ECONOMIC OUTLOOK.

Auckland Star, Volume LXI, Issue 210, 5 September 1930, Page 8

ECONOMIC OUTLOOK.

"REDUCE EXPENDITURE."

EFFECT OF NEW TAXATION. t

MR. M. STEWART'S PLEA.

' spite ofv protests from the commercial community the Government's taxation proposals have been adopted and will undoubtedly prove a further set-tack to commerce and industry and check . that . economic expansion which New Zealand's great natural resources warrant. Inevitably they must, have the .effects of restricting .business ,generally, and of the period of depression, said Mr. M. Stewart, chairman of the.Auckland Chamber of Commerce, urgi'ng the need for economy. "Where there is a progressive increase of taxation a stage must eventually be reached when capital becomes so depleted enterprise so cramped, and the ability of primary and secondary industries to compete so diminished, that even still heavier taxation will fail to ihcreaserevenues. Rather therefore than taxation < being increased, all Government costs should have been substantially reduced, and it is surprising that the Prime Minister, .when his Budget proposals, did not consider a cut in all Government salaries, commencing at the top and including Parliamentarians, together with further Departmental economies (especially in the Railway Department) in addition -to those already announced. Costs ;of administration and national services have increased noticeably during recent years, and general government plus local, taxation now amounts to about £17 13/ per head of the population, while in 192223 the figure was £15 9/, an increase of 15 per cent.

Wages and Cost of Living. "The present economic position clearly demands that all production costs should be reduced, and that no extra burdens should be-imposed—particularly burdens of a type that can be passed on to the primary producer. The Government Statistician's cost of living figures for May, 1930, are (except for a slight resecsion in 1923) the lowest recorded since 1919, and represents a level 11 per cent below t'ie average for 1920. Weekly adult money wages on the other hand were in the first quarter of 1930 no less than 14 per . cent above the somewhat low 1920. levels. ' As compared with 1914

levels, retail prices are up 58 per cent and weekly wages no less than 66 per cent, while at the same time there has been .a reduction of about 4 per cent in the length of the standard week's work. Any reduction in the present unduly high wage levels would immediately reflect itself in lower production, costs and a lower cost of living figure, and would so afford a further justification for wage reductions, thus furnishing an impetus to industry and inspiring investors with confidence. '.'..'. . '.■?; ; ,-.■ .-.?■■ <. ■■

"We should take" a; lessoir from the experience of Australia and face the position fully and' adequately, by reducing our expenditure eoinmensurately with our reduced income, whjle it is possible to do so. In prosperous times, when our produce was selling ■■ at high rates, we could afford t'o spend liberally, but on the present basis of returns for our exports (viz.: 21 per cent abovel9l4 levels), with retail prices 58 per cent above 1914, and wages 66 per cent above those' levels, we are now living in a'n artificial atmosphere. To recover our position we must now. reduce "i expenditure; and until we adopt a policy of this direction it is difficult to see how we can expect to make any progress .towards economy recovery." .., •;:. - f * ,