Prime Minister At Cheviot

Kaikoura Star, Volume LIV, Issue 54, 12 July 1934, Page 4

Prime Minister At Cheviot

On Monday night the Hon. G. AV. Forbes. Prime Minister, gave a lengthy address before upwards of 200 peolple, dealing with questions of the day. Mr Forbes said: “We appear to be slowly emerging from a depression which for its length and severity has not been equalled since the dark days of the late ’eighties. There is, even now. no occasion for careless optimism, for there are factors in the situation giving cause for much thought, anxiety and action. But on the other hand there is much to reassure us, and it is eminently a time for stock-taking. “The memories of many people must be extremely short, judging oy the class of criticism which one hoars of actions taken by the Government. Why did they do this, or that? is the question we hear put, sometimes in contemptuous terms, as if the critic was confident that had he been the dictator of the moment, he would have provided a solution, giving satisfaction to every section of the community “But the vitally important point to remember is that these decisions had not to be made in the light of facts available to-day. Such knowledge, if miraculously it could have been in the possession of everyone three or four years ago, might, at least have minimised our difficulties, though it could not have disposed of them, because most of the factors wore entirely outside the control of anyone in the Dominion. It has not been a New Zealand depression, but one of world-wide scope, unparalleled in modern history. New Zealand, depending for prosperity almost entirely on income received from products sold in the world’s markets. was particularly vulnerable, especially as the worst feature of the catastrophic decline in prices was that they affected primary products more than any other commodities' (practically JIS per cent, of our exports coming from the land). “To assess fairly what the Government has done to help its people through the long-continued times of depression, I must recall fects which have been forgotten by many, so fast and furious has been the pace of events, and so unexpected their character and severity. There was a comparatively brief period of low prices for our exported products from 1025

till 1927, when a fair recovery was made till the cud of 1928. But from 1928 the drop in prices, the decline in national income, w'as fast and con-

tinued. There seemed —to use a familiar business phrase—to be no bottom in the market. We all hoped that when, early in 1930, those prices reached the pre-war level, that they could go no lower, but the rate of decline never lost its pace until the welcome revival in wool gave the Dominion its first relief from a disastrous condition of affairs. “Now, what was the Government doing during all this time? It was pointed out by a former for Finance, the Hon. W. Downie Stewart, in 1927, that whenever prices fall and national income shrinks, critics demand an immediate contraction of public expenditure. But as Mr Stewart then stated, public expenditure cannot be expanded and contracted with the same ease as a concertina without intensifying unemployment and serious dislocation of public services. Foi- the year ended March 31, 1929. there was a budget deficit, though the excess of our exports over imports was £12,048,478. The shrinkage in the national revenue had been receiving attention, and in December, 1930, the Government of which I was the head determined to take more drastic steps than had hitherto been con sidered necessary, and we set up a special committee of Cabinet to make an overhaul of all departments of State, this committee having the assistance of the head of the Treasury and the Public Service Commissioner. At this date there was a general hope and expectation that world prices bad reached bottom. “But as we now know—though we could not know at that time —the Dominion’s producers still had several years of financial difficulty to face; the worst was yet to come. However, national expenditure was drawing in, and reluctantly the Government, in March, 1931, was forced to reduce expenditure and to make the first, cut. of 10 per cent, in the salaries of its employees. At the same time the amendment was made in the Industrial Conciliation and Arbitration Act to enable industry to meet the altered conditions, the court being empowered to make general orders varying the minimum wages in accordance with the ascertained ability of the industry concerned to meet labour costs. These measure* wore unmoved bv Parliament at

an emergency session. To oui economie troubles in that year was added the disaster of the Hawke’s Bay earthquake, which imposed further financial burdens on the people of New Zealand. “Falling national income through low export prices reflected itself formidably in the revenue of the Consolidated Fund, and it was necessary, in addition to retrenchment, to make increases in taxation. The Dominion’s railways suffered severely from falling traffic, and the interest deficiency began heavily to burden the Consolidated 1 and. This was dealt with comprehensively in July, 1930, when train mileage was curtailed, some unprofitable branch lines closed, and other savings effected which it was estimated ..would improve the net financial position to the extent of £136,000 per annum. Drastic curtailment of the defence services followed, the compulsory system being replaced by a revival ol tlie old territorial service on a voluntary basis. But w’orld trade continued to decline, prices of our exported commodities reached unprecedented depths, and all sections of the producers were selling their goods at an actual loss, compared with costs of production and handling. Every measure of public and private economy, had hardly been adopted before the conditions became still more depressed and caused these efforts to become quite inadequate to the position. We had reached the stage of a national emergency.

“The situation led in 1931 to the decision by the Rt. Hon. J. G. Coates and his supporters in the House to join with the Government supporters in evolving and carrying through Parliament the measures necessary to promote confidence and stability, and bring about the rehabilitation of the Dominion. The view of the Reform party, expressed- by its leader, was that there was necessity for action without further delay, and that if they failed to take action they would be failing in their duty to the country. “It was obvious that measures would be needed which would involve sacrifices by the community, and that the legislative plans, though vitally necessary, would be none the less unpalatable. There was no easy way out of the economic difficulties.’’

The Prime Minister dealt with many other questions, and on the motion of Mr J. T. Head was accorded a vote of thanks for his honest statement of the country’s position.