Improved productivity must be next—Moore

Press, 22 July 1989, Page 8

Improved productivity must be next—Moore

By

BRENDON BURNS

In Wellington

Tight monetary policies, as introduced by Mr Roger Douglas, are easy to implement but without improved productivity New Zealand faces a crisis, says the Minister of External Relations and Trade, and Deputy Minister of Finance, Mr Moore.

In a pre-Budget speech yesterday, Mr Moore said it was inevitable that the Government look beyond monetarism.

Mr Douglas’s policies had given predictable results — some beneficial, some harmful.

Inflation was down to single figures but unemployment was up.

Productivity had only increased

marginally, said Mr Moore. “What Government achieved under Roger Douglas as Finance Minister was the first bite. “It is easy to run a tight monetary policy. It broke the mould. "But now we must focus beyond

Rogernomlcs — to the next wave.” New Zealand had swung from being one of the world’s most protected nations to one of the least

regulated. The pieces now had to be put together to create a new economy.

If the primary goal of Rogernomlcs was to reduce inflation, then a logical

next step was to improve New Zealand’s productivity. International competitiveness came from being exposed to the harsh, cold winds of competition and reality.

Mr Moore said some New Zealand companies still did not realise this. “They think it would be better to buy their competitors.” The devaluation in 1984 was the most sensible thing that had happened to the New Zealand economy in several decades.

“Not only did it propel manufacturers and exporters strategically to the next stage of the development of their economy, but it is creating the kind of shock necessary to make

progress on trade, growth and competitiveness.”

Mr Moore said eventually unemployment created by industry readjustment would be absorbed by activities which grow from pursuit of a more competitive economy. The Government was obliged to initiate programmes to improve New Zealand’s competitiveness.

But to frame the choice as either picking winners or respecting the free market showed misunderstanding of the issues.

“The real issue is what kind of domestic trade policy and competitiveness strategy, in conjunction with

what set of International rules, will produce mutual benefit and global growth.”

Mr Moore said massive opportunities for New Zealand existed. “We must harness them through a more negotiated economy.

"Putting that new economy in place is the job of Government.” The word "crisis” had been cheapened by too frequent use, but no other word so well describes New Zealand’s situation.

Without better competitiveness, it faced a continued long, and not necessarily slow, decline, said Mr Moore.