THE PRESS THURSDAY, JULY 29, 1976. Imports and unemployment

Press, 29 July 1976, Page 16

THE PRESS THURSDAY, JULY 29, 1976. Imports and unemployment

Plans to rectify New’ Zealand’s economic plight trip more easily from the tongues of those who do not. at present, have to translate their words into actions—or to live with the results of those actions. A former Minister of Finance (Mr Tizard) has chosen the week of his successor's first Budget to criticise the Government’s failure to bring the country’s external accounts closer to a balance.

According to the latest figures from the Reserve Bank. Mr Tizard is certainly right in noticing the imbalance New’ Zealand’s export earnings for the year ended June. 1976. are almost a third higher than for the year ended June. 1975 Payments for imports have not increased at such a rapid rate in the same period, but imports still cost substantially more than the country’s revenue from exports. As the Opposition has not been slow to point out. New Zealand is still borrowing abroad to bridge the gap

But in chastising the Government for its failure to restrain imports further. Mr Tizard risks making himself an advocate of higher unemployment. Almost certainly, that is not what he intended, but further restraints on imports, with the object of bringing New Zealand’s external trade closer to a balance, may have that effect.

Increasing exports is one of the answers, and this must be done without putting undue inflationary pressure on the economy. Something further might be done to restrain the flow’ into

New Zealand of luxury consumer items; but these are not an unduly large part of New Zealand’s bill for imports. Significant cuts in imports could only be made in the raw materials and partly manufactured items needed to keep industry’ — and its emploj’ees — busy. Last year, Mr Tizard’s own policy was attuned to maintain such imports.

To demonstrate that Mr Tizard’s new approach to New Zealand’s external trade deficit has undesirable consequences is one thing: to suggest an alternative, workable policy for the Government is quite another. Although prices for primary exports are improving, inflation elsewhere continues to keep the cost of imports ahead of the return from exports. The problem is to find a way in which the volume and cost of imports can be adjusted with as little disruption as possible to economic activity in New Zealand. At the same time, all New Zealanders will have to accept further restraint on their standard of living until the country’ as a whole is to live within its earnings.

However this is done, it will be painful. It must be even-handed and should not erode employment or the means by which almost all New Zealanders enjoy access to the necessaries for a decent life. Some attempt to restrain consumer spending on imports can be expected in today’s Budget, but Mr Muldoon should not cut back so hard that economic activity will be seriously curtailed. Mr Tizard and his colleagues would be among the first to complain if he did so.