Economic plan unveiled

Press, 21 July 1982, Page 11

Economic plan unveiled

PA Wellington Labour’s trade and industry spokesman, Mr R. 0. Douglas, has unveiled a 10point plan which he has called a "total economic strategy." It advocated radical changes to the tax system, new investment policies, a new education system, steps to reduce inflation and to solve the balance of payments deficit, and new growth policies. It also foreshadowed policies which encouraged the private sector to invest in productive rather than "speculative" areas of the economy, highlighted the importance of a "public consensus” on using new technology, aimed to encourage the sharing of ideas, and the establishment of a scheme to help the country adapt to the over-all package. Two years ago, Mr Douglas was sacked from the Labour shadow cabinet for releasing an “alternative budget” "We need to face the reality that New Zealand is in deep economic trouble, and that we cannot continue as we have over the last 15 years for much longer,” Mr Douglas said to the Eastern Hutt Rotary Club. , “We need to accept that the present policy of one-off, ad-hoc type decisions will never work, and that what

we need is a total economic strategy aimed at dealing with all our current difficulties.”

The first point of Mr Douglas’ plan was a new tax policy to bring “equity and fairness” into the tax system, reward savings, investment, increased productivity, and long-term export sector investment, and place a penalty on "wasteful expenditure/’

The tax plan would also aim to shift the attention of Government from “petty interferences with businesses and individuals,” reduce administrative costs, increase employment, simplify the present tax system, and reduce evasion or avoidance.

Mr Douglas said that he had prepared such a tax

policy and would release it soon after the Budget. A new investment policy, he said, would take into account the number of jobs created, the amount of export earnings, the contribution to economic growth, and the amount of extra Government revenue accrued for every million dollars invested. It would also take into account the contribution to regional growth, and how the investment used resources.

Mr Douglas advocated, an education.system to provide opportunities to learn over a person’s whole life. < This would allow people to gain knowledge and apply it well. He said that inflation had to be controlled. In the shortterm that would be difficult,

and inflation would be impossible to prevent, but steps had to be taken to reduce it to below the rates of New Zealand’s trading partners.

“It must be handled by a combination of policies including responsible fiscal and monetary measures, the encouragement of competition in domestic markets, price controls in limited areas, agreements with the trade union movement, and employers on reasonable wage fixing machinery, and. above all. an economic strategy which produces .growth,” said Mr Douglas. , The . balance of payments deficit could be solved with a greater, export drive, and encouraging investment in the export sectors where New Zealand had an advantage. Policies also had to be implemented to stimulate growth, including maximum decentralisation, devaluation, and an assets tax, to encourage production and discourage wasteful investment.

Policies were necessary to encourage the private sector to invest in productive, em-ployment-orientated economic areas, rather than speculative activities, and “other dubious investments entered into purely for tax avoidance,” Mr Douglas said. This would require a shift from taxing income to taxing wealth, he said.