‘Debacle’ if Govt restraints fail

Press, 11 August 1982, Page 39

‘Debacle’ if Govt restraints fail

The outgoing chairman of the New Zealand Finance Houses Association, Mr T. W. Fitzgerald, has given a warning of dire consequences if recent Government economic restraints fail. Addressing the annual dinner of the association. Mr Fitzgerald said the association had taken pains to support the actions of the Government. “Much has been said of the recently introduced regulations and control mechanisms: there is little that can now be said of any import concerning these. "Let me add, however, that if these restraining measures do not work, then we will be witness to what may well be the greatest economic debacle we have seen."

Mr Fitzgerald said he was disappointed, and believed all members were, because there was no "balance of consultation" in the attempts that were made to be fully co-operative with the objec-

tives of the Minister of Finance (Mr Muldoon). He also urged the Minister of Justice (Mr McLay) to introduce legislation in the present session of Parliament for the proposed security regulations. The finance houses’ opposition to inflation-proof bonds during the year did not stem from fear of competition, Mr Fitzgerald said. The houses feared the potential cost to the future taxpayer and the implicit commitment of the bondholders to inflation. “Moreover, we did feel that it was unreasonable for the Minister of Finance, the

Prime Minister, to blame the financial institutions for upwards pressure on interest rates when this had initially flowed from the high yields offered by inflation-adjusted bonds:" But he believed the investing public must be wise enough to see there must be real commitment to reducing inflation, and as a consequence a reduced attraction of the bonds. Emphasising that he was expressing his personal . opinion, Mr Fitzgerald said more and more individual freedom was being given up with hardly a bleat of protest.