SOUND PROGRESS

New Zealand Herald, Volume LXXII, Issue 22198, 27 August 1935, Page 11

SOUND PROGRESS

FUTURE OF DOMINION SURVEY BY MR. FORBES ACTIVITIES IN BRITAIN WORK OF GOVERNMENT [by telegraph—own correspondent! RANGIORA. Monday A review of his activities in Britain and an account of tlio Government's .stewardship wore given by the Prime Minister, Mr. Forbes, when addressing his constituents at JUangiora to-night. Ho said lie thought the Government was entitled to claim that the necessary steps had been taken to ensure the progress of New Zealand on a sound foundation. Ho was accorded an enthusiastic reception. .After outlining the London hieat negotiations, Mr. Forbes referred to the contention that New Zealand would be able to secure a free market for its produce in the United Kingdom if it were to make to Britain a straightout offer of free trade. Tho outcome of the recent negotiations, lie said, had emphasised more than ever the impracticability of such a scheme. It might bo noted that Australia, with its extremely high tariff against British goods, also gave bounties in aid of its exports—such as the equalisation plan for butter—yet in spite of this New Zealand was unable to secure better terms than Australia. Wool and Substitutes

Referring to a visit which he paid to a top-making plant that handled a large amount of New Zealand wool, Mr. Forbes said: " It is assuredly only too true that our crossbred wools are suffering from the competition of artificial fibres. 1 was told by an official of the British Wool Federation that more than 100,000 bales of crossbred wool have been replaced by artificial fibres in one avenue alone. Consequently, it is necessary for us to bo on the watch to improve our wool from the point of view of manufacturers' requirements and to assist in the search for new avenues of utilisation." The threatened competition of artificial fibres had stimulated the better processing of wool and astonishing strides had been made that were tending to increase the use of wool. There was a need to exploit those qualities of wool which were not easily imitated, because the "United Kingdom alone was producing over 100,000.0001b. of artificial silk and the quantity was steadily increasing. " On the whole." said Mr. Forbes, " I gained the definite impression that there was a distinct revival of the demand for our wool in the United Kingdom. but we need to take the whole problem seriously." Recovery In Britain

" I was amazed by the improvement in economic conditions at Home," said Mr. Forbes. "During the past year this has been very marked and Britain now admittedly leads the world in economic recovery." While the United States and France were showing monumental deficits, and Germany and Italy were doing their best to correct the ominous state of their finances, Britain could prove that the tide had turned. In the past four years the Chancellor of the Exchequer in Britain had granted remissions of taxation and restorations of pay cuts which, in a full year, would amount to £"2,000,000. Reviewing the problems which besot the Coalition Government in Now Zealand when it came into office, Mr. Forbes said its first task was unemployment, the relief of which had cost £14,000.000 since 1931. This sum had come almost entirely out of the pockets of the people. In striving to achieve Budget equilibrium the Government had endeavoured in all cases to make every economy in expenditure. To make tho burden on the taxpayer as light as possible it had drawn considerably upon reserves, and the aggregate assistance to the Budget from such non-recurring items amounted to £8,916,000. Debt Charges and Revenue

It was most nnfair to criticise the Government because the total public expenditure had remained roughly about the same as before the depression. Ravings in ordinary expenditure of about £9.986,000 a year had been made since 1931, but this had been offset by quite new expenditure, much of which was due to the depression. It was also unavoidable that some Government expenditure should be completely rigid. For example, New Zealand's annual debt charge amounted to £12,800,000. Interest reductions on internal debt, made by conversion, amounted to £930,000. The charge on the overseas debt amounted to over £7,000,000, New Zealand currency, and payment of this had been made immensely more difficult by the fall in produce prices. In 1929 debt charges absorbed about one-sixth of the value of the Dominion's exports. In 1932, owing entirely to the fall in values, they absorbed one-third.

On the revenue side customs receipts declined from £7,605,970 in 1931 to £6.485,011 in 1934. while income tax declined from £4,003,606 to £2.961.243. La«t year, however, owing to the return of more prosperous times, customs vielded £7,423,597 and income tax £a, 796,477. The Exchange Rate

It was worth noting that for the relief of unemployment no less than £14,500,000 had been raised without borrowing. Since 1931 only £1,000,000 had been borrowed overseas, while in New Zealand onlv £5.655,475 had been added to the public debt. This was an average annual increase of £1.664,000, compared with £7,000,000 in the years before the depression. Mr. Forbes said the alteration in the exchange rate was definitely part of the Government's policy of endeavouring to remove the disparity between farming prices and farming costs. Not only had the raising of exchango not produced a fall in imports, but it had most definitely saved large sections of the farming community from bankruptcy. In spite of higher exchange and the sales tax, there had been practically no increase in the cost of living.