THE ECONOMIC NEW YEAR

Evening Post, Volume CXIII, Issue 3, 5 January 1932, Page 6

THE ECONOMIC NEW YEAR

The year 1931 will be unforgettable for a variety of reasons, but not less than for the problems of an economic character it has bequeathed to 1932 for solution. The principal of these New Zealand problems is how to cope with 50,000 unemployed; how to face a reduction in exports of £10,000,000 for a twelve months; how to meet a shrunken Government revenue derived through the Customs duties and some other sources; how to encounter the difficulties that are likely to arise out of the Government's assumption of control of funds, the proceeds of sales of exports by their owners; and restoration of public confidence in the Government's regard for private capital and income. In his New Year message the Prime Minister again mentioned the probability of calling for "further sacrifice." Some of our domestic difficulties are of our own making and must be overcome by ourselves, but New Zealand, no more than any other British Dominion, is not responsible for the main cause of its troubles, namely, the world-wide economic instability, for the whole world is off balance, and beyond setting our own house in order we can do no more towards restoration of a general equilibrium. Blondin, the intrepid funambulist, set' himself no more difficult balancing task than that expected of the Government of this Dominion, but Blondin was not only brave. He always kept his head. He did not worry whether he could cross Niagara on the tight-rope, for he knew that he could"; but he personally saw that everything was staunch and trustworthy and in its ■place, and so, confident in his own ability, he performed his thrilling acts. Had he lost his nerve he would have lost his life. The successful emergence of New Zealand from its present ecor-.omic difficulties will mainly depend upon the attitude of the^ Government, keeping its head, seeing that everything is in order, staunch and trustworthy.

Except for the present disturbed condition of wprld affairs, there is much that is right and staunch and in its proper place in New Zealand at the beginning of this new year for the performance of the Government's great balancing act of 1932----33. The causes may be seasonable or temporary, but the fact stands that there is a reduction in the unemployment figures. Certainly, income from exports is greatly reduced this year, but there are increased quantities of dairy produce and meat and some-other exports going \out, and there would have been a greater volume of wool exported and turned into much-needed ready money had its owners been disposed to meet the market, low as it is. With greatlyreduced incomes and in far too many instances no incomes at all, it was hardly to be expected that duties on imported goods could yield their customary revenue to the Government; besides, adverse exchange, and —since October last—almost prohibitive exchange with some foreign countries whence New Zealand, imported. Imports'and therefore Customs revenue have diminished to a trickle of their former volume, showing that duties can be fixed so high as to yield no revenue. at all, ~u

simple fact not always apparent lo the average politician. If Mr. Forbes's suggestion of "further sacrifice" is to be interpreted as still more taxation, it is quite apparent to the majority of taxpayers—the smaller income people—that die

limit has been reached if not exceeded, with unemployment lax reckoned in.

The trade balance in favour of the Dominion should lie a source of great satisfaction to the Government, for all the heavy loss on income from' exports. The position is disclosed in the Customs returns for eleven months ended 30th November, as follows:— 11 mths,, 1931. £, Exports ..... 31,814,844 Imports 23,019,300 Excess exports . 8,795,544 Here is a balance to the good of nearly £9,000,000 in New Zealand currency. The values of. exports shown are free-on-board New Zealand, and may represent more or less when they are disposed of in overseas markets; and the value of imports is on the basis of values in countries whence they are imported, plus 10 per cent. In any case, the excess of exports oyer imports for 1931 was better than that for 1930, when the eleven months' returns showed £2,000,000, in round figures. So far as external trading is concerned, the Dominion is living well within its means, and saving, too. As to the return of confidence generally the Dominion can do practically nothing outside its 'own borders. No Government by any party can command outside markets. It may spoil them, but it cannot compel buyers to pay more for any goods or services than those markets will stand for. Price-dictation from remotest times to our own has been tried and has always failed, and the price of'money can be included in goods and services. New Zealand's whole troubles of the present day are attributable to the 'fall in commodity prices, and with that fall the departure of confidence in markets. Not only have producers suffered, however, for the losses by depreciation in values of investments in New Zealand have been comparatively enormous and probably will never be made good. Savings also have melted away, and therefore everything should be done to encourage further savings.

But the facts to be.kept well in view in 1932 are that the 1931 external trade balance was substantial; that production is well sustained and increasing, and the earth continues to yield more and more year by year; and that the Dominion is, therefore, quite ready when the turn for better in the markets comes to take advantage of it, to supply in greater quantities than before— and should do so' in higher quality j all round. But the Government must realise that this greatly-desired change cannot be brought about if producers and all co-operating with them and serving them in various ways transporting their produce by land and sea, furnishing them with finance, supplying their needs of every kind are called upon to make "further sacrifice" if that means increased taxation of any kind, direct or indirect. Adjustment of expenditure to income is essential, but if "economy" is to mean still further unemployment and heavier burdens on the employed the. revival of internal trade and the restoration of confidence which all fervently hope for in 1932 will be retarded. The issue rests with the Government and those in positions of advisory authority— the Treasury, the Taxation Department, the Customs, also the banks, but it is essential that the Government should have the willing co-operation of all engaged in industry, commerce, and finance.