XN000022-1987-02-25 — Page 18

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WEDNESDAY, FEBRUARY 25, 1987

MR JACOBS SAID HE EXPECTED 1987 TO BE A YEAR OF MORE BALANCED GROWTH BETWEEN DOMESTIC AND EXTERNAL DEMAND, THE EMPLOYMENT SITUATION WOULD CONTINUE TO BE GOOD, AND DEMAND IN THE ECONOMY WOULD REMAIN STRONG RELATIVE TO SUPPLY,

+THIS, PLUS THE LAGGED EFFECT OF INCREASED IMPORT PRICES, MAY GIVE RISE TO SOME ADDITIONAL INFLATIONARY PRESSURES.

THE AVERAGE RATE OF INCREASE IN CONSUMER PRICES IS FORECAST TO BE ABOUT 6 PER CENT, WHICH IS HIGHER THAN THE CORRESPONDING RATE OF 3.7 PER GENT ÎN 1986. THE FORECAST RATE OF INCREASE IN THE GDP DEFLATOR IS ABOUT 5.5 PER CENT, HE SAID.

MR JACOBS FORECAST THE GROWTH RATE OF THE GDP IN MONEY TERMS THIS YEAR TO BE 12 PER CENT, IMPLYING A CURRENT PRICE GDP OF ABOUT $330 BILLION,

+AT CURRENT PRICES, PER CAPITÁ GDP IN 1987 SHOULD THUS BE ABOUT $58 000, EQUIVALENT TO US$7 400,+ HE ADDED.

CONTROLLED RISE IN SPENDING WHILE LOWERING TAX BURDEN *****

THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, TODAY (WEDNESDAY) PROPOSED A BUDGET WHICH INCLUDES A CONTROLLED INCREASE IN PUBLIC SPENDING TOGETHER WITH A MODEST LOWERING OF THE BURDEN ON TAXPAYERS.

DELIVERING HIS BUDGET SPEECH IN THE LEGISLATIVE COUNCIL, MR JACOBS SAID HE HAD A RANGE OF OPTIONS TO TAKE IN MAPPING OUT THE STRATEGY FOR THE NEXT FINANCIAL YEAR, GIVEN THE PRESENT IMPROVED OUTLOOK FOR THE PUBLIC FINANCES.

THESE INCLUDED FURTHER GROWTH IN FACILITIES AND SERVICES : A REDUCTION IN THE BURDEN ON TAXPAYERS: THE ACCUMULATION OF FISCAL RESERVES OR A PRUDENT MIXTURE OF ALL OF THEM.

+THE LAST OPTION IS, IN MY VIEW, THE RIGHT WAY FORWAI HE SAID.

MR JACOBS STRESSED THE IMPORTANCE OF AN ECONOMIC GROWTH RATE ASSUMPTION IN THE FORECAST AND ACCORDINGLY IN PLANNING.

+IN THE LIGHT OF THE HIGHER THAN EXPECTED GROWTH RATE ACHIEVED IN 1986 AND WHAT WE NOW FORESEE FOR 1987, I CONSIDER THAT A LIMITED UPWARD REVISION OF THE GROWTH RATE ASSUMPTION IS NEEDED, HE SAID.

/MR JACOBS