LESS RIGID CONTROL

Evening Post, Volume CXXVIII, Issue 135, 5 December 1939, Page 8

LESS RIGID CONTROL

The Hamilton mass meeting did not ask for abolition of the import restrictions. Speakers admitted frankly that control at the present stage was inevitable. But they pointed to the ultimate and only sure remedy for the existing state of affairs—increased exports —and asked for measures that would promote this by encouraging greater production. In the meantime, they sought modification of control to give 'greater elasticity in importing. The soundness and moderation of these proposals cannot be disputed. They rest upon a correct diagnosis of the trouble. They cannot be dismissed as political agitation, for the promoters of the meeting have strongly emphasised that they have no political affiliations. They are acting as business men, producers, and employees who are vitally interested in their business and employment. Rightly they claim that they should have a voice in matters which closely affect that business and employment. They must pay the price and they are fully entitled to ask the Government for an assurance that it will "call a halt in the policy of deliberately controlling the whole economic structure of this Dominion." The policy of the Government made control unavoid-, able, but the rigidity of that control by bureaucratic methods has caused it to be more irksome than would have been necessary if the business people had been allowed a greater say in what is, after all, their own business. As to the need for increased production there can be no argument. The facts given by Mr. Sinclair show that this is a matter of great urgency. If production had been maintained the crisis now would be much less acute. Now it is not enough to restrict tfie use of sterling funds. The problem must be attacked from two sides and an endeavour made to increase the* funds. The Government will doubtless say that this is realised and that an appeal has been made for more production. So it has, but the response cannot be complete unless appropriate action is taken to remove the cost and labour disabilities under which farmers are labouring. Mechanised clearing and improvement of inferior land will probably be a contribution, but more urgent is the position of land now in occupation. The Hamilton meeting asked for a clear statement from the Government, specifying its intentions in the direction of reducing costs on farms and up to the point of shipment and outlining steps it intends to take towards placing the farming community in a position to secure adequate skilled labour at rates and conditions comparable with those enjoyed by other sections of the community rendering equal service. Until the Government faces this issue frankly a full productive effort cannot be made. The Prime Minister's broadcast on Sunday was not an advance answer to these arguments. He presented the present control as a recognition (which previous Governments had not made) of the fact that New Zealand must live within its income. Previous Governments, he said, had borrowed to meet part of overseas commitments. But this, apart from the fact that the present Government is borrowing also by means of export credits, is not the whole story. Earlier borrowings were justified to the extent that they represented accretions of capital, wisely applied to capital developments. Of course there was waste, but there was also profitable use, or New Zealand would not have reached its present stage of development. The past cannot be blamed, for, in spite of the faults of the past, the present Government came into office with London funds in an exceedingly strong position. Similar strength cannot be restored merely by rigid State control. There must be recognition of the basic cause of the trouble—excessive internal expansion of purchasing power. The Prime Minister on Sunday claimed that reduction of internal purchasing power would not help traders and would mean reduction in wages and pensions. But if the internal currency has been expanded beyond the point at which it truly represents production there must be either reduction or depreciation of the currency. That there has been such expansion was admitted by Mr. Savage himself when he said in the Budget: ". . . we are not suffering from a shortage of money in New Zealand, but from a shortage of what money will .Jiuy." Reduction or depreciation will have the same effect—the people will obtain less goods, and goods are the real measure of income. But depreciation is a lopsided and often inequitable method of reducing income. It -presses most severely upon the people with fixed incomes, particularly pensioners.

Moreover, it fails to restore confidence in the way that it would be restored by a frank facing of the cost and expenditure problem. If there were this frankness in making necessary adjustments, we should be greatly helped by a change in the flow of capital. Now no new capital is flowing in, except through the export credits, and whatever can find a way through the sterling barrage is flowing out.