Mr Muldoon gloomy about prospects for world’s economy

Press, 27 November 1979, Page 3

Mr Muldoon gloomy about prospects for world’s economy

Parliamentary reporter No previous conference of the Commonwealth Parliamentary Association could have met at a time of greater inhumanity of man to man, said the Prime Minister (Mr Muldoon) yesterday. Speaking at the opening of the association’s twentyfifth conference, Mr Muldoon told the 240 delegates that the scale of inhumanity was so vast that it not only taxed the mind to conceive it, but threatened to paralyse the will to act to afford relief.

“That such dreadful cruelties are being deliberately practised, and so much starvation, malnutrition, and disease exist purely from causes of lack of resources and the occurrence of natural catastrophies, is a reproach to our very civilisation,” he said. “A few men can, for example, be put on the Moon, yet hundreds of thousands of people, mostly children, die on Earth for lack of elementary means of sustenance.”

Mr Muldoon said he was unable to take an optimistic view of the world economy. He had predicted two years ago that the rich would get richer and the poor would get poorer, which was what had happened. “This year, the industrialised nations, as a group, will experience a modest, combined deficit of SUS2OOOM while the non-oil producing developing countries will

have a record deficit of SUS4O,OOO million or more. “These figures reveal the heart of the main economic problem that confronts the world today — the accelerating price of oil. It is re- j sponsible for the dismal’ prospect of a spreading re-j cession and continuing high, rates of inflation,” said Mr: Muldoon. Any attempt to lift living] standards, to stabilise commodity prices, or to transfer resources from developed ] countries to developing countries could be negated by the Organisation of Petroleum Exporting Countries simply adding another dollar to the price of a barrel of oil. Increasing oil prices were not in response to market forces, but a result of O.P.E.C. policy, Mr Muldoon said. “I believe the price will double in a period of about 12 months,” he said.

It was comforting to talk about recycling O.P.E.C. surpluses, but that involved some countries increasing substantially their foreign debt. “How long can the world financial system absorb these strains? It may not be long before the private-sec-tor banking system runs into serious difficulties in attempting to recycle these surpluses,” Mr Muldoon said. “New Zealand is a major exporter of dairy products, but the increase in our bill for imported oil in the current year will absorb the en-l

tire annual earnings of our dairy industry. New Zealand is a relatively affluent country. 1 shudder to think of the effect of oil price increases on some of the countries whose Parliamentarians are at this conference,” he said. Other issues apart from ■ oil could not be ignored, Mr ■ Muldoon said. Among these was the problem for world (trade posed by two sets of I rules being used — one for industrial products and one | for agricultural products. “Agricultural protectionism is practised by almost all industrial countries to the detriment of their own economies, to the disadvantage of their consumers, and to the frustration of internationally efficient producers such as New Zealand, and the producers of tropical agricultural products," he said. “I strongly sympathise with those developing countries which produce commodities such as sugar and find their markets restricted by the inefficient beet sugar product in the industrial nations. “I am very conscious that many developing countries require not aid but permission to trade.” The contradiction between the need of the developing countries and the economic problems confronting those countries wanting to respond to that need was a moral issue for the Commonwealth “community of friends” which shared a common bond of compassion, Mr Muldoon said.