NO RETRENCHMENT

Greymouth Evening Star, 16 May 1939, Page 7

NO RETRENCHMENT

LABOUR POLICY DEFENDED

STATEMENT BY MR. SAVAGE

[PER PRESS ASSOCIATION.]

WELLINGTON, May 16.

A suggestion that certain drastic economy measures had been recommended to the Government from responsible quarters, was referred to Mr. Savage, in an interview, to-day. In reply, Mr. Savage said: Recommendations have been made from many different sources, that the Government should rigidly curtail expenditure. I took it that these recommendations meant that the Government should reduce wages, retrench civil service staffs, and stop all major public works. I can say now that the Government has not the faintest idea of putting any of these suggestions into operation. If we fail in the policy we have been carrying out, we will make room for someone else. Recommendations of that sort point the way to the destruction of the foundation of industry, :tnd that- is not the policy of this Government. We want to build up New Zealand, by maintaining for the people that standard of living which was brought to them when the Labour Government assumed office.”

Mr. Savage said that the people of New Zealand had an easy choice. They had to make up their minds whether they would support the present Government, with its forward policy, or go back to the old order of reduced wages under previous governments. It was the custom to balance overseas trade by borrowing, and by reducing wages at certain times, and, in certain circumstances, overseas borrowing might be unavoidable, but for many years successive Governments in New Zealand had reducted taxation in times of prosperity, and had borrowed lavishly abroad. That sort of tiling was not going to occur again. He and the Government had to make a choice, on behalf of the people, between making a reduction in wages all round, with substantial cuts in the civil service,and operating a policy of selecting-im-ports, to bring about the needed adjustment of the overseas...,trade balance. • ■; * :• r ' :". On its assumption of office in 1935, the Government commenced-the. preparation of its plans to reverse the policy of low wages and the low standard of living which had been follow’ed by its predecessors. Jt.was obvious to everybody that trade gpuld not be expanded on the’basia'jjadSpted by ,the old Government. The’Labour Govern-; ment’s policy was designed to give the people an immediate increase in purchasing power. That had been brought about by increasing -wages. The first result had been a substantial increase in importations. “We knew that, ultimately, we would be faced with difficulty as a result of this policy,” said Mr. Savage, “but we went as far as we could with it. It is now necessary for the Government deliberately to plan the selection of the country’s imports. We have chosen for ourselves a. method of importation that will assist us to adjust the trade balance of New ..Zealand, and, at the same time,, develop in this country those industries that are necessary to its progress.”

SECONDARY INDUSTRIES.

They might have chosen other ways, said Mr Savage. -.-Tariff would have been a breach of the Uttawa Agreement, and would not nave given the right of selectioxx obtaining under the present system. The sate and only course was to develop secondary industries. The people of New Zealand demanded; a reasonable standard of comfort, and there was no reason why they should not achieve that standard by their own efforts. Reducing wages would not do it, nor the curtailment, of necessary Public Works. Borrowing would not do it, either. It could only be done bj* tlxe efforts of the people of New Zealand themselves, and they must keep on building up their own industries. “To-day,” he added, “the Government is facing two big issues. One is to meet its obligations overseas, and the other is to maintain the strength of New Zealand’s secondary industries. Realising this, the Government will turn a, deaf ear to those who are advocating wage reductions.”

After reference to the load of interest carried on overseas loaxis, Mr Savage said that they aimed to protect New* Zealand industries, and obtaixx a. favourable balance -in London bj* regulation of imports, and deliberately selecting only those goods that •were essential. The only borrowing policy he w*ould; favoxu* would/be borrowing to obtain supplies of raw* material for use in New* Zealand factories.

LOCAL BODY LOANS NEW RATE 4.1 PER CENT. WELLINGTON, May 16. In an interview, to-day, Mr. Savage stated that, in connection with the position arising out of the- flotation of the Government’s internal loan, consideration had been given to the question of the adjustment of . the rate of interest for local body borrowing in the Dominion. The new rate for local bodies would be four and a-qiiarter per cent., as compared with four per cent, on the Government issues. The slightly higher rate will place local bodies in a position to obtain a fair share of the funds available for investment, from time to time, and will thus enable essential works under their jurisdiction to be carried on.

Regarding the existing unexercised authorities to borrow at three and a-half per cent. Mr. Savage said that, on application being made to the Treasury, arrangements would be made to issue an amending Order-in-Council, authorising the local bodies concerned to borrow at the new rate of four and a-quarter per cent.

Mr. Savage intimated that, while many of the larger local bodies would doubtless find it possible to borrow at the lower rate, it may be necessary at a later date, in the case of smaller local authorities, to provide for some variation in the issue price of their loans. This, however, would not affect the new rate, which the Government proposes to stabilise at four and a quar-

tei*'.®er cent, for this class of borrowing;' '' ,

DUNEDIN- REQUIREMENTS--

DUNEDIN, May 16. General satisfaction is expressed with the Prime Minister’s announcement that the interest rate for local bodies is to be raised above 3i per cent. Cr. Taverner, chairman of the city Finance Committee, stated that the amount the city would want, immediately, was £ 150,000. Mr. Begg, chairman of the Harbour Board, stated that recently, the Board was granted permission to borrow £lOO,OOO at per cent., but where this was to come from he could . not say. The work, for which the loan was to provide finance, was already begun. He wondered if the Government would lend a portion of this internal loan to local bodies, at their 3J. per cent, maximum.

MR. MULHOLLAND’S CRITICISM.

AUCKLAND. May 16.

Fricndly criticism of what he- described as “an obviously-organised' campaign in favour of New Zealand secondary .industries,” was mad-? by Mr. W. W. Mulholland (President) at the Farmers’ Union: Conference. The tendency was, he said, to infer that, primary industry was not as important as manufactures.' and that, even if overseas,- markets- failed, secondary i n diu s tri e s won Id. beD ab I e to provide all that -was necessary to retain the present, standard of Giving. ■ 7 Not .a matjufacturc-r could- turn a wheel, or get. raw materials’, unless the necessary goods.-were paid for by produce grown pn- New Zealand farms. If the standard' of living was to be retained. it . would be necessary to sustain. export values, as. revealed in the last three years’ records. Difficulties, and dangers' had Men created bv exchange control, under which’ the New ’Zealand pound had two values. The farmers’ difficulties were being increased by high costs, and the widening of the gap between the internal and external value of the currency would accentuate tire position. Deterioration was now going...on in the farming industry, and would increase as finii"-’ passed. It would take Herculean methods to overcome this tendency. The effect of tile Gov-'crnme-nt.’s. policy on. the goodwill of overseas customers must, also be considered