Govt policies 'damaging’ —producers

Press, 3 December 1985, Page 2

Govt policies 'damaging’ —producers

PA Wellington Government policies are causing short-term damage to the economy, say the Manufacturers’ Federation and Federated Farmers. The two bodies, while commending the Government for its long-term economic aims, expressed concern in a joint statement yesterday about its “apparent reluctance” to see considerable pain was being experienced in farming and manufacturing. The price of short-term pain was lost export markets and unemployment as a result of the impact of the unrealistically high New Zealand dollar and interest rates, they said. This was made worse by the “unreal” wages agreed to during the latest wage round.

the Government had moved to free up large sectors,of the economy but had failed to address the

employment sector, which represented more than 60 per cent of export costs. “Labour market rigidities must be recognised and resolved and now without fear or favour or else we will be destined to go down the tubes simply because our costs are not internationally competitive,” they said. Significant adjustments were being made by manufacturers and farmers just to stay in business while Government policies were spawning a host of new departments with no costbenefit analysis available for public scrutiny. Government spending, coupled with its determination to fund the deficit internally, was holding interest rates at unreal levels.

The producer sectors did not want a “U-turn” in policy, rather a reduction in Government spending and a freeing up of the labour market.