Development schemes criticised

Press, 24 July 1987, Page 3

Development schemes criticised

The role of the Government in the economy was the theme of the Minister of Finance, Mr Douglas, in an address to about 50 retailers and others in Ashburton yesterday. Mr Douglas agreed that the Government had a responsibility to help regions to prosper, but questioned the political motives behind past regional development policies. Past politicians had directed economic resources to regions for potential political gain, he said.

A marginal seat retention scheme functioned, but it did nothing to iron out differences between regions. Those differences and resources were the strength of regions and the key to their development, he said. It would not have been so bad if money had been pumped into viable projects in those areas, but a big boom-bust cycle had developed. “Think Big” failed to keep its promise and $8 billion worth of aid had been poured down the drains,” Mr Douglas said.

Some believed regional industries could be coddled with subsidies and controls, he said. Pouring subsidies into' them encouraged them to be less efficient and less innovative than their world counterparts.

New Zealand could not gain from subsidising lossmaking businesses or by ignoring the signals of the marketplace, Mr Douglas

said. Mr Douglas said farmers had been subsidised to produce more sheepmeat when the world market was falling. Some were paid to plant more grapes for wine the country could neither drink nor sell, and then paid to rip the vines out. Mr Douglas said the Government had to provide physical and social security as well as economic security. The latter meant creating a climate which was secure and stable so that people could plan with certainty. “Fundamental to this is a healthy, growing economy, opportunities to achieve a better living standard and, above all, jobs,” he said. "A healthy economy is one that is growing, adapting and responding to change on an ongoing basis. It is continually moving from less productive to more productive activity.” Mr Douglas was interviewed on Radio Ashburton about his book, “Towards Prosperity,” before signing copies at a local bookseller.

During the booksigning, two persons angry at the effect of Rogernomics on their livelihood bought and then tore up a copy of Mr Douglas’ book in front of him. He seemed unperturbed and said he had spoken to the two men earlier and told them they were welcome to put further questions to him at his public meetings.