Banker sees bright outlook

Press, 22 September 1987, Page 37

Banker sees bright outlook

PA Hamilton The abolition of income tax, inflation at under 2 per cent and the kiwi dollar worth SUSI.I9 — this could be New Zealand In 1997, according to Auckland merchant banker, Mr Michael Fay. Speaking to a property management institute conference in Hamilton yesterday, he painted an optimistic future for the country under Rogernomlcs.

He said by 1997 New Zealand’s population would top 4 million and the country would be a major international financial centre.

Agriculture would switch from extensive pastoral farming to intensive production of processed quality food and fibre products. Manufacturing would shift from Import substitution to high valueadded activities, particularly into communication

and technological support Falling labour costs would attract industry from a stagnating Australia, be said. New Zealand would become a significant second tier force in global securities trading, attracting a new breed of immigrant who worked in the Northern hemisphere but lived in New Zealand.

Auckland and Wellington would be reurbanised, catering to an affluent and mobile population, and the building boom would continue with much bigger edifices designed to accommodate the banking industry’s needs.

There would be an endless variety of secondary service industries employing the greater part of the workforce. Specialisation, communications and excellence would be key influences, he said.

Economically, the public debt would be slashed by selling assets and reorienting Government spending and there would be a dramatic improvement in the country’s balance of payments.

The New Zealand dollar would stabilise at around USB5c later this year before steadily appreciating as our inflation rate dipped below world rates in the early 19905, he said. By 1997 it would be worth sAustl.sO and SUSI.IO and be the third most traded currency in the world ahead of the Swiss franc and sterling. The deutschemark would replace the United States dollar as the world’s reserve currency. New Zealand’s annual economic growth would average between 3 and 6 per cent, brought about by the revitalisation of internationally competi-

tive manufacturing and service sectors, while inflation would average between DJS and 2 per cent As a last policy initiative before retiring in 1998, the Minister uf Finance, Mr Douglas, would abolish income tax. ,

Mr Fay said New Zealand had the resources; and people to make this future a reality, but needed to change its attitudes and management For too long people had 2 blamed the rest of the world instead of facing up to change. While he supported Ro-, gernomics, farmers had been treated too harshly and not enough was being spent on tourist promotion.

Deregulation should have started with the marketing, distribution and transport sectors, moved to the processing industry, and finally to the farm gate. .