Minister predicts big rise in index

Press, Volume CXVI, Issue 34156, 18 May 1976, Page 3

Minister predicts big rise in index

t.Veu, Zealand Pres* Association)

WELLINGTON, May 17. The Deputy Minister of Finance (Mr Gair) today predicted a “substantial” increase in the consumers’. price index for the first half of this year.

He made the prediction in a speech to the Civil Service Institute in Wellington.

The Minister singled out two items as being partly responsible for the predicted substantial increase — increased import costs and the “unavoidable impact” of the delayed increase in Government charges and petrol prices.

But he emphasised that in his view the “building boom” based on land speculation was finished, and said the monetary package announced at the week-end should reduce the desirability of speculative building investment.

Mr Gair said the only alternative to tight restraints on wage increases were spiralling inflation and widespread unemployment. It was inevitable that any cut in Government spending would affect “sacred cows.” Special interest groups would no doubt consider that their particular area had had unduly harsh treatment. He added: “The Government must be quite realistic and resolute in stopping projects which are of lower priority and which it cannot, Tor the moment, afford.”

Mt Gair said the consequences of the Labour Government’s economic policies were that they were carried very unevenly across the community.

“In the three years, 1972-73 ito 1975-76, salary and wage .payments as a percentage (share of private income rose from 58.5 per cent to 65.7 per cent. During the same period, company income before distribution fell from; 12.8 per cent to 10.8 per cent,] while farming income fell even more dramatically from 10 per cent to 4 per cent. “Social security benefits and pensions have improved their relative position through this period.” Mr Gair said that when the president of the Federation of Labour (Sir Tom Skinner) reacted to the week-end’s measures he did not acknowledge that in the first half of the year although wage and salary earners' had taken a reduction of 7| per cent per head in real weekly take home pay since October of! last year, there had been a fall of 12 per cent in effective gross domestic product. The Leader of the Opposition (Mr Rowling) said today that inflation in New Zealand would reach an annual rate of 20 per cent by mid-year.

In his comments on the' i Government’s economic meaisures published on Saturday, Ihe was reported to have said (that faced with escalating initiation, which would reach an iannual rate of 20 per cent in ithe next year, the Governiment had again hit the wage fend salary worker. i Today the Opposition I leader said his remark on initiation, made in a statement ■dictated to N.Z.P.A. from his Richmond (Nelson) home, had! been misunderstood and re-j ferred to the inflation rate at mid-year, not next year.

Silver ScrolL — Auckland singer song-writer, John Hanlon, has been awarded the 1975 Australasian Performing Right Association Silver Scroll, New Zealand’s premier award for song composition, for the second year in succession. His winning entry was a nine-minute track entitled, “Windsongs.”—(P.A.)

Diver unconscious.—A diver, brought to Auckland in a high-speed mercy dash from the Poor Knights Islands on Sunday, is still unconscious in the recompression chamber at the Devonport Naval Base. Mr R. K. Box, of Pakuranga, was returning to the surface when his air ran out at about 26 metres.—(P.A.)