Govt reviews expenditure

Press, 30 January 1986, Page 6

Govt reviews expenditure

Govemment expenditure for the 1986-87 financial year was under review and the findings would be disclosed in this

1983-84 year. At that stage the Government was borrowing the equivalent of half of all private savings, he said.

year’s Budget, said an Associate Minister of Finance, Mr Caygill, yesterday. He was addressing local body officials and staff at a meeting organised by the Canterbury United Council.

This deficit was reflected in a poor performance of the economy during the last decade, Mr Caygill said. “The Labour Government’s achievement so far with the internal deficit

has been a reduction in

“New Zealand’s deficit is u still too large,” Mr Caygill said. "We are still

the order of $1 billion since the 1983-84 deficit,” he said.

absorbing too much private savings to finance the Government’s borrowing programme for the State sector."

Government expenditure must continue to decrease to reduce that deficit and in order to meet the wage payments

The • country’s internal deficit had been gradually increasing ‘ for several

agreed to during the last wage round, Mr Cargill said.

yetrs and reached a total? “This is a fact of life we ofl3ooo' million for thd? don’t relish but we don't

seek to escape from,” he said.

“Floating the New Zealand dollar has meant that the Government is no longer increasing its overseas loan programme. “We have ceased being a net borrower of overseas funds. The Government is borrowing as it needs to repay debts that fall due.

“We are also getting into the overseas loan market to borrow where we see an opportunity to reduce the interest cost and to spread our currency resources," Mr Caygill said. The floating of the dollar had also helped the Government to deal better with inflation, particularly with |the flow-on of cheap<j imports, Mr Cay-

gill said. “The increased imports have also tended to impose some pressure on New Zealand suppliers that was not previously there. I think inflation this year will still be higher than any of us should accept “The Government’s objective is to get the rate down to one that is competitive with our main trading partners. Until we do that we will continue to lose to the competitive edge of those partners,” he said.

Even if this year’s inflation rate dropped to 12 per cent the country still had to improve, Mr Caygill said.

“The result of Government measures oysr the past two years has Seen to

increase the economy’s flexibility in responding to overseas economies. We have, for example, reduced the extent to which the Government influences private decisions, reduced many subsidies and cut back import licensing.”

The Labour Government had introduced the most comprehensive reduction in tariffs so far, Mr Caygill said. “There is no ideal plan of economic attack. It is simply not possible to stage economic reform that will meet everyone’s point of view. It is the Government’s responsibility to make the choices. “Meanwhile, the world won’t wait for us to sort outselves out,” he said.