Crunch point for policy?

Press, 17 October 1986, Page 4

Crunch point for policy?

By HELENA WISNIEWSKI NZPA staff correspondent London The coming wage round may be the crunch point for the financial policies of the Labour Government, according to a New Zealand supplement in the international business magazine, “Euromoney.” Barring a high general wage increase — or a new “worldwide economic dislocation” — the Government’s financial reforms could put the economy in better shape than it has been for 20 years, the supplement said. The glossy, titled “New Zealand: Letting the Mar-

ket Rule,” described the economic reforms inspired by the Minister of Finance, Mr Douglas, as “genuinely remarkable.” “One of the great virtues of the approach is that, by contrast with Muldoon, it is farsighted: where Muldoon’s moves were tactical and shortterm, those of Douglas are strategic ... “The other great virtue of the new Government’s moves — again in contrast to Muldoon’s — is their consistency,” it said. But there were a number of dark clouds in sight. The general projection for the country’s balance of payments was “not

rosy” and many forecasters were far from optimistic about the approaching wage round, it said. There was also doubt over whether New Zealand could make sustained progress in reducing inflation. “... New Zealanders may have built themselves into a world where there is too much complacency and too little competition ... this will simply not allow the country to get inflation down to its competitors’ rates. “The big question is whether the shock of Roger Douglas’ reforms has shaken them out of it. The coming wage round will provide the answer.”