Pay curb warning

Press, Volume CXV, Issue 33790, 12 March 1975, Page 2

Pay curb warning

(N.Z. Press Association)

WELLINGTON, March 11.

After accepting a wage increase in January well below the rise in the consumer price index for the latter half of 1974, the Federation of Labour would be reluctant to accept a similar wage increase again unless there was a compensating reduction in personal income tax, said the Bank of New Zealand economist (Mr L. C. Bayliss) today.

He was speaking to the Auckland Manufacturers’ Association.

In wage negotiations the New Zealand trade union movement had shown much greater responsibility and regard for the real wages and jobs of union members than had Australian and British unions, Mr Bayliss added. Discussing Government policy measures and options in the present economic situation, Mr Bayliss said demands were strong for Government action to help business,

farmers, students, builders, I local authorities, fixed-income I recipients, aerial topdressers, ; transport firms, car manufacturers, and others, by reducing taxes, increasing subsidies, lowering hire-purchase . terms, reducing Government security ratios, easing liquidity, and other measures. Similarly the Government was under pressure from business and fanning interests to restrict wage increases by substituting cuts in personal income tax if necessary. In isolation each sectional group’s argument for special Government assistance had much validity, but collectively they added up to huge claims on resources that could not possibly be satisfied, said Mr Bayliss. the Government had the difficult task of deciding priorities and in doing so it must be strongly influenced by the coming General Election, as would any democratically elected government. If the Government conceded to all the demands it would place an intolerable burden on the Budget, bearing in mind that Government revenue would increase more slowly in 1975/76. But Mr Bayliss forecast!

that in the next few months the Government would: Further stimulate house building by easing Government security ratios on savings banks. Ease the tax burden on business by lowering company tax or changing the basis of tax as a means of limiting labour shedding. Make a small reduction in personal income tax for lower-income groups and undertake a minor restructuring of taxation. Make every endeavour to repeat the January, 1975, wage formula.

Tighten the issue of import licences for goods still subject to control. Further ease credit restrictions to business. Ease controls on personal sector lending by financial institutions to lower costs of consumer credit Put much more emphasis on special measures to create employment. However Mr Bayliss saic that all sectors would believr they were carrying an unfai : share of the burden of ad ljustment.