REPLY TO CRITICS.

Auckland Star, Volume LXVI, Issue 238, 8 October 1935, Page 11

REPLY TO CRITICS.

LABOUR'S POLICY. GUARANTEED PRICES. MR. SAVAGE'S ARGUMENT. (By Telegraph.—Press Association.) NELSON, Monday. Large attendances were present at the meetings at Blenheim and Nelson addressed by tho Leader of the Opposition, Mr. Savage. In replying to recent criticism of the Labour party's guaranteed prices policy, Mr. Savage summarised his argument as follows:— (1) Exports provide the only means whereby external national commitments can bo met. (2) The obligation to export therefore becomes a national one, which should bo guaranteed by tho nation. (3) The high rate of exchange provides a temporary, costly and uneconomic method of guarantee because (a) it ultimately cancels itself out; (b) it acts as a brake on United Kingdom sales to New Zealand, therefore lessens the British market for Dominion products; and (c) it assists the exporter most when ho needs it least, i.e., the higher tho prices received for exports tho greater the subsidy accruing from tho high rate of exchange. (4) A guaranteed price need not necessarily exceed the amount paid, at present approximately £10,000,000 annually; it would be an alternative to and not an addition to the high rate of exchange and the exporter would obtain tho greatest benefit when prices for exports wero low.

(5) Tho main question in dispute is whether we shall continue to raise from tho people of New Zealand by means of the indirect form of taxation kilown as tho high rate of exchange not less than £10,000,000 annually for tho purpose of subsidising exporters, or by control and uso of tho public credit through tho Reserve Bank we should pay that amount to exporters without imposing tho indirect form of tax referred to.

Labour, Mr. Savage concluded, said tho payment should be made through tho Reserve Bank, and not from taxation.