Government ‘out of touch’

Press, 25 February 1980, Page 14

Government ‘out of touch’

PA Wellington .The Government appeared more concerned about its own fiscal problems than those of business which provided . the . wealth of the nation and the. jobs, for most people, said the president of the Chambers of Commerce (Mr David Fine). - He was replying to the Government after a statement of concern by five national organisations over the liquidity problems facing business. Mr Muldoon yesterday described the statement as "exaggerated”. “One wonders whether the Government is really in touch with the reality and urgency of the situation,” Mr Fine said.

“Today the Prime Minister was reported as saying that there was any qmount. of money available for borrowing, but the Deputy Governor of the Reserve Bank said that there had to be a tight control of money supply to restrain inflation. “The Government has to

realise that firms are short of cash. Most cannot afford to borrow more or have already committed available security. Because of inflation they urgently need, additional funds to maintain- their businesses.” 1 'Mr Fine said while there was still demand ■ for goods and services, collection rates hgd slqwed . because other firms - were .in a similar position. Liquidity would be made worse because some tax due‘to be paid would be assessed on illusory rather than real profits. “Firms must be able to generate and retain sufficient cash so that they are not forced to borrow at high rates of interest for ordinary working capital,”, he said. “Some fiscal measure which can allow’ firms to retain more of their earnings is long overdue.” ...

The heads of five of New Zealand’s most influential organisations, representing trade and employer sectors, on Thursday said that unless urgent action was taken to deal with "the liquidity cri-

sis”,. New Zealand's domestic and export business would suffer.

I The joint statement, through the president of the Manufacturers’ Federation (Mr F. Turnovsky) said that liquidity had worsened markedly in the last few mpnths. The statement was ascribed to the presidents and chief executives of Federated Farmers, the Retailers’ Federation, the Chambers of Commerce, the Employers’ Federation and the Manufacturers’ Federation.