INFLATION IN NEW ZEALAND

Press, Volume LXXXIV, Issue 25679, 16 December 1948, Page 6

INFLATION IN NEW ZEALAND

“Workers’ Worst Enemy”

MR NASH BLAMED BY MR HOLLAND “Some say the Minister Of Finance (Mr Nash) is a.clever financier, but lie is bringing this country to financial ruin ” saicT the leader of the National Party (Mr S. G. Holland) after declaring. in an address last evening, that reckless inflation was still going o and would continue as long as Mr Nash remained in office. Inflation, caused by the increasing gap between money and goods, was the workers worst enemy. . , _ _ _ The Minister of Industries and Commerce (Mr A. H. Nordmeyer) had told the last Federation of La . b our conference that the gap in 1938-39 was £48,000.000, while in 1945-46 it was £159,000,000, said Mr Holland. In 1936 the national income was £135,000,000. and in 1947-48 it had risen to £455,000.000. No one believed production had increased correspondingly. An example of inflation was given a month ago. When the exchange rate was reduced the law required the Government to take £21.500.000 out of circulation and pay it to the Reserve Bank. Mr Nash created that sum of new credits with the Reserve Bank without creating a shilling’s worth of goods. Everyone was looking for a sound solution to the inflationary spiral. The solution was a simple one—to get nd of the causes. The cause of inflation, and the cause of steeply rising living costs, was the Government’s financial policy of creating money and credits without goods. The constant race between rising wages and mounting costs could only end in disaster for the workers, "many of whom were now realising that higher wages were not the answer, and that the only remedy was the National Party’s policy of incentive schemes to encourage greater production and increased efficiency. There had never been so much unrest in the civil service as at present. People in responsible positions had been to him and said they had never known such dissatisfaction. The public servants had been shamefully treated. Public servants felt that they had been bluffed and fooled for nearly a year, and what added to their anger was that one small branch, the Government Printing Office, threatened to strike, so in that one case the recommendations of the margins and anomalies committee had been put into effect. Although direct action was abhorrent to the Public Service, its members felt that it was the only way to get anywhere with the present Government.

"Direct action will have to be dealt with in New Zealand,” added Mr Holland. “It indicates lack of national discipline.”