CRISIS AND REMEDIES

Hawke's Bay Tribune, Volume XXII, Issue 68, 3 March 1932, Page 6

CRISIS AND REMEDIES

ECONOMISTS DEVISE PLAN.

EXCHANGE RATE 25 PER CENT.

A national plan to meet the economic conditions now faced in New Zealand has been drawn up by a group of economists and published in the “New Zealand Dairy Produce Exporter.” The signatories are Professor H. Belshaw, of the Auckland University College, and Messrs D. O. Williams, lecturer in economics, Massey Agricultural College, and L. W. Holt, H. R. Rodwell and F. B. Stephens, all of the staff of the Auckland University College.

After an extensive analysis of the farming and budgetary position of the country the economists summarise it by saying that the problems New Zealand faces are:—■

(1) To remove or minimise the disparity between production costs and selling prices, so that production may not only be maintained, but substantially increased, and in particular to place farm production on a profitable basis.

(2) To spread the burden of depression more equitably over the community. In essentials this is another aspect of the problem of removing price disparities.

(3) To balance the national and local body budgets. While it is important that further economies should be attempted the scope for these within a short space is limited. Nor is it possible to meet the situation by increasing the rates of existing taxes. Again, the ultimate solution consists in increasing the taxable capacity of the people by liberating production from the hampering effects of price disparities.

The skeleton of the plan produced by the authors of this paper is given under the following six heads: — (1) As a first step, the exchange rate should be raised to 25 per cent, and held at not below that level until conditions stabilise overseas. The currency should then be revalued in terms of sterling at a level to be determined by an expert commitee.

(2) A reduction of all interest and other fixed charges should be imposed, subject to exemption in the case of hardship. (3) 'I he Government and the banks should agree to a lowering of deposit and “over the counter” rates.

(4) A further reduction of wages and salaries of 10 per cent, should be imposed. (5) the Government should effect economies to the extent of £1,000,000 contemplated in the Financial Statement, October, 1931, and a further £1.000,000 including a 10 per eent. reduction in the salaries of civil servants.

(6) A plan should be prepared to hal"h e the Budget in two or thre, years, deficits in the meantime to be financed by Treasury bills or other form of internal loan. Tn the detailed discussion Hie authors of the plan suggest there should be a reduction of “say, 20 per cent.” in all fixed charges.