Wage-tax tradeoff talks break down

Press, 3 June 1981, Page 1

Wage-tax tradeoff talks break down

PA Wellington The Government and the Federation of Labour again failed to reach agreement yesterday on a proposal for a wage-tax trade-off as a method of dampening inflation during this year’s wage round.

After more than an hours discussion at the Beehive, the Prime Minister (Mr Muldoon) told reporters that the parties had had no success in reaching agreement. The Cabinet, which discussed its possible options earlier yesterday, would nowmeet by Monday at the latest to decide the next moves, Mr Muldoon said. “All the discussions will now be at an end,” he said. However, the F.O.L.'s secretary, Mt K. G. Douglas, said the door was still open as far as the F.O.L. was concerned. The F.O.L. had offered to discuss the detail of the wage-tax trade-off if the

Government was prepared to adjust tax levels to take into account fiscal drag. Essentiallv the offer amounted to a $4.50 tax cut a week, or 8 per cent on the average wage. The F.O.L. would submit this offer to the Government in writing today to show “quite clearly that we are not closing the door in these discussions.” Discussing the talks at a news conference later, Mr Muldoon said, “At the end of the discussions, they (the F.0.L.) said that unless there was a tax reduction as of right on top of any tax tradeoff, there would be no deal. “That, of course, is not

acceptable to the Government, and so we have come to the end of our discussions,” he said. The Cabinet had considered the talks in advance and made “certain decisions” depending which way the talks went. “We now have several options in front of us for action by the Government,” said Mr Muldoon. “From here, the Government has to accept resonsibility now for wagefixing.” Decisions based on yesterday's meeting would be made by Monday at the latest. In response to a question, Mr Muldoon said that return-

Ing to wage controls was certainly an option before the Government. Mr Muldoon said the F.O.L.’s argument that the Government had failed to talk about the specifics of its proposal had no validity. Every question the F.O.L. had put up had been answered in correspondence between the F.O.L. and the Government, he said. • The offer put forward by the . F.O.L. effectively torpedoed the talks, Mr Muldoon said. Mr Douglas said the F.O.L. would release to the news media today details of its offer to the Government.