AIMS NOT NEW

Dominion, Volume 30, Issue 155, 29 March 1937, Page 9

AIMS NOT NEW

Review of New Deal In

Dominion FINANCIAL BREAKERS Policy Depends In Long Run on Exports BRITAIN’S KEY POSITION By Telegraph.—Press Assn.—Copyright. (Received March 28, 6.30 p.m.) London, March 27. The “Economist,” in an article on “The New Deal in New Zealand.” describes Mr. Savage’s Government as opportunist in outlook and combining a measure of State Socialism with reflationary spending and social betterment.

“None of these aims is new in New Zealand politics,” the paper says. “The outstanding change has been from indirect to direct State control of economic life, which increases the temptation to spend public money extravagantly. “The Labour Government needs the strength of mind to resist this temptation, under pressure from the constituencies. It also needs to guard against excessive advances to settlers, since over-borrowing on mortgage was among the chief causes of the previous inflation of land values. “The guaranteed price system is even more dangerous. It implies the building-up of a surplus while prices are moderate or high. Much depends on whether the farmers will tolerate the system in good years when they are able to protest that they can obtain better prices than the Government is paying.

“There may also be financial breakers ahead. Mr. W. Nash’s Budget was orthodox, but if interest rates rise the Budgetary problem will be strained, and there will be strong pressure from the extremists to make the central bank supply “costless credit.” “The Government also is anxiously concerned to get a renewal of New Zealand's trade agreements with Britain. Labour's new deal will depend in the long run on exports. In that sphere Britain is still the deciding factor,” the “Economist” adds.