Lange gives Douglas qualified backing

Press, 8 December 1988, Page 6

Lange gives Douglas qualified backing

By

PATTRICK SMELLIE

The Prime Minister, Mr Lange, endorsed the broad economic approach of the Minister of Finance, Mr Douglas, in an important peacemaking speech .in Christchurch yesterday. Coming ahead of next week’s two-day Cabinet meeting, the speech was significant also because it follows a strenuous campaign by Mr Douglas since the sacking of a former Cabinet Minister, Mr Prebble, a month ago.

Mr Douglas has been exposing what he sees as the Government’s unfinished business, and calling on his colleagues — the Prime Minister being his prime target — to continue with economic reform. Militating the possibility of peace between the two, however, is the more personal matter of the Prime Minister’s alleged refusal to allow Mr Douglas to retain his press secretary, Mr Bevan Burgess. But while Mr Lange

said little Mr Douglas could disagree with yesterday — advocating further change rather than his earlier call for a “breather” — he did stake out a position distinct from Mr Douglas’s.

For a start, he was insistent that there were two stages in the economic reform process, and that stage one was now over.

Stage one was where “inefficient activity is squeezed out of the economy.” “That is why there has

been disinvestment and why there is unemployment,” he said. “The second stage of reform is the shift of investment into efficient activity.”

But while he remained committed to keeping inflation low, Mr Lange also acknowledged that there were few signs now of people preparing to make new investments. He called also for lower interest rates, saying there was “no uncertainty about the Government fiscal policy.”

But later in the speech, he again defended current levels of social services spending at the same time as saying reform in this area was still needed.

Mr Lange also gave a commitment to a more negotiated style of economic management than in the first stage of reform, implying that the spirit of the compact forged by the Associate Minister of Finance, Mr Moore, with the trade union movement was more appropriate than Mr Douglas’s less conciliatory style.

“Ministers then (in the first stage of reform) were proud of their inaccessibility and they were right to be. The Government would make its announcements and businss would duly make its adjustments,” Mr Lange said. “That time is now gone. There is no question now of Government by proclamation. No dramatic announcement can spark the economy into life,” he said, in an apparent reference to the ill-fated economic statement of

December 17 last year. But while long on intentions, the Prime Minister’s speech was short on specific policy options. The Leader of the Opposition, Mr Bolger, said the speech was “an admission of the failure of four years of Rogernomics.” The speech did not indicate how the disagreements between Messrs Douglas and Lange would be resolved, and this remained the main reason for present loss of business confidence, Mr Bolger said.