‘Pretence’ to say economy on track

Press, 12 April 1988, Page 8

‘Pretence’ to say economy on track

■ ’ 'u I. ? . r People were sickened by the frequent pretence of the Minister of Finance that the economy was “all on track,” the member' of Parliament for Selwyn, Miss Ruth Richardson, told the electorate’s annual meeting last evening. • H . 1 •I'L .

“The unnerving experience of a two-term Labour Government will mean that New Zealanders in future will subject politicians and their policies to more searching scrutiny,” she said. ’ j The public would not continue to tolerate debacles such as the grand Ministerial pronouncements of economic policy on December 17, she said. National had to heed that mood and win confidence by showing that its behaviour was wholly consistent with policy. The price was being paid for high inflation, exchange ; and interest rates with l unemployment, low to nil growth i ’rates, and declining investment. “We should not be surprised at those:' . high rates — they are a’ direct consequence of Government’s bad economic behaviour.” Miss Richardson identified five key elements to improving economic performance. These were: Turning the domestic deficit and current account deficits into! ! surpluses. Allowing greater I competition in the economy. Reducing taxes. | | ■. Cutting’ Government-led

inflation. ' . / Encouraging competitiveness. i The domestic deficit, between $l4OO million and $lBOO million, put horrendous pressure on the domestic economy ’and had to be cut to ease jhigh interest-rate presjsure, said Miss Richardson. i The current account ’had added about $ll ’million since Labour i came to office. Surpluses ;in that 'account “were a must” to deal with debt. National had to entourage greater competi- | tion in the New Zealand I economy through deregu- ’ lating the labour market, and removing constraints on new investment. “The unduly high costs

imposed by inefficient transport and distribution systems, as South Island producers know, must be ! eliminated.” Taxation had grown i from about 29 per cent of : private income in 1973-74 to 43 per cent in 1987-88 i and .the burden had to be ! reduced. I ; Miss Richardson said j this meant - targeting income support to the hard-pressed and allowing competition between ■ the providers of key

seiyices. i National’s policy in health had been “endorsed by the Gibbs Committee report last 'week,” which identified savings of $6OO million in the system alone, said Miss Richardson. j Consumption of services ‘ traditionally supplied by the Government had to be c'ut and State assets had to be returned to the private sector, where better returns could be used to reduce debt. I Miss Richardson also attacked Government-led inflation. ' "It is rich for the Minister of Finance to complain about the inflationary behaviour of local government when it is central Government that is the prime inflationary culprit.” Taxes in Government - charges had risen dramatically under the Labour Government, said Miss Richardson. I The Labour Government had failed because it had refused to control its own expenditure, walked away from education and research and development responsibilities. Sand refused to create a icompetitive labour market, she said.