Govt incentives ‘a luxury’

Press, 26 September 1984, Page 20

Govt incentives ‘a luxury’

PA Wellington The Under-Secretary for Trade and Industry, Mr Neilson, has warned that Government incentives biased towards the use of capital might be an expensive luxury at a time of high unemployment.

The Government’s industrial assistance policy was aimed at providing neutrality across all sectors of the economy, he told the Timber Industry Federation conference in Rotorua.

“We’re not into picking winners. Some of the recent

apparent winners are likely to prove damn expensive and the taxpayer will have to foot the bill, for example over investment in the inshore fishery.” The market should decide winners, he said.. In the meantime the Government wanted to remove apparent distortions.

Investment allowances were withdrawn because it was considered they were not effective in achieving their goals. Mr Neilson said he considered broader policy moves designed to create a

more positive and receptive investment climate should more effectively fulfill the allowances’ purposes. “At a time of high unemployment, another incentive biased towards the use of capital may be an expensive luxury,” he said. “Your industry would need to demonstrate to the

Government this state of affairs was particularly anomalous, i.e. that sawmilling alone should be singled out from all manufacturing for reinstatement of Government assistance.” Mr Neilson said the bene-

fits of moving from import licensing to tariff-based protection would be improved economic efficiency and stimulated growth and development “H we are to achieve an improved economic performance, a better standard of living and increased employment opportunities, it is

essential that our resources are directed into activities which yield the highest return. “Large differences in the level of industry assistance will not achieve this objective.”