The Press TUESDAY, JANUARY 21, 1958. Significance of the Session

Press, Volume XCVII, Issue 28490, 21 January 1958, Page 10

The Press TUESDAY, JANUARY 21, 1958. Significance of the Session

The Parliamentary session opening today has a significance greatly exceeding the importance of the slim programme of immediate legislation. The bill to authorise the £lOO tax rebate is important, but only because it will give statutory authority to something that really came into effect with the election of the new Government. The damage inevitably resulting from this blatantly inflationary piece of electioneering has been done. It could not be undone, even if the Opposition used its unusual voting strength to frustrate the mandate so recently obtained by the Government. The damage can already be seen in the import controls introduced, so the Government claims, to curb the upsurge of imports caused by Labour opportunism. The consequences will be felt for years to come. What is significant is the opportunity this session gives the Opposition to expose the effrontery of Mr Nash and his colleagues in blaming the previous Government for a situation of their own making. The people of New Zealand should be left in no doubt that the running down of overseas reserves to an ’uncomfortable level was the predictable result of the State's giving away £lB million of revenue that it had already spent. This is the real “ squandermania ” that has gone on. If Mr Nash was dumbfounded by what happened in the last few weeks of the year he must be simpler than anyone had expected. It will be the Opposition’s task to remind Mr Nash of all the warnings that he was given months before the election, and that he rejected because they did not suit Labour’s electoral strategy.

The Opposition will also have the duty of examining the policy introduced by Mr Nash to meet the situation. This policy is, of course, implicit in the. Labour Party’s philosophy. It was quite frankly predicted during the campaign by Mr Nordmeyer, though the electorate may have missed his still, small voice among the louder invitations of Labour candidates to electors to burn their income tax demands. Whether this restriction of trade is the only, or the best, policy is

quite another matter. Imports probably greatly exceeded the demand of even the Labourinflated market, and would have fallen off sharply this year without any action other than a tightening of the credit squeeze and a display of fiscal responsibility by the Government. The sufficiency of the reserves may be debatable; but if there was a short-term difficulty it could very easily have been resolved by using" the facilities of the International Monetary Fund. This would have had the considerable advantage of giving a fillip to international trade. Instead, New Zealand is adding not inconsiderably to the forces of world recession. It should also be pointed out that when Labour adopted a similar policy in 1939 to meet a similar Labour-induced problem the results were not particularly good. Mr Nash should be asked why he expects greater success this time, particularly since the cuts may save no more than £l3 million in exchange. In short, the Government should be asked whether its interlocking policies of inflation and tight economic control do not too neatly fit its goal of socialism to be entirely compatible with its plea of national necessity.

The third point on which the Government should be pressed is its plan to tax the selfemployed twice in one year. Mr Nash has promised the double social security tax will not be exacted from those who have already paid their share. This is fair enough as far as it goes, provided he can show that the machinery for assessing the obligation is administratively possible. But, even so, why should those held liable be compelled to pay a year's tax in advance as well as their current tax? Why should payment not stand over until death or retirement, whichever is applicable? The Gcvernment has too many promises to redeem to forgo willingly any revenue, however unpopular and difficult its collection may be. It may, however, find that the memory of injustice will linger longer than gratitude for a tax rebate which is already beginning to turn sour with the threat of indefinite import controls.