‘Thaw’ sought at end of Govt freeze

Press, 18 March 1983, Page 3

‘Thaw’ sought at end of Govt freeze

PA Wellington “Very moderate” wage increases, if any, were expected after the scheduled end of wage-price freeze in June, said the Prime Minister, Mr Muldoon yesterday. A 'retailers’ delegation had told him yesterday morning .that they and their staff preferred the freeze to continue beyond the planned 12 months. They would rather have jobs instead of a “wage movement,” Mr Muldoon said.

He was commenting on the Government’s move this week to stop liquidity by introducing new savings stocks, and raising yields on treasury bills and ordinary Government securities. The Government had acted to prevent an upsurge in property prices because of the availability of mortgae money, he said. It did not want to bring in a credit squeeze — “we are mopping up the excess.” He said that there was no shortage of investment for well conceived projects.

Mr Muldoon has indicated in recent months that the Government wants a “thaw” in the wage-price freeze rather than a sudden end on June 22. Is is a view shared by employers’ representatives. .

Inflation was projected at 2 per cent for the March quarter, an annual rate Of 8 per cent, he said.

“That is what I want to cement in. I am getting more and more evidence that as this is appreciated,

the public are satisfied with the freeze,” said Mr Muldoon. The retailers’ delegation had said that they could live with the freeze, even if it was extended.

The tripartite wage talks between the Government, employers and unions would have a “considerable” effect on what happened in June, said Mr Muldoon.

‘Clearly, we are talking about in terms of June . . .

very moderate wage increases, if any,” he said. Explaining the Government’s reasons for this week’s moves, he said there were indications of a “very large upturn in the supply of money. “It is absolutely essential that that be neutralised,” he said. The Government’s new issue of Kiwi Savings Stock would make it more difficult for people to buy a first home, said the Labour spokesman on housing, Mr P. B. Goff, yesterday.

The Government had often asserted that it was not increasing its role in home loan finance, preferring to encourage greater private sector involvement. By private sector finance first was drawn off into inflation-proof bonds, said Mr Goff.

“Just as the impact of that is wearing off and there is greater availability of private money for lending, small savers’ funds are now to be diverted to the Government’s coffers by the Kiwi stock scheme,” he said.