NEW EXCHANGE RATE

Press, Volume LXXXIV, Issue 25579, 21 August 1948, Page 6

NEW EXCHANGE RATE

“Every Hom? Will Share In The Benefit” STATEMENT fif MR NASH (P.A.) I*ELLINGTON, August 20. “People in every walk of life HU benefit from the alteration in the exchange rate, which vill result in a considerable reduction in the cost of living,” sijd the Minister of Finance (Mr W. Nash) to-day. “It simply means the removal if the exchange loading on all imported goods, which will meat that imported consumer goods and goods used by farmers rill be all greatly reduced in price,” Mr Nash said. “A wide raijge of New Zealand manufactures win become cheaper became of the lower cost of imported raw materials, and capital equipment price reductions will be evident in such importd items as food, tobacco, . textiles, clothing, footwear, building materials, motor-cars, i petrol, tyres, tractors, manures, wire, and many other goods. As imports, with the exchange rale ((stored to parity, arrive in the Dominion, lower prices will vjork through the whole of New Zealand’s economy in town tnd country alike, and there is not a home which will not Shane in the benefit. “The Government, through the Price Tribunal, will provide for the reduction in costs to be made effective in lower prices to the consumer,” Mr Nash said.

“With the price system operating, the alteration in the exchange rate will ensure that the pay-out to the farmer will cover his costs with a reasonable return for his capital and labour. He will be placed in a stronger, more secure position by the sure foundation of lowered costs which he will enjoy, “ There has never been a time more suitable than the present to re-estab-lish parity with sterling. In 1933, the drastic action of devaluing the New Zealand pound was made by the Coalition Government, primarily, in its view to help farmers in the desperate circumstances of the depression. The farmer to-day no longer needs the “support” of depreciated exchange rate. Circumstances to-day demand in the interests of the whole community that exchange -parity be restored to reduce prices.” A choice had to be made between two main alternatives, Mr Nash said. One was to follow an upward spiral of prices and increased incomes, followed by further increases in prices and intensifying the difficulties now facing the country. The other course, and the one chosen, was to find a way of reducing costs. A large proportion of the high prices and costs operating today was caused by the increased prices for imports. Price increases in other countries had been considerably greater than in New Zealand, and that disparity had been accentuated by New Zealand’s high exchange rate. “Everyone, the .housewife, pensioner, wage-earner, farmer, manufacturer. and businessman, understands the truth that the endless and futile chase of income after prices brings only disillusionment and disappointment,’’ Mr Nash said. “They will therefore share the Government’s conviction that it was better to increase the purchasing power of existing incomes and bring down the cost of living. It is vitally necessary, and to-day is the best time to do it.” Mr Nash said that the farmer’s in-

come to-d4j from butter, cheese, meat, tallow, whtat, and many other products, wouJs not be adversely affected, The guaranteed price gave complete protection tqdairy farmers against any fall in expot prices, and, if desired, the was prepared to institute guaratteed prices for other products. The Stabilisation Pool Accounts at present amounting to £40,000.000 might not grew with the rapidity that they had in the past, but it would be appreciated that their value had now been increased substantially in real purchasing poyfcr. That was true of everyone's savings. “I propose toinake a fuller explanation of the reasons leading to the Government’s dttision, and to describe the results which may be expected in a broadcast on Squday evening,” Mr Nash said. Answering questions put to him, Mr Nash said the Government had not yet received from theteovernment of Australia or any other country any comment on the restoration of the exchange parity, or request for discussions on any results of the move on New Zealand’s overseas trade, Asked whether outstanding import licences would be reconsidered in view of the fact that they would now command a greater voliiijje of goods than formerly, Mr Nash said that holders of licences would be advised as to any change of policy whkh might result from the restoration of exchange parity. ; Mr Nash said he didjnot expect any substantial change in customs revenue, as that was levied bn thft sterling value of goods. The restoration of parity would not lessen the need for Netv Zealand to economise on dollars, nor would it reduce New Zealand’s demand for dollars. The top goods Netv Zealand required from the dollar areas would still cost the same amoiiftt of dollars, blit the cost of those dollars in New Zealand currency wouldwe lessened.