Mr Quigley speaks out on freeing economy

Press, 9 March 1984, Page 4

Mr Quigley speaks out on freeing economy

PA Wellington The former Cabinet Minister, Mr Derek Quigley, warned the Government yesterday that time was no longer on its side, and it should implement promises to liberalise the economy. Mr Quigley’s comment came on the same day that the Acting Minister of Finance, Mr Falloon, reaffirmed the Government’s commitment to “progressive, rather than rushed” liberalisation.

Mr Quigley, the member of Parliament for Rangiora and former Associate Minister of Finance, said that steps should be taken immediately to phase out import licensing and replace it with an appropriate tariff structure.

Farmers and retailers had recently expressed concern that the Government was backtracking on a commitment to begin moves

from import licensing in July. Earlier, Mr Falloon had said in Dunedin that the Government was following the “least painful” policies for the country. It had tried to avoid applying “short, sharp shock treatment” to break the “wage-price spiral.” Mr Falloon said the Government was committed to stability during the present recession, continued borrowing and investment for future growth of jobs and incomes, and improvements in the economic efficiency of work dominated by State enterprises. The alternative strategy of the elimination of excessive protection, elimination or severe reduction of the budgetary deficit, and zero or little monetary growth had consequences that would include action from militant unionists.

“They know that that would put about half the

work-force on the dole, without a tax base to finance the dole, unless of course we did a quick Uturn on policy.” That could create the “revolutionary situation” fantasised about by unionists who wanted to substitute a State capitalist system on the Soviet model for a competitive private capitalist system, Mr Falloon said.

Mr Quigley said that farmers were facing a crisis. The most effective help the Government could give would be to fulfill its promises, and progressively reduce assistance through the economy. The Agricultural Review Committee had shdwn last month that the 1984 income for sheep and beef farms would be “a mere $19,800 (down 16 per cent on the previous year).” Factorysupply dairy farms would suffer a 10 per cent drop to $19,000.

The figures were much worse than they appeared, because they had to cover taxation, capital repayments, and spending on items such as machinery and development. “The underlying weaknesses that these figures illustrate will not be overcome by throwing more money at the farming community in the form of increased supplementary minimum prices or other forms of short-term assistance,” Mr Quigley said. Farmers, and consequently New Zealand, were faced with a crisis which made it difficult to restructure.

“However, time is no longer on our side,” Mr Quigley said. The Government had been talking about liberalisation since 1962, he said, and last year its National Development Strategy had said that the type of financial support should change.