LABOUR

Press, 25 November 1981, Page 12

LABOUR

Q. “Labour will introduce tough anti-monopoly and procompetition policies. These will include real price control in areas where there is little or no worth-while competition.” Can Labour give examples of the “monopolies” it has in mind? Can it give examples of prices which would be controlled?

A. The emphasis in Labour policy is on controlling those who use monopoly-type power to limit competition or to raise prices. The Trade and Industry Department has a list of industries and firms for which either a product or a geographical (local) monopoly exists. As at March 31, 1981, applications for some 399 collective pricing agree-, ments had been registered in New Zealand. These are the sorts of areas where price control could be imposed, but are too numerous to list here. The thrust of the policy, is to promote competition as the effective way of keeping prices lower. Labour's policy on monoplies is much wider than implied in the question. It includes provision for such matters as monopoly and conglomerate inquiries; and independent examination of

important merger or takeover proposals.

There have been no monopoly inquiries undere the National Government. This will change with Labour. The Fletcher-Challenger merger, which created New Zealand’s largest company, was passed by the Examiner without reference to the Commerce Commission for examination. This would not have been the case with Labour policy. Q. “The present company tax structure works in favour of big companies which are exporting,” and, “the next Labour ' Government will undertake a comprehensive review of present export incentives.” Are export incentives for big exporters to be reduced? Are taxes on large companies to be increased? Does Labour want to reduce the size of New Zealand’s largest companies?

A. Labour, like the National Party, is committed to a review of the export incentive - system. Our policy states: “The next Labour Government will undertake a comprehensive review of present export incentives to ensure that the aim of adding to New Zealand’s foreign exchange is achieved. Labour will increase the availability of export incentives to small, and medium-sized companies which do not presently qualify for export market development grants.” Any review is likely to result in some companies (big or small) paying different amounts of tax to their present liability. If the question is meant to

imply that Labour's income tax reforms will be funded from new “super taxes" on big companies then the implication is utterly wrong. Of all the parties, Labour is the only one to have costed its tax reform proposals and to have given a specific indication of how they will be paid for: a foreign exchange surcharge, a clampdown on tax evasion and avoidance, and through - the increased revenue that Labour’s policies of real economic growth will generate. Q. Would Labour introduce a capital gains tax? A. No.

Q. The cost to the user of transport services should be the real cost of the resources involved. Does this mean that the Railways and Air New Zealand will be required to pay their way? Does the “real cost" referred to include the cost of capital expenditure?

A. Labour Governments have always recognised a responsibility to ensure the provision of adequate transport services where social, environmental and regional development needs have been recognised as being of paramount importance. Where subsidies are provided, it is important that they be clearly identifiable so that the economic cost of Government policy can be identified and evaluated.

While traditionally capital expenditure for public services has been principally raised by loans with users paying only for facilities in current use. in the last six

years National’s policy towards. for example, electricity and Post Office pricing has been to compel users to pay not just for current facilities in use, but also to pay for the development costs of facilities to be brought into use. While in the long run the costs of capital expenditure would be expected to be. met by the services provided, Labour will not expect consumers to pay for the cost of future facilities.

The losses being suffered by Air New’ Zealand are a relatively recent phenomen and we ‘do not expect these to continue indefinitely. Railways will be providing a number of social services for which it would be unreasonble to expect users to meet the full cost. This is w|iy our policy includes explicit subsidisation of these services.

Q. Under Labour, all the South Island and much of the North Island would be designated as Regional Development areas. How can these areas be helped without penalising the few areas of New Zealand not especially designated? A. This question is misleading. Labour believes in balanced development across the regions and in all sectors of the economy. This means using the potential of each region to the best advantage of that area, with particular emphasis on creating jobs, through further processing and adding value to local resources.

Labour's policy does not involve assisting one region

at the expense of another. Quite the contrary, a programme of balanced development means that by giving some assistance to those areas with the most undeveloped potential we will assist these regions to increase output and income, benefiting themselves particularly, but with flow on benefits for the rest of the country. Q. Labour appears to envisage a considerably expanded role for the Rural Bank; “Financial support for the Rural Bank will be adjusted accordingly .. .” What will be the source of additional funds for the Bank? A. Additional funds will come from the extension of the role of the Rural Bank to a real bank, taking deposits. Government funding will also be increased. It was announced recently that the Rural Bank, which was established by the previous Labour Government, can now give loans to only about 50 per cent of applicants. The stock and station agents are justifiably complaining that they are being saddled with a lot of hard core debt and thus find it difficult to fulfil their traditional role of providing seasonal finance. Labour’s plan to inject an extra S9OOM over the next five years into the rural sector for development investment will provide an expanded role for the Rural Bank.

Q. Labour is proposing a 6 per cent surcharge on foreign exchange. Are any other new constraints envisaged on foreign travel? A. Labour is proposing a surcharge of up to 6 per cent on foreign exchange. This means that those wishing to purchase foreign exchange for use overseas will beliable to pay the surcharge. While tickets purchased from Air New Zealand will not be liable for the surcharge, there will be some flow-on increase in costs. To this extent, making foreign travel a little more expensive will encourage people to holiday in New Zealand and will discourage, but not prevent, overseas travel. Of course, many of those wishing to travel overseas will receive more in income tax cuts than they would have to pay in terms of foreign exchange surcharge. In short. Labour policy includes no constraints on foreign travel. In fact, we intend to abolish the 13-week rule for overseas travel by superannuitants. A maximum 6 per cent foreign exchange surcharge will add no more to travel costs than one year of the National Party’s “sinking exchange rates” system of monthly devaluations. The main difference is that the surcharge will produce revenue to make income tax cuts possible. . Q. What use does Labour envisage for electricity from

the Clutha and Lower Waitaki power developments? A. Electricity generated from these developments will be used in two ways: (1) Labour's policy of encouraging regions to use the energy source in which they have a comparative advantage will be translated into a 25 per cent reduction in the level of bulk electricity tariffs for industrial and domestic users in the South Island. (2) Labour’s policy of real economic growth involves a target of 3 per cent growth per year — well in advance of that allowed for in the Government's Energy Plan. This will mean increased electricity usage by industry — particularly small and medium-sized businesses.

Q. “Labour will encourage greater processing of primary produce close to where it is produced. The emphasis will be on added value and new job opportunities.” What additional products can be processed in New Zealand, for what markets, without labour costs making New Zealand exports uncompetitive on world markets?

A. A prime example of adding value to exports is Labour’s carpet marketing plan. This is a thoroughly researched policy designed to capture 3 per cent of the United States carpet market. Labour intends to join with major manufacturers of carpet, in New Zealand. Carpets will be made in New Zealand and marketed directly through a retail operation under New Zealand control that cuts out most of the middlemen. Initially, the expanded production will come from existing facilities; as the concept is proved, refined and expanded, a major

expansion of facilities will be needed.

This carpet plan is but one example of how a Labour Government will assist exSirters and producers to entify new markets for our primary produce, Woollen carpet is a “champagne” class product in the United States, currently having less than 1 per cent of the total carpet market, down from 10 per cent in the sixties. This is a viable and exciting proposition — approved of by most parts of the New Zealand industry.

Q. What is the object of inviting Maoris to note tribal affiliation on the Maori electoral roll and on birth certificates? Will pakehas be invited to note country of ■family origin or other important affiliations? A. For many years the Maori people have not been encouraged to take any pride in their cultural heritage. Many were displaced from their tribal lands as a result of the Land Wars and consequently lost contact with their tribes. Others became part of the second migration, from the rural areas to the towns and cities. Consequently, they, and especially the second generation, have lost touch with their origins. This policy is designed to restore and create renewed pride in ancestry. The Maori people will be encouraged to state their tribal affiliation as a recognition that they belong to more than just a nuclear family, but also to a wider family, the hapu as well as the whanau. Should a significant number of pakeha also express a desire to note cultural identification we would consider such a proposal.