Economy

Press, 15 September 1988, Page 14

Economy

Sir, —“The Press” of August 26, reported Dr Brash, the new Governor of the Reserve Bank, as saying: “Confidence is very low but I, personally, am very optimistic about the future of the New Zealand economy because a lot of things are now beginning to go right.” Would it be possible for Dr Brash to enumerate a lot of things beginning to go right, leaving out the lower inflation rate and lower interest rates that most people are sick to death of hearing about while seeing the unemployed increase by thousands every month. There appears to be no doubt that Dr Brash and Roger Douglas and his big business cronies are all of the same mind, which is very bad news for the remainder of the New Zealand public until such time as the Roger Douglas gang is discarded by the Labour Party or the voting public. Dr Brash will have to be discarded at the same time, but will this be possible when the present National finance spokesperson appears to be voicing exactly the same ideas? — Yours, etc., J. B. HOOD. September 6, 1988. [Dr Brash replies: “J. B. Hood asks me to describe everything that is going right with the New Zealand economy, but not to talk about lower inflation or interest rates, which he clearly finds boring. That is a bit like saying ‘tell me about managing the country but don’t talk about politics.’ The task is unreasonable so I make no apology, for ‘boring’ J. B. Hood a little further. New Zealand’s high rate of inflation has been at the root of

many of our economic problems for many years now. Any of us that are a bit over 30 have had double-digit inflation for so long now that low inflation is but a distant memory. That high inflation has not only given us our high cost of living, but it has also produced many of the problems faced by our export sector. The Reserve Bank has the clear task to get rid of inflation and that is what we have been doing over the past four years and will continue to do. So far, we have brought inflation down from around 18 per cent to a current rate which is almost certainly less than 5 per cent. That is something we can be proud of because household budgets are no longer being stretched by spiralling prices. As a consequence of the lower inflation, interest rates are coming down too, which means more people are able to afford to buy a house. In addition, a great deal of progress has been made in recent years in improving the productivity of both public and private sectors. When the present recession ends, that process will be seen to have been of very considerable benefit to us all.”]