INFLATION IN N.Z.

Press, Volume XCV, Issue 28182, 22 January 1957, Page 8

INFLATION IN N.Z.

Bank Official’s Opinion

(New Zealand Press Association) DUNEDIN. January 21.

A lack of saving, more than any other single factor, has contributed to the present period of inflation in New Zealand, in the opinion of Mr R. O. Smellie. of the Commercial Bank of Australia. Wellington. Mr Smellie. in his paper “Sources of Capital in New Zealand” presented to the Science Congress today, said that voluntary savings had been inadequate during the past 10 years. The importance of adequate savings and easily accessible sources of capital to an expanding economy could not be overemphasised, he said. “The demand for capital finance in the decade since the war ended has been great, and the problem has been both t increase its supply and to ensure its sufficient investment.” he said.

Some authorities had claimed that with savings taking 20 to 25 per cent, of the national income. New Zealand had about reached the limit of her capacity to save. This might be so if this amount of saving had been carried out •voluntarily, Mr Smellie said. However, the high level had been partly due to compulsory and forced saving through taxation and inflation.

“The position is, as is always the case in inflation, that New Zealand has been and is short of genuine voluntary savings,” he said.