The Press TUESDAY, NOVEMBER 22, 1966. Labour On Prices

Press, Volume CVI, Issue 31223, 22 November 1966, Page 16

The Press TUESDAY, NOVEMBER 22, 1966. Labour On Prices

The leader of the Labour Party (Mr Kirk) has been attempting to make an election issue of prices. His appeal to consumers would be more impressive if Labour’s announced policy on prices and trade practices were less unsatisfactory. The party’s manifesto says Labour would not hesitate to impose controls if prices “become unreasonably high” because of the absence of effective competition “or for other “ reasons Price control is a threat any Government can hold over private enterprise. No-one need doubt that Labour is the party most firmly wedded to controls and least concerned about their attendant anomalies, high administrative costs, inducements to black marketing, and frustration of the forces that encourage competition in business. It is difficult to imagine how Labour, committed to an inflationary policy of increasing the country’s supply of money, could avoid imposing more and more controls on prices. Labour overlooks the power of consumers to regulate prices if they are determined to do so. Labour, as always, fails to recognise that price controls destroy competition between producers and encourage monopolies. A producer who sets his prices too high attracts competitors. Price controls and import controls confirm monopolies. Labour forgets the salutary spur of imports—even token imports—on local producers, and the effectiveness of the threat of lower import tariffs on manufacturers who are inefficient or greedy. New Zealand does not need more price controls; it needs more competition and more efficiency in production.

Labour has nothing to say about the inevitable price increases after general wage orders. It attempts to divert attention from these by alleging that “ prices of many commodities rise before a Court “ decision is given ”, Labour proposes to require the Court of Arbitration to issue general wage orders corresponding to the value of increased productivity. Employees rightly share the better returns from increased output if they have shared in improving output. But Labour cannot have it both ways: if returns from increased productivity are wholly absorbed in increased wages consumers will not get the benefit of the lower prices that higher productivity would permit in a competitive economy. Are the benefits of mechanisation not to be passed to consumers and to those responsible for the investment in machines? Must higher wages continually absorb the gains made by better production methods at the expense of all consumers? General wage orders increase the costs of all industries, efficient and inefficient alike, and consumers are usually no better off.

Labour’s manifesto says “the activities of the “ Consumer Council will be extended The council already has ample powers to protect and promote the interests of consumers. It can now work with the minimum of Government intervention. The growing membership of the Consumers’ Institute should ensure that the council will be a powerful instrument on behalf of consumers. The Labour Party apparently believes that the ordinary citizen’s initiative and his powers of selection are blunted, that the idea of self-assertion has become feeble, and that without the intervention of a paternal Government the council cannot get on with its job.