POLICY AND PRACTICE

Evening Post, Volume CXXVI, Issue 150, 22 December 1938, Page 8

POLICY AND PRACTICE

Labour's policy of insulation has had many repercussions outside as well as inside New Zealand. Evidence of difficulties which have arisen in Australia, especially in relation to the tourist industry, in which, it is stated, New Zealand already enjoys a large "favourable balance," was provided by the Sydney correspondent, of "The Post" yesterday. It is true that many of these difficulties are temporary, but they draw attention to contradictions in the policy now adopted and the policy which Labour has advocated in the past. One of the main contradictions is in regard to exchange. Labour came to office in New Zealand pledged to reduce the exchange rate, which it maintained was at an artificial level, but it has pursued a policy which has had the effect not only of making the existing rate no longer artificial, but of enforcing drastic steps to avoid a further increase. Plainly a Government which in Opposition so strenuously opposed a high rate of exchange could not peg it at a sstill higher rate, but economic necessity demanded some action, and the Government was forced to adopt other measures. Thus insulation, which the electors were told was being held in reserve to act as a buffer against depression, made a premature appearance as a permanent feature of the new economy.

In one other important respect, too, there has been a clear contradiction. When the Empire Chambers of Commerce met in New Zealand, delegates were addressed by the Minister of Finance (Mr. Nash), who, in a speech which attracted a great deal of favourable comment at the time, spoke of the ideal of free trade. Free trade between the nations, he declared, was an ideal worth striving for, but unfortunately there were too difficulties in the way to allow of its immediate application. The aim of the New Zealand Government, however, would be a system of regulated expansion. This sounded very well, but how has this "regulated expansion" worked out? Under a policy of import selection and exchange control, Mr. Nash's policy of "regulated expansion" is in grave danger of becoming, if it has not already become, one of "regulated contraction." Two-way trade, ■whether in tourists or in goods, is likely to become more and more difficult of accomplishment.