Intervention again debated by National

Press, 21 May 1988, Page 9

Intervention again debated by National

By

BRENDON BURNS,

political reporter

The debate within the National Party on intervention in the economy was thrown wide open last evening with a plea for members to reject the temptation to return to the past.

National’s spokesman on State-owned Enterprises, Mr lan McLean, warned the party’s Waikato division against listening to seductive voices promoting intervention.

On Thursday, the Leader of the Opposition, Mr Bolger, said the word intervention was now coming back into use after being unpopular and unfashionable. Last week-end, a National Party Wellington division conference remit committee had called for a National Government to intervene, if necessary, to reduce interest, inflation and exchange rates. Mr Bolger accused the Government of intervening to instruct the Reserve Bank to hold up the value of the dollar, by holding monetary policy tight. “I would pick up the phone and ring the Governor of the Reserve Bank and tell him to stop all this nonsense,” he said.

The number one problem in the economy was not inflation, but the decline in investment and production, said Mr Bolger. Mr McLean said farmers and others hard hit by Rogernomics were in desperation seeking a return to “intervention.” Such a call was tempting, he said. “The temptation invites ambitious, budding politicians to climb on board, seeking to build their future on a populist base embracing the Left of the Labour Party as well as traditional National Party supporters.” Intervention of the kind often advocated did not work, said Mr McLean. In what seemed a clear reference to the Muldoon Government’s wage and price freeze, he said no Government regulation or law had increased longterm price stability or increased wealth. “Moreover, intervention

based on nostalgia for a golden past which never really existed, is not necessary.” “As the rest of the world has now recognised economic growth and high standards of living come through a greater use of market forces rather than more intervention.” The Minister for Stateowned Enterprises, Mr Prebble, said Mr Bolger’s latest comments on intervention showed him to be going around in economic circles. “The business community has now has doubts about Mr Bolger’s grasp of economic realities confirmed by his amazing admission that he believes all our economic problems will be solved by phoning the Governor of the Reserve Bank.” Mr Prebble said printing money would not solve New Zealand’s problems and would produce double-digit inflation within six months.