THE New Zealand Herald AND DAILY SOUTHERN CROSS MONDAY, FEBRUARY 28, 1938 MR. SAVAGE ON POLICY

New Zealand Herald, Volume LXXV, Issue 22974, 28 February 1938, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS MONDAY, FEBRUARY 28, 1938 MR. SAVAGE ON POLICY

Mr. Savage's policy speech at Tauherenikau leaves a pronounced impression of laboured optimism. The theme of "happy days" was flogged so hard that his hearers may have been left wondering whether the Prime Minister was trying to reassure himself as well as them. People do not need to be told there are no clouds in the sky and never again will be. They can look up and see for themselves. Mr. Savage may try to persuade them that a holiday sky will always be overhead, but they know he is no Joshua to command sun and moon. Nature's rhythm is eternal, taking little account of politicians. Mr. Savage would be more reassuring if he allowed for human experience, took note of the clouds lowering on the horizon, and made provision against the inevitable rainy day. Such ordinary prudence, however, makes no part of his policy. He still believes that his Government created pi-esent prosperity and can perpetuate it. "By increasing the standard of living and creating national assets," he declaims, "prosperity has not only been restored, but it has been increased to levels never before experienced in this country." Whether the degree of prosperity is so great as claimed, the people can judge for themselves. Housewives, for instance, may object that higher prices are discounting higher wages and the weekly allowance will not go so far. Producers are also alarmed at the speed with which costs are overtaking prices. For a time, certainly, there was a net gain and part of it still remains. But the credit does not belong to the Government, whose whole policy has forced up the cost of living. The real stimulus came from the rise in the value of production, £20,000,000 higher in two years and £30,000,000 above 1932. The producers have created prosperity and not the weavers of words and red tape in Wellington. Nevertheless Mr. Savage claims the credit. "The economic system," he says, "has been reorganised in respect of agriculture." The majority of farmers may be puzzled by this assertion. They still must wring a living from the soil, subject to the seasons, much as of yore. The Government's "reorganisation" has left the age-old problems of the land untouched. Even Mr. Savaged statement that "the dairy farmer has been given a guaranteed income for the first time in his life" will be scornfully repudiated. Nothing has been "given"; the dairy farmer must work hard for every penny he gets. He is paid by results. Nor is his "income" guaranteed; only the price of the product—a very different thing with production costs rising against the farmer every day. One of the heaviest items, a main factor in raising the cost of living for farmer and everyone else, is represented by taxation. It is a tardy admission by Mr. Savage that this represents a "mighty lot of money," although he understates the amount taken from the people's pockets by £5,000,000. The Prime Minister ignores the unemployment levy and wages tax. No doubt it is pleasant to be so well-to-do that 8d in the pound and 5s a quarter can be overlooked. Yet on his own figures given at Tauherenikau, Mr. Savage includes the £5,000,000 on the spending side. He is more at home there and ladles out the millions lavishly. He counts high tax revenues "a result of better times." Possibly he answers to his conscience in the same way for failing to reduce wages tax and for not keeping his promise to abolish sales tax. In any case the Labour Government believes it can lay out the people's money to better advantage than 4 those who earn it. At present it appropriates 5s 6d in the pound out of earnings. Mr. Savage asserts that this money, "spent in creating public assets," goes back into circulation and so maintains prosperity. But would it not do so as wejl if the people were allowed to spend it themselves on what they desired 1 ? Would it not da so better than when being wasted on building uneconomic railways, creating liabilities instead of assets?

Perhaps the most disturbing portion of Mr. Savage's panegyric was that in. which he claimed to be able to produce prosperity in perpetuity. It is the new version of the old "onward and upward with the brakes off." The Prime Minister has better hopes than Professor Piccard of finding nourishment in the stratosphere.. His latest idea offers a reminder that only 10 years ago, the United States —richest in resources, backed by endless human talent and inventiveness —thought to have discovered the secret of good times without end. It was an era of hectic spending, ever higher wages, boastful confidence and boundless credit. Yet, only six months after the "Prosperity President" was inaugurated, the whole structure came crashing. Nor could, nor did, the monetary factor, which Mr. Savage regards as "the most important," prove efficacious in making recovery. Although America is far more nearly self-sufficient than New Zealand, she has failed to insulate her economy from world economy. Yet Mr. Savage imagines it possible and practicable for the country with the largest exports per capita in the world. If the wool cheque should drop from, £18,000,000 to £6,000,000, as it has done in the past, New Zealand will be able to import less-tea, sugar, silk, machinery and petrol and will be so much the worse off. A statesman would recognise the risk and seek to cushion the effects of a fall. To pretend New Zealand can flourish while the world languishes is dangerous folly, the product of fatuous optimism. The sound method would be to take in official sail now, rather than rely U>a fail? windafrforeyen;