Cabinet faces gloomy start to New Year

Press, 26 January 1988, Page 3

Cabinet faces gloomy start to New Year

By

BRENDON BURNS,

political reporter

The Cabinet will hold its first meeting of the new year today, faced with gloomy economic forecasts for all indicators except inflation and interest rates.

While there may be some jubilation at single digit inflation having been achieved in 1987, any back-slapping must be tempered by the enormity of what 1988 holds in prospect.

Ministers will need all of the summer holidays they have enjoyed, as they return not only to a world and domestic economic downturn, but an increasingly incensed Labour Party. The newly elected president, Mr Rex Jones, has forecast some sharp differences of opinion in the party this year, particularly with unemployment continuing to rise.

The December unemployment figures — which saw Christchurch’s total above 10,000 for the first time — will be a likely agenda topic for the Cabinet.

Another issue for discussion may be the community’s response to the pre-Christmas economic statement, which outlined future tax cuts and the immediate ending of many superannuation, life and medical insurance tax concessions.

But the main author of the statement, the Minister of Finance, Mr Douglas, will be absent from today’s Cabinet meeting. He is attending a World Economic Forum meeting, which has most Western nations as members. The meeting will discuss international economic trends and issues.

. With Mr Douglas absent, detailed discussion on the economy may wait

until his return early next month. However, Ministers may anecdotally report the responses they heard from members of the public to the economic statement’s contents.

Some angry reactions to the ending of superannuation tax concessions may be heard in the Beehive today.

The first Cabinet of the year tends to be an informal affair, with discussion centring on political issues.

The mid-January radio interview of Labour’s president, Mr Jones, in which he said the Government’s policies threatened the New Zealand way of life, is something the Cabinet cannot ignore. Unemployment was Mr Jones’s major concern, and the Minister of Employment, Mr Goff, said in releasing this week’s grim figures that worse was to come.

It had been hoped that this year, with inflation and interest rates declining, the jobless total would begin to fall.

But October’s world stockmarket crash and resulting uncertainty has confirmed the trend upwards. Mr Jones, as national secretary of the Engineers’ Union, is also helping lead the fight against the State Sector Bill. It will be another battle the Cabinet will want to win, as it is a likely precursor to further deregulation of the wider labour market.

Today’s Cabinet meeting is also likely to have a report on the situation in Fiji from the Minister of Pacific Island Affairs, Mr Prebble. He spent his holidays there and through his wife, Nancy, has family connections in that country. He informally met the new President, Ratu Sir Penaia

Ganilau, and the Prime Minister, Ratu Sir Kamisese Mara, during his time in Fiji. Consideration may also be given to New Zealand’s relations with France. Major Alain Mafart remains in Paris, with no guarantee yet provided by the French that he will be returned to Hao Atoll.

The Cabinet may consider the state of the Opposition which faces continuing rifts over economic and social policy, the latest centring on Sir Robert Muldoon. At the week-end he publicly renewed his call for a managed devaluation of the New Zealand dollar.

Sir Robert said having a different policy at the last election cost the party heavily in marginal,seats and he hopes those National members of Parliament then opposed to such a move have now been “educated.”