REDUCTION OF SUBSIDIES

Press, Volume LXXXVI, Issue 26125, 30 May 1950, Page 5

REDUCTION OF SUBSIDIES

MR HOLLAND’S ACTION COMMENDED

“WILL INJECT REALISM INTO N.Z. ECONOMY” (Rec. 8 p.m.) LONDON. May 29. “The New Zealand Prime Minister (Mr Holland) has acted wisely,” says the ■Economist.” commenting on Mr Holland's decision to reduce subsidies on food and other consumer goods. “The subsidies amounted to roughly one-seventh of the total Government expenditure. They served to create in New Zealand, as they do in Britain, the atmosphere of a never-never land, in which few understood the price that was being paid to maintain their apparent standard of living. “The test of Mr Holland’s action, however, will be in the Budget which is to be presented in July or August. If it can be balanced without recourse to such measures as those of the previous Government—which, according to Mr Holland, created £26.000.000 of paper money to pay off some of its debts—then there should not be much danger of inflationary tendencies, inherent in rising prices and wages, getting under way. “The reduction of subsidies, if it does nothing else, will at least inject some degree of realism into the New Zealand economy.”