Budget welfare cuts ruled out

Press, 21 April 1986, Page 1

Budget welfare cuts ruled out

By MARTIN FREETH in Wellington The Minister of Finance, Mr Douglas, has ruled out expenditure cuts on health, education, and social welfare in this year’s Budget. These three big areas of spending were outside the Cabinet’s present review, Mr Douglas told a Labour Party regional conference at Levin yesterday. Health, education, and welfare spending would, however, be reviewed over a longer period than the lead-up to the Budget “to make sure we have ...the philosophy right, now and into the 19905,” he said. Mr Douglas repeated earlier assurances that

the present review was not to {{slash the level of expenditure blit improve the quality of return for taxpayers’ money. His address argued that Government policies to boost growth through greater! economic freedom ware entirely consistent frith traditional Labour! concerns for working people. “Oum people,” said Mr Douglas, "unlike the wealthy, have no great, safe, at cushion under their economic bottoms to protect! them. "Wonting people are more Iht risk than the to lose their jobs, their sailings or their hope of a beiter future. “It is because of that vulnerability ■ that our people depend, far more

than the wealthy, on having a healthy growing economy,” Mr Douglas said. The National Party represented the “traditional wealthy haves” in New Zealand. Mr Douglas warned that the pain of economic adjustment would continue. There was hard evidence that his policies were working. He pointed to a running annual rate of inflation now at 10 per cent, and a level of food price inflation during the last 12 months of less than that. To hold Government spending during the same period to just 0.5 per cent ahead of estimates was first-class management, Mr Douglas said.

Official overseas debt had fallen, overseas reserves had been restored to a safe level, the external balance of payments was on a healthy trend, and the terms of trade had shown a two point improvement. Mr Douglas said the Government well knew every New Zealand family and every business was under pressure from high interest rates, but this was necessary to force the shift of productive resources from uncompetitive industries into new profitable enterprises. “We are seeing a rapid shift of resources out of activities which New Zealand does not do well enough, into new areas where we can excel.”

Mr Douglas pointed ,to growth in tourism, horticulture, deer and goat farming, and carpet yam manufacturing as examples. New Zealand’s future was at stake and it could win the fight to adjust to a more efficient economy, providing more wealth and jobs. Mr Douglas took the unusual move yesterday of releasing to the public Treasury papers prepared for the previous Government He sought to pursue his attack on the Opposition for asserting that an official forecast before the election indicated that a National Administration could have achieved a deficit in 1985-86 of $l.B

> billion, assuming no - changes in its policies. t The four Treasury rei ports, prepared between - December, 1983, and May, 1984, show forecasts sub- > stantially higher. [ Mr Douglas also rej leased a paper written by Treasury officers days be- [ fore the election, indicating that they were puzzled by comments by the then ’ Minister of Finance, Sir Robert Muldoon, suggest- • ing a $l.B billion deficit ! could result in 1985-86. The reports show concern by officials at the size of the deficit and advise moves to cut it substantially. Mr Douglas is expected to announce in the next three days a final deficit for the year just ended of just over $2 billion.