NATIONAL FINANCE

Ashburton Guardian, Volume 55, Issue 269, 27 August 1935, Page 3

NATIONAL FINANCE

REVIEW BY THE PREMIER.

POLICY OF RECONSTRUCTION.

DEFENCE OF THE GOVERNMENT.

(Special to the “ Guardian.”) CHRISTCHURCH, This Day, In his speech at Rangiora last evening the Prime Minister (the Rt. Hon. G. W. Forbes) dealt with the national finances. Mr Forbes said:— The financial year ended with a surplus of approximately £1,800,000. National expenditure was £24,500,000, and revenue totalled £26,126,000. The surplus was all the more welcome because of its unexpectedness, and it was due in the main to items of a nonrecurring nature, such as the profit on the sal© of gold, high returns irorn death duties on account of the deaths of a few wealthy persons, then ugam, the returns from income tax were high because of the higher returns from wool from the previous year. The increase in total taxation last year by £3,267,000 over 1933-34 is not the result of any increased rates of taxation—-it is due entirely to the general improvement in trade and business. It is also worth remembering that the total taxation includes some £4,500,000 a year of unemployment tax, which is directly necessary ‘ for the relief of unemployment. The increase in this tax and in income tax is also a clear indication of the improvement in the national income. It is calculated that the wages bill of the Dominion increased by £3,600,000 last year. Incomes other than wages showed an increase of more than £6,388,000, but it must be remembered that this figure is based on. incomes earned in the year 1933-34 the year of improved wool sales. Nevertheless, this total increase of £10,000,000 is a clear indication oi better times. Then again the increased customs and sales tax returns are another direct and certain reflection of increasing trade.

Customs Revenue Increases. Customs revenue for the financial year 1933-34 was £6,485,000 —fox - last year it was £7,424,000. The latest available figures (for the first half of the calendar year) as compared with the same period of 1934 show that this increase is being continued. lor the half year, January-June, 1934, customs receipts were £3,386,892. For the •half year, January June, 1930, wrey were £3,681,599. , The same position is disclosed in respect of the sales tax, which is based directly upon the volume and rvalue of wholesale business in New Zealand. The sales tax returns increased from £1,847,000 in 1933-34 to £2,170,500 in 1934-35. The half-yearly figures (Jan-uarv-June) are:—l934, £988,121; 1935, £1,131,465. The undoubted increase in general confidence is, of course, even more important than these figures. Summing up, I think I may claim to have produced evidence of general restoration. Indeed, you have only to look around to see the clearest indication on every side. Certainly there is a striking change in the general attitude towards national conditions. There is now a pronounced spirit of optimism in the place of gloom, and prospects are undoubtedly better than at any time since the depression began. Export values., have improved, imports have increased, the balance of trade is favourable, costs of production have been reduced, and money is available in abundant quantities. Drastic Economy. It is usual for the policies of Governments to attract more attention than the efforts of private individuals, but in the aggregate the latter are more important. Throughout the aepressiion in New Zealand the processes of individual adjustment which have been pursued have been Reading tlie country into a healthier economic organisation. Great sacrifices have been made by the community, but these sacrifices have not been in vain, and it is impossible to believe that any policy that would have ignored the fall in national income would not have .increased the difficulties of the country. ‘The Government itself has pursued a policy of drastic economy in public expenditure in just the same way as the public has had to economise in its private expenditure, and it rests now largely with private enterprise to build" upon the foundation that lias been laid.

The Government are, I think, entitled to claim that the necessary steps have been taken to ensure the future progress of this Dominion on a sound foundation. To do this, we have been obliged on many occasions to risk the gravest misunderstanding of our motives and indentions and to incur in many cases marked unpopularity. Reconstruction Measures. We embarked on a policy of reconstruction, and before very long we could see that in the normal three years of Parliament there would not be sufficient time to complete this process and with the programme as it proceeded we could not feel confident that the most important measures that were required would have'been put into effect. We accordingly extended the life of Parliament for one year, and when we appealed to the electors we asked that we be given their support so as to enable us to take the necessary steps to meet the financial crisis which had overtaken this eonutry owing to the world depression, and that support was given to us. We had found that three years was insufficient for the work, the life of Parliament was extended accordingly, and you will agree that the time was fully occupied. Among the Acts passed last session were the measures setting up. the Mortgage Corporation and the Executive Commission of Agriculture, and the Rural Mortgagors Final Adjustment Act, which were among the most important legislation required, and which we hope will be of great assistance to the country. When I said that we required the additional time fo complete the urgent portions of our programme, I think you will agree that it was a wise thing to do. To drop the reins with an unfinished programme would have been disastrous. We preferred to extend the life of. Parliament to enable us to proceed with our pro-

gramme which, while perhaps not entirely complete, will enable us to go a long way to overcome the inflationary effects of the boom period. Four years have now passed and the results of the Government s measures can be clearly seen emerging from the chaos of the depression. Practically every sign at present is one of encouragement. There is a marked return of confidence and a general and thoroughly justifiable belief that our feet are again firmly on the ladder to prosperity. We have already left the bottom rung behind us and are climbing steadily. A criticism frequently made is that the Government has no policy. I can only reply! that in my opinion no Government has ever been so keen on evolving and consciously carrying out a consistent policy as the present Governihent.

People speak of the depression in New Zealand as though it were the product of the Government. Surely, every thinking man and woman knows that the depression affected the whole world, and affected many countries before and after it touched New Zealand. Certainly, we had in our economy weak elements that were made apparent by the depression, but to blame the Government for having caused it is as futile as it is absurd.

Insulation From the Worst Influences.

Our policy has been to insulate New Zealand from the worst of the depression’s effects and' to strengthen those elements which were weak and were endangering our whole economic structure. Because our economy is an agrarian one we have had to continue our measuresi of agrarian legislation.

We have been blamed for introducing experimental measures. Yet it is the tradition of this country that hold measures should be adopted to meet an urgent situation. lam confident that the future course of events will prove the policy that we' have pursued towards recovery was also right. Oddly enough another criticism is also made that we should go back to the legislation of the 90’s. But critics must realise that conditions have entirely changed, and what was right in the 90’s is not necessarily right in 1935 We are faced with this position that, if our producers, upon whom the country depends, are brought to bankruptcy, then labour conditions in their turn will be brought to impossible levels. Unless we can maintain the financial stability of the Dominion and restore trade to a profitable level then wages and our living standards will suffer, and the people's savings will disappear.

Government and Pritvate Enterprise. The Government lias been blamed for its interference with private enterprise. I admit that the Government has rendered a great deal of. assistance which in normal times would not have been necessary. This action is justified on the grounds of public welfare and not on sectional interests. The Government has no intention of abolishing private initiative or enterprise. Governments here and elsewhere have always imposed regulations on the interplay of economic and social forces through social legislation, through tariffs and other commercial regulations. Every country has its particular agricultural, financial or industrial policy no matter how vaguely understood generally or ill-defined, which through its Government it seeks more or less consciously to further. In the present time, however, action lias to be more definite and vigorous because the old system has proved to have been incapable of meeting the present situation.

Critics and opponents of the Government are always apt to make rash promises and criticisms that are very wide of the mark. It is comparatively easy for the party in opposition to do this, and already a large net lias been put out to catch all kinds of fish and lines have been cast to which have been attached ©very conceivable kind of hook and bait ever invented as political lures. But the Government must necessarily! he guided by a sense of responsibility in its promises. There can be no question of the Government’s endeavouring to out-hid- the promises of the opposition.

Encouraging Industry and Progress. Blaming the Government is not going to get us anywhere. The Government is here for the purpose of encouraging industry and progress, though evidently critics would have you suppose that its aim is to hinder everyone. The general policy of the National Government in future must be to maintain the. confidence which has now happily been restored, to create the conditions in which individual enterprise may flourish, and to supply where possible the means whereby it can be assisted and materially encouraged. That this can be achieved there is no doubt. The Government has faith in the people and hope in the future. The Government is also determined to maintain the freedom of the individual which has always been the outstanding characteristics of British democracy.

One point I wish to emphasise particularly—that at this time above all, when prosperity is obviously returning, it is essential that we should remain calm and steady. The people of this Dominion did not lose their heads during the depression. They realised, as did the people of the Old Land from which they sprang, that the times demanded sacrifices and drastic measures of -readjustment. For this purpose they adopted the wholly commonsense view that was taken in the United Kingdom—that this was no time for party recriminations or for political manoeuvring. They 'welcomed the formation of a. National Government in New Zealand, as a. similar Government was welcomed in the United Kingdom. The excellent results in Great Britain are obvious, and they are becoming obvious here. A steady, sound and sober policy i 9 all that is now required to consolidate the position of this country on as strong a. basis as it ever has been. But if the people of New Zealand are misled at this juncture, when success is in sight, by quack nostrums and by fairy tales of spurious shortcuts to untold wealth, then all that lias been done may well be wrecked. The Future. This is not yet the time, nor is it the place, to detail the Goverment’s policy for the future, if, as I am confident will be the case, they rrro returned to power at the next election. As the country is aware, the Reform Party and the United Party, appreciating the fact that the times call, at this juncture more than ever, for a

complete co-operation of effort, have again decided to sink all party differences and to appeal to the country as a National Government in the interests of the wfiole of the population of the Dominion and not of any sectional portions. The National Political Federation which has been forced for this purpose, and which lias been accepted so readily and so universally by the supporters of the Reform and the United Parties, is an indication of our complete conviction that unity and co-operation must continue, to be our policy. "United we stand but divided we fall.”

Now that we have dealt with the urgent measures of reconstruction —measures which are on the Statute Book and which are being put into operation so that they may fulfil the intentions and policy of the Government —we can now turn to consider what steps can be taken for the improvement of the conditions of life of all sections of the community. We intend to make a special effort in connection with the unemployment problem in the hope of putting it on to a sounder basis, and we intend to take every, possible step within our power to stimulate industry in order that a greater number of workers may be absorbed into the usual channels of employment.

Overseas Trade. So far as overseas trade is concerned we are paying special attention to improving the quality of our products and to exploring to the utmost every possibility of extending markets. As the country is aware, we have recently appointed a Trade Commissioner in Europe, with headquarters at Brussels, and another in the United States of America, with headquarters ar Los Angeles. As opportunity offers, it is our intention to extend this representation to enable us to take advantage of any improved international conditions and any relaxation of presenttrade restrictions that will enable us to widen our markets. The question of housing is receiving our very careful attention, and while in the United Kingdom the Minister of Finance and I devoted a- considerable amount of time to investigating the remarkable progress that is being made there in this matter. We collected a great deal of information as to the action that is being taken by the Government and by the municipalities for improving the conditions of cities, and Mr Packwood, an engineer of the Public Works Department, who is at present in the Old -Country, has been detailed to make a special survey of the position and to collect all possible information, particularly as to the class of building that is being erected and the cost of construction. We have also under examination many suggested schemes for improving the social conditions of our people, including the questions of social insurance, health insurance, and medical attention, together with may other matters for social betterment.