THE PRESS MONDAY, JULY 2, 1984. Labour’s economic strategies

Press, 2 July 1984, Page 20

THE PRESS MONDAY, JULY 2, 1984. Labour’s economic strategies

The Minister of Finance, Sir Robert Muldoon, has dismissed the Labour Party’s statement of policy for the New Zealand economy as 11 pages of platitudes. He has said also that Labour’s economic policy is largely indistinguishable from the Government’s own. This surprising conclusion might arise in part from the extent to which Sir Robert Muldoon himself has resorted to interventionist economic policy. More probably, his judgment is the result of a hasty appraisal of a declaration that is unspecific, in places deliberately ambiguous, and calculated to appeal to an envious egalitarianism. Platitudes and statements of good intent there are in abundance in Labour’s policy; but to accept — solely on the basis of its incomplete allusions — that the policy is a mirror image of the Government’s own economic policy neglects the socialist credo that fathered it.

When he presented his party’s policy, the Leader of the Opposition, Mr Lange, said that the lack of detail in the policy was because Labour lacked information to which the Government and Treasury officials alone were, privy. It would be irresponsible, he said, to quote figures in election promises without knowing fully “the state of the books.” Perhaps so, although Labour’s spokesmen purport to be sufficiently familiar with the state of the books to quote, for instance, precise figures on each New Zealander’s indebtedness. The obfuscation is greater than an alleged dearth in figures, which is an old, and essentially misleading, claim by parties out of office. The important figures are available. The Labour Party’s coyness about how and from where it will extract the money necessary to fund its drive for economic growth cannot all be blamed on a lack of information for its policy-makers. Reticence here has little to do with the computation of figures and a lot to do with Labour’s desire not to alarm or deter the voters.

Care for the aged and infirm, State assistance for the handicapped and the helpless, a better standard of living, and a “fair” taxation system that takes account of a “fair” incomes and prices policy are ideals that few people would reject. The extent to which they are enjoyed at present is a matter of definition and viewpoint. For the economic policy of the party, a fabric of fine sentiments such as these will deaden demands of the Left yet in no way would restrict a Labour government in its activities. The main purpose of the policy remains a continuous redistribution of money from the better-paid to the lesser, from the productive to the non-productive, from the earner to the spender, from the individual to the collective, and from the private to the public, with the reduction of the free market economy as a necessary consequence.

Perhaps the policy-makers felt that voters would shy away from too blunt an acknowledgement of this purpose. They would be well aware of the alarm in the electorate — and. the dismay among some party faithful — when philosophical purists at Labour Party conferences attempt to commit the party to doctrinaire socialist policies that would make any New Zealand General Election unwinnable for Labour. Perhaps the policy-makers had hoped that, by ignoring the socialist intention of the policy themselves, it would go unremarked by others. In any event, the policy avoids direct acknowledgement of its parenthood and is selective in stating its effects: the benefits of its sectional philanthropy are dwelt on, though the sectional impositions on unwilling benefactors receive scant mention.

Labour’s main overt concern in the policy understandably is with jobs and the desirable reduction in unemployment. Removal of the sinking lid policy on staff numbers in the Public Service, engineering an increase in building and construction activity, State investment in selected labour-intensive industries, and expanded social, health, and education services are part of Labour’s policy and will provide jobs. The list is not strong on activities that will increase the nation’s wealth and the ability to pay for its increased bureaucracy and welfare services. Also part of Labour’s policy are items that can be presumed to limit the provision of extra jobs: increases in company tax, the encouragement of overtime work by income

tax adjustments, the promise to reduce waste in the public sector, increased charges to industry for such things as power and freight, and, indeed, further increases in wages. Some of the policies are incompatible to the point of being unworkable; implementation of only the agreeable and painless among them would worsen New Zealand’s economic difficulties. Sir Robert Muldoon’s reaction is understandable in one sense: that the sorting out of what is practicable and consistent in the policy from what is conflicting tends to lead to courses of action not so very different from his own.

The ritual pledge to “deal firmly” with monopolies predictably turns a blind eye to a classic example: the monopoly of labour that results not from restoring compulsory trade unionism, blit from giving unions a new strength. Among the ready examples: prices will be set according to a policy arrived at with the approval of the unions, the unions will help to determine how taxpayers’ money will be invested in industry and which industries should get assistance; and the unions will be represented on the board to advise individual allocations of these investments. The party has made full obeisance to Trades Hall. This has some strange results.

Labour is not uninterested, for instance, in the process of technical innovation and adaptation by which productivity is increased and wealth is created. The policy earmarks investment for research and development. Closer links are promised between research work and commercial needs. Indeed, some of the funds to be applied to investment in selected industry are expected to come from royalties owing to the State on technological development. This is laudable and exciting stuff, but it comes under the control of the promised Industrial Development Board, for which the Development Finance Corporation becomes a mere agent. Thus the task of securing innovation and encouraging technological advance-is allotted primarily to the State, to public enterprise, and to the unions in partnership — that is to say, to the three agencies least receptive, if not conspicuously hostile, to change. For all that the policy refers to consultation and consensus, it also spells out the intention of a Labour government to intervene in many parts of the eeconomy and leaves the door open for meddling in many other parts. Under Labour, the Reserve Bank would become a more active instrument of control and manipulation of the economy. Under Labour, publicly owned agencies would be able to exploit the commercial potential of product development and market research done by the private sector. These consequences are stated; others only can be guessed at. All of the involvement of a Labour government in the day-to-day affairs of the market-place relies on an assumption that a Labour government would understand the interests of those under its control better than they do themselves. This kind of thinking is the source of one of the strongest objections to the present style of government that has come from critics of the National Party. It is strange that the Labour Party puts itself so keenly behind such thinking when, at the same time, it wants to seem to be a supporter of personal or corporate enterprise. An alarming facet of the Labour policy is the thrust for increased protectionism. The present reduction in import licensing — essential for New Zealand’s continued access to overseas markets — will be halted. Some control by licensing is foreseeable, regardless of which party governs; but additional import licensing is strongly hinted at by Labour, and extra tariffs would be imposed for further protection. The missing, and essential, part of the argument is the explanation of how New Zealand industry, apparently returning to more protected conditions under Labour, is going to remain sufficiently competitive to maintain exports. This part of the policy deserves refinement and specific explanation. The lack of consistency at this stage does not mean that Labour would fail to manage the economy; it means that, like its Australian counterpart, Labour would have to sort out its ideas and, eventually, action and policy would part company.