Trade terms disappoint

Press, 17 January 1979, Page 1

Trade terms disappoint

On G.A.T.T. and the E.E.C., Mr Muldoon said that after five years of negotiations the international trade negotiations under G.A.T.T. might end within the next month or two. i - “The result seems likely to be a very considerable disappointment after five years of effort,” he said.

“As far as New Zealand is concerned, we may well get some minor concessions on agriculture in return for some minor concessions on our part. ■ Set out on paper they'are likely to appear ludicrous. “Agricultural protectionism still remains the main international issue which gives the lie to the protestations of generations of politicians who have espoused the cause of free multilateral trade,” Mr Muldoon said.

The problem of the accession of Greece and other countries to the E.E.C. would make New Zealand’s position even more difficult in the battle for access to markets. “In the long term I believe a trade agreement between New Zealand and the Community is the solution.” he said “It may

be that we are close to the time when we should set out to negotiate such an agreement.”

Defending Government policy, Mr Muldoon said that all kinds of people had recently been commenting on the economy: “editors, columnists, economists, and unsuccessful politicians.” Most of them had fallen into one or both of two kinds of error, he said. “They have failed to distinguish between the short-term picture and the impact of current Government policy and the longer term or structural situation.

“They have also failed to differentiate between the macro or over-all economic scene and the micro or detailed application of economic events and policy to the various elements that make up the total economy. “In the main, their comments have applied to the ma c r o-economic scene whereas effective policymaking must go into much more detail.” Mr Muldoon said that events were evolving very much as the Government expected.

“In the medium to longer term, there must be some restructuring of the economy and more of our resources diverted into export production,” he said.

Mr Muldoon rejected as “astronomical” a prediction on Monday by Mr Rowling, of an internal deficit of S2OOOM this year. He said he was also not prepared to accept at this stage the estimates of some people for an increase of 12 per cent in the consumer price index for 1979. (Mr Rowling has predicted 10 to 12 per cent inflation.)

Mr Muldoon said the 51350 M deficit budgeted for with Supplementary Estimates was a lower percentage of the gross national product than the SI2OOM deficit bequeathed to his Government by the Labour Government when it went out of office in 1975.

“More important, as against 1975, there was a need last year to stimulate the economy so that we did not continue the downward movement which had gone far enough,” he said. The larger deficit was quite deliberate policy. Natural growth in

revenue would cover the full year of the October 1 personal tax reductions and the increase in national superannuation which began at the end of August. “Given no further changes in policy, it appears likely that for the 1979-80 year the deficit would not be greatly different from the 1978-79 year and could indeed be smaller,” Mr Muldoon said. One factor which affected the result was the sum of between S6OM and SBOM of company tax relating to the stock concession of last year which was not repeated this year.

“Because of the manner of assessing company tax, the concession could be taken in for company provisional payments and will not come to charge until late in the 1979-80 year, thus increasing this year’s deficit and reducing the potential deficit for the next year,” he said. Mr Muldoon reiterated that the Government was committed to a review of death duties.