32
"fair" has been mentioned as part of the title I am sure
that what most of the advocates of such controls are after 13
a restriction of rents below market levels. Determining
market rents for non-residential premises would be difficult
enough without trying to decide on fair rents and the legion
of valuers and other experts likely to be needed to administer
any such measures would be quite beyond our resources at the present time, even if the idea was sound, which it is not.
(B) Government expenditure
90.
A second possible cause of internally generated
inflation was mentioned by my honourable Friend. Mr. Williams:
Government expenditure increasing at a faster rate than the
gross domestic product. As he pointed out, this could lead
to such competition for available resources that pressures
would build up on costs and prices.
91.
I am well aware of the increase in the ratio of
Government expenditure to the gross domestic product that has recently taken place (from 13.4% in 1971 to about 16.3%
in 1973 as shown in Table 4 of the Economic Background
publication). This ratio is still low by world standards
and I would not wish to be dogmatic here but, as part and
parcel of our budgetary strategy, we must ensure that
Government expenditure does not grow for any significant
length of time at a rate substantially at variance with
that for the gross domestic product. Were it to do so it
would soon outstrip the growth in revenue at existing tax
rates and could only be maintained by raising extra taxation,
which, in turn, could have consequences for the growth rate
of the economy.
92.
(C) Government pay policy
Thirdly, internally generated inflation could arise
if pay awards for the public service were to lead those given
by the private sector. In this connection, I can only go along with the thinking of my honourable Friend Mr. Hilton Cheong-Leen, namely, that Government pay awards should,
in general, be related to increases in the cost of living,
provided three conditions are met, namely, that the increase
in the cost of living is permanent, that private sector
/wages..
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