Minister: Economy ’at full stretch’

Press, Volume CXIII, Issue 33383, 15 November 1973, Page 3

Minister: Economy ’at full stretch’

(New Zealand Press Association) WELLINGTON, November 14. ’ Wages had increased about 18 per cent over those of a year ago, but were now being held in a situation similar to that in which the Arbitration Court had issued a general wage order of 15 per cent in the Korean War wool boom, the Minister of Finance (Mr Rowling) said today.

In a speech to the Wellington branch of the Society of Accountants, he said the Government had taken strong measures to control inflation, which was caused largely by overseas factors outside the control of the Government.

The wage freeze would hold wages until June 30, 1974. This was an extremely valuable degree of wage stability. “This increase in wages has occurred in the context of a

spectacular rise in farm income, which has changed completely the income relativities among the major sections of the community,” Mr Rowling said. This raised basic questions of how prosperity should be shared. After the Korean wool boom the Court of Arbitration had issued a general wage order of 15 per cent in similiar circumstances.

“A major justification for the 10 per cent revaluation in September was the effect it would have on passing around the benefits in the form of a lower rate of inflation, to the ultimate good of the whole community, rather than in the form of wage increases involving sectional conflicts and rising costs,” said Mr Rowling. “We are now approaching 1974 against this background, and with the economy at full stretch. In these conditions the Government is concentrating on two tasks, the shortterm one of maintaining economic stability, and a medium-term one of maintaining the impetus for growth.” The inflation this year had been a great disappointment to the Government, and “we have made no secret of that,” he said. Through concerted efforts inflation had been contained significantly below its potential level. “This is a point that our critics are unwilling to admit,” he said. “EXTRAORDINARY YEAR” “In several ways, 1973 has been a quite extraordinary year. There has been the strongest and most synchronised phase of economic expansion in post-Second World War history, representing a dramatic and very rapid recovery from the recession of 1971-72. Employment, output, real incomes, and real consumption have all risen at record rates,” said the Minister. “In the first half of this year, real G.N.P. in the major Western economies is estimated to have risen 8 per cent, compared with an average 4.8 per cent during the decade of the 605,” he said. Associated with this boom had been an unprecented rise

in world commodity prices, which was estimated to have added between 2 to 4 percentage points to the rise in consumer prices, depending on the trade and consumption patterns of individual countries, he said. “We in New Zealand have suffered at the upper end of this range. Rising meat prices have alone accounted for about 40 per cent of the increase in consumer prices,” said Mr Rowling. The Opposition in Parliament had constantly spoken against every major measure taken against inflation — the three-year freeze on Government charges, the wool subsidy scheme, the sheepmeat subsidy, the voluntary farm income stabilisation, and not least revaluation, said the Minister. “Without these policies the inflation rate would have been appreciably higher,” said Mr Rowling. PROFITS GOOD “Our prospects are good. So far this year net company profits announced in the press show a very strong upward trend. Over the last six months, an analysis of these figures shows increases averaging between 30 and 60 per cent.

“The last three months have shown an average increase of 46 per cent, compared with 16 per cent for the corresponding period in 1972. Average profitability is now at the highest level for the last decade at least,” said the Minister. The Government hoped to see this reflected in a rate of investment which would provide a strong base for further expansion, said Mr Rowling. Chaplain’s visit One of the chaplains who officiated at the wedding of Princess Anne will visit New Zealand at the end of this month. He is the ChaplainGeneral of the British Armed Forces (the Ven. J. R. Youens), who holds the rank of Major-General. ChaplainGeneral Youens has held his present appointment since 1966, and his trip to New Zealand is to bid farewell to Armed Forces chaplains before his retirement next year.