Bolger advocates labour reform

Press, 24 March 1988, Page 1

Bolger advocates labour reform

PA j Wellington New Zealand’s labour market should be deregulated because it has become hidebound, prevents the j best use of labour, and depresses profits, according to the Leader of the Oppositions Mr Bolger. ~(

He said the dollar was overvalued as a direct result! of Government intervention, and called for a “climate of growth” to be crieated for exporters., Mr Bolger advocated i the gradual (reduction of tariffs protecting the domestic manufacturing I industry and accused i the Government of forcing too much change bn the public, i ;

Of the labour market, Mr Bolger said the balance of power had now moved from the employer to the employee since the labour [market was originally regulated. “It had become excessive and! hidebound in New Zealand so; that employers and investors are denied the i opportunity of making the best use of labour and creating the profits necessary to pay New Zealanders good wages,” he said. ? . i - “We are not a high-wage country now.! we are slipping rapidly down the wage structure.” Industry must be in la position

to earn enough, through (efficient production, to pay good wages. • “If you don’t pay people decent wages you inevitably force them into the welfare system,” he said. • ! i [hi Deregulation of the | labour market would give flexibility, which was particularly important with technology. | .'![;! • New Zealand could [keep a competitive edge (if it kept up with technological developments, rather than being "the last country where we are reluctantly dragged [in to survive,,: where there are very little advantages at all, and we are just tail-end Charlies.” | J|! Of the exchange raje, Mr Bolger said the dollar was overvalued as a consequence (of Gov-ernment-intervention, in spite of Government assertions (to the contrary. ! j I “The dollar’s value has everything to bo with the Government because it sets the interest rate policy which has dominated the value to (New Zealand.” ( The Government had deliberately pursued a high interest rate policy which had attracted huge flows of capital from abroad, pushing the New Zealand dollar above a realistic level, i

As well, the Government had, through the .Reserve Bank, "kept the short end of the money market tight to hold up interest rates.” |L. ( A move, about a month ago, to relax short-term interest rates, and in October last (year to tighten them up, confirmed this, he said; ( !i!|| t 1 | '■[ Mr Bolger said he would continue to float the dollar, and then try to achieve a' realistic value through a mix of policies. “I think the first decision you have to make as a Government is to have a commitment to get the dollar ijight.” The Government had said for some time; with the Reserve Bank, that they had no views as to the correct exchange rate or interest rates. [ “That is an act of gross negligence, in my view,” .said Mr Bolger. \ ■ | I[J j ■ | I 1 ' . Governments should determine what value they wanted for their currency and then implement policies to achieve that value. Asked whether he would use the Reserve Bank to intervene, Mr Bolger said, “A Bolger Government would I want | the exchange rate to reflect the needs of our exporters.” [