The Press WEDNESDAY, MAY 9, 1956. Labour’s Financial Policy

Press, Volume XCIII, Issue 27963, 9 May 1956, Page 12

The Press WEDNESDAY, MAY 9, 1956. Labour’s Financial Policy

The New Zealand Labour Party is in a dilemma over a financial policy to offer the electors next year. Because New Zealanders in recent years have shown a marked preference for private as against State enterprise, the Labour Party no longer proclaims openly its former principal objective—the “ socialis- “ ation of the means of production, “ distribution, and exchange ” although it may pursue this objective by such indirect means as may| I seem politically expedient. But its real difficulty is that its position has been challenged as the party standing traditionally for the redistribution of wealth in the community. It matters little that no-one, least of all the Social Creditors themselves, has shown clearly who would gain and who would lose from the hotch-potch of 'economic and monetary devices i proposed by the Social Credit [Political League at the last election. The promises were there—more [lavish, more comprehensive, and less realistic than the Labour Party had thought of offering, even in its most irresponsible moments. Someone obviously would have to pay if these promises were to be kept; and everyone would be the loser from the disastrously increased inflation. But neither consideration is likely to weigh very heavily with that section of the Labour Party’s supporters, or former supporters, who regard themselves as “ under- “ privileged ”. These things must have weighed heavily upon the finance committee which prepared a report for the annual conference of the Labour Party at Wellington. In the report, “ provisionally approved" by the conference, some effort has been made to appease those Labour Party supporters who think that the Social Creditors may “ have something ”, even if they do not know precisely what that something is. Notwith-1 standing that the State already has ample power to control the operation i of the whole financial system—the same power that the State possessed 1 during Labour’s term in office and still possesses under a different government—the policy solemnly affirms that the State should be “ the sole authority for the issue of “ credit and currency ”. Another, even more handsome, gesture to the Social Creditors: “the public credit “to be used to the fullest extent' “ compatible with the public good ”. i Just what this means only the committee can say; but if it means the issue of “ debt-free ” money by the Reserve Bank, as the Social Credit movement proposes, the answer is that “ the public good ” would certainly not be served by this device at a time of prosperity and inflation, although it is a recognised weapon in the financial armoury of governments in time of depression. On the whole, however, the committee deserves credit for refusing to compete with the Social Credit Political League either in promises of wholly unnecessary ; “ reforms ” in the monetary system 'or in promises of new and increased social benefits. Nevertheless, the way is left open to the reintroduction of the direct controls and the restoration of the State dominance that are close to the hearts of the doctrinaire socialists, however little they may be paraded in public. The declared policy on price control is, in fact, almost identical with that of the present Government; ’ ut no-one can be in much doubt about the direction and the emphasis that such a policy would take under a Labour government. Import selection and exchange control (why both?) are [mentioned, but for a different [purpose from that to which import control was directed under the last Labour government. Now the: controls are to be employed “to “ make certain that the country’s “ commitments for overseas debt ” are met and exchange accounts kept in balance. Under the former Labour government they were used, in the name of full employment and other laudable objectives, to promote a much less laudable economic nationalism and exclusiveness, in which anyone who could make anything, with little regard for price or quality, was assured of a market protected by these controls against competition from abroad. Plainly, the Labour Party has at [last recognised that New Zeai landers of all political persuasions feel that they are entitled to a wider choice of goods—and to the stimulus that the competition of imports gives to New Zealand industry. But Labour’s protectionism has not been abandoned; it has only, for the meantime, been prudently thrust out of sight.