TO BE FIXED

Grey River Argus, 16 December 1942, Page 3

TO BE FIXED

, N.Z. INCOMES AND WIDE RANGE OF • PRICES War Stabilisation Plans WELLINGTON, Dec. 15. In a statement to-night Rt. Hon. P. Fraser, Prime Minister, announced the economic stabilisation policy of the War Cabinet, which is of universal application and interest. He said: Seven years ago the Government of this country pledged itself to the ideal of social security, to the ideal of a society in which the fear of poverty should be banished from every home. That ideal is well on the way to being realised, lhe Social Security Act . and minimum wage are only one side of the social security in this country. The other side is the measures we ha,ye taken, particularly since the outbreak of war, to conttol the cost of living, in September, 1939, all prices were brought under control through the Price Tribunal. In September, 1940, 38 of the more important commodities entering into the cost of living were stabilised. Meat, bread and butter, for instance, have not , in " creased in price since the beginning of the war. But perhaps the most important ractor in controlling our cost of living has been control of farm prices. But the Government has for some months been anxiously aware that its control measures are no longer adequate. Pressure by economic interests for increases in the prices of their products is becoming more and more insistent. Hitherto manufacturers and traders have been absorbing much of the increase in their costs, but their profit’ margins are narrowing and the process cannot go on much longer. Effective price control is becoming difficult; and already the phenomenon of the “black market”. with all its demoralising consequences, has begun to appear. Why are these things happening? The answer is simple. Our people are working harder and earning more money, but the supply of things they can buy is not increasing. It is growing less because of the inexorable needs of war. Since 1939 the national income has increased by about 150,000,000 but the supply of goods people can buy has decreased by more than £40,000,000. That is, the gap between the supply of goods and purchasing power is of the order of £100,000.000. This excess of purchasing power has begun ■to swamp our price controls. We are going to do two things, each of which will depend for its success on the other. We are going to extend the policy of

stabilising the prices

of a large group of the essentials of living and we are going to stabilise individual rates of pay. You will recall that in addition to the general measures that were brought into force on the very night war was declared to restrain any undue rise in prices, there have been a number of commodities and services which have been fixed in price. There are at present- 38 of them and by various means their prices have been kept fixed. The only exception was that a rise of 2d was allowed in th e price of eggs. Now the list of stabilised commodities is to be greatly increased. There will be 110 items in all and the purpose of lhe Government —indeed the determination of the Government— is that the prices of these taken as a whole shall remain stable. If there are any variations — and we shall do our utmost to prevent any—then a rise in one will be offset by a fall in another. The whole purpose of this is to ensure that over this range of commodities and services, and they are all very important in every family, the pound will buy the same next month as this month, and the same next December as this December. I will not give the full list of commodities that will be covered, but it includes a wide range of groceries, dairy products, meat, some fresh fruit and vegetables, fuel and lighting, clothing, footwear, drapery, furniture and a large number of miscellaneous articles which all of us have to buy. I think that when you see the list you will agree that it is surprisingly large and comprehensive. There are* no luxuries in it but it is not the : business of our Government to make it easier for people to buy luxuries in wartime.

We are also taking care to ensure that the purpose of the plan is not frustrated by “profiteering” and “black marketing.” The penalties for these offences have been made very severe with minimum fines as well as maximum for both individuals and companies, and provision for imprisonment as well as lines and confiscation of the goods concerned. The great majority of commodities to be fixed in price are made in New Zealand. They are produced with the skill and labour of New Zealand workers using New Zealand materials, power and transport. The cost of labour and materials, and also the rents of business premises and land, determine prices, therefore when we wish to keep the prices fixed we cannot do it without fixing within narrow limits the price of labour, which is wages, and also the level of rents. One cannot be kept stable if the other is unstable. Therefore we must slabilise wages and rents. This is the main part of the decision of the War Cabinet. You may be thinking why should wages be stabilised? Isn’t everybody in this? Yes, everybody is in this. Stabilisation applies to all yates of remuneration, including time and piece wages and overtime, allowances, fees, commissions, travelling expenses and directors’ fees. Not only wages and salaries but all incomes have been or are to be stabilised by one means or another. The price the farmer receives {for all the main farm products will not be increased. This means in effect internal prices divorced from export parity, and any excess will be paid into pool accounts. The major items of' farmers’ costs will corresponedingly be held and the cost of holding them will be debited to the' appropriate accounts. The incomes of companies and individuals are held down through the combined operation of income tax, excess profits tax and price orders. No classes of persons I are able to say truly that the war I measures of the Government leave, them untouched and no classes of persons should be able to say it. I wish to stress the inter-depen-dence of these two measures. It will not be possible io hold down the prices of essentials in the shops un- ■ less rents and incomes of all kinds,' including wages, are held down. too. I It would not be possible and if it were possible it would not be fair, I for the object, let me say again, is to fix the producing power of the pound insofar as it is spent on buy- . ing essentials. The plan might be called a collective bargain which the community is to make with itself. If the prices don’t rise then, wages will not. If prices of essen-' tials rise, then wages must rise also. The two are to be tied together. If therefore there is a marked flutuation in prices after a period of three months, provision has been made to

offset it. In general, what has been decided is, that if the average prices of the whole group of essentials rises by more than 2J per cent, then the Arbitration Court will issue a general order raising or lowering wages. After that, there will be no adjustment of wages unless prices rise by more than 5 per cent. The farmer will be treated in the same way. In the event of a general order affecting other forms of remuneration, the farmer also will receive an adjustment in his price.