Labour Proposals For Economic Planning

Press, Volume CV, Issue 31004, 9 March 1966, Page 14

Labour Proposals For Economic Planning

GVew Zealand Press Association) WHANGAREI, March 8. A Labour Government would establish a central planning council as part of measures “to change the policies that have harassed farmers and businessmen alike,” the Leader of the Opposition (Mr Kirk) said in Whangarei today.

The council would lay down guidelines for a policy of planned, dynamic national growth inside New Zealand’s existing resources, he said.

The council would consist of representatives of all important economic groups, including farming, wage and salary-earners, industry, commerce, transport, education, and finance, Mr Kirk said. Guideline planning, said Mr Kirk, had already contributed greatly to the economic development of other democracies, particularly France, West Germany, Sweden, and Japan. Mr Kirk said a Labour Government would use Reserve Bank credit at low interest rates for certain approved capita] development. An effective finance, credit and currency policy was basic to economic planning, he said. Finance policy must stimulate production, not encourage speculation. “Because of New Zealand’s present dependence on export income, overseas trade trends help dictate the internal credit level which is desirable,” Mr Kirk said. “Apparently the present Government fails to appreciate that fact.”

It had consistently allowed a wide range of quasi-banking institutions to extend the supply of credit and substantially to affect other financcial activities: institutions such as finance companies, stock and station agents, certain building societies, hirepurchase concerns, insurance companies and the short-term money market, Mr Kirk said. But not all these agencies were well equipped or willing to measure and make allowances for overseas price changes and total export income.

Too often the resulting haphazard issue of credit in some fields had produced a situation to which the orthodox response had been a credit squeeze.

“Labour will avoid this approach, and considers that control before credit is issued lis more effective and less painful than measures afterwards,” Mr Kirk said. “Labour will therefore amend the Reserve Bank Act to bring all banking and all such credit activities within the bank’s jurisdiction. “The bank, in turn, will implement Government policy.” One function of the central planning council would be to advise on a desirable credit level and the projects for which it would be used. “Such a body would also advise on best use of national resources,” Mr Kirk said. This would enable all im portant areas of the economy;

to plan for regular, sustained, dynamic growth. Mr Kirk said the Labour Party believed the State should—“and we would see that it did”—create and use credit, at the cost of issue, for approved capital development. “The extent of such issue obviously depends on many inter-related factors. “These include the need to maintain a stable internal price structure and the level of overseas earnings. “The services of the planning council will be used extensively to analyse and advise on these factors.

“But, inside the limits imposed by these criteria, we are determined that Reserve Bank credit will be used on lasting and worthwhile public activity,” Mr Kirk said. “It should not be frittered away but, where used, it should be used to create lasting and beneficial assets for people.” Mr Kirk said the national planning council he envisaged would be under the chairmanship of either the Prime Minister or a senior Cabinet Minister.