No agreement on fiscal regulator

Press, 20 July 1979, Page 3

No agreement on fiscal regulator

PA Wellington The Government caucus yesterday failed to come to any decision on the proposal of the Prime Minister (Mr Muldoon) to introduce a fiscal regulator.

The issue will be discussed by the caucus again next Thursday, and Mr Muldoon said he hoped to get consensus before he left for the Commonwealth Prime Minister’s conference in Lusaka next Friday. In his Budget-night speech last month Mr Muldoon said he hoped to introduce legislation to allow tax rates to be reduced by regulation when Parliament was out of session. Some Government backbenchers and National Party divisions have expressed reservations about such a move and see it as an erosion of Parliamentary responsibility. At a press conference this afternoon, Mr Muldoon said the Government caucus members had discussed one or

two proposals for means of ratifying or validating reductions in taxation made when Parliament was not sitting. “We have not concluded our discussions,” he said. He refused to outline the specific proposals the caucus was looking at, saying that thev were quite complex. Mr Muldoon said there was general acceptance in the caucus that the move was desirable for economic reasons. But some members were concerned about adverse comments on the proposals. The Government already had power to increase and reduce indirect taxes while Parliament was not sitting, he said, and Parliament could validate over-expendi-ture which had not been au-

thorised by it. The last Labour Government had committed and spent about $3OO million which Parliament had not voted. “So we had to pass an Act subsequently validating

it retrospectively,” Mr Muldoon said. The same constitutional lawyers who were criticising the present proposal had accepted with equanimity the fact that for years the Government could raise or lower indirect taxes while Parliament was not sitting. “They are totally illogical and it suggests to me they have not got enough to occupy their time,” Mr Muldoon said. The caucus realised it was a politically sensitive issue but the Government was not going to be easily dissuaded from going ahead with the proposal. It was important because it provided a fairly rapid injection of purchasing power. Mr Muldoon agreed it would be easier to explain

the proposal to the public if the term “tax reduction” was used rather than “fiscal regulator.” Asked where the term originated, he replied: “I guess someone in the Treasury, originally.”