Mr Lange predicts ‘battle’ for savings

Press, 3 August 1983, Page 8

Mr Lange predicts ‘battle’ for savings

PA Wellington Interest rates demanded for savings will be “very high” this year as the Government and private sector battle for funds, said the Leader of the Opposition, Mr Lange, last evening. Opening the Budget debate in Parliament, Mr Lange said the internal deficit was forecast at $3.2 billion and the Institute of Economic Research estimates private savings would be around $5 billion this year. “If the deficit is financed entirely within New Zealand it would take over 60 per cent of our savings,” said Mr Lange. “Obviously the interest rates that will be demanded for savings will be very high indeed this year in real terms as the Government and private sector battle for funds.” The effects of the struggle will be “disastrous both socially and economically,” he said. It would be intensified by the withdrawal of the tax concession on selected overseas borrowings by New Zealand firms. “There will be little chance of mortgage interest rates coming down or rents not increasing.” Mr Lange also said he could not find anything in the Budget to give the nation the direction towards achieving sustained and jobcreating growth. “I believe that the deficit is now so large that it serves to crowd out private sector investment.” Mr Lange said the 1983 Budget was not the significant document it should have been and the Government ought, instead, to be running a hoopla stall. He chastised Government members of Parliament for sitting through their party’s annual conference at the week-end and doing nothing about the Prime Minister’s intervention in the economy. Mr Muldoon had told the financial sector to bring down interest rates “or else,” said Mr Lange. That “or else” meant “if you don’t conform to the dictates of the Government, we will tax you, or we will retrospectively move against you.” “We will control you ... and we will threaten you until we have to move to retrospectively punish you. “If ever a message was

given as to the shallowness of the commitment of the members opposite to any principle at all of responsible conservative constitutional philosophy, it went out the window when they sat through those weeks of that sort of threatening and at their conference did nothing whatever. ... “What we have now is a bunch of interventionist manipulators bereft of principle who ought ot be running a hoopla stall.” Mr Lange said the Budget should fit into some over-all plan for New Zealand’s economic recovery and development. plan" would lend certainty tb the economy. It would overcome the destructive election-year cycle of economic management. But this Budget fits into no such over-all plan.” Economic policy had not been debated in Parliament this year because the House had sat on only 19 days, he said. “Pragmatic and extremely short-term deci-sion-making results. We therefore have bad government and continually ineffective decision-making. “This year’s Budget was prepared and presented without any reference to economic discussion occurring in this chamber. “Further, one-third of the current financial year passed before this year’s Budget was presented ... Parliament has been degraded into a constitutional convenience.” Mr Lange said the document had no specific signs of fresh initiatives. “There is continuing uncertainty over industry and agricultural assistance policy. “The promised statement on the future export incentives turns out to be only an announcement of more delay. “The uncertainty surrounding S.M.P.S also continues, with the support prices being cut in real terms. “How can manufacturers and farmers plan with any confidence for future investments in this situation?” The Associate Minister of Finance, Mr Falloon, said Mr Lange’s speech was “a lot of negative clap trap,” containing nothing positive. Mr Lange had uttered a

lot of platitudes about employment and housing but had offered no alternatives to the policies being pursued by the Government and “no policies to deal with New Zealand’s problems.” A housing problem did exist in some areas, Mr Falloon said. The Government admitted it and had dealt with it in the Budget. “But the housing problem is not caused by the lack of houses,” he said. “It is caused by different life styles, by the social problems that are occurring, by people’s attitudes to each other and their families.” Those issues were something the Labour Party would be better to debate than simply criticising the Government for not building enough houses, he said. World wide there had been a rise in unemployment and a reduction in demand, Mr Falloon said. “So we have to look to our resources more than ever before,” he said. “The Budget this year is aimed at doing that.” Other countries had brought in strict monetary Colicies to curb inflation, ut New Zealand had avoided that. The “shocking social dislocation” that had been caused in the United Kingdom and Europe had been avoided in New Zealand by the wage and price freeze which had worked effectively to keep prices stable and inflation down “by over 50 per cent in 12 months.” Real incomes “by and large” had held during the freeze, he said. The lowering inflation rate was encouraging manufacturers to sell their products overseas, Mr Falloon said. The Producers Price Index — the cost of inputs into production — had shown only a 0.4 per cent increase in the first quarter of 1983, he said. “That’s the thing that makes the manufacturer ... decide whether or not he’s going to invest in further production and further development.” Manufacturers knew they had to go offshore to expand their markets and develop more jobs, he said, and they had “responded magnificently” in recent years. Mr S. J. Rodger (Lab., Dunedin North) accused the

Government of “botching up” the economy and the country’s future. “He (Mr Muldoon) has left us in hock, up to our necks and getting deeper and deeper every day.”

The Government now owed $15,000 for every taxpayer in the country—a total of $18,733 million.

New Zealanders were looking for a new direction and a definite plan for the future and were “sick and tired of waiting.” The Minister of Health, Mr Malcolm, said the Government had “achieved very real restraints” in hospital spending “with absolutely no significant reduction in services.” He attributed that to the “good work by the public hospitals and by the elected hospital boards.” This year had seen the total cost of the hospital structure function at the same level, allowing for inflation, as last year, Mr Malcolm said. Meanwhile, the hospital structure had “demonstrably strengthened” during the year.