Budget tough but fair—Minister

Press, 5 November 1984, Page 1

Budget tough but fair —Minister

PA Wellington The Budget this week would be “tough” but fair, said the Minister of Finance, Mr Douglas, yesterday. He indicated that through tax and welfare benefit changes low-income families would be “looked after,” and that while some prices would rise others would fall.

Mr Douglas also warned manufacturers and others against imposing excessive price increases. Mr Douglas, who will present his first Budget on Thursday, at 7.30 p.m., wrote in the “New Zealand Times” that unlike previous “tough” Budgets, the 1984 Budget would make significant structural changes to the economy. “The measures in the Budget will be all about making the New Zealand economy more dynamic and more productive but with fair shares for all. So the Budget should not be seen as a cause for gloom and despondency,” he said. The Budget would set out to tackle three things “close to the heart of the Labour Party and most New Zealanders” - growth in living standards, jobs, and social equity. “Achieving, these objectives will not be easy,” said Mr Douglas. “New Zealand is at present in an economic disaster zone.” He said the Budget would be important but should also be seen in context with other moves taken by the Government. “New Zealanders have limited amounts of resources with which to generate our standard of living. “We have been misallocating these resources, propping up industries which are in trouble and pouring money into huge ‘think Big’ projects. At the same time, the Government’s deficit has expanded so that it now takes $4 in every $lO of the community’s savings to finance this deficit.

“This is the cause of high interest rates and the root of future inflation.

“The Budget will begin to correct the misallocation of resources which has been slowly eroding our living standards. The internal deficit will be reduced. This

will take pressure off interest rates.”

Mr Douglas said that the Budget would ensure that the low-income family was looked after but in the longer term there would have to be more comprehensive measures to look after vulnerable groups in society. “The tax and welfare systems are the only mechan-' isms which target income assistance to where immedi-

ate need is greatest," he said.

It was essential that high inflation did not erode the benefits of devaluation. “Manufacturers and those responsible for pricing should take note of the Government’s commitment to a firm monetary policy. They have been warned that excessive price rises will simply not be accommodated by monetary policy,” said Mr Douglas.