Price rises ‘offset’ by tax adjustments

Press, 3 February 1984, Page 4

Price rises ‘offset’ by tax adjustments

PA Wellington Tax adjustments already made during the wage freeze would “more than offset for most taxpayers” any price increases in the immediate future, said the Prime Minister, Sir Robert Muldoon, yesterday. However, the Acting Leader of the Opposition, Mr Palmer, said that wage and salary earners were much worse off since the freeze started in June, 1982, with prices rising 19.4 per cent and wages rising 4.7 per cent. Sir Robert said on Wednesday that regulations extending the wage freeze until 1985 would be promulgated soon and the freeze would remain until the trade unions ratified a new long-term, wage-fixing procedure. The Federation of Labour will consider the ratification at its May annual conference.

Before then, the price freeze will end on February 29 and the rent freeze will end on March 31. Asked in an interview yesterday if it was fair to allow prices and rents to

rise while wages would not in the short term, Sir Robert said it was fair when taking into account a considerable tax concession for most earners in October, 1982, and a further adjustment for low-income earners last October. “Those offset, and percentage-wise more than offset for most taxpayers, what will increase in prices in the immediate future, which looks like a continuation of about 1 per cent a quarter, which we have been having now for more than a year,” he said. He said that the price freeze would not be extended because of distortions in the price structure and cited, as an example town milk producers who had not been receiving prices comparable with other milk producers. “But even after price increases which might take place between now and the time a wage order is paid out, you are not going to find the disparity between wages and prices which we have normally had over the years between two wage

movements.” Sir Robert said that the F.O.L. was offered the option for 1984 of a wage order of about 3 per cent or a negotiated wage round under strict guidelines, and chose the latter. Mr Palmer said that the real nominal wages index had dropped 12 per cent since the freeze began. “So what is clearly happening is that wage and salary earners are much worse off as a result of the freeze than they were before,” he said. He accused the Government of delaying the end of the wage freeze for as long as possible so that it did not have to make any decisions which would show up inflation before the General Election.

The F.O.L.’s president, Mr W. J. Knox, said that he was not surprised by the Government’s move to extend the wage freeze.

“But the Government does not communicate with us,” he said.

Manufacturers would exercise moderation in price increases after the

end of the freeze, said the manufacturers’ president, Mr Earl Richardson. The chairman of the Combined State Unions, Mr Ron Burgess, said that the extension of the wage freeze was a “cynical” use of Government power.