Evening Post. WEDNESDAY, SEPTEMBER 8, 1937. TO CHECK RESULTS

Evening Post, Volume CXXIV, Issue 60, 8 September 1937, Page 10

Evening Post. WEDNESDAY, SEPTEMBER 8, 1937. TO CHECK RESULTS

A long recess has given the Government, the Opposition, and the public an opportunity to take stock of the results of last session's legislation. The first part of the session which opens tomorrow will, in consequence, be mainly devoted to a review of results. The Budget, the Ad-dress-in-Reply debate, and proposals for amending legislation will afford ample scope for examining results. There is need for examination. The Government, while admitting minor mistakes and a readiness to correct them, adheres to the main, lines of its policy and claims that .its legislation and administration have so far achieved their purpose. The public are not convinced and the onus is upon the Government to furnish proof of success. It will not be sufficient to point to a buoyant revenue, a decrease in unemployment, and other signs of prosperity as evidence that the guaranteed price, the control of credit, the expenditure of huge sums from loan and revenue, and the institution of the forty-hour week have induced this prosperity. It is necessary to make a m6re careful scrutiny and to consider: (1) How far this prosperity is the result of the improvement in export markets and the drastic writing-down carried out by the previous Government; (2) how far Labour measures have enhanced or diminished prosperity mainly induced by export buoyancy; (3) whether the Labour policy is likely to stabilise prosperity on a new and permanently higher level, or raise it temporarily to boom heights at which it cannot be maintained.

In order that an examination on the lines suggested may be thorough, it is necessary that the Government should furnish Parliament with more complete information than has hitherto been made available. On credit policy particularly there should be a complete, disclosure of all transactions: what amounts have been raised by orthodox loans from Government Departments or from the public, and at what rate; what are the prospects of a return from the expenditure of these loan funds; what issues of new credit have been made for housing, produce-market-ing, of other purposes; what realisable assets have been created with the new credit and what measure of inflation has resulted; what course is to be followed in the event of a higher guaranteed price resulting in a greater deficit. This information is essential for correct assessment of the results of the credit experiment. It has _ a direct bearing also upon the question of industrial.and living costs. There is mqre than a suspicion that costs are rising in consequence of inflation, that heavier taxation is hampering the expansion of industry, and that the foundations of prosperity may be undermined by the Government's desire to distribute benefits before they can be paid for. The value of the benefits given so far and their cost should be taken strictly into account. For example, what evidence is therethat the forty-hour week has substantially reduced unemployment? We know that there has been some reduction at the public cost in rates, taxation, and loss of profit through the increases made necessary in public services. But what has been the effect with industry generally? Has it been hampered and has it been compelled to raise its charges to the public, thus risking loss of business through competitive imports? What will be the final result —more labour employed, or the same labour engaged at higher cost and costs higher all round? Again what will be the final result of the housing policy? Will it be a substantial net gain in housing accommodation, or a small gain and the transfer of •responsibility for house-provision to the Government in consequence of the partial retirement of the small builder who cannot compete with mass production and the use of public credit? We state these issues not with a view to suggesting that the whole policy is wrong; but in the firm belief that the surface indications, whether good or bad, are not always reliable. Free spending will always produce a temporary prosperity, but the setback afterwards is often disastrous. It is most necessary that there should be probing beneath the surface. The Governments policy, despite the Prime Minister^ assurance that the Government's plans are working out as it hoped, is largely experimental and must be scrutinised closely with a view not only of immediate results but of ultimate effects upon the industrial and financial fabric of the Dominion. No matter what may be said by the advocates of new economic systems, the standard of living of any people cannot be raised above their productive capacity. For a permanently higher social standard there must be a foundation of greater productive capacity. The danger lies

in the attempt to produce an illusion of prosperity "by mortgaging the future. A country, as well as an individual, may live at a high standard for a time by using capital resources and borrowing; but the consequence is the same for the country as the individual, a forced j return to living within straitened means. The Prime Minister may give to | this caution the answer made the other day that "any attempt to bring about social justice will always re- | ceive opposition from the reactionary forces." But that is not; convincing. Parliament will be asked in the latter part of the session to authorise great and costly new benefits in national health insurance and national superannuation. We believe that some provision on these lines should be made. Contributory pensions and sickness benefits are much better, and more just, than free grants. But the scale of the provision must be such that it can be made without imposing an unbearable strain on New Zealand finance and industry, and hindering their progress. Benefits can be given only if progress is maintained. It is imperative, therefore, that the Legislature should make an exact and thorough audit of the results of the policy to date, to ascertain accurately how industry is bearing the weight already placed upon it, •and what additional weight can now be imposed with safety.