Kiwi Stock move likely this week

Press, 14 June 1983, Page 6

Kiwi Stock move likely this week

PA Wellington A decision to change the Government’s Kiwi Savings Stock scheme is likely this week — three months after its introduction — said the Prime Minister, Mr Muldoon, yesterday. Changes to the scheme, introduced on March 16, include a lowering of the 15 per cent interest rate and have been foreshadowed by Mr Muldoon for some weeks.

He said yesterday that other interest rates would drop “as soon as this Kiwi Stock is-off the market.” Mr Muldoon also told a post-Cabinet press conference that he was not sure the Government would go ahead with proposals for tendering of Government securities. The Prime Minister said he wanted further talks with officials on the subject.. “I don’t want to do anything that inhibits the pat-

tern of a general downwards movement in interest rates. If I thought that tendering might have the effect of holding them up we wouldn’t do it, it’s not sufficiently important.” Virtually all investors ’ would be able to take part in the tendering, being proposed by officials.

Suggestions for a system for both Treasury bills and Government stock were outlined in a Reserve Bank discussion paper circulated to financial institutions and others two months ago. They resemble the system adopted by Australia last year.

The Leader of the Opposition, Mr Lange, said Hie Kiwi Stock scheme had pushed interest rates to unprecedented high levels when an allowance was maee for inflation.

Mr Lange said $ll5O million had been borrwed by the Government through the savings stock. Of that

amount, almost $l6O million had already been cashed in by investors. “The net amount represents $894 of debt for every worker. If this amount remains outstanding for a year it will cost each worker at least an additional $134 in taxes this financial year. When the costs of the processing delays and the high brokerage fees for the corporate investor are added this sum increases.”

Mr Lange said that a short-term interest rate in excess of 13 per cent during a price freeze was extraordinary and represented economic mismanagement. “The effect of such rates can only be to discourage further essential and productive investment by the private sector. The longterm effects of this can only be to reduce employment, production, and exports — in other words, inhibit recovery.”