Government Savings Policy Defended

Press, Volume CIV, Issue 30803, 15 July 1965, Page 3

Government Savings Policy Defended

(New Zealand Prtss Association)

WELLINGTON, July 14.

“Without savings we would have to resort to higher taxation—a form of compulsory saving that would be unpopular.” said Mr D. Maclntyre (Govt., Hastings) speaking on his motion in Parliament today approving Government savings policy.

He said at the end of the last financial year savings were at record level. Because of increased prosperity, savings had risen from £3l million in 1961 to £62 million in 1965.

“In a free society we rely on the savings of the people to provide capi-

tal,” he said.

Mr R. J. Tizard (Opp.. Pakuranga) said Mr MacIntyre chose to compare the people’s savings in a year when butter brought 206 s a hundred-weight with savings in a year when butter brought 350 s and asked the House to believe that it was the Government’s efforts that increased savings. Mr Maclntyre's motion said the saving of £lO6 million for the year ended March 31 were used for capital works including electricity (£15.5 million), land settlement (£6 million), housing construction (£6.3 million), education buildings (£3.5 million), railways (£5 million), telecommunications (£4.3 million), nubile buildings (£6 million), forest development (£1.3 mil'ion), airports (£1.9 million), State Advances Corporation (£25.7 million) and other works (£1.2 million). Debt redemption took £8.7 million and £2O million was repaid to the Reserve Bank; £600,000 was advanced to harbour boards from the World Bank. TEEN-AGE SAVING

Mr Maclntyre wanted to debunk the notion that teenagers were bad savers. “The teen-agers are the best savings group in New Zealand,” he said.

One-third of the people saved regularly, one-third on occasion and the other third had little or no savings. He said because of increased prosperity, savings had risen from £3l million in 1961 to £62 million in 1965. “Without savings, we would have to resort to higher taxation—a form of compulsory saving that would be unpopular,” said Mr Maclntyre. “In a free society we rely on the savings of the people to provide capital. “People are able to buy the essentials of life and still have something over to save,” he said. Mr Tizard (Opp., Pakuranga) said the Government was to finance its programme on £49 million of borrowings and then asked the Opposition how it should be done. Mr Tizard cited the Labour Government’s war-time national savings campaign, when wages were much lower, which in the four years 1942 to 1946 resulted j in annual savings of £l7 million, £24 million, £23.5 million and almost £24 million. Denying that the Government had contained inflation as claimed, Mr Tizard said between March, 1964, and

March, 1965, trading bank overdrafts were steady at £216 million, but then suddenly there was “a terrific upsurge after a statement that overdrafts will not be increased to meet taxation.” In a month the total of overdrafts rose to £261 million, said Mr Tizard.

“That makes possible the investments that the member for Hastings was talking about," he said.

The Parliamentary undersecretary to the Minister of Finance (Mr Muldoon), replying to Mr Tizard. said the first Labour Government's record savings came at a time there was a shortage of goods to buy.

Today, retail sales were up and there was plenty to buy, yet there had been record savings.

He said the Public Trustee was lending at the same rate today as five years ago. “We have the problem of growth accentuated by our high standard of living,” Mr Muldoon said. IMMIGRATION

It had been estimated every immigrant to New Zealand required £2500 of capital investment—in housing, roads, schools, etc. The immigration programme required, at a very conservative estimate, £5O million a year on capital investment. One of the best ways to cover it was by internal Government borrowing. National Party policy had been to increase small savings as an alternative to increasing taxation. There was a third way to meet expenditure—Reserve Bank credit, Mr Muldoon said. “Increased internal borrowing is simply a reflection of record savings," he said. Mr M. A. Connelly (Opp., Riccarton) said one of the problems facing the country under a National Government was that New Zealand spent all its earnings overseas and borrowed as well. There was nothing in the kitty for the unfortunate government that took over. I Various factors contributed to the high level of savings during the first Labour Government, he said, but the major factor was stability of prices.

Since 1961, with the 11} per cent increase in prices,

the Government had decreased the purchasing power of savings.

“GREEDY HANDS”

The Government has put its “greedy hands and fingers into the purse of the people” and taken away £67} million from small savings, Mr Connelly said. It had also taken away small savings in the form of insurance policies. Mr Walsh (Govt., Tauranga) said the savings figures indicated New Zealanders were very prudent saving people, and the public was very conscious of the value of money. He said there were more than 2 million Post Office accounts containing £386 million, and a quarter of the population had two savings accounts.

"SCRATCH BACKS” Sir Basil Arthur (Opp., Timaru) said Mr Maclntyre’s motion was of the type for ever being brought forward to scratch the backs of “the Ministers in the front benches.” “They are only introduced to prevent the Opposition bringing in matters of vital interest to the country, and to give the Government a chance to stall off issues where they are vulnerable.” Referring to trustee savings banks. Sir Basil Arthur said the Government always tried to take credit for initiating them but “they were actually started and encouraged by the present Leader of the Opposition when he was Minister of Finance.”

Mr H. J. Walker (Govt.. St. Albans) said if New Zealand was going to face the last decades of the century properly equipped and balanced economically, maintaining her standing of living, playing a full part in world affairs, and helping under-developed countries. then she must have capital now.

Like all young countries New Zealand had resources untapped and was short of canital, said Mr Walker. The Minister of Finance (Mr Lake) said the committee had found teen-agers were good savers. "The Government, in conjunction with the recommendations of the Savings Committee, has broadened the base of savings in New Zealand.”

The National Party, Mr Lake said, thought saving was one of the mainsprings of economic growth.