REPLY TO MR WATTS

Press, Volume XCVII, Issue 28475, 3 January 1958, Page 8

REPLY TO MR WATTS

Statement By Mr Nash (New Zealand Press Association) WELLINGTON, January 2. “It is difficult to determine what Mr Watts means by his statement that ‘the position of New Zealand’s overseas funds is nowhere as serious as I stated it last night,’’ said the Prime Minister (Mr Nash) this morning, when commenting on the former Finance Minister’s criticism of import controls. “Our overseas reserves are £3O million less than Mr Watts himself expected they would be in July of last year,” said Mr Nash. “They will not pay for as many imports as the funds which were available when the National Government took office in 1949—this in spite of an unprecedented commodity income of £2119m in the last eight years, £ 1500 m in excess of a similar period immediately before that in which the National Government took office. “Mr Watts’s comment on the £3om in reserves is very misleading. This sum includes the £2om mentioned by me last night as the Defence Fund. These are moneys set aside to bring our defence equipment up to date, as provided by Parliament when submitted for approval by the National Government.

“These funds cannot very well be used for both the purchase of defence equipment and for imports,” continued Mr Nash. “The larger proportion of the remainder of the £3om is insurance funds held against earthquake and other risks, and a sum kept in reserve by the Post Office Savings Bank. Does Mr Watts say that, except in extremity, these funds should be used for ordinary spending? Mr Watts’s “Failure”

“The action we have* taken is to remedy the disturbed position created by the failure of Mr Watts to act. He would have had to take similar action to save our credit and good name or else let our country drift further into the whirlpool of unorganised and unmanaged overseas funds, which has consistently brought crisis on crisis in previous years. The practice followed by the National Government was to borrow overseas to meet the continued deficits.

"Mr Watts may not consider the position of our overseas funds serious, but all thinking men with any knowledge of the position will feel differently,” added the Prime Minister.

“Other than for a short period the funds set aside for specific purposes should be used only for those purposes. There are no reserves to meet emergencies, and when that condition arises, New Zealand would have to default in its payments. I would rather not face this position, which means that we shall maintain our reserves.

“It is likely that Mr Watts still subscribes to the view expressed just after the election, that even the National Government would have had to restrict imports further. They would have continued with exchange control, without import selection. As I pointed out last night, such a policy does not prevent exchange from being used for non-essential purposes, while some essential imports might well be kept out. Certainly, the National Government’s policy failed to hold our overseas funds at an adequate level.”