PRIME MINISTER'S TOUR

Press, Volume LXXI, Issue 21639, 25 November 1935, Page 12

PRIME MINISTER'S TOUR

* HETURN TO OWN ELECTORATE \ HEARTY RECEPTION AT WOODEND INCREASES IN WAGES AND LOWER TAXATION FORESEEN "It has been said that under an inflationary policy wages and salaries climb toilsomely up the stairs while prices go. up in the lift," said the Prime Minister, the Rt. Hon. G. W. Fotbes, when telling a Woodend audience that Labour's plan for guaranteed prices involved an inflationary policy of finance. To finance its scheme Labour would have to embark on a policy similar to the one which had such tragic results in Germany, where inflation destroyed the wealth of the country, he claimed. "The "first thing the Government of New Zealand had to do in the depression was to see that the country was solvent and that we were not spending" more money than we could receive as revenue," Mr Forbes said when defending the Government's policy during the depression. "In doing this we had to take a great many steps which were extremely distasteful. But the men in" positions of responsibility recognised that it was a duty to the people of New Zealand to keep the finances in a sound condition to meet all our obligations, to see that all our employees were paid and when revenue increased, to make it a little easier for those whose incomes had been reduced in the pro- : cess of me. .::". the depression." Ktlief for People Mr Forbes repeated a former statement in which he expressed the hope that because of the present indications of buoyancy in revenue and trade the Government would be able to restore in full the balance of the reductions made in civil servants salaries and to do something to reduce the heavy taxation which had been made necessary by the heavy falling off "* re_ venue during the depression. When we get the first wiped off the slate •we can direct attention to the other, Mr Forbes said. "We realise that -.vhatever we can do to reduce taxation is a wise thing to do." More than 100 electors listened to the address and gave Mr Forbes an exceptionally friendly hearing. He told them that because of the policy followed by the Government the country would now be able to get the 3'ull benefit of the recovery, of which there were now very definite signs. The Government was not claiming for itself all the responsibility for the recovery, because there was no doubt that recovery rested partly on the rise in prices being received for primary produce. But still the Government's policy had enabled the country to be in a position where it could receive the beneficial effects of the recovery without retardation.

Started With Deficit ''Prices are improving and the Old Country is confident in our integrity and reliability," the Prime Minister said. "You gave us a free hand in 1931 and we can now point to a surplus although when we started off we were facing .a huge deficit. We did not have to borrow to achieve that record. And we have maintained our credit on a high level. We maintained production during a period of great difficulty for the producers. It is a pretty fair record that we can point to for those four years. We have come through the worst period in the history of cur country. We had.plenty of suggestions about tak'ing short cuts to prosperity by some manipulation of the currency, but the countries,which tried that immediately endangered their position all the more.

No Borrowing' "Instead of borrowing, the Government of New Zealand thought it a fair thing to meet the burden by asking the people of to-day to pay for it rather than to leave it to the future generations and so place them in a position where they could not enjoy the fruits of recovery. Those countries which tried to borrow their way- out are in worse difficulties today. Great Britain faced the position 'squarely, and is now able to show substantial benefits, and is a long way en the road to recovery. New Zealand ,\-'.'x the same line and: has been able 'to case the burden of those who were ttee.L-g the depression worst."

"Mushroom Party" Speaking about issues at the election Mr Forbes said: "I do not look upon this mushroom party called Democrats as playing any serious part in the election. The real issue lies between the Government and Labour." .He repeated his former criticisms of Labour's plan for guaranteed prices, and his assertion that under such regulation all incentive to improvement :Ei quality of production would be lacking. New Zealanders were not 'easily led away by schemes of that 'sort, he said. Labour would pay for vit by getting control of credit facilities. It was estimated that it would -take between £20,000,000 and |£30,000,000 to guarantee prices and wages in the affected industries. "They sav that by a system of costless credit they can pay for this scheme. We know that sort of stuff. And this, mind you, is put over for .the intelligent people of New Zealand. 'I am amazed that the Labour party ■would do it." Wages and Prices Mr Forbes attacked the assumption „of Labour and other speakers that it ■'was the Government's policy of wage .reduction that had reduced the purchasing power of the people. When one came to examine the position in the light of sane business common sense it'was easy to dee that when business had been reduced abnormally by the effects* of a-depression expenditure had to be reduced commensurately. When. the business of the country had, dropped by from 30 to 40 per cent, there was no escape from going on the rocks if. overhead costs were not reduced. He told deputations who had complained about the reductions that it was when the general revenue of the country dropped that purchasing power dropped, and the other was only the adjustment necessary to bring down costs in accordance with the reduced amount of revenue. Mr Forbes received a hearty vote of thanks. , After the meeting he and Mrs Forbes left for their home at Cheviot. They will return to the city to-day. Mr Forbes will speak at Leeston this afternoon and Kaiapoi this evening, and to-morrow afternoon will end a strenuous campaign when he addresses farmers at the Rangiora saleyards. He and Mrs Forbes will leave to-morrow evening for Wellington.