Deficit to rise —P.M.

Press, 17 August 1978, Page 22

Deficit to rise —P.M.

PA Wellington A mini-budget next month would push New Zealand’s public deficit still higher, the Prime Minister (Mr Muldoon) told Wellington businessmen at a campaign luncheon. He said he would announce Supplementary Estimates about the middle of next month which would lift the deficit above its present level of 6 per cent of the gross national product but would not push it to the 9 per cent of the last Labour Budget. The SIOSOM deficit an= nounced in the Budget in June included a S2SOM allowance for supplementary estimates. Mr Muldoon indicated yesterday that recent wage settlements, including back pay for public servants, would affect the Supplementary Estimates. But he also promised more funds for the building industry and reading: “A bit more money, not too much.” The economy could stand some stimulation and the Government had been trying in recent weeks to assess just how much. The recent general wage order, back pay for public servants, and the national- ! superannuation increase at the end of this month would all increase spending power. Domestic inflation was still the most important issue facing the Government. Inflation would stay at about its present rate or a little less during the next 12 months but there were suggestions that ! international inflation would I rise again next year.

In spite of that Mr Muldoon hoped to keep domestic inflation at about 10 per cent, keep the income structure in iine with that, and then gradually reduce inflation. The balance-of-payments situation was also fairly relaxed, with a dramatic improvement at present but the likelihood that private imports would rise next vear. The balance-of-payments

deficit had improved about 20 per cent in the year to June, falling to about S4OOM compared with about S49BM in the June, 1977, year. Mr Muldoon said. A worsening balance next year could be offset by savings of SIOOM to SISOM when Maui gas came on stream but it was hard to prophesy so far ahead.