Evening Post. THURSDAY, SEPTEMBER 28, 1938. A SQUANDERED INHERITANCE

Evening Post, Volume CXXVI, Issue 78, 29 September 1938, Page 8

Evening Post. THURSDAY, SEPTEMBER 28, 1938. A SQUANDERED INHERITANCE

Perfect timing has been the outstanding feature of Labour's innings on the Parliamentary wicket. The year 1935, midway between depression and prosperity, was an ideal year for Labour to displace a Government whose reward i'or slump-fighting was inevitable unpopularity. The year 1935, and the !two years following it, were years of favouring economic breezes for ! which Labour might presume to take credit—and did. They were years in which, owing to the economies that wrecked the late Government, the Treasury was in excellent trim to reap the harvest of returning prosperity, with few obstacles in the way of maturing oversea loans, and with abundant sterling exchange to ease the shock. Labour picked up the economies of the Nationalists, anathematised them, and thencapitalised their result! Labour owed much to its predecessors in the way of financial opportunity— or inheritance, to use Mr. Lee's word —and repaid them with abuse. Perfect timing asserts itself again' in the drafting of the Social Security Bill to start as from April 1, 1939, four months after the elec-

tors have been called on to vote in, the spirit of the Bill's promises, without experience of its costs. Arriving on the wave of economic recovery, Labour now stands on the crest of the wave; and before the curl in the crest can develop the writs will have been returned, and a Parliament commissioned to deal with the critical period of 1938-41 will have been elected on the false and spendful standards of 1935-38. This is perfect timing and shrewd strategy. It is true that economists of the "damping down" school say that record Government spending in prosperity is badly timed, and that public works peaks should occur in depression. But the timing would be understandable if the real desire of the Government were to empty the Treasury, to exhaust the taxpayer, and to Set the stage—in recession, or in depression—for experimental credit issues and Socialistic control. In the years 1936 and 1937, a Government seeking stability and desirous of preparing for a rainy day would have eased off in spending and taxing. What explanation, then, can be offered for the Labour Government's reversal of its preelection ' stand against higher taxation other, than that the Government is prepared to make a rainy day- rainier,:as a means of monetary revolution and -of extending the Socialist structure, the foundation of which has been laid in 1935 : 38? In other words, what explanation is there for the reversal of taxation anil sales tax attitudes other, than that the Labour Government is prepared to tax and spend in a manner hostile to orthodoxy, for which Mr. Savage has expressed complete disrespect? Orthodoxy of course is not a spepific term, but nothing can bie more specific than the statement of Mr. J. A. Lee (in "Socialism in New Zealand") that "sweeping changes can be effected only by repeatedly and continually breaking down the profit-making iystem." Though Mr. Lee writes as w private individual, Mr. Lee the Parliamentary Under-Secretary to the Minister of Finance cannot be altogether deaf, dumb, and blind to what the private Mr. Lee thinks, desires, and demands.

. A distinction must be drawn between a Government that binds the country, in perpetuity, to social service payments in the honest belief that those payments can be met, and a Government that enters into immense financial commitments regardless of whether they can be honoured. A distinction must be drawn between a Government that would consider its financial reputation lost if orthodox methods of payment broke down, and a Government that would regard a financial breakdown as a welcome opportunity for reconstructive Socialism. The present Government's recklessness in public works and other spending, and the Finance Minister's juggling with the actuary's figures in the hope of reducing the gap between the costs of social security and the available financial resources, suggest that the Government is in the latter category; that it has a leg on either side of the fence—if. everything can be paid for in the ordinary way, "well and good," but if it cannot be paid for and if the old system cracks, "well and better." A safe passage home will be good, but hitting a rock en i route will be not so bad.

No other philosophy fits the tactics of overcapitalising prosperity by squandering, over-taxation, and overborrowing; of promising social security payments in perpetuity when the taxation resources are not in sight (except by penal rates pf tax next year), and when the Finance Minister's own Budget estimates indicate that the peak of tax revenue has passed; of laying broad legislation foundations for a complete Socialism, hitherto used so sparingly that in 1938 the unobservant elector does not realise that this wholesale Socialism is just round the corner. Whether it is planned or ,*iot, a social-financial breakdown is Socialism's opportunity. The Government's prosperity debauch must precipitate a breakdown if export prices fall, and then will come the occasion to restrict imports through the exercise of the Government's unused powers of ownership and control of external exchange (Reserve Bank Act) and to make a deal with New Zealand manufacturers. Labour has so raised the costs of New Zealand industries that they cannot of themselves retain the market against imports; but Labour

can, by action against imports, bring the market back to New Zealand manufacturers if the manufacturers will pay Labour's price. The Industrial Efficiency Act, with its licensing provisions, is all ready to assist. The erection of a social security which is not secure, the banking powers which will operate when over-taxing and spending lame private enterprise, the industrial laws that enchain industries, tlie powers over both exports and imports, all lead to one Socialist goal; and the 1938 General Election is perfectly timed to secure a mandate for this revolution before its half-visible trends are discovered by the electors.

. A sign of the times is the shrinkage of, London funds, a squandered inheritance from a better Government that had triumphed over far worse conditions than Labour has yet had to face. Here, again, Mr. Lee is helpful. In "Socialism in New Zealand" he writes :

On March 30, 1936, the sterling exchange available in London to the Government amounted to £24,830,101 —a -very handsome inheritance for a Labour Government desiring to carry through a policy calculated to bring New Zealand into conflict with international banking hostility.

These words, "a policy calculated," etc., coming from Mr. Lee, paint the Labour aims in deeper and faster colohrs than any critic would care or dare to employ. And as to the "inheritance" from the former Government, where is it? It is shrunk by more than half.