Mr Walsh Critical Of Economic Policy

Press, Volume CI, Issue 29722, 16 January 1962, Page 3

Mr Walsh Critical Of Economic Policy

(New Zealand Press Association)

WEL’JNGTON, Jan. 15.

When the National Government took office, overseas assets of the New Zealand banking system stood at £6O million, the president of the Federation of Labour (Mr F. P. Walsh) said today in his address to freezing workers at Ngauranga. “Today they are down to £47 million which includes the £27 million borrowed in London and New York,” he said.

“When the £27 million is deducted from the £47.5 million it leaves £20.5 million in our balance of payments—an amount insufficient to pay for one month’s imports.” Mr Walsh said that although the Prime Minister (Mr Holyoake) in his broadcast in December, 1960. on the “state of the nation.” had assured his listeners the Government would use no “crash facties" in bringing the country’s economy back to stability, the facts were that in November. 1961, New Zealand’s monthly imports were £25 million —an alltime record—and its overseas assets had been depleted to a stage where New Zealand had less than two months’ reserves to pay for imports on the average monthly payments made for the year ended November, 1961. “In place of carrying out his undertaking, he has allowed things to drift, hoping something would turn up to increase prices for our exports to an extent

where the economic stability of the country is being endangered,” said Mr Walsh.

“His policy of permitting the trading banks to advance funds to importers to import goods far in excess of the country’s ability to pay for them, must inevitably bring a day of reckoning. Over the past 12 months we have spent £6O million in excess of our income.

“How long can this go on? The policy of mortgaging the future production of the country so that his supporters—the bankers, stock and station agents and importers —can continue with their merry spree can lead only to disaster." The Government was suffering from the delusion that it could borrow its way back to stability. Obviously it overlooked the fact that “shylock will demand his interest.

“Interest payments will be the first call on the country's export receipts The £27.000.000 in loans overseas at 6 per cent, requires £1.620.000 yearly to be paid from the sale of our exports overseas.’’ Mr Walsh said. “This means it would require 101.000 dressed lambs at the present-day market value of 32s each to pay the yearly rates on the £27.000.000 borrowed. or 6300 tons of butter sold on the London market at an average price of £285 a ton.