THE Hauraki Plains Gazette With which is Incorporated THE OHINEMURI GAZETTE MONDAY. WEDNESDAY, FRIDAY “Public Service” FRIDAY, MAY 19, 1950 DOWN FROM THE CLOUDS

Hauraki Plains Gazette, Volume 59, Issue 4281, 19 May 1950, Page 4

THE Hauraki Plains Gazette With which is Incorporated THE OHINEMURI GAZETTE MONDAY. WEDNESDAY, FRIDAY “Public Service” FRIDAY, MAY 19, 1950 DOWN FROM THE CLOUDS

For some years New Zealanders have been encouraged by lavish State expenditures tothink in terms of national finance more befitting a country of very much larger population and of greater productive output. It. has over-reached itself, and the heady pace, particularly of thesefive post-war years, must be slowed down. We have arrived’ at the point where the Government had to consider how best to come to grips with the most vexing financial situation which, could confront any administration, an inflated currency getting .out of hand. The previous Government committed its successor to a capital expenditure which, if carried out, would involve £366 millions in the next seven years. That would exceed by £250 millions the resources of the country by borrowing and taxation combined. No government could go on like this and maintain a stable cost of Iving,. still less reduce it. The public did not know of the magnitude of all this. What it did know was that “inflation is about.” For some years it has been dazzled by millions, so that an extra million here and a million there same to mean nothing" at all. But most were aware that “things are getting dearer” and: that “a pound just goes nowhere.” This is the symptom of a sick economy. The Dominion was attempting expenditures it could not afford. A specific instance, one of several brought to light, was the proposed 20bed maternity hospital near Wellington to cost £160,000. . A toogeneral acquiescence in such costs has sent national expenditure soaring. Now we learn from the Prime Minister that Social Security will involve £5O millions this year— £2s a head for every person in the land. This should’ be a sobering throught to those who had hoped for taxation reduction this year. Obviously this state of affairs could not continue. 'Had theLabour Government continued in. office it could no doubt have' gambled for a time on phenomenally high export and covered tax and borrowing shortages with credit money. Yet the symptoms of malaise in the currency would have betrayed themselves with increasing effect. The Labour originators of facile credit would themselves have* been forced into corrective action —by removal of subsidies, for example, which duty they nervously began before expulsion from office. The unenviable task has fallen to the lot of Mr Holland and the Cabinet. To them the country’s gratitude is due for. facing the situation boldly, if for the time being' unpopularly in some directions. A country with its head in the clouds of easy millions must inevitably be brought down *to earth and reality.