97 Letter from Webster to Henderson

Wellington, 8 July 1980

CONFIDENTIAL

Prime Minister Muldoon Budget Statement

In his Budget Statement Mr Muldoon, referring to moves toward closer economic relations between Australia and New Zealand, stated inter alia 'Certain problems have been identified. I make it clear that if these cannot be surmounted, this exercise will have to be abandoned, a result which I would regret' etc.

Officers of this Commission discussed this comment at length. No reason was known which currently may have prompted the remark. My concern was the effect such a comment may have on the primary and manufacturing interests in New Zealand.

The words used appear to be now drawing public comment. A respected newspaper, 'The Press', today carried a leading article. Last evening in an address to a civic group, Sir Frank Holmes said, inter alia, that closer economic ties were essential and there was no reversal of the trend.

I spoke this afternoon with Hugh Templeton, Deputy Minister of Finance. He said in brief that some matters of concern had arisen. The Prime Minister is depressed. Certain individual negotiations are taking far too long. The matter was discussed today. White ware difficult. He must be satisfied. The comment was to rally the faint hearted. Industry will know by end of the year. Its all a part of the negotiations. Its no more or less that which was said previously. We can work through it. Nothing should be read into the comment.

I was aware of one journalist challenging Prime Minister Muldoon on the evening of the Budget. He was told the words were not intended to alert any new situation.

Secretary, I note the above as our Prime Minister will be in discussion with Mr Muldoon in the near future.

More detail is in cable O.WL5812 of 817/80.

[NAA: A1838, 370/1119/18, xviii]