Evening Post WEDNESDAY, MAY 10, 1939. A CHANGED SCENE

Evening Post, Volume CXXVII, Issue 108, 10 May 1939, Page 10

Evening Post WEDNESDAY, MAY 10, 1939. A CHANGED SCENE

The Labour caucus.meets in Wellington today and will hear a preliminary statement from the Prime Minister of the legislative programme to be placed before Parliament in the session, beginning at the end of June. The conditions are different from those which ruled when the party held its first caucus after the General Election. Then Labqur, fresh from its election victory, was jubilant and assured, so assured that it felt free to indulge in the luxury of a private dispute regarding the | Prime Minister's right to select the members of Cabinet. That caucus | had a certain amount of publicity, mainly unofficial, and there has been more since, for the question of] authority then raised was carried from the caucus to the Labour Conference at Easter. Conference dealings with this and other issues of party authority and .discipline, are still evoking public interest as facts not revealed in the official published reports (even in the official organ of the party) gradually come to light. Today's caucus, however, has other momentous matters to engage its attention, matters not mentioned (so far as reports inform us) at the November "victory" caucus. The "victory" caucus did not feel called upon to inquire how the victory was won. . It could exult over a triumph won in the face of what has been termed a campaign of "vilification and misrepresentation" by the opponents of Labour. Now, if it is honest with itself* it must admit that the victory was a result of conceal* ment* and that the alleged misrepresentation by critics was nothing of the kind. The misrepresentation was made by Labour, which assured the trusting electors that all was well, that prosperity would last as long as they voted for Labour, and that any doubts cast upon the financial soundness of the country were only the malicious attempts of people who would go so far as to damage the country in order to injure the Government.

The concealment practised during the election campaign, and the reckless promises of further great benefits which would have been revealed as disastrous if the real financial condition had been made known,, were major factors in winning from the voters an unwarranted expifession of confidence. But they were worse even than this. They definitely contributed to the aggravation of the crisis when it was finally admitted. Had the Government admitted in June (when the Reserve Bank gave its authoritative warning) that there was need for caution and begun then to apply corrective measures, it could have avoided the drastic action since made necessary. Delay in checking over-expenditure and the loss of sterling funds made the loss! more disastrous. But if the Government had taken prompt and prudent measures to revise its own policy and to stave off a crisis, it could not have adopted the extravagant plans for social security which were to be its chief election card, and revelation ]in October of the real state to which it had brought the Dominion's finances would possibly have brought 'about its \ defeat. So the state of the [country was not revealed, and trei mendous further commitments were made, at the expense of the country's [security and prosperity, to win a [political victory.

We do not expect the Government or the caucus to admit this; but the country should know it. What the caucus must do is to consider the consequences. Especially must it give thought to the finances of the future. It cannot now conceal from itself what was hidden from the electors—that the sterling crisis and import restrictions, though they may bring an artificial and forced prosperity to a section of industry for a time, are bound to be most costly* ultimately. The effect upon thei national standard of living, and upon the welfare of the Dominioui's basic primary industries, must sbe serious. The Government's own revenue cannot escape. How then are the heavy additional burdens of the Social Security Act to be borne? Is the Government to make further demands upon an overtaxed public, will it try to cover this up by inflationary credit financing (giving workers the ,same money income but less real purchasing power), or will it meet the . position fairly and admit that expenditure must be Reduced and that its policy in the past has produced only a short and illusory prosperity? We have no doubt what the Govern-1 ment should do. It should admit that its emergency measures are inI sufficient by themselves to restore

financial soundness, that economic secondary industries can be established only by reducing costs, and that "insulation" is merely a deceptive and temporary device, worse than useless unless it is accompanied by a thorough internal adjustment of national expenditure. This is the course the times call for, but has the caucus the courage to take it?