Serious collapse in spending—Labour

Press, 26 November 1982, Page 6

Serious collapse in spending—Labour

PA Wellington Figures revealing a decreasing volume of retail sales show a “very, very serious" collapse in spending power caused by the wageprice freeze, according to the Labour leader. Mr Rowling, yesterday. He joined the call for a general wage order to restore domestic buying power. The Statistics Department gave figures showing that the volume of sales dropped 2.9 per cent between the June and September quarters, compared with a decrease of 1.8 per cent between the March and June quarters. September sales fell 3.5 per cent from August and when compared with the previous months that showed

the decline was accelerating, Mr Rowling said. The department said that the figures were calculated by adjusting increased sales in dollar terms for seasonal factors, and deflating them to remove the effects of price changes. When the figures were adjusted for population changes as well, retail sales per head dropped 2.5 per cent between the June and September quarters, compared with a 1.2 per cent drop in the previous quarter. Mr Rowling said that this was a matter of very serious concern, showing a very serious collapse in discretionary

expenditure. “What I guess we are seeing is the so-called price freeze and wage freeze begin to bite,” he said. Mr Rowling suggested that the decline in retail sales reflected a drop in real incomes. which gave substance to the Government’s statements that it would try to reduce real incomes. This would cause business confidence to collapse further, thereby causing further job losses and depressing further the over-all economy. “There has to be a resuscitation of domestic purchas-

ing power,” he said. “The way that can most effectively be done in the short term, of course, is a general wage order on a dollar basis.” This would put more money into the hands of the lower-income and middle-in-come groups, which were the spenders within the domestic market. A general wage order was called for by a special Federation of Labour conference last week, but rejected by the Cabinet. The Prime Minister, Mr Muldoon, said that there would be no wage order and the freeze policy would remain “tightly held” because it was reducing inflation. Mr Muldoon said that New Zealand was “riding out the storm” of recession. ■ Mr

Rowling called this statement irresponsible in light of the retail trade figures and the external deficit. The Social Credit leader. Mr Beetham, said the retail sales figures showed that the Government had deliberately “jacked up” the economy | before the last General Election. The drop in retail sales this year, compared with the same period last - year, showed the true state of New Zealand’s economic health. “All the talk about growth i strategies and increases in real income and the like j cannot mask the fact that; the true test of economic | performance ultimately is j the level of retail sales,” he said. “It is only at that point that incomes and production finally connect, and the latest figures showing a downturn in real terms confirm that this Government has allowed the state of the economy to run down.” It was significant also that while retail sales had fallen in real terms, the proportion of sales subject to hire purchase showed a very marked relative increase. “This only serves to confirm the cash crisis facing so many consumers and businesses today and helps explain the current spate of lay-offs and redundancies and business closings,” Mr Beetham said.