Govts have no magic touch —economist

Press, 18 March 1988, Page 4

Govts have no magic touch —economist

PA Wellington Governments never solve problems but are part of the problem, and people should not depend on them I for subsidies or market regulations, according) to the Westpac Bank’s economist, Mr Rufus Dawe.

■ "The | Government never helps anyone, it only transfers one group’s problems on to another group. If they give subsidies to) farmers then the taxpayer has to pay them." he told a Rotary club | in Westport on Wednesday. Industries on the West Coast that had been dependent; on Government hand-outs had been living in ah "illusion." he said. "The Government leads them up the garden path and sooner or later abandons; them, because if an industry, is not viable no Government can keep it going indefinitely."

The Government had made the mistake in the paist of encouraging industries; on the Coast that needed ;raw materials to be transported to the area and then the finished pro-

duct had to be transported out. making transport costs too high for the industry to be viable. He ' criticised the Labour member of Parliament, Jim Anderton's, own economic policy which was released on Wednesday, as it did not deal in specifics. - Mr Anderton's policy was based on the 1935 Labour . Government's strategy, he feaid. which would be disastrous if used today. | • "What you nave to deal with now is the present. Mr Anderton is saying this is how we fixed problems then, we can do it again, which is useless." Mr Dawe said the Government couid not pay subsidies to produce goods for which there was no market, such is meat and butter. j ,

He also said the Government could not manipulate the exchange rate and interest rates, not' only ■ because . of the money it would take but because it wouldn’t help New Zealand's situation. He said the Government would not get |the economy healthy again but' the economy wquld get; itself healthy. All the Government, should do was get out of the way and not tamper; | . u The private sector will solve its own problems if given a fair chance." He believed vyith the deregulation of the market the private sector |was being given that; chance and was "compelled to' get going." . ' [ ■ "We're on the verge of a .prosperity undreamed of," he said. ,j