RESTORING WAGES

Dominion, Volume 29, Issue 256, 25 July 1936, Page 10

RESTORING WAGES

Long Debate on Finance Bill BURDEN OF COSTS Opposition Members Apprehensive Members of the House of Representatives yesterday morning resumed the second reading debate on the Finance Bill, which makes provision for the restoration of cuts in the salaries and wages of civil servants and others to the 1031 level.

Difficulties facing the Government iu the way of rising costs were referred to ny Mr. A. C. A. Sexton (Country, Franklin), who expressed doubt as to whether’ tribunals and Investigations would be effective in keeping down costs, and suggested that the only way of dealing with the situation was by the issue of a national discount against the national credit. A rise in costs, said Mr. Sexton, wan the most serious difficulty the Government was up against. President Roosevelt had encountered the same difficulty in America, and if wages were increased by 8 per cent, costs advanced by 9 per cent. Competition was so keen so far as the necessaries of life were concerned that he did not think there was much scope for profiteering in the sale of those articles, although it might be possible iu other businesses. The Cost of Living. The cost of living was rising ana sooner or later the Government would be forced to meet that situation in some other way than it had indicated, added Mr. Sexton. The only way he knew of was to call on the national credit for a national discount. If that were done the people would get the benefit of their increases in pay. He believed that any Government which could administer the sales tax could administer a national discount. Such a discount was really a sales tax in reverse.

Mr. W. J. Broadfoot (Opposition, Wuitomo): Who eventually provides the national discount?

Mr. Sexton: It can be provided out of the national credit The real truth is that money is not created to keep pace with the goods produced. Mr. A. F. Moncur (Government, Rotorua) charged the Leader of the Opposition (Rt. Hon. G. W. Forbes) with inability to look into the future and sec any other system of society than one based on existing conditions. Mr. Forbes, he said, had consistently refused to recognise the advance of the machine age and the possibility that machines could be used to enable a reduction in the working hours of men generally. Mr. Moncur was attacking followers of the orthodox systems of banking and finance when he was reminded by Mr. Speaker that, while the scope generally allowed for discussion on a Finance Bill was wider than usual, it would be necessary for the speaker to relate an abstract discussion to the provisions of the Bill. Mr. Barnard made the reminder a general one for the House, other speakers in the debate having shown a tendency to deal with wide aspects* of finance. Mr. Moncur advocated the adoption of modern credit principles in the State financing, and stated that he looked on the' education of the masses to the new economy as one of the great hopes for the future well-being of the country. ,3s Money Available? Agreement with the Government’s proposals for wage-cut restorations in principle but not in method was expressed by Mr. W. J. Polson (Opposition, Stratford). “We are asked to pass this Bill, involving the expenditure of huge sums of money, without any explanation as to where the money «ill come from,” he said. ‘‘Our doubts were aroused last night by the attempts of the Minister of Finance to camouflage the position, and we are en- : itied to ask that those doubts should oe removed.” There was a clause in the Bill extending the power of the Government to borrow on Treasury bills, Mr. Polson continued. The Minister of Finance had attempted to say that the provision was for the anticipation of estimated revenue, but a study of the sections in other Acts to which the clause referred made it clear that it was expcnditune that could be anticipated up Io the full amount for any year. Whatever the estimate of expenditure might >e the Minister could borrow the whole of it by Treasury bills. The country was entitled to regard that with a degree of apprehension. “The last Government said definitely that on April 1 of this year it would make the final restoration of Hie cuts,” Mr. Poison said. “I do not know why this Government has delayed so long, particularly in view of I he pledge given by the Prime Minister that the cuts would be immediately reStored. Is this change of front due to

the fact that the money is not available? Probably the reason is that the difficulty in which the last Government was placed still persists. Money has had to be spent in other directions. We can group the promises of the Government into three classes. First there are the broken promises—and tlie last six months have been strewn with broken promises. The reduction of the exchange rate aud the abolition of the sales tax were supposed to have been put into effect immediately, but the exchange aud the sales tax are still with us. Then there are the distorted promises, like the marketing scheme, and finally there are the delayed promises like the restorations of salaries. Restoration Overdue. “I quite agree that the . restoration should be made to public servants.” Mr. Polson continued. "It is overdue, aud what is being done anight have been done much earlier. But when we come to the Government’s proposals for restoring the cuts in industry generally throughout the country, it is a different matter. There is no basis on which these proposals can legitimately be established. There may be new industries, with new conditions and new awards, and an attempt to restore arbitrarily the 1931 standard may easily create a boomerang in rising costs.” . ,

Already, as a result of the Government’s legislation, costs were rising to an alarming extent, Mr. Polson added. The cost of every lamb frozen had advanced by Bd. ' Mr. D. W. Coleman (Government, Gisborne): What a shame! Mr. Polson: Yes, it is a shame. This Government has very little real sympathy with the farmer. Mr. H. M. Christie (Government, Waipawa): Have you ever been a farmer, or have you had someone to do your farming for you? Mr. Polson: I have been a farmer all my life. Naturally, I cannot be here in Wellington and milking cows at the same time.

Mr. Christie: You would be serving a more useful purpose. Mr. Polson: I dare say I would, it is useless to try to talk reason to those on the other slide of the House. Costs in dairy factories, Mr. Poison continued, had risen by 2-sd. per lb. of butter. Building costs were up by 25 per cent., aud there had been increases of 20 per cent, in the price of clothing and board and lodging. A price-fixing tribunal was to be appointed by tlie Government, but that was one of the most amusing pieces of camouflage imaginable. The Board of Trade Act provided more power than was needed to deal with the position, but a tribunal was to beset up which would not affect the position one iota.

Mr. Polson also criticised the clause in the Bill providing for the varying or rescinding of contracts for work where the cost of carrying out the work had been increased by recent industrial legislation. The provisions might operate harshly on people who most required protection. Opposition's “Scare-mongering.” “If the last Government had still been in power there would have been no restoration of cuts whatever,” said Mr. D. W. Coleman (Government, Gisborne). He referred to a statement made the previous evening by Mr. W. A. Bodkin (Opposition, Central Otago), who, he said, had stated that if it had still been in office the last Government would have made a more generous restoration than was provided for in the Bill. Yet Mr. Bodkin had asked where the money was to come from to provide the restoration contemplated in the Bill. “No one will deny that the last Government had its difficulties,” continued Mr. Coleman, “but instead of remedying them it actually aggravated them. New Zealand was the last country in the world to feel the effects of the depression, and we saw what was happening in other- countries, but the Government just allowed things to drift along. When we were in the midst of depression, the Government could think of nothing better than to reduce wages, expenses and allowances. Instead of getting out of its difficulties, it made them greater.” Mr. Coleman declared that the great majority of the farmers of New Zealand endorsed the policy of the present Government. Admittedly there were some who were inclined to be timid, but that state of mind was due to the scare-mongering work of the members of the Opposition. Independent View. Stating that the first section of the Bill merely restored the last of the cuts, Mr. C. A. Wilkinson (Independent, Egmont) said there was no doubt that if the previous Government had been re-elected it would have returned salary and wages reductions in full. "Are you a member of the Opposition?” asked a Government member. Mr. Wilkinson: I can change if I want to, I suppose. It is the privilege of an Independent. I certainly was elected as an Independent, and I am readj- to support any legislation I consider to be in the interests of the country. I cannot agree, however, that the present party In power is doing that. In the main, I am satisfied fo be in opposition.” Mr. Wilkinson said the Bill showed that the Government was in a state of panic in regard to its own measures. Clause 47 gave it power to exclude any

factory or class of work from the provisions of the Factories Amendment Act, a measure which it passed only six weeks ago. If that was not back-ped-alling he did not know what was. The Government was running away from its own legislation. The Government could ameud the Act by Order-in-Council. The Minister of Finance himself would not deny that. What would the Minister of Labour have to say? Why was he not Objecting? Why was he allowing his legislation to be tampered with? Mr. Wilkinson said the Government was attempting to solve the unemployment problem largely by its public works policy. Each of the 20,000 men on public works was estimated to be costing the Government £5OO a year, the total annual bill for labour alone thus amounting to £10,000,000. The cost of living was rising all over New Zealand, Mr. Wilkinson continued, and people were becoming apprehensive. If the increasing of wages and the shortening of hours were to be offset by increased costs the Governmnt would have accomplished nothing. The Prime Minister, Rt. Hou. M. J. Savage: We will accomplish something all right. Mr. Wilkinson: The only cure the Government has to offer for rising prices is its proposal to set up a court which,’ I presume, will make inquiries in cases where prices are raised. Inquiries like that were made during the war, and very expensive men silent their time on trivialities. That, no doubt, is what will happen now. Referring to the increased payments to the unemployed, Mr. Wilkinson said the Government was giving these men ”/- an hour, and their work in the smaller towns was just as useless as it had ever'been. There were more men doing useless work in that way than there were 12 months ago. Rationalisation of Production.

The claim that improved methods of marketing and production would allow higher wages and lower hours in industry without a commensurate increase in costs and prices was made by Mr. C. Morgan Williams (Government, Kaiapoi). He attacked members of the Opposition who had taken the attitude that if wages were increased a rise in costs and prices was inevitable. They had failed to realise that there was such a thing as the rationalisation of production.’ He quoted the recent reduction iu the prices for superphosphate, which lie said bad been made in the face of shorter hours and higher wages iu the industry. By improved methods of marketing it had been possible to reduce hours, pay higher wages and provide the product at a lower cost.

•‘I have been a distributor of superphosphate myself, but I do not mind saying that tlie profits made by distributors have been far too high,” Mr. Williams added. "T know of another anomaly which affected prices in the industry. The manufacturers of superphosphate refused in the South Island to supply dairy factories direct, declaring that purchases must be made through the merchants. This line was taken, although the factories were among the largest distributors.” As another example in bis argument Mr. Williams mentioned the retail price of onions in Christchurch. When onions- were cheap during a recent season, he said, the retail price was nine times what tlie producer was receiving. Actually, he claimed, tlie costs of production bore only the remotest relation to the retail price of a commodity. It was the wasteful system of distribution that was largely the cause of the higli price of commodities. Interest Rates. The opinion that the restoration of wages would encourage rather than hinder the progress of industry was expressed by Mr. ,1. G. Barclay (Government, Marsden). The action so far taken by the Government hud helped for instance, to keep interest rates down, lie said. Had the last Government remained in power, _ a policy would have been adopted which would have tended to raise interest rates. The increase in the cost of manufacturing butter, due to tlie policy of the Government, would not be anything like the estimate of two-fifths of a penny per lb. quoted by Mr. Polson. Even if that was the experience production costs would only have returned to approximately the 1931-32 level. "Sky the Limit.”

Criticism of the proposed extension of the borrowing powers of the State was expressed by Mr. W. P. Endean (Opposition, Parnell). He mentioned the many changes in the legislation giving the Government greater borrowing facilities on Treasury Bills. The statutory limit of £4,000,000 was extended in 1931 to £6.000,000. An extension was made later to permit borrowing up to one-third of the estimated current expenditure. Later still the one-third limit was raised to one-half. Now the full amount could be borrowed on. The sky had become the limit. Could there by any wonder that people were becoming apprehensive, when wise old principles were being swept away, as in the case provided for in the Bill? Such actions made one wonder what would be the ultimate future of a young country like New Zealand. Mr. Endean also referred to the clause in the Bill dealing with the payment of allowances to members, and suggested that it might be open to abuse. He asked the Prime Minister if he would provide a report comparing the cost of administration incurred by the last Cabinet with that incurred by the present Government and the coopted members. “I cannot understand the attitude adopted by the members of the Opposition with regard to the restoration of wages,” said Mr. H. M. Christie (Government, IVaipawa). “We have been told that if the Opposition had been in power to-day it would have restored wages as from April 1. We have also been told that our wage-restoration policy will have serious effects on the country. How does the Opposition reconcile those two statements?”

Replying to the previous speaker, the Hon. A. Hamilton (Opposition, Wallace) said that if the state of business did not warrant the restoration of salaries and wages to the 1931 level the restoration would do harm. When improved business permitted, it should be given, but not unless. A Government member: Restoration of wages will help to improve business because the workers will buy more goods. Mr. Hamilton: Somebody else will buy less. If you raise the rate of wages to the 1931 level, why not raise them a bit higher? Mr. Christie: That is a reasonable level to which to raise them at the present time. Continuing, Mr. Hamilton said that an erroneous argument advanced by members of the Government for many years was that New Zealand could set up a living standard within its own borders without regard t° the standards ruling overseas, but he noticed that some Government members were beginning to realise that our living standard was affected by outside influences, particularly by the price level of New Zealand’s exports on the London market. Much had been made by Government speakers of the desirability of a reduction of interest rates on overseas loans, but he would remind them that

the previous Government had effected n reduction in interest, rates. Why, he asked, was the Minister of Finance not restoring the cut in interest rates? The Prime Minister: We have no intention of doing it either.

Mr. Hamilton: There are any number of people whose income depends on what they receive in interest. Mr Hamilton concluded by stating that the last Government had brought the cost of living down, and despite tihe fact that wages had to be reduced, the worker was able to purchase as much at the lower rate as he would when the cuts were fully restored. The debate was interrupted by the introduction of the Prevention of Profiteering Bill.