EXCHANGE RATE.

Press, Volume LXIX, Issue 20772, 4 February 1933, Page 19

EXCHANGE RATE.

COST OF INDEMNITY. POSSIBLY LESS THAN £500,000. STATEMENT BY MINISTER. rf ßO n Our Pari.ia.mbmaut Reporter.] WELLINGTON, February 3. An indication that the Government's undertaking to indemnify the banks against loss on account of the high e\'eha«"" might cost the country less than lixs £1,000,0(10 that had been allowed for it, and even less than £500,000, wa.-> given by the Minister for Finance (the Kt. Hon. J. G. Coates) during his reply in the second reading debate on the ISanks Indemnity (Exchange) Bill. Dis-1-u.i.iing the increased charges attributed to flic exchange, Mr Coates said it was very likely that the cost of indemnit'yii).« the banks could be kept under £JOO,i'OO, and it was quite on the cards that the Government would be able to get through with no loss at at). *'So i'nr us the puldic. finances are concerned," ho added, "the position looks very much clearer than when it was ■firft di.-clis-cl. '' .Mr Cnuti'3 prefaced his reply with a plain statement that the Bill before the llou.io «ai a Government Bill, and that, all Government supporters were aslc'd to support it. Mr .1. McCombs (Lab., Lyttclton): The big Mick. Mr Pontes: It is not a big stick. It in nn ordinary fact of Party Government, and one cannot get away from t. Mr Coates went on to describo Mr MeCombs as a past master at misreproMintation, who had built up his wholo story on a suggestion which he attributed to the Government that y.to incren.-o in the exchange rate would lower the cost of living. In Australia . the fact was that retail prices ha.l 1 fallen, but for anyone to argue that to increase the rate was to reduce tho cost of living would be utter nonsense. The Country Pays. "Undoubtedly the country pays for it," said the Minister. "It is, after nil, a readjustment and a readjustment that we are looking for. We believe that tho fall in commodity prices will offset the normal increase that would take place in New Zealand." The argument had been advanced that on account of the exchange, the price of everything in the country would automatically rise by 15 per cent., the Minister said. He had evidence before him corcrisig cveiy-day commodities which showed that in some cases the exporter was earrving the whole rise in the exchange "rate. In other cases he was currying the whole of the increase up to 10 per cent. Concessions of this kind had been made on such cornmodU itieu as coffee essence, cocoa, cornflour, ft powders, vinegar, sauces, and cigar- >!§ etto papers to name only a few. lne if increase in the price of raw sugar had ■in been 10s a ton and not £1 as was to bo II expected, and so far as his enquiries went the retail price in Wellington If had not moved up one fraction. Meinfll hem had declared that the price of f meat would go up, yet the only evi- !! fence that eould be gathered in Welhngitl ton wa.-i that beefsteak had risen by H 1 Id per lb. The fact was that competi- !'! tion and tho forces of competition would m in a «reat measure control prices. When j- the rate had been increased in AustraI Ha all sorts of reports had been cirfl cuiated to the effect that the CommonI wealth was doomed. Ho had ample eviL dwee from business people in every 1 State of Australia, in which they clearly stated that conditions this year ||' were better than they had been for tho II last three vcars. Emphasising that the primary industries wore the basis of the % Dominion's economic structure Air timtes -aid that to-day the number of l\<- stock in tho country was on the point |V «f declining. The sheep returns in parit ticular fhuwed a definite falling off. He A- wuld understand City members complaining for he knew that not one of - them realised tho trials and tribulations . " of the farmer. They were fiddling while Rome was burning. Ut A. H. Richards (Lab., Eoskill). '' Too riflht voii are. . -;. . Bofening to the press criticism of '■'. tlw Government's action, Mr Coates >;, Mid it was well known that the press ,p- was very idosely and mat erudly «t----t"> fc«ted bv the raising of the exchange «V nte. In *■<*. if there was one indus- -; try which would feol the early effects ;$" of th* increased rate, though only tem>s£',' porarlly, it would be the industry ot 4jjjJ, tfoe pfesß. lM Drop in Assessable Income. ff'" The Minister quoted figures showing %tuc marked decline in income tax «t«r*» during the last tjieo ■:' ■ nars and said it was estimated #r*tfr.;3 year the Boinnuon's ;,y| J "tt««*siiblo ineomo would „ not do r''>- 'wore than £30,700,000, compared with in 1030. During the debate, ;-&,, md Mr Coates, it had been argued that V'i the action of tho Government would eifc &• {tuft in increased coat to the worker. Ho :/:- {thought it was his duty to point that at tho present tuoinont in New ,•: ;JEtalßHd thev had a combination ,ot .[, .wealth and labour fighting the Govcrnfe« W. Labour was supporting those |j, ,)*!f.were keeping wages down to 5s. a h \ Who Leader of the Onnosition (Mr 11. k,tViH»ll*Bd): You kudir there' «»■■«* !'"( , lalShnce at all. , . ..„ #',]! *r Uwtitt: i don't say it to a definite ?Ji UfLaee, but bv the exigencies of the |f irHfoßnsianccs we iind two elements in ys' fe*% *»"" i (imp. MS , i l Wr(? t Budget Position. ij>.{ Miniver for Finance went on to m- *4r u, the ents which had been Sv IT- «**i|o Lv tho former Minister tor ■M, JLWtawc/the Hon. W. Downie Stewart, *f 'i ""ft refuwrt the aur jestion that the raism t l«4f the ejEohange was wholly respott- *> r the prospective deficit ot f li 'r *K!00,000. He wanted to point out to Mv ( m «ou«trv that before the exchange §.' i, VlMtien win coufciderod at all. the Oof' '' '' Mffaoßfc wiim faced with a shortage of m f f "M*au> of J£ 0,100,000. That figure was J' L**JM '>" estimates which had Jicon l| ! ;' { **I«M to him by the Treasury. Some j £/ ij Viflu items wef- as follows: If'f { k>tiims duW .. ;.* -400,000" ' £, t . |ffi«U»o tax ' .. .. 700,000 1 f •fc"' 1 tas • ■ • • 25 ' 00 ° W ' ffcut and Telegraph Dell- 4- i. P*'tment profits .. 470,000 1 { |s«lrt*ttys .. .. 000,000 Klfi sfMons .. .. 50,000 B. Vff^ 1 fll ° Ajfures he had tjuotod it should that, the increase in the es-rH-SE8 * notH »thH' -iding, it would havo KS.'JJ#*'MeeMary for the ■ Goveroinottt to B:MitvMi!*^ r rtl P * a revenue.