OVERSEAS ASSETS OF N.Z.

Press, Volume LXXIX, Issue 23859, 30 January 1943, Page 4

OVERSEAS ASSETS OF N.Z.

Mr Sullivan’s Reply To “Thp Press” QUESTION OF IMPORTS AFTER THE WAR (P.S.S.) WELLINGTON, Jan. 29. “A leading article under the heading ‘By-election Finance’ in ‘The Press of last Tuesday acknowledges that my statement referring to the increase in overseas assets over the last three years from £8,600,000 to £40,400,000 is a statement of fact," stated the Hon. D. G. Sullivan yesterday in reply to the leading article. “1116 deduction that this increase in overseas assets leaves the country in a favourable position to provide for imports when they become available and to meet without fear or default obligations incurred overseas, is, however, stated by ‘The Press’ to be unsound. Such reasoning on the part of ‘The Press’ is surely not only unsound, but fan“lt" would be as rational to argue that a business undertaking which had increased its cash reserves was in no better position to' increase its purchases or to meet its debt obligations. Stripped of its verbiage, this is what ‘The Press’ article means, if it means anything. If the overseas assets had dwindled from £40,400,000 to £8,600,000, we would have had a chorus of stern and grave warnings concerning the threat to the economy of the country, which this serious deterioration constituted. It follows that a proportionately favourable situation is established by the inverse position of an increase in overseas funds from £8,600,000 to £40,400,000, Improvement in Balances “The admitted fact is that over the period under review the overseas balances have improved by nearly £32,000,000. This increase in the accumulated overseas reserves obviously represents Unused capacity to pay for imports or to liquidate debt obligations which remain for future use. To speculate vaguely about what may happen in the future does not dispose of th? fact that whatever our debt obligations may be' we will be in a more favourable position, both in the matter of paying for imports and discharging debt obligations by virtue of the existing overseas surplus of £40,400,000. “To employ ambiguous phraseology and sophistical reasoning with the object of confusing public opinion by obliterating the admitted facts is to employ controversial methods that are questionable. If New Zealand’s overseas balances are to be completely discounted because future war debt obligations may absorb them, does it not logically follow that the same rule will apply to all countries, including Great Britain? At bpst it is a gloomy philosophy, since the use of overseas assets for the sole purpose of liquidating war debt obligations would mean that industry and trade would be completely strangled in advance of all post-war endeavours towards reconstruction. Position of Britain “The supposition leaves no alternative but that Britain could not export her manufactured goods to New Zealand or the other Dominions, because no overseas funds would remain with which to pay for these. Indeed, Britain herself, by the same token, would not be in a position to import the raw materials which constitute the basis of her industrial and trading activity. "Even should it be assumed on the basis of the illogical deductions of the leader i writer that all overseas surpluses would be finally used to liquidate war debt obligations, the actual existence of substantial reserves at the present time nevertheless places the Dominion in a more favourable position than it otherwise would be, since the demand upon future current revenue would be correspondingly reduced. It is, indeed, surprising that such plain and simple truths require to be reaffirmed in order to correct the false impressions of the leader writer. “The endeavour to belittle the favourable position established by the payment of £11,000,000 sterling of the debt incurred in terms of the Memorandum of Security Agreement also represents a fictitious interpretation of the facts. In informing the public of the proportion of war debt that has been liquidated oqt of current revenue, what other common-sense basis can be taken than that of the commitments that have actually come to charge? Taxation and War Costs “Had the leader writer been more interested in informing the electorate and less interested in confusing it, he would have quoted a statement from the Prime Minister’s review of the Dominion’s war finance that in the three full war years ended September 30 last the total war receipts had been £ 130,000,000, and of this sum more than 50 per cent, ‘had been raised by taxation, This constitutes a favourable position for the Dominion as compared with the 42 per cent, of the cost of war met by taxation in Great Britain over the same period, according to a cabled statement by Sir Kingsley Wood, British Chancellor of the Exchequer, on December 18 last. “Still, no doubt, ‘The Press’ will continue to attempt to convince the Dominion that these favourable circumstances represent no benefit to the Dominion or 'promise for the future. In other words, it will adopt the role of the confirmed pessimist who almost deplores the serenity of the sunshine of a perfect day on the grounds that it may be overcast to-morrow or that there may be a downpour next week. "The best safeguard for the future is a sound position for the present. In this respect the Government has maintained a balanced perspective. For example, the existing overseas asset exceeding £40,000,000 has not been built up out of unemployment, poverty, and travail of our people, as was the overseas balance, accumulated by the National Party when in office, and without any cavilling or censure from ‘The. Press’.”