Mr Douglas ‘out of touch’

Press, 24 January 1986, Page 23

Mr Douglas ‘out of touch’

PA Wellington The Minister of Finance, Mr Douglas, had divorced himself from reality with his optimism about the economy, the Opposition’s spokesman on finance, Mr Bill Birch, has said. Discussing the economic outlook, Mr Douglas had said on Tuesday that whatever the short-term prospects were there was a high level of confidence

in the medium term. “Investment intentions are high. The sharemarket is buoyant and there is a considerable degree of optimism in our economic prospects being shown by both New, Zealanders and foreign in-' vestors,” Mr Douglas had told Hamilton Lions. Mr Birch said that the optimism contrasted with high inflation, a huge rise in Government spending,

the largest Budget deficit for the first eight months of a financial year, the biggest one-day drop in the sharemarket, forecasts of rises in unemployment, and a slump in growth. Government spending was out of control with high wage settlements yet to be reflected in Administration spending, and debt servicing up 43.3 per cent because of high in-

terest rate policies. “Any growth in the economy is taking place in the Government sector. The private sector is being severely squeezed, particularly small business and the self-em-ployed,” Mr Birch said. Mr Birch predicted also that with the effects of goods and services tax inflation was likely to be close to 20 per cent by the end of the year.