P.M. rules out an early budget

Press, 5 October 1977, Page 6

P.M. rules out an early budget

PA Wellington Although the world economic outlook was not good, the Government did not propose another package of restraints before the end of the year, said the Prime Minister (Mr Muldoon) yesterday. Further restraint could do “considerable damage,” he said.

But while unemployment! had “probably passed the' low point of the year,” the; business outlook was nod good, said Mr Muldoon. 1 “The upturn in various major economies is petering out and the general impression that one gets talking to finance ministers and bank-1 ers is that they are afraid that next year there may be l less economic activity,” he said. There was a rising degree) of protectionism around thej world, and New Zealand! could not expect much help, from economic activity in, other parts of the world next year “No-one feels that it is go-i ing to be a setback of the' 197* type, but there is a lot! of pessimism about, and the) feeling that next year might) be a pretty dull year; no-one: is looking much beyond! that.” However. New’ Zealand’s, credit rating over the next seven years was good, and' the general consensus was; that its economic policies'

/were about right for the) /circumstances, and it would /come through with less relaHtive damage than some ■other countries. He described the 1.M.F.! ; meeting as the most con-1 fused of the eight he had! ■ attended. “Everyone knows! /what has got to be done, but! ( the political will to do it! ■* seems to be lacking.” The one “bright spot” was! the efforts of the Secretary-! :■ General of the Organisation! ■for Economic Co-operation! Hand Development to organise > | joint action with oil pro-i rducers. This action would i ■ have to be taken in concert,! as it would be done unilaterally by the Germans or ■Japanese, and the Americans ;'were worried by their huge J deficits internally, Mr Muldoon said. I He hoped it would not be; ! long before action was taken, as “we cannot last many years.” Mr Muldoon did not think the world was headed for a 1930 s type depression, but !the situation could become '“very very difficult, indeed.”!

:j Countries such as the United States could quickly “put up the shutters” on imports, and the seriousness of the position could be measured by the fact that jnext year would be the fifth lin a row in which the sur- ■ pluses of O.P.E.C. nations and • industrial producers would be ‘over $4O billion a year. : This was the extent of the extra debt burden which I primary’ producers such as New Zealand, and non-oil i producers, were having to 'carry. , But the developing countries were at fault in believiing that this problem would somehow go away. Some E.E.C. countries which were good friends of New Zealand in public were prepared to “put the knife in” when it came to negotijatitig access for exports, said Mr Muldoon. “.As was borne out in the negotiations last week in the agricultural committee of the Community, the only country that was arguing on •a basis of sympathy was 1 Britain,” he said.