Govt in deep trouble over freeze—Mrs Hercus

Press, 7 September 1982, Page 3

Govt in deep trouble over freeze —Mrs Hercus

Loss of public support for the wage-price freeze meant the Government was in “deep political trouble,” said the Labour member of Parliament for Lyttelton, Mrs Ann Hercus, yesterday. Seventy per cent of New Zealanders believed the freeze was not an effective way of controlling inflation, Mrs Hercus told the Canterbury Economic Society and representatives of the Trade and Industry Department in Christchurch. She was commenting on a recent National Research Bureau poll which found that in answer to the question: “Do you think that the wage and price freeze will be effective in helping to reduce inflation in the long term?” that 70 per cent said no, 17 per cent replied yes, and 13 per cent did not know. Mrs Hercus said that the Prime Minister, Mr Muldoon, had called for public support when announcing the freeze on. June 23. He must how accept that that call had been overwhelmingly rejected, she said.

The only members of the Government still speaking in support of the freeze were Mr Muldoon, the Minister of Trade and Industry, Mr Templeton, and the member for Rangiora, Mr D. F. Quigley, said Mrs Hercus. The 12-month freeze , was “economically stupid and grossly inequitable” and had been introduced in a time of panic only a few days before the Consumer Price Index figures for the June quarter were to be announced, she said. These figures showed “enormous” increases. The previous three price freezes, in 1970, 1972 and 1976, had all been introduced by the present Minister of Finance, Mr Muldoon. Each had temporarily held the Consumer Price Index, but prices had burst upwards when the freezes were lifted, said Mrs Hercus. The freeze was simply putting economic problems on ice for 12 months, she said. A price freeze was an economic tool, but should only be used under two conditions: for a short time, and

as a forerunner to any policy package to be introduced at the end of the freeze. The present freeze failed on both accounts, because of its length and because the Government had no policy to follow, Mrs Hercus said. Answering a suggestion from a member of the audience that the freeze might work if public figures did not “sabotage” it by undermining public support for it, Mrs Hercus said: “The freeze in itself cannot control inflation.” The fallacy in the 1982 Budget stemmed from the Government’s reliance on the wage-price freeze as a “major economic tool.” Mrs Hercus said that Mr Templeton had labelled her “the Patricia Barlett of the price freeze.” “If that is the case, he is Al Capone, since the freeze is a corpse full of holes,” she said. Mr Templeton said yesterday that the Government's wage-price freeze was the subject of considerable “orchestrated criticism.” “Some destructive in-

terests are ignoring facts so as to gain prominence," Mr Templeton said. “Those who seek to undermine the freeze threaten our whole country. The country needs all the constructiveness it can muster, a social consensus of good will from everybody interested in maintaining jobs and exports.” Defending the freeze, Mr Templeton said: “Despite the criticism and threats, the use being made of the price complaints procedure, for example, to demonstrate good public participation in policing, thereby strengthening the freeze. - “The fact that the great majority of price complaints continue to be false alarms helps demonstrate the participation of the business community.” Commenting on the poll figure showing that most people questioned doubted the effectiveness of the freeze, Mr Templeton said the Government stood by the policy as “being a vital element in reducing inflation over the next year.” Mr Templeton said the poll was conducted before the announcement of the important Budget tax measures that complemented the

freeze. He announced that during the week-ended Wednesday, September 1, the Department of Trade and Industry received 199 price complaints, the main categories being groceries (87) and res-taurants-takeaways (21). In the same period, the department completed investigations into 115 complaints. Of those, 103 were found to be without justification.