‘Financial Review’ says freeze working

Press, 16 July 1983, Page 9

‘Financial Review’ says freeze working

NZPA Sydney The wage-price freeze has left New Zealand well placed to take advantage of the world economic recovery, provided the Prime Minister, Mr Muldoon, keeps his nerve, the “Australian Financial Review” said yesterday. The influential daily generally regarded the freeze as a success, and predicted it would form the basis of National’s campaign in the General Election next year. The report outlined the background to the freeze, and said growing unemployment in an economy which had known virtually no unemployment throughout most of the post-war period undercut the resistance of a work-force “not noted for its militancy at the best of times.”

Comparing the situation with Australia, the report said New Zealand’s Govern-

ment had the legislative power to mandate a freeze “and in Robert Muldoon, it has a Prime Minister with enough determination to enforce it.” Once the freeze was in place, the next problem was what to do with the money supply, and “once again Mr Muldoon acted decisively to mop up surplus funds.” Mr Muldoon’s KISS bonds served another function. “While (overseas) borrowings cushion the New Zealand consumer from international realities, they expose the Government to criticism for external financial recklessness,” it said. “In effect, Mr Muldoon will have forced the private sector to do some of the overseas borrowing the Government would otherwise have felt impelled to make.”

The “Financial Review” said the precariousness of

New Zealand’s economy had percolated to the Labour Party, “if not to the Federation of Labour.” It noted that Labour leaders were now talking of the necessity for some control after the freeze ends in February, but said the F.O.L. predictably disagreed and proceeded with its campaign to break the freeze with a $2O-a-week pay rise. The report said that the union movement had now switched the focus of its attention to the Government’s threat to abandon compulsory unionism, leaving the freeze as only a secondary issue. With inflation now firmly under control, the world economic recovery would take New Zealand along with it, provided New Zealand’s economic reins were held firm, said the. newspaper.