services were scarcely enough to keep pace with inflation. Did the Government believe in publicity financied health services, he asked, or was it following a policy of trying to help the development of private facilities run for profit. Hospitals were closing wards because of staff shortages, and there was nothing in the Budget to finance any change to health services. Sir Keith Holyoake said the Budget would produce steady growth for New Zealand, greater prosperity and higher standard- of living. If the Opposition believed the Budget was fuelling the fires of inflation, he hoped it would not demand increases in every departmental vote. The Budget stated the simple fact mat New Zealand had had a very steep increase in the cost of living last year, Sir Keith Holyoake said. Costs could rise rapidly even under Labour Government in this and other countries. “However, there is no question whatsoever that cost increases are slowing,” he added. “The two Budgets of last year are certainly having the desired effect.” Referring to the implementation of Part 111 of Hie Stabilisation of Remuneration Act, the Prime Minister said that Mr Kirk on Friday had

said he hoped the trouble would be resolved by negotiation and in a constitutional way.

“That is exactly what the Government has done,” Sir Keith Holyoake said.

The Government had held increased spending this year to 4.5 per cent in “real terms." This meant severe restriction on some activities but nearly 60 per cent of the increase was going to education, social security, health and works and capital advances.

Record attacked

Mr M. A. Connelly (Lab., Wigram) said Sir Keith Holyoake had failed to justify the Budget and had failed to refute the “trenchant and valid criticisms,” made by Mr Kirk.

The Government had a deplorable record on industrial relations, and its policies resulted in unemployment, stagnation and loss of labout force.

What was required, said Mr Connelly, was some encouragement for market research and development. New Zealanders should be encouraged to get out and see what new markets were there for their products, and to see what new products could be developed here to meet latent demand.

The Budget should have contained some measures, he said, to improve productivity and keep export costs down, increase efficiency, and keep New Zealand goods competitive on overseas markets. Mr Connelly said the time was overdue for the Government to call a conference on productivity, which would call people together to study New Zealand’s potential. If there was an excess of overseas funds, he said, this should be spent not on more consumer expenditure, but on increasing productivity. The Minister of Education (Mr Taiboys) said that last year $267m was spent on education, and the vote this year was s29Bm. Howevei the amount spent this yeai would be well through the s3oom barrier.”

Since the annual building programme was announced, the Government had given further consideration to education board needs and the position of the building industry, and it had been decided to add s4m to the original programme.