MR SULLIVAN’S REPLY

Press, Volume LXXXII, Issue 24866, 4 May 1946, Page 8

MR SULLIVAN’S REPLY

“APOSTLE OF OUTWORN CREED ”

(P.A.) WELLINGTON, May 3. “A parting shot at the Government’s control of the Reserve Bank was made by Mr Leslie Lefeaux before embarking on the Akaroa for Britain," said the Acting-Minister of Finance (the Hon. D. G. Sullivan) in a statement today. “Mr Lefeaux’s whole attitude is based on his inability to understand that in 1935 and at subsequent elections the people of New Zealand, exercising their democratic constitutional rights, voted for the banking and financial policy of the Labour Government and against the allegedly ‘sound’ finance policy represented by Mr Lefeaux that was hindering New Zealand’s return to prosperity. His grouch, therefore, is a grouch against the decision of the electorate. “In 1935 Government expenditure was needed to affect excessive, unjustifiable deflation which the Nationalist Government and its financial advisers had imposed on the country, and which Mr Lefeaux on attaining office as Governor of the Reserve Bank did nothing to correct. The Labour Government, in 1935, by increasing wages, salaries, and pensions and promoting public works and industry, and by guaranteed prices and , increased expenditure, expanded our economy and corrected the disastrous deflationary policy of its predecessors. “Up to September, 1939, the total of Reserve Bank advances and investments in New Zealand was £23,500,000, mainly for housing. Mr Lefeaux says that this was unsound; but what was the result? The answer is this—houses.

“Mr Lefeaux asserts that in 1938 the •people became rich in paper money but starved in goods? This is plain nonsense. At no time in New Zealand’s history did our people enjoy greater plenty than they experienced in the year before the war. They were better fed and clad, better in health, and better equipped in every way in all comforts ana amenities for their homes. War Finance “Why is it that Mr Lefeaux refrains from mentioning New Zealand’s amazing success in financing the war? Has he failed to observe that the Government, backed by the people in their contributions to war loans, succeeded with a minimum of recourse to the Reserve Bank in financing the war which cost New Zealand £574,000,000? Moreover, New Zealand has paid for every penny of its overseas war costs and has in addition reduced its overseas debt by more than £40,000,000. “From September, 1939, to March, 1946, the total or Reserve Bank advances and investments in New Zealand increased by only £11,400,000 for all purposes. This record of restraint in expanding central bank credit during the war is unequalled by any other belligerent country. This is the basic reason why New Zealand, more than any ether country, has maintained stability of prices in spite of the tremendous price increases of imported commodities, and has also maintained the best standard of living in the world. “If Mr Lefeaux had been fair enough to mention these facts he would of course have cut away the .basis for his criticism. It is to be regretted that Mr Lefeaux has taken his departure from New- Zealand without paying a single tribute to the war effort of the people, the efficient control of the Dominion’s activities, and the wise financial policy of the Government. “I desire to express sympathy with Mr Lefeaux’s expression of disappointment and regret at the comparative failure of the task he was called upon to undertake when he came to New Zealand. If he had taken a clear view of the desire of the people of New Zealand to go forward both in peace and in war to the highest level of production and the best possible standard of living, he could out of the wealth of his experience have mad** a worthwhile contribution to the happiness of our people. Instead, he revealed his attitude throughout in that he preferred at the very moment of his departure to issue a statement making a hostile attack upon the Government, grossly distorting the facts, and misrepresenting the state of the country—and apparently without waiting for a reply. Mr Lefeaux is the unrepentant apostle of an outworn creed.’’