RECOVERY AND RECOIL

Evening Post, Volume CXXIII, Issue 1, 2 January 1937, Page 10

RECOVERY AND RECOIL

Political action determined the course of events in New Zealand in the year now closed. The year began with a Labour Government in office, but with its policy in doubt, for the platform on which the Labour Party won the General Election was so generalised in its terms, so full of benefits for all and harm for none, that within it anything from Liberalism to bright-red Socialism might have been introduced. The new Prime Minister made reassuring speeches suggesting that even the financial control measures which were anticipated might be modified. Anyway, nothing would be done hastily. Similar language was employed by responsible Ministers when Parliament met* but it contrasted strangely with the measures submitted to the House of Representatives. And the determination with which these measures were forced through the House contrasted also with the terms in which Ministers invited the co-operation of all parties and classes in considering proposals for the public welfare. The double steam-roller of an overwhelming majority and the closure overrode opposition and was not checked by reasoned pleas for reconsideration. Only upon minor points was any modification accepted. On major issues the Government had clearly made up its mind, and would entertain no compromise.

In this manner complete Government control of currency credit and external exchange was established and the power taken to make new money issues. The State became the owner of all dairy produce shipped for export, making payment therefor I at a fixed price and assuming responsibility for marketing. The industrial laws were rewritten to reinstate compulsory arbitration, introduce the forty-hour week and .compulsory unionism, restore pay cuts, and grant increased benefits to workers. The Government, further, assumed or resumed direct control of various activities formerly under 'boards or semi-State direction. The railways, broadcasting, the Mortgage Corporation, and the licensing of transport were thus brought under political control. All this involved extended Government power to initiate and enforce new policies, and widen Stale control of the business of the individual. The final step, and it was the only one on which there was any sign of hesitation or disposition to compromise, was to place on the Statute Book an Act giving authority for the rationalisation of industry and the introduction of a licensing system. The initial measures taken under that Act show that it is not without purpose that the term "industry" has been made wide enough to cover all forms of distribution and marketing of the

The legislation, of which we have given only a few samples and not a complete catalogue, resembles the Government election policy inasmuch as it provides the broadest foundation for any structure. On it may be erected an edifice of humanitarian reforms similar to those of early Liberalism; or there may be a dizzy structure of Socialism—for today. All depends now upon administration. In those parts nf ils policy which lent themselves to immediate operation, the Government has been much inclined to seek results at once without counting the cost. It has enforced wage and employment benefits, and enlarged public works activity without reckoning carefully that someone must pay. Only in exacting taxation and reducing the exchange rate has there •' been a cautious pace—in fact a right-about-face in relation to taxing. The business activity of the present season will undoubtedly encourage those members of the Government whose motto is "hasten quickly." They will say: "See what has come from a bold policy! We must make more haste with other things—credit issues and wholesale housing, bigger works, higher pay and bigger pensions." They will not see that the recovery so far experienced is in part due to British recovery, in part the result of the previous Government's cost-reduc-tion measures, and in part bought with a price that has yet to be paid in higher living costs, higher taxation, and perhaps greater debt.

In the New Year will the advocates of boldness control Government policy? Will ihey insist tliat the Minister of Finance shall use his credit-issuing authority fully, not merely to finance dairy produce marketing and perhaps carry a marketing deficit, provide £5,000,000 on easy terms for housing, and supply any funds which may not in the meantime be cheaply available from other sources? Will they insist that public works shall be financed with costless credit, without regard to Mr. Nash's stipulation that the credit must create assets? Will they insist that the Minister of Industries and Commerce shall use all his powers under the Industrial Efficiency Act? Already the Government has big commitments—a National Health Insurance and Superannuation scheme which, desirable as it is, cannot but be very costly, especially if the Government yields to the temptation to make it highly attractive at the outset. Then there is education. There is scope here for reforms which need not add heavily to the bill, but there are others which will demand an increased vote. Education, health, and superannuation are on the programme for next session. With such a programme the Government cannot afford to be rash in the administration of the legislation already passed. If it is it will be at its own peril. It must take account of costs and benefits, of rising expenses in industry (admittedly booming just now), of higher prices which are taking the gilt off wage restorations, and of heavier taxation which threatens to retard industrial expansion at a time when new are needed to support a bigger scheme of social I benefits. In this matter there should bo no illusion. Social benefits, whether health, education, or pensions, cannot be provided by a Government, except as agent. The public must pay for the provision, and the public can do so only while the scale of benefits is such that the cost does not diminish prosperity. Resources must be husbanded, and industry must be kept in health by not demanding too much from it. If too much is demanded it is not merely the wealthy man that will be dragged down. The industrial structure and the bright hopes of betterment for the wage-earner will be pulled down too. For the New Year, then, the watchword should be: progress certainly, but with keen and careful scrutiny of the ground.