Nats in confusion over fiscal policy?

Press, 23 July 1987, Page 3

Nats in confusion over fiscal policy?

By

OLIVER RIDDELL

in Wellington

National’s start to its General Election campaign is being bedevilled by confusion as to what its economic policy really is. Its announced economic policy calls for a floating exchange rate, as is policy under Labour, and all members of National’s caucus in Parliament have agreed with the policy. None have disagreed publicly with it. But in tandem with this policy has been the reiterated belief of leading figures in National that the value of the New Zealand dollar is too high and ought to be devalued. It is not just the former Prime Minister and Minister of Finance, Sir Robert Muldoon, who has been calling for devaluation. Two of National’s three-man finance troika have too.

The Deputy Leader of

the Opposition, Mr Gair, agreed with Sir Robert the day he told a meeting in Hawke’s Bay that a “substantial devaluation” was needed. Then National’s spokesman on taxation, Mr Doug Graham, who had earlier described Sir Robert’s remarks as unfortunate, then said virtually the same thing at a meeting in Wairarapa. It would not be possible for a future National Government to have both a floating exchange rate and a substantial devaluation. Mr Gair said a devaluation would occur naturally, because the dollar, was over-valued, and so not be inconsistent with having a floating exchange rate.

Whichever perspective is taken, the issue is confused for National and for those seeking to understand its policies. The waters were fur-

ther muddied by confusion as to how much money a new National Government could save. National’s revenue spokesman, Mr Michael Cox, had said National would save $lOOO million. Then the Leader of the Opposition, Mr Bolger, said National’s policies would coSt $5OO million.

The effect of this seemed -to be to halve the figure first set out by Mr Cox, but Mr Cox explained that his $lOOO million was a net saving and that the gross saving would be $l5OO million. So far this week, Mr Bolger has said that National would direct the Reserve Bank to stop intervening with interest rates and has told Federated Farmers that National would not intervene in the economy. He explained this by saying that the direction to the Reserve Bank would not itself be an intervention, but a direction