Mr Muldoon iorecasts smaller price rises

Press, Volume CXI, Issue 32676, 4 August 1971, Page 3

Mr Muldoon iorecasts smaller price rises

(New Zealand Press Association> WELLINGTON, August 3. His guess was that the September quarter this year would show an average price increase of less than 2 per cent, the Minister of Finance (Mr Muldoon) told newspaper advertising managers today.

That represented an annual increase of perhaps a little more than 6 per cent, a satisfactory result, he said.

Opening a two-day conference of advertising managers in Wellington, Mr Muldoon said that newspaper advertising was something of a barometer for the economy.

“I hope that at the moment you are running about a normal level, because that is the way the economy is. Perhaps it is a little on the way down, but it will not go much further if we can help it,” he said.

Last year had brought all kinds of trouble which he could not predict, particularly the wage-price rises which became out of hand in the last quarter of 1970. Mr Muldoon said he had a message for newspaper editors, or the people who wrote editorial articles: “You tend to take things rather too superficially.” Bare statistics, he said, could be misinterpreted. Smaller rises For the calendar year, prices rose 10 per cent, and probably about 20 per cent in actual wage rates, although the nominal wage increase of 22.6 was the figure used. At the end of the year, rises had put the price increase at 15 per cent, the wage increase about 30 per cent, both completely out of hand, he said.

In the two quarters since, the increase in prices had dropped to 2.5 per cent, then 2.2 per cent. It was quite clear there had been a “good deal of settling down,” said Mr Muldoon, even allowing for the expected price increases when the freeze was removed —increases that would normally have been made earlier. Yet the quarterly figure was still down. Settling noted “We have this settling of prices, some settling of wage escalation, and we would think that for the September quarter, the figures for which are taken in about a fortnight’s time, the percentage increase would be under 2 per cent. “This is a guess; I am sticking my neck out, and I could be wrong. It is based on my analysis of the movement of price and related factors. “If this is so, we are at present dealing with a rate of price increase on an annual basis of perhaps a little over 6 per cent, but prices are still settling. And that would be a satisfactory result as far as I am concerned,” said Mr Muldoon. “We cannot expect to get back to what was previously regarded as normal—2j to 3 per cent—for some time yet, but if we can continue the movement . . .”

Mr Muldoon said he was quite sure that everywhere

else the economy was in good shape, and that there were no likely distortions that could not be tidied very readily—“if we can only deal with this question of wages and prices.”

“The central feature of the whole thing is to keep this de-escalation moving slowly, but at that point we come up against industrial unrest, and we have got various disputes. We would expect them to reach a satisfactory conclusion after reasonable negotiation.” A month ago, the country was disturbed and worried about the psychiatric nurses’ strike, but this had been discussed and settled in what he believed to be a reasonable way—“no-one got any extra pay, but we are going to have an independent inquiry,” said Mr Muldoon. Breweries strike Now there was the breweries strike. “For those of you living in Auckland, I suppose that is fairly serious, unless you drink gin.” The most important element of the breweries strike was the determination of some people in the trade union movement to break down the Stabilisation of Remuneration Act, the Government’s stability policy, and to beat the “system,” said Mr Muldoon.

They did not want the system of industrial law to continue, they wanted a return to direct bargaining, direct confrontation with employers, picking off the weaker ones and then bringing the others along. They wanted economic chaos in the country. F.O.L. control “The Federation of Labour, generally speaking, however, is a very responsible organisation. They have got certain basic principles that they find very hard to compromise, and they speak in very tough language, the kind of thing that makes headlines.

“But basically they are a responsible organisation, aiid It is possible to negotiate with them,” said Mr Muldoon. “The F.O.L. fortunately, has remained in the control of the more moderate elements of the trade unions, but we should never underestimate the ability of a small group of militants deliberately to cause unrest and then call on trade union solidarity to swing the vast bulk of trade union support in behind them. This is where the danger lies,” the Minister said. Then it came back to the Government to intervene, albeit “reluctantly and perhaps, at times, too often.”

When there was a situation where wages and-prices were running away, then clearly the Government had to intervene and take an active interest. Finn stand “We are not going to provoke any kind of confrontation with the trade union movement. If we did step in the people would not support it; but we have got to stand firm on this issue and I believe we will. “I believe we will find a| settlement that will preserve the structure of the stability we have set up,” said Mr Muldoon.

He concluded: “External affairs are in better shape than ever. Internally, they can be settled and tidied without too much difficulty, provided we can deal with this industrial situation, pinch out those people who want to disturb as a matter of personal policy, and work with the responsible element which is the greater part of the trade union movement.”