Mr Rowling calls for mini-Budget

Press, 4 December 1979, Page 2

Mr Rowling calls for mini-Budget

PA Wellington The Leader of the Opposition (Mr Rowling) last evening called on the Prime Minister (Mr Muldoon) to present immediately what would amount to a miniBudget to tackle economic pressures which, if unchecked, would sharply in- I crease as New Zealand moved into 1980. He was speaking on the eve of a resumption of Parliament amid mounting speculation that Mr Muldoon will announce taxation cuts for everyone before Christmas. 1 It is believed that a cut of; up to 5 per cent across the i board applying from next April 1 is being considered. This could be done through legislation passed by Parliament before it adjourns for the summer recess. Mr Rowling said tax cuts; without complementary ac-: tion would simply fuel in- 1

flation and do nothing to boost real production. The economy would move into a critical phase early in the new year. The fact that inflation had not been brought under control had made a tax cut necessary. “The wage increases that go with inflation have not I made people any better off,” said Mr Rowling. “It’s just a case of more dollars buving less,” “The fact that they are earning more dollars, however, has pushed manv people into higher tax bracIkets and that means that (their take-home pay is I sharply reduced. “If wage and salary earners have less to spend that will force retailers and manufacturers to retrench and (throw thousands more New ' Zealanders out of work.” Mr Rowling said the outlook was for a rapid rise in official unemployment figures from

the present 50.000 to around 70,000, with school-leavers particularly badly affected. The main world economies were slowing down again,

with the United States and Britain moving into a new (period of recession. That had; (serious implications for the (demand for New Zealand’s traditional exports and for the level of activity in the New Zealand economy. The Government’s action should include: 1. A cut of at least 5 per . cent in income tax for all' ■lower-income and middle-' income earners from early next year. 2. The Government had to announce a forward pro-; ;gramme for its own charges, (so that manufacturers and' consumers could plan ahead (with some confidence. It], (had to abandon the free-for-:, (all in the money market and: (bring interest rates back under control. 3. Firm instructions had to i be given to lending institu-: tions to ensure that lending! ito importers was strictly n

controlled. This was essential; to keep down the. demand, for imports and to ensure that spending was directed towards New Zealandproduced goods. 4. Concerted action had to be taken to encourage priority investment. Funds had to be made available at low interest for important investment projects, particularly 1 those with an export potential. 5. Action had to be taken to provide proper work opportunities for school-leavers.* Funds at present used to pay the unemployment bene-' fit should be used instead to provide training courses and. community work. Workers: should not be taxed ‘To pay, other workers to rot in enforced idleness.” Mr Muldoon has not ruled out the possibility of a mini-' Budget. He said recently that that, could he done at any time.