The second major problem is inflation. There has been a substantial
increase in prices. A significant part of this is of a once-for-all nature,
brought about by the recent removal of subsidies on a range of consumer
goods. Another major factor has been the rise in the prices New Zealand
has had to pay for imports. The Government expects that, as these
factors recede, the rate of inflation will reduce significantly in the
second half of this year.

The achievement of these two goals—a reduced rate of inflation and
a balance of payments deficit of manageable proportions—will provide
a sound base for further economic and social development.

The Government will ensure that while the economy is restrained
sufficiently to bring both the external account and the rate of inflation
back to a reasonable level, these policies will be implemented in such
a way as to minimise any increase in unemployment.

Over recent years the State has played an increasing part in our
economy. The Government believes that its role has now become too
dominant and that it is in line with the will of the people that this
trend be reversed. The reduction in the rate of growth in Government
spending announced recently, and the changes in the interest rate policy
implemented earlier this year, have been a start in this direction.

The Government will re-establish an effective system of economic and
social planning. An experienced team has already been set up to review
the National Development planning system and the consultative function
of the Sector Councils. The Government will also promote the effective
linking of national and regional planning.

A confident and expanding farming industry is essential to New
Zealand's continued prosperity. The new Government took immediate
steps to extend the fertiliser application bounty from 31 December
1975 to 30 June 1976. At the same time it put into train an extensive
survey of the livestock industry to identify the factors which have led
to a stagnation in livestock production over the past 6 years. The
Government is considering what measures could best be taken to
reverse this trend and provide farmers with the incentives needed to
obtain increased production.

One of the more pressing problems has been the quest for a greater
measure of stability in farm incomes. Following negotiations with the
meat and wool industries, the Government announced recently the
introduction of separate schemes to stabilise income from meat and
wool by means of price smoothing operations. A Meat Export Prices
Stabilisation Bill will be introduced to give effect to the meat stabilis-
ation proposals while the wool industry proposals are being dealt with
by means of regulations under the Economic Stabilisation Act 1948.

Parliament will also be asked to consider further the Meat Amendment
No. 3 Bill which provides for a Meat Industry Authority and which
is at present before a Select Committee.

The control and eradication of noxious plants is a costly burden on
farmers and also an inhibiting factor in increasing production. The
Government intends to introduce a Noxious Plants Bill which will
replace the Noxious Weeds Act 1950 and which will implement the
recommendations of the 1973 Committee of Inquiry into Noxious
Weeds Administration.