COST OF LIVING

Evening Post, Volume CXXIII, Issue 73, 29 March 1937, Page 3

COST OF LIVING

WAGES INCREASES

OFFICIAL COMPARISON

MINISTER'S REVIEW

RISE IN PRICES

"There appears to be a considerable amount of misunderstanding in the minds of a certain section of the public as to the relationship between increased prices and the increased purchasing power," said the Hon. D. G. Sullivan, Minister of Industries and Commerce, and Minister in Charge of the Census and Statistics Office, in an interview today.

"I do not for one moment deny that there has been some increase in the cost of living, but I say equally emphatically that the wage-earner in New Zealand is in substantially a much better position today than he has been for many years past," stated the Minister. "I say definitely that the increase in the cost of living has been more than offset by the wage and salary increases, and that the people have still a substantial margin which represents the difference between their increased wages and the increased cost of living. So far as New Zealand is concerned the increase in retail prices has been but small as compared with the increases in wage rates and in purchasing power.

"This statement is based on absolute fact as disclosed by a study of the latest figures supplied to me by the Government Statistician. The figures show that the official index number of retail prices of all groups of household expenditure as at February 15, 1937, was 900, on base average of the years 1926-30 equals 1000. (This figure may be subject to a slight alteration when the final check-up is made, but it is substantially correct.) This figure represents the following increases over the corresponding figures for February of recent preceding years:— RETAIL PRICES, FEBRUARY, 1937. , Increaso per cent. Over February, 1936 7.3 Over February, 1935 ;. .1.0 . Over February, 1934 .' .' 11.9 Over February, 1933 12.9 RETAIL PRICES. "There is a special interest in the comparison of recent movements in wage rates with the corresponding movement in retail prices. The latest figures available of wage rate statistics relate to December, 1936 (the figures being compiled at quarterly intervals only). The following is a comparison of the movements since 1935 in the wages rate index in comparison with the movement during the same period in retail prices:— INDEX NUMBERS (Base 1926-30 equals 1000). Increase ' Tear December, per 1935. 1030. cent. Money wage rates . SSB 1017 18.5 Retail prices 537 BS7 6.0 Effective wage rates 1025 1147 11.9 "The effective or real wage rate index is ascertained by applying the price index to the nominal wage rate index. As these are not for the same period the effective wage-rate increase cannot be stated as applying to any particular period, though it represents a twelve months' movement. It will thus be seen that the effective wage rates have advanced by nearly 12 per cent, during that period, and this definitely answers the criticism that the increased purchasing power has been cancelled out by increased prices. WAGES ELSEWHERE. "I think it will be interesting to New Zealanders to see the following comparison in respect to wage rates overseas. Wage rates in New Zealand have increased to a much greater extent than in other countries, and the position of the wage-earner shows a much greater relative improvement than in the United Kingdom or Australia. The improvement is even greater than the figures suggest, for, as I have just indicated, the purchasing power is considerably greater than the improvement in wage' rates: — Percentage Period. Increase. Great Britain— Retail prices, December quarter, ' 1935 /• 2-5 Nominal wage rates, compared with December 0.l Effective wage rates, quarter, 1936 0.6 Australia — Retail prices, December quarter, 1935-December quarter, 1936 .. 2.9 Nominal wage rates, September quarter, 1935-September quarter, 1936 •••• \-l . Effective wage rates •,.~ 1"! , (decrease) New Zealand— Retail prices, December, 19;>5-De-cember, 1936 ; . 6.0 Nominal wage rates, year 1930December, 1936 IS-' Effective wage rates "••» "These are official figures that tell their own story in the light of hard facts. * , . "It will be seen that retail prices have advanced by 6 per cent.', and the question is asked, is this reasonable? There are several factors that must be taken into consideration 'in dealing with this question. One factor is that many industries were carrying on production on an uneconomic basis during the years of the depression, and it has been essential for these industries to increase their prices to enable them to continue operations. That fact cannot be denied, and,it is reasonable. Another factor is that some producers, manufacturers, distributors, wholesalers, and retailers have had in some measure to pass on to the public the extra costs imposed on them by reason of increased wages, the 40-hour week, etc. Others have been compensated by increased turnover. A third factor is the increased cost of imported goods. For practical purposes we may consider the first two of these factors together. ' PROFITEERING ACT. "The Government was not slow to appreciate the fact that with the return of better times, increased output, the institution of the 40-hour week, and higher wages, costs in industry in general would undergo changes which were likely to be reflected in retail prices, and the Government, provided the necessary machinery by means of the Prevention of Profiteering Act whereby a check could be imposed on those increased prices in order to see that any increases were justified. I am not saying that the Act was necessary in many cases to prevent commercial immorality in price increases, but many business men did not know exactly where they stood, and the Act wan passed to give the Government the power to make complete investigations into increased prices and to take action where such increases were not justified. Approximately a hundred different lines have been investigated by my Department since the passing of the Act, and I am bound to say that we found that in many cases the increases in prices were justified. I will have no hesitation in bringing cases before the tribunal where necessary, but in each of the instances of unreasonably high prices which we have discovered reductions have been made at my request, and drastic action has not been necessary. Nevertheless, my Department, under the Prevention of Profiteering -Act,. lias been

responsible for material reductions in j price being made in a number of very important commodities of everyday use, and further lines are still under investigation. This check-up will be continued, and if prices are not reduced when they are found to be unjustified then appropriate action will| be taken. IMPORTED GOODS. "The price of imported articles also plays an important part in our cost of living. There is nothing we can do in New Zealand to prevent rises in overseas prices in lines such as steel, hardware, foodstuffs, etc. There are certain things we must import, and we must pay the world's ruling prices for those articles. To illustrate, I would quote the following as instances of increased prices of imported articles, comparing the prices in January, 1936, with the price in January, 1937:—• Jan., 1936. Jan., 1937. £ s. d. £ s. d. White lead, cut 70 0 0 84 15 0 Oregon timber, 100 ft . 2 2 0 2 7 4 Manilla rope, cwt 4 5 0 4 15 0 Western red cedar, 100 ft 2 8 0 217 6 Chrome calf leather, ft 0 1 6 0 2 1 Glace kid leather, ft .. 0 110 0 2 1 Tea (Ist grade), lb .. 0 2 1% 0 2 3% Serge, yd 0 15 0 0 16 6 Sheet lead 35 10 8 44 0 0 Copper sheet, lb 012 015 Iron bar 22 10 0 24 10 0 Galv. corrugated iron, cwt 26 S 4 31 9 2 "These are only a few of the many' lines which New Zealand imports, most of which show an increase in price, and it is obvious that this has an important bearing on our cost of living which we cannot control in any way. PRIMARY PRODUCTS. "Finally, our primary products are bringing increased prices in the world's markets. Every New Zealander is pleased to know that there is a keen demand for wool, that meat and dairy produce are bringing higher prices than in years past, and that prices generally for farm products are increased. Naturally, this price must also be shared by our local consumers, and must be accepted.

"In conclusion, I would summarise as follows:—

"1. There has admittedly been some increase in the cost of living, contributed to by the increase in the price of goods imported into this country from abroad; by the increase in the prices received for our own exportable primary products, and by the Labour Government's legislation.

"2. On an average the increase in the cost of living that has taken place since the Labour Government took office has been more than compensated for by the increase in wages, leaving the workers with a substantial advantage estimated by the Government Statistician to be 11.9 per cent, and that consequently it is not true to say that the increase in workers' wages provided by this Government has been cancelled out by increases in the cost of living."