Party leaders policies on growth strategies

Press, 17 November 1981, Page 22

Party leaders policies on growth strategies

Mr Muldoon

Statement by the Prime Minister, Mr Muldoon. The National Party is the only party this year which is tackling economic growth in its proper sequence. \ From 1975 to 1978 we settled down the after-effects of the first oil shocks which

had been badly mishandled by the Labour government. Then the second oil shock hit us and the last three years have been devoted to dealing with this.

The change in the value of oil from $2 a barrel in 1973 to about $35 a barrel today has, however, one favourable spin-off for New Zealand. At today’s value of energy we are an energy-rich country.

fourth in the world on a population basis. In the last six years we have built up our export production both in traditional industries and in new ones, a 40 per cent increase by volume up until the end of last year and probably 48 per cent by the end of this year. That is what has saved us at a time when we are paying this year $lOOO million more for , oil than we did three years ago. This increase in export production must continue but in addition it is simple economic common sense to exploit the advantage that our energy resources now gives us. By. turning that energy into various exportable products we ean build an entirely new export sector that will return us some $lOOO million a year after paying all external costs, including finance. For some strange reason both of the opposition parties oppose this development. Instead they have grandiose plans for distributing wealth which their policies could never earn.

As these energy-based projects come on stream — and the first, the ammbnia-urea , plant, will be on stream next year — our balance-of-pay-ments account will gradually move from the red to the black and this will give a lift to every sector of the economy.

Every small business is, in some way, dependent on overseas funds, whether for plant, raw materials, or components. Every housewife is

dependent on overseas funds for sugar, tea, coffee, bananas, oranges, to name just some of the foodstuffs.

Put alongside .the _ continued expansion of our traditional export industries, farming, forestry, fishing, tourism, and sundry manufactured goods, the new en-ergy-based sector will add about twenty per cent to our annual wealth. The overseas funds that are generated will be used for the benefit of every business, large and small. The new wealth will be taxed and thus broaden the tax base and permit a lower rate of texes generally. ..

A prosperous economy will provide jobs, not just for the unemployed at present but for children now at school and children not yet born.

This is the proper way to go about building an economy. It is fortuitous that we have these huge energy resources: hydro power, gas, geothermal steam, coal, lignite, and now, at last, oil. It is fortuitous that we have them at a time when the value of energy has multiplied by so much but it would be criminal if any government adopted the policies of the two opposition parties and failed to capitalise on our good fortune. This surely is the central issue of this year’s election campaign.

Mr Rowling

Statement by the leader of the Labour Party, Mr Rowling.

The experience of the last five years suggests that economic growth is non-exis-tent in New .Zealand. The latest official "Statistics Department figures show conclusively that there has been no economic growth at all under the present National Party Government.

In fact, New Zealand’s growth performance over a very long time period has been extremely poor by international standards. We have vied for last place, along with .Britain, over the last twenty years in terms of economic growth per head. It was only during the time of the third Labour government

that respectable growth rates occurred.

Economic growth is essential if New Zealand is to meet the legitimate hopes and needs of its people. It is only through growth that enough jobs, paying worthwhile wages, can be created. It is. only growth that can provide enough extra resources to meet the growing health, education, and welfare needs of New Zealanders.

Labour’s growth policy starts from an examination of the real reasons for the lack of growth in the New Zealand economy. It is a complex area, with a number of inter-related problems. There are no simple answers. What is required is not a simple slogan and a series of projects of doubtful economic validity but a comprehensive programme stretching across the economy which attacks all the causes of poor growth. These causes are:. • Low domestic demand. • Low investment. • High inflation. • Continuing balance-of-pay-ments difficulties. • Lack of regional development. • A completely unbalanced tax system. The results of no growth of the last five years is the huge increase in unemployment and a progressive rundown of social services. Labour intends to attack all of the problems that affect New Zealand’s growth performance, with a package built round reforms in the

tax system and an across-the-board increase in investment.

Besides providing much needed relief for families, Labour’s personal tax-reform policies Will generate a substantial boost in demand for local goods and services. This boost in demand will in turn lead to an increase in jobs, in investment, and a move to a higher growth rate.

This, of course, can only happen if the balance-of-pay-ments situation can cope with the extra strains that a local expansion will involve. Labour’s . foreign-exchange surcharge has been carefully designed to offset the impact on imports of the forthcoming tax cut and the resulting increase in economic activity. It will give a slight increase in protection for local manufacturers and, for the first time in six years, provide for a genuine sustainable increase in production.

As well as lowering the demand for imports, Labour intends to push ahead very rapidly with export production. New Zealand exports still consist very largely of primary products and semiprocessed primary products for the simple reason that these are the areas in which we are the best in the world. Labour’s export programme is built round agriculture, horticulture, manufacturing, forestry, and fishing since' these are the areas that will produce exports quickly and with the maximum return

for New Zealand’s investment.

According to Federated Farmers, $2OOO million invested in agriculture over the next ten years will provide increased export earnings of about $lBOO million by the end of the decade; with the increase building steadily through the next ten years. It will also provide at least 50,000 jobs, ■ half .on farm and half off farm.

According to the National Party, $6OOO million invested in “think big” will provide increased export earnings and import substitution of $670 million by the end of the decade after worsening the balance-of-payments situation right through until 1987. It will also' provide less than 4000 jobs. That is the major difference between the two parties. National intends to invest all the available extra investment resources in a few large, inherently risky projects, with long pay-back periods and no major increase in jobs. Labour intends to spread investment throughout the economy in areas with much faster returns in exports, with a much greater return per dollar invested and with many times the number of jobs. Some of the “think big” projects will be delayed, a couple may be cancelled, and the ones that do proceed will not crowd out the extra investment that New Zealand needs.

An integral part of Labour’s growth policy is a commitment to lower inflation. High inflation makes

investment decisions more risky as well as penalising the less-well-off sections of the community. Inflation will be wound back through a sensible monetary policy, through tighter controls on Government charges, through the tax-wage offset that Labour’s tax policy will encourage, and through the promotion of greater competition in the economy as well as the reintroduction of a flexible' subsidy programme for basic foodstuffs. Most important is the need to break the inflation psychology that grips New Zealand after prices nave doubled in the last five years. That will require determination and real leadership. Regional development, is also essential if all parts of New Zealand are to reach their potential. All of the South Island will be declared a regional development area under the next Labour government, giving greater emphasis to the over-all growth of this part of New Zealand. Over-all economic growth is, after all, mainly about creating worth-while employment opportunities. The Planning Council has estimated that about 330,000 jobs will be needed over the next ten years to return to full employment.

The’ record of the two parties in the area of job creation shows about the clearest contrast possible between philosophies and performance of Labour and National.

According to the latest issue of the “Labour and Employment Gazette,” the Labour Department’s official publication, just over 100,000 new jobs were created under the third Labour government. This is an average of 33,000 jobs a year spread throughout New Zealand. Under the last six years of National, a total of 30,000 new jobs, fulltime and parttime, have been created. That is bad enough but over the two years to February, 1981, the total number of new jobs in New Zealand was 1100. National’s average, under the new national growth strategy, is about 550 new jobs a year at a time when 33,000 plus new jobs are required.

The main issue this election is economic growth. Voters have to choose between two parties and assess their policies. The records of National and Labour are quite clear. Labour has achieved growth, and provided jobs right through the first oil shock. Labour’s growth strategy . worked. National’s has not. They are the facts. The choice is between a return to the basics with Labour’s policy or a big gamble under National. Mr Beetham Statement by the leader of the Social Credit Political League, Mr Beetham. Social Credit recognises that development round re-gionally-based indigenous industries which are well suited and well proven in New Zealand can provide a far greater capacity to fund or finance this country’s growth with onshore capital. This will reduce dramatically the foreign ownership so prevalent within New Zealand.

As an important part of Social Credit’s basic strategy, the small-to-medium business sector will be revived to ensure a viable, active, demand-based home market as a springboard for more diversified indigenous manufacturing export growth. Social Credit also recognises that the stimulated demand will place pressure on

the balance of payments. This will be combated by. Social Credit’s investment policy, which will provide investment for regionallybased indigenous industries such as diversified agriculture. fishing and aquaculture, forestry, tourism, indigenous energy, and added-value manufacturing such as tanning, wool processing, and furniture manufacturing. ■

All these industries ’ are employment-intensive. re-gionally-based, and foreigncapital earners or savers. They are all industries that the present Government has talked a great deal about but have only a fraction of their potential realised as investment has dried up and taxation continues to oe a major disincentive.

This is particularly noticeable in fishing, aquaculture, tourism, and the indigenousenergy options. Agriculture and forestry fare a little better but now face threats from the present Government’s commitment to multinational companies who want to exploit New Zealand’s raw materials such as coal, ironsands, hydro power, gold, raw logs, and fish protein. While this is occurring, the indigenous-industries sector is being starved of investment capital for growth. Even more significantly, the human-resource base will never be adequate to sustain reasonable growth in both at the same time.

Social Credit is totally committed to getting inflation under control to restore the value of people’s incomes and savings once again. It is the only political party in New Zealand with a clear decisive policy to do so. A Social Credit government will give a directive to the Reserve Bank of New Zealand which will state that the New Zealand money supply must be kept- in strict control and relationship with the production of goods and services.

This will require that only the Reserve Bank has' the right to create purchasing power. It will remove the right of the private trading banks to create credit, or purchasing power, as they do at the present time' Social Credit does not and will not interfere with private banks in any other way other than to remove their right to create out of nothing credit, or purchasing power, to sell to their clients at a handsome profit to themselves and at an enormous cost to our economy in uncontrollable, rampant inflation.

Social Credit will marshal with incentives, both taxation incentives and interest-rate incentives, this country’s investment resource into regional development banks, regional development banks with a commitment to the producing sector, particularly the producing sector based on developing our regional indigenous-resource base.

These banks, or lending

institutions, will be founded on a similar basis as the present trust banking operations. They will offer infla-tion-proofed savings for longterm investment plus 2 per cent interest. They will have a brief to on-lend funds to productive enterprises at 5 per cent interest rates.

The aim is two-fold: • To create a climate of incentive to expand and produce and so generate employment. • To assist in reducing costpush inflation by reducing producing costs. A person who invests will receive the inflation-proofing by a combination of tax deduction and interest.

Our research department 1 asserts that on present terms the cost of this measure will equate with the major cost of unemployment under the present Government. ’ The major difference is that there will be no unemployment under a Social Credit government because every producer will be desperately needed in the growth industries expanding in response to the- implementation of Social Credit's economic policy. If is vital that this incen-tive-based marshalling of New Zealand’s onshore investment resource takes place if New* Zealand is to realise its full potential without prostituting itself in the foreign capitals of the world. Combined with Social Credit’s taxation plan will be its exciting new “Proposition 28,” which is aimed at stimulating the producing sector by incentives. This plan calls for a minimum non-taxable income set above the maximum welfare benefit at $3760 approximately, thereafter a flat 28 per cent income-tax rate spread on a broader base than the present graduated income tax that has the average taxpayers on a marginal rate of 48 per cent, or 48c in the dollar.

The recognition of the family by the income-split-ting concept allows the wife in a one-income family to add her non-taxable allowance to her husband’s. Thereafter no tax is payable unless there is expenditure in a tax year in excess of $lB,OOO. After $lB,OOO of expenditure in one tax year, a further tax is payable of 28c per dollar. It is important to note that this will only be payable if excessive spending takes place and even the maximum tax paid would be less than is at present the situation in most cases. There will be non-taxable items, such as first homes; farms, etc scheduled.

This tax plan is aimed at encouraging production and savings without penalising the low-income group and yet recognising the present disadvantages of the singleincome family.

The combined effect of Social Credit’s economic proposals will stimulate production through the marshalling of savings and investment into the productive sector. The special emphasis which Social Credit will place on indigenous and re-gionally-based industries will realise the potential of these employment-intensive industries and create far greater wealth at far less cost than the current “think big” strategy promoted by the Government. New Zealand can solve its own problems in its own way. New Zealand can build the sort of future they want under their own control if they have the courage to go after bold initiatives.

New Zealand is in a great deal of trouble. It can work its way out of it if we do not panic ourselves into disastrous short-sighted options.