Douglas accuses Govt of U-turn in economics

Press, 30 March 1989, Page 6

Douglas accuses Govt of U-turn in economics

PETER LUKE,

political reporter

The former Minister of Finance, Mr Roger Douglas, last evening accused his former Cabinet colleagues of making their first big about-turn in economic policy by not fully deregulating New Zealand Post.

The partial deregulation announced last week showed that the Cabinet had bowed to minority union and party interest groups and had cost the public potential savings of $4O million, he said.

- Mr Douglas warned that this sort of policy uncertainty raised questions of whether the Government or non-elected officials were running the country. “If those people can turn Cabinet around on a question of significant benefit to the nation, nobody will ever know

where Government is going, or how secure it is in its policy direction. “The only copper-bot-tomed certainty in that case will be that Labour is going to lose the 1990 election.”

The Minister of Commerce, Mr Butcher, while not denying that the Cabinet had revised its position on full deregulation, rejected Mr Douglas’ claim that this amounted to a U-turn in economic policy. “We have engaged in a substantial degree of relaxation of regulations which is entirely consistent with the thrust of our policies since 1984,” he said last evening.

He argued that the “substantial liberalisation” announced last week would reap a large part of the savings cited by Mr Douglas,, but that the broader social costs of

fully deregulating the corporation could have outweighed these savings. Mr Butcher suggested last evening that the Government had revised its intention to axe the corporation’s statutory monopoly after submissions from its rural caucus members.

Full deregulation would probably have led to a 25c surcharge on rural deliveries and less frequent services.

But Mr Butcher rejected Mr Douglas’ argument that a caucus agreement to fully deregulate had been overturned by party and union pressure. “The support of caucus was obtained for a relaxation of postal regulations with the proviso that there be continued price equalisation and regularity of service,” Mr Butcher said.

Citing a paper prepared

by Mr Butcher himself, Mr Douglas said that full deregulation would have led to an average drop of 5.9 per cent in postal prices, compared with an estimated increase of 4 per cent if the monopoly was retained. “The annual saving in mail costs to business and the public would have been $4O million, or 10 per cent of New Zealand Post’s postal revenue." Mr Butcher disputed this argument, saying that the relaxation of competition he announced last week would be enough to ensure a large part of these savings were made. Mr Douglas last evening conceded that postal charges would not have been uniform nationwide after deregulation, but this problem would have been covered by the surcharge on letters to rural delivery addresses.