Mr Bolger warns of ‘backwater’

Press, 10 November 1986, Page 3

Mr Bolger warns of ‘backwater’

PA Wellington Lack of investment in exporting ventures could reduce New Zealand to an economic backwater, with permanently high unemployment, the Leader of the Opposition, Mr Bolger, warned yesterday.

There was now little confidence in exporting and investment and production was declining, he said.

“This trend will only be reversed when investors are convinced it is more profitable to invest in enterprises or companies producing for export, than it is to speculate on the stock market.”

Mr Bolger’s comments in an address to the New Zealand-Taiwan Business Council at Rotorua come after feverish activity on the sharemarket last week.

On Friday, turnover was 19.79 million shares, valued at $51.33 million,

with the Barclays Index, a main indicator of sharemarket activity, reaching a new high for the seventy-eighth time this year.

“Unfortunately for New Zealand over the last two years, it has been far easier to make money out of shares than out of exporting,” Mr Bolger said.

Total exports for the year ended June, 1986, had declined by $742 million. The volume of eiqports had also declined.

New Zealand’s very high interest rates had had a crippling effect on industry in general and New Zealand’s inflation rate was one of the highest in the developed world. “These two factors and the volatile New Zealand dollar have created particular difficulties for exporters at the present time. These difficulties

are directly related to the Government’s economic policies.” Mr Bolger said that by persisting with high and increasing internal deficits, the Government had put considerable upward pressure on New Zealand’s interest rates. This had attracted overseas investors, which had kept the value of the New Zealand dollar high, to the detriment of exporters.

“The combined effect of present policies is to make New Zealand an expensive place in which to produce exports. The decline in exports has been accompanied by a rapid increase in unemployment as jobs have been lost in the productive sector,” Mr Bolger said.

High productivity was essential if New Zealand was to regain a competitive position in international trade.