Timid move, too late —Mr Muldoon

Press, Volume CXIV, Issue 33649, 26 September 1974, Page 2

Timid move, too late —Mr Muldoon

(New Zealand Press Association) WELLINGTON, September 25. fhe Government's devaluation had again been characterised by the timidity which was the hallmark of Labour decisions on economic management, said the Leader of the Opposition (Mr Muldoon).

“Mr Rowling recently t said that our terms of ; trade had declined by ; 15 per cent,” Mr Muldoon said. 1 “An effective devaluation ’ should have been at least as 1 much. To say that the prices of goods imported from Australia will not rise is another '■ way of saying that our Tas- ■ man trade will suffer because I the Australians have dropped I the vhlue of their dollar by more than we have,” said , Mr Muldoon. : “Our adverse balance of ■ payments with Australia for

■jthe June year was $334m, a •isum exactly equal to the! . total deficit on our current account with the whole world. “The Government’s move 1 will cause this balance to inrcrease. As usual with this ; Government, the move is too > little and too late. And as; usual with this Government,; ■ we are taking our lead from, Australia and acting in Aus-' ! tralia’s interests rather than our own,” said Mr Muldoon. I •‘Boost to inflation” Devaluation by 9 per cent iwas not an effective solution to the financial crisis, said the leader of the Social Credit League (Mr B. C. Beetham). Devaluation would further, boost the inflationary spiral, he said. “The effects of a 9 per cent devaluation will be to increase the return of all exporters by a like amount,”' Mr Beetham said. “This will quickly force up the price of local goods, as manufacturers equalise the returns from exports and local sales. “In addition, increasing the returns of all exports by 9 per cent will unjustly in- 1 crease profits for some, but I leave others, such as meat I and wool producers, in al hopelessly inadequate posi-| tion,” he said. “Devaluation will further boost the inflationary spiral and aggravate social and industrial unrest as organised groups of people attempt to maintain the relativity of their incomes.” Price worries Effective price controls were needed after the devaluation. said the secretary of the Federation of Labour (Mr W. J. Knox). The F.O.L. was particularly i concerned about the effect of devaluation on prices. “It’s just a further burden on the consumer, particularly when wages have fallen behind prices during the year ended' June.” Mr Knox said. "The wage and salary earner is asked to carry a bigger burden, and I hope the Government will now; realise some form of price■ ; control needs to be instituted.” he said. “Based on these devaluations. the Consumers' Price Index will show an increase of 2 to 21 per cent.’’ |

The F.O.L. had no proposals : I for a wage order at present : he said. "But we will be ' watching the situation very closely.’’ J “Opportune time” ' The Dominion President of >j Federated Farmers (Mr J. T. J Kneebone) said that while Lthe devaluation came at an opportune time, when the new farming season was getting under way. the 9 per cent adjustment was clearly inadej quate for the meat and wool sectors, whose prices had fallen heavily. Because of the Government’s decision not to match the 12 per cent adopted by Australia, Australian meat and dairy exporters had an automatic export advantage over New Zealand farmers. “To be effective any dei valuation must be preceded or accompanied by Government measures to reduce the rate of inflation in the economy. If these steps are not now taken the primary industries, which have already borne some frightening cost increases recently, will be i further disadvantaged by yet i another round of wage and I price increases. “The farming industry now 1 looks to the Government to ensure that the export sector actually benefits from the devaluation decision,” said Mr Kneebone.