Call for investment boost

Press, 18 July 1980, Page 4

Call for investment boost

PA Wellington New Zealand needs more investment to generate jobs, reduce dependence on imported oil, .’.' and promote economic growth,' according to a working committee set pp. by the Planning Council.

In an 86-page- report on investment issues, Dr D. T. Brash (convener), Sir Frank Holmes’, and Messrs W. Smith and G. Thompson, say that without more and better investment the country’s social and economic' position can only decline; “Thpre is obviously" room for considerable improvement in New Zealand's investment performance in. the 1980 s,” the committee says. “We have been operating at rgtes of investment (76111010 th? "middle ranges fpr th? more developed economics, yet our production and income growth have been disappointingly low” , , . Since 1975-76 there had

been almost no growth in output or employment, and investment had declined. The report is scathing about inefficient .use, of capital, 'and in this: respect. includes attacks on restricted shopping and working hours. It is critical of import licensing, industrial • rela-tionsstop-go monetary and fiscal policies, and the taxation structure, If also says the Government should get the best return possible from .publicly-owned resources (such as timber) uged in investment projects... •The report ?ays that in the shortrferm the effect of increased investment, aggravated by short-term tecreases in oil prices, m? ans that New Zealand's balance-of-payrnents deficit will widen. . -

In a« introduction to the report, Sir Frank, as chairman of the council, says most of New Zealand’s ener-

gy projects have a high overseas exchange content and the substantial net benefits to the balance of payments will not be felt until the end Of the decade. The report suggests that too little has been invested in activities designed to earn or save foreign exchange, and too much in suburban development, although not necessarily in housing as such. It also refers to inefficiencies and delays in construction,'which accounts for nearly 60 per cent of all investment, and the low level of investment in new plant and machinery, particularly in the private sector.

The report says recent Government moves to relax price controls, employ a flexible exchange rate, create new export incentives, and introduce more flexible monetary policies should help promote con-

fidence. There is evidence the strategy is already working for exports, it says. Among policy changes suggested are: Taxation reform: Personal taxation indexed to the inflation rate so taxpayers do not automatically move into higher tax brackets. Income tax reduced and expenditure taxed by broad-based, low retail-sales tax on all goods and services. The report also proposes reform of company tax and comments on the negative investment c feet of no capital gains tax. Regulation ; and control: The committee urges a com? mitment to review, amend, or abolish controls costing more than their social good, and a more rapid transition to reliance on tariffs, rather than import licensing. It also wants higher priority to a programme for reductions in transport licensing and controls.