Mr Bolger attacks inflation

Press, 30 May 1985, Page 4

Mr Bolger attacks inflation

The Labour Government was steering New Zealand towards “banana republic inflation,” said I the Deputy Leader of the! Opposition, Mr Bolger, in Timaru yesterday.

The rate of inflation would soon exceed 20 per cent for the first time in the country’s history, he said. The Minister!of Finance, Mr Douglas, had admitted that the goods and services tax v/ould boost inflation by another 6 to 7 per cent. | Even independent economic commentators predicted that New Zealand was heading fpr a slump because of Labour’s policies, Mr Bolger said!

The slump could have been avoided. He said the Labour Government had inherited strong economic growth, low inflation, low interest rates find rapidly growing employment. “All the indicators were right. We could) have come out of the wage and price freeze without) unleashing the economic forces the present Government has unleashed.” j

New Zealand’s trading relationship with) the rest of the world was plunging into crisis, he said. )

The current aiccount trade balance had dropped from $1260 million last year to $l2O million in| March, this

year. In the year to March, imports rose by 36.5 per cent while exports rose by only 16 per cent.

“New Zealand exporters are having their confidence destroyed at the very time when we must increase our efforts in the export area.” said Mr Bolger. The overseas debt had increased from $16.3 billion in June, 1984, to $22.2 billion in March, 1985. it had increased further since then. After 10 months of Labour Government the debt per head had increased from about $5OOO to $6BOO. New Zealand’s trade and payments were in huge deficit and the country was

borrowing vast amounts overseas. The Government had borrowed $1.2 billion and the private sector almost $1.9 billion. Private borrowing had more than doubled since last year. “Under Roger Douglas’s management the economic affairs of New Zealand have deteriorated to the extent that it is more profitable to lend your money to the Government, at no risk, than to have it invested in essential industries such as agriculture,” said Mr Bolger. Farms and houses were being sold and businesses closed because people could

not afford the interest rates, he said. Government assertions that its policies needed longer than 10 months to bear fruit were simply “a plea of mitigation.” Mr Bolger dismissed as a joke Labour’s suggestio r that National was incapable of change.

When in opposition, Labour members of Parliament had voted against every move the National Government made to free up the economy, he said. “We have been changing rapidly ... but change should not be equated with mad panics into some economic theory.”