Labour deserved ‘second chance’

Press, 17 August 1987, Page 7

Labour deserved ‘second chance’

Commercial spokesmen in Christchurch have little quarrel with the New Zealand electorate’s Saturday night decision, but they point to possible difficulties for the Labour Government in its second term. One sharebroker expects the Labour win will mean a short term firming of Interest rates, a rise of 1 to 2 per cent But they largely agree that Labour deserved its chance for a second term to prove whether its economic policies would work. A former national president of the Chambers of Commerce, and now a director of Newmans, Mr Allan Williams, said he believed the Government 'Should choose locpl jobs r ahead of its pOffcies of

relaxing import duties. “I object strongly to the relaxation of import duties on shoes and clothing, when the first choice should be to provide employment," he said. "I [ would rather pay a little bit more for clothes and shoes and make sure I people are employed. “I am happy they have , this three years to prove what they say they can do, but I am worried they ! could get too socialisti- ; cally minded,” he said, i He hopes the Governi meat’s spending in social i areas will not get out of proportion to its income. “As a country of three f million people, we are i striving to do a great - deal,” he said. > Manufacturers and ext porters were now “ex5 tended completely’’by the f high level of fllterest

rates, he said. “Every 1 per cent that comes off interest rates makes a large difference to the viability of companies. I’m not talking about profit — I’m talking about viability.” A sharebroker with the city firm, Egden Wignail and Company, Mr John Wignail, said the stock market had expected the Labour win, and he expected no big surge in the next two days. “I do expect the market to be quietly confident for some time,” he said. But he believes the Labour Government might have difficulty controlling its stronger trade union elements in the wake of the election. “The unionists could put the Government under a lot of pressure in the next few months.”

A change of Government would have meant a fall in confidence overseas in the New Zealand economy, he said. The flow of venture capital and investment capital into the country would have stopped. Interest rates had been a little lower over the last few weeks because the Government had eased up on the money supply, as governments always did just before elections, he said. It had done this in several ways, including the wheat subsidy, and it could also be flexible about when it paid its bills. He expected interest rates to rise 1 to 2 per cent, but in the long term they would depend on the inflation rate. If it could bfr-reduced to 10 per cent

next year, the Government would have done very well. He regarded that as an outside chance. ' The managing director of Waitaki International, Mr Athol Hutton, believes it was right to give Labour another three years to complete the job it started. “I know there were a lot of people suffering a lot of pain in the last two years, but if everything goes as it should do, we should have a much stronger and better economy.” That would enable the Government to carry through its social policies better. But he suggested the business community would like the Government to press on with deregulation of the labour market A