Full agenda for the Cabinet

Press, 21 January 1984, Page 14

Full agenda for the Cabinet

By

MIKE HANNAH,

Parliamentary Reporter

Post-freeze economic controls are likely to dominate the agenda for the first Cabinet meeting of 1984 next Tuesday.

A stockpile of other business has built up, however, while Ministers have been on holiday. Even if this takes a back seat to discussion of “life after the freeze,” it will demand early attention from the Cabinet.

Apart from the resumption of wage talks, more detailed discussion of price controls, and the fate of other controls due to expire on February 29 — such as interest rate regulations — matters likely to arise early this year cover the gamut of portfolios. All Ministers can be expected to review issues in their areas of responsibility, and among likely topics are: the start of voluntary unionism on February 1, and strategies to combat youth unemployment; the fate of export incentives; negotiations for Australian Skyhawk aircraft; compensation for redundant fishermen; special legislation to speed up construction of a dam on the Kawarau River; the oil hunt; an industry plan for the motor vehicle industry; the fate of Railways services; campaigns against drunken drivers; doctors’ fees; and the introduction of a numbers game, lotto.

Some of these issues may receive only scant attention at this stage, of the year, but they are expected to surface more prominently over the next few months. Setting the scene for deliberations next Tuesday will be the economic and political outlook for a year, featuring the end of a 20month curb on wages and prices and the calling of a General Election. A hint of the economic outlook for 1984 was dropped in the “Orewa speech,” delivered by the Prime Minister, Sir Robert Muldoon, last week. Low wage rises, even lower interest rates, and little rise in

local body rates were part of Sir Robert’s scheme to keep inflation down to between 5 and 6 per cent. Looming darkly in the background was a large internal deficit that precludes many more tax concessions. Other factors were the prospect of little relief from record unemployment and a fear that the economic recovery in the United States could fail in 1985.

Sir Robert probably will update his outlook for the year when he leaves on February 10 for a Ministerial meeting of the Organisation for Economic Co-operation and Development in Paris, and meetings with British, Irish, and American leaders on an extensive overseas tour.

Meanwhile, though, the Cabinet’s attitude to post-freeze controls is likely to be determined by the sort of thinking contained in the Orewa speech: a tight economy, looking for a recovery in world trade, but better placed with lower inflation to survive in current conditions.

The outlook for traditional agricultural products is also cautious, dominated as it is by low demand overseas and continued restricted access in European markets. New Zealand is still heavily dependent on wool, meat, and dairy trade and any lift in overseas economies would be felt quickly in these areas, especially wool sales. The Government is likely to be advised that, although the drop in farm investment could be halted this year — thanks to the holding of prices, especially of fertiliser, during freeze — market prospects till June remain unchanged. Exports are also affected by exchange rates, and the Government can be expected to keep a weather-eye on this area since Australia floated its dollar late last year.

Export incentives and supplementary minimum prices will be reviewed this year. The fate of the supplementary minimum price scheme will depend on overseas prices for primary products, but

export incentives face significant changes next year as New Zealand is required by the Closer Economic Relations agreement with Australia and by the General Agreement on Tariffs and Trade to remove export subsidies. Sir Robert is expected to discuss this issue, as well as the need for world economic reform, with President Reagan on his overseas trip. Hanging over the resumption of wage talks this year will be the introduction of voluntary unionism on February 1. The Federation of Labour has elected to negotiate wage rises through a limited wage round starting some time in the middle of the year, rather than accept a general wage order from the Government.

The move may help to convince union members of the value of unions, but the timing will create a lag between the lifting of price controls and the chance to recoup any losses in wages. Considerations in the labour portfolio will be coloured by the latest unemployment statistics, showing yet another rise, particularly among school-leavers and women. Sir Robert has already indicated his intention to investigate policies to avoid a build-up of unemployed school-leavers. The Minister of Agriculture and Fisheries, Mr Maclntyre, is expected to be ready to discuss proposals to compensate inshore fishermen made redundant by stricter controls imposed last October.

A series of seminars, held by fishermen around the country late last year, produced a report which Maclntyre has mulled over during his Christmas break. Suggested moves, floated by his Under-Secre-tary, Mr W. R. Austin, last September, included buying out the fishermen, or redeploying them to offshore ventures. Areas considered likely to be most affected by the fishing controls include Northland, Auckland, the Bay of Plenty, Gisborne, Napier, the West Coast and the Canterbury Bight. The Minister of Defence, Mr Thomson, may be able to inform

his Cabinet colleagues of progress in negotiations to buy Skyhawk aircraft from the Australian Government to supplement the Royal New Zealand Air Force's fleet. Controversy erupted over the negotiations during the Christmas interlude, when an Australian newspaper report said that the Australian Government was asking well over the market price for the aircraft.

Discussion on energy-related matters — the oil hunt, dented over Christmas by the withdrawal of the Penrod rig from the Great South Basin, and means of speeding up construction of a dam on the Kawarau River in Central Otago — may be postponed on Tuesday, until the Minister of Energy, Mr Birch, returns from a lengthy overseas trip. Mr Birch is scheduled to inspect oil searches off the Western Australian coast when Cabinet Ministers gather around the table on Tuesday. Transport is likely to remain in the spotlight this year and the Minister, Mr Gair, is expected to have reports ready for the Cabinet — if not on Tuesday, then soon after — of the fate of the Railways services, campaigns against drunken drivers, and progress on a review of on-shore transport costs. A topic for later discussion, in March or April, will be further possible rises in road user charges, and later still, perhaps, a review of speed limits. The Minister and the Railways Corporation have been studying the recommendations of a group of American consultants, Booz-Allen and Hamilton, for changes to the Railways services. Long-distance passenger services and managerial staff are expected to be among early topics for decisions, while any decisions to redeploy Railways staff will be closely watched. A report on the “Operation Checkpoint” campaign aimed at deterring motorists from driving away drunk from liquor outlets, is expected before the Cabinet in February, when further campaigns or the need for legislation — such

as the bill Mr Gair failed to have passed by Parliament last year, introducing random stopping — will be discussed. A long-awaited industry plan for the motor vehicle industry may also receive early attention from the Cabinet after being delayed last year. The Industries Development Commission submitted its final draft of a plan last May, but final decisions were delayed by the row over investment rules between the New Zealand and Australian Governments, and by consideration of factors relating to C.E.R. Sir Robert is optimistic that the investment row can be resolved this year. Public reaction to criminal law amendments introduced last year is likely to take up the time of the Minister of Justice. Mr McLay. The bills represent significant and potentially controversial reform of penal policy and rape law. A select committee is scheduled to start hearing submissions early in February.

Government policy on private television will be an early issue for the Minister of Broadcasting, Dr Shearer, though detailed consideration may wait until the National Party caucus returns to Wellington in February.

Doctors’ fees may be on the mind of the Minister of Health, Mr Malcolm, especially as there has been talk of higher fees once the freeze expires, and higher call-out fees. Hanging over these possible increases is continued debate over the level of the general medical services benefit, and the contribution of Accident Compensation Corporation payments.

The Minister of Internal Affairs, Mr Highet, has promised to try to introduce the numbers game, lotto, before his retirement at the end of the year. He is due to receive a report before Tuesday from two senior departmental officers, who have recently completed a study of lotto in Australia, but the report is likely to require further study before the Cabinet is asked to deal - with a proposal.