Nats join interest rates row

Press, 18 May 1989, Page 1

Nats join interest rates row

By

PATTRICK SMELLIE

in Wellington

The Opposition climbed on the interest rates bandwaggon yesterday, holding a meeting and press conference with a newly-formed industrial lobby group campaigning for lower rates. The leader of the group, the. Federated Farmers’ president, Mr Brian Chamberlin, said the issue went across party-political lines. Two Opposition finance spokespeople, Miss Ruth Richardson and Mr Doug Kidd, however, rammed the point home with specially prepared briefing papers focusing on Government failures on the interest rate front. Mr Chamberlin said the productive sector of the economy was worst hit by high interest rates, businesses still routinely paying as much as 20 per cent or more for their borrowing. Although businesses were wellsecured investments in many cases, banks were still taking a wary view of commercial lending. The four main banks surveyed by “The Press” yesterday were charging between 15.75 and 23.25 per cent for commercial loans. This compares with home mortgage interest rates about 15 per cent. While banks had been helpful to many indebted farmers, Mr Chamberlin suggested that in

many cases they should have been prepared to forego shortterm profit for long-term returns on loans.

The president of the Manufacturers’ Federation, Mr Barry Brill, also a member of the lobby group, said many businesses were finding it a better investment to repay debt rather than invest in new production. The lack of new investment was of even greater concern than the difficulty businesses had paying present interest rates, he said. “Some businesses can’t see returns from new investment as high as they could by retiring debt. “There’s no risk in retiring debt. You’ve got an absolute certain return of as much as 20 per cent. “While you have that climate, you’ll have no investment and no turn-around in the unemployment rate.” Another lobby group member, the executive director of the Tourist Industry Federation, Mr Tony Staniford, said many in his industry could not even make sufficient profits to consider retiring debt. In its briefing paper the Opposition blamed the Government for high interest rates by creating political uncertainty, high inflation expectations, low savings, and maintaining high levels of borrowing.