Investments in economy start to pay—Minister

Press, 6 March 1984, Page 9

Investments in economy start to pay—Minister

New Zealand was coming out of an “agonising” period of economic restructuring and was about to see a turnaround in the economy, said the Minister of Energy, Mr Birch, in Christchurch last evening. Mr Birch told a public meeting in the Fendalton electorate, attended by about 90 people, that the investments made in the economy over the last nine years were starting to pay. This year there would be substantial growth in the economy, which would be sustained over the next few years.

In the mid-19705, when the National Party came into power, New Zealand’s terms of trade had dropped 30 per cent, Mr Birch said, while the Labour Government had lived by a policy of “borrow and hope,” the National Government set out to rebuild the economy. It expanded the volumes of traditional exports and looked for new opportunities in fishing, forestry, horticulture and the energy projects.

The years of rebuilding the economy were agonising. The Government had to face the 30 per cent drop in income and borrow to support the standard of living and to finance new investments. During that time New Zealand had had to live with little growth, a high accumulated debt, and high unemployment. “The good news is that for the first time in nine years, 1984 is predicted to be a year of substantial growth. The Reserve Bank

is predicting 2.5 per cent growth in the economy because we are starting to get a return on the investments we have made,” Mr Birch said. Provided there was no international crisis or new oil shock, that growth could be maintained through the second half of the 1980 s. This would mean the creation of more permanent jobs and an improvement in the balance of payments deficit to the point where there would be a surplus. Mr Birch said that the energy projects which used natural gas from the Maui field off Taranaki, which would all be on-stream by the end of next year, would result in a saving of $lOOO million each year. This was after the interest on investment finance was paid. By 1990 it was projected that horticulture would be earning $lOOO million a year. Industry figures showed that kiwifruit would earn S4OOM, apples S2OOM, berry fruit SIOOM, cut flowers and native plants SSOM, onions S3OM and squash SISM.

Horticulture and the energy projects by themselves would be earning S2OOOM each year. Because of those developments the balance of payments situation was turning round and New Zealand would have a trading surplus within the next few years.

Already the trading deficit was improving. Last year it was about SI7OOM, but this year it had halved to about SBSOM, which was about 11 per cent of total

exports. The question for the Governmnt in the future would be whether the trading surplus should be spent on economic growth to reduce unemployment or to pay off the debt. The National Party’s job this year was to make sure the Government stayed in power so that it could keep New Zealand in the right direction, rather than letting “the Socialists” turn the corner.

Mr Birch said that in its policy on overseas trade announced yesterday, the Labour Party had promised to put trade union representatives on producer boards.

“That puts a cold shiver down my back. I am not anti-trade unions, but what I do not want to see is a fundamental change in the direction in which we are going at a time when we can see ourselves moving out of the problems we have had in the past,” he said.

Answering questions after his speech, Mr Birch said he believed a comprehensive approach was needed on future hydro-electric projects to avoid the problems experienced with irrigation from the Clyde dam. A team of experts should be sent to study projects regionally and to look at all aspects of the development, including water resources, farming needs, and roading requirements. Irrigation needs should not be seen as separate from the building of a dam, he said.