The Press THURSDAY, FEBRUARY 24, 1972. Ready for 64 tougher measures”?

Press, Volume CXII, Issue 32849, 24 February 1972, Page 12

The Press THURSDAY, FEBRUARY 24, 1972. Ready for 64 tougher measures”?

When the Prime Minister (Mr Marshall) said on Tuesday that the people of New Zealand were “ ready for tougher measures to control inflation ”, he no doubt represented accurately enough the mood of the electorate. After two years of unprecedented increases in the cost of living, noone can contemplate with equanimity the prospect of having to pay, 12 months hence, 9 per cent or 10 per cent more for the week’s groceries or a pair of shoes. Unfortunately, one man’s costs are another man’s income; and the incomes of different sections of the community have risen unevenly in the last two years. Those members of the community who think they have lost ground continue to make strenuous efforts to catch up with the others—and with their own costs.

The main losers in the inflation race of the last two years have been the business firms and farmers (with the exception of dairy farmers) whose costs have outrun their revenue. Wage-earners, on the other hand, are well ahead of price increases; as Mr Marshall pointed out, average weekly wages increased nearly 33 per cent in the last two years while the Consumers Price Index increased 19 per cent. The two figures are both averages; some wages rose more, some less than 33 per cent, and some prices rose more, some less, than 19 per cent. The disparity between the two figures is so great, however, that it is unlikely that many wage-earners are not in a better position today than they were two years ago to buy more of the things they want

There can be few employers whose profits today are higher than they were two years ago—and even fewer shareholders whose dividends have risen sufficiently to compensate them for the increase in their cost of living. The “tougher measures” envisaged by Mr Marshall “will impose a sufficient “restraint on increases in wages and prices”, but not a “ rigid restraint ”. A completely rigid restraint—which is, of course, impracticable—would freeze both wages and prices; it would also stabilise the wage-earners’ share of national income at its present, unprecedented, level. Even so, most employers would probably accept a period of lower profits in exchange for an assurance of stable wage levels and of industrial peace. If Mr Marshall can persuade the employers and the Federation of Labour to accept a scheme which results in a reduction of inflation and of industrial unrest he will earn the gratitude of both sides—and of the whole electorate.