MR. NASH’S PLANS

Dominion, Volume 31, Issue 105, 28 January 1938, Page 12

MR. NASH’S PLANS

Adverse Effect On Private Enterprise LABOUR FALLACIES Nationalist Speaker At Upper Hutt "Your present Minister of Finance is using public credit to smash private industry,” said Mr. W. L. Barker, speaking at Upper Hutt under the auspices of the National Party last night. A depression-worn people had been bought bv fantastic promises, he said, and nothing but disillusionment and increasing strangulation by Governmental and bureaucratic control had been received from Labour’s attempts tq fulfil its election pledges. '“Prosperity of a kind fell upon us as it always does after a period of depression,” said the speaker, Vet Mr. Nash and Mr. Savage would have us believe that they were responsible for the comparative prosperity overseas which automatically reflected itself in higher prices for our exports and an increase in imports, causing a rise in our national income which automatically raised the revenue of the State. By this means Mr. Nash’s Government wa s in a position, through no efforts of its own, to hove more money to play about with. Qu top of this, Mr. Nash, the Minister of Finance, who is actually the Prime Minister and one of the dictators of New Zealand, instead of reducing taxation actually increased R. Bv this method has Mr. Nash got money to turn New Zealand into a nation of navvies. A Labour Fallacy. “Most of the measures followed by Mr. Nash to alleviate unemployment have been financed out of budgetary resources, in other words out of taxation, which means that it has not in any way produced an addition to the purchasing power of the country. The purpose of heavy spending on public works as carried out by Mr. Nash was a twofold one. The first was to reduce unemployment, and the second was to raise the internal price level and relieve the burden of private indebtedness. Now public works can produce these two effects, but it all depends on the method by which the public works are financed. If they are financed mainly by inflation they will tend to serve this dual purpose. But if they are financed out of taxation the danger is that normal productive activity will be greatly discouraged owing to heavy taxation, and that is just the position in New Zealand to-day. In this method lies a fallacy. Large public works should not be encouraged in comparatively good times. When a State is moving into prosperity it is better for industry to absorb the unemployed than for the State to strangle industry by taxation so as to obtain money io create employment for men who, if taxation had been reduced, would have automatically been absorbed into private industry. Population and employment follow capital and profit. But if a Minister of Finance imposes heavy taxation on industry he must in the long run create more unemployment —which is exactly what Mr. Nash is heading to do to-day. Employment Policy. “I am prepared to admit that in a period of depression public works should become an integral part of our economic system, but they should be financed essentially by borrowed money or through an unbalanced Budget, which could be carefully balanced when good times came round 'again. But it is not wise or sound for a Minister of Finance to spend huge sums on public works during a period of rising prices, because by so doing he is monopolising credit which would otherwise be absorbed in private enterprise, and thus private industry, which normally absorbs about 65 per cent, of our people, is starved by a shortage of credit and excessive taxation which prevents industry from expanding, frightens the necessary capital out of the country, and keeps capital from being invested in New Zealand. - “However, to allow private enterprise in comparatively good times to absorb the unemployed would not suit Mr. Nash, because that would not be working toward Socialism. For Mr. Nash to establish Socialism he- knows that he must first cripple private enterprise and the easiest way to do that is to impose heavy taxation and other burdens like the 40-hour week on industry so that our private industry, competing with the rest of the world, must break down, leaving the wayclear for Mr. Nash to establish largescale organisations under the direction and discipline of the State. That is what Mr. Nash 'calls constructive Socialism I “I have tackled Mr. Nash on this principle because I want to point out to you that your present Minister of Finance is using public credit to smash private industry. And on this issue alone I am prepared to take Mr. Nash on to any platform in New Zealand and prove to any audience that Mr. Nash’s national finance is unsound. Ail Suffer Together. “Sections within a community may thrive temporarily at the expense of another section, but in the long run they all suffer, and that was where Mr. Nash and his colleagues made their big mistake in 1935. They promised to make the farmer prosperous by a guaranteed price. They promised to make the manufacturing industries prosperous by protection. They promised to make the labouring section prosperous by higher wages and shorter hours. They promised to make the investor wealthy by reducing taxation. But what have they done? They have commandeered the farmers' produce; given him depression prices for his produce but boom costs on which to work. They have crippled the manufacturer by taxation and high costs. They have frightened the investor away by taxation. They have given the working people higher wages and shorter hours, but their policy has caused costs to soar so high that the worker to-day is realising that the position is rapidly developing where he will soon be worse off financially than he was under the old order. “Mr. Nash was going to release bank credit left and right and at the same time lower the exchange rate, said Mr. Barker in a reference to Labour's plans for control of the Reserve Bank. “But he soon discovered that he has no hope of reducing the rate of exchange while external prices and costs are rising and he has also discovered that if he throws too much bunk credit about he will lie in the awkward position of having to allow the rate of exchange to break and go up to about 135-140. Of one thing you cun rest assured, Mr. Nash cannot lower the rate of exchange while lie is per mitt Ing costs to rise. “The ony way that Mr. Nash can

hope to achieve his ideal where he can be more liberal with bank credit is by establishing State control of imports and exports so that he can eliminate tlie rate of exchange and start a system of State bartering. Then he would be able to use his Bank credit a little more fully but at tlie same time such a scheme would require a degree of Stat? planning and State control over business and industry in New Zealand that we would not tolerate. But unless Mr. Naslj is prepared to plan industry and control this country along the lines of Russia lie cannot do much except break one important election pledge after another; and they made Mr. Nash Minister of Finance! He has a lot to learn yet, but New Zealand is paying for b.is education.”