DEFLATION URGED

Greymouth Evening Star, 30 May 1946, Page 3

DEFLATION URGED

LACK OF ECONOMIC BALANCE NEED FOR GREATER OUTPUT (P.A.) WANGANUI, May 29. Deflation by means of the removal of subsidies and by reductions in wages and salaries, and increases in interest rates to reduce the purchasing power in the hands of consumers was advocated by Mr. D. L. M. Martin, economic research officer at the headquarters of Federated Farmers of New Zealand, Wellington, in an address, to the interprovincial conference of delegates representing the lower part of the- North Island, which opened in Wanganui to-day. With deflation, said Mr. Martin, there should be increased internal production and importation and increased prices for exports. The three methods might be used in conjunction with each other.

Reviewing New Zealand’s present economic situation, Mr. Martin said that there was a state of unbalance as a result of the war, and there was, therefore, more purchasing power in the hands of the consumer than there were goods to satisfy the demand. Bank notes in circulation had increased from £12,000,000 in 1939 to £44,000,000 in 1946. Bank deposits had increased from £142,000,000 to £211,000,000 and the aggregate private income from £186,000,000 to £292,000,000 in 1944.

Mr. Martin said that Government action was needed now to provide the incentive to produce more by reducing income tax and subsidies and by raising the working week from 40 to 44 or 48 hours.

“The stagnant and atrophied policy of the Government will be the downfall of the country,” said Mr. Martin, who also dealt with Empire trade. The conference expressed disapproval of the method of subsidising crops as a means to increase production. “We are absolutely sick of subsidies, because they are hidden taxes, and now that the war is over subsidies should be taken off,” said one delegate.