THE YEAR IN NEW ZEALAND.

Otago Daily Times, Issue 21531, 31 December 1931, Page 7

THE YEAR IN NEW ZEALAND.

When Friday falls on the thirteenth day of the month superstitious persons choose to regard the occurrence as an ill omen. Their apprehensions received some practical support in New Zealand this year, as it was on February 13, a Friday, that the Prime Minister (Mr Forbes) made his statement regarding the finances of the country in which were foreshadowed the extra burdens that the community has since been called upon to bear, and the sacrifices that have since been demanded of all sections of the people. On his return from the Imperial Conference Mr' Forbes lost no time in making himself fully acquainted with the financial position. The revenue anticipations, upon which the Budget had been based, had not been fulfilled. For the first nine months of the year expenditure had exceeded revenue by £3,500,000, and a deficit of £700,000 seemed inevitable. For the approaching financial year a revenue shrinkage of more than three and a-half millions was threatened, together with an increase of £900,000 in unemployment subsidies and debt charges. The public debt had been increased by over eight and a-half millions in twelve months. The basic fact was, Mr Forbes said, that the Dominion had no option but to adjust its affairs to a permanently lower level of prices. His proposals for meeting the estimated deficit were a reduction of 10 per cent, in all public service salaries, other economies to afford relief to the Consolidated Fund, an increase in postal charges, and an increase of taxation. It was also proposed to empower the Arbitration Court to review the rates of wages and reduce them by general order to an extent considered desirable in the existing circumstances. These proposals were adopted at an emergency session of Parliament, but they led to a display of stubborn resistance on the.part. of the Socialist Party, which chose to ignore the fact that already the producing, business, and professional classes had suffered severe contractions in income, including 40 to 50 per cent, in the case of primary producers, brought about by a decrease of £20,000,000 in the value of exports and of some ten millions in the value

of primary products consumed locally. The Arbitration Court, after hearing evidence on behalf of representatives of employers and wage earners, made a general order in terms of its authority for the reduction by 10 per cent.' of wages governed by industrial awards.

Later, during the ordinary session of Parliament, Mr Forbes had a further unpleasant, though not unanticipated, announcement to make. His estimate of a deficit of four and a-half millions had been falsified by the downward trend, or, in his own words, he had been “ ovei’-optimistic,” and his revised estimate was for a possible deficit of £5,500,000, less the amount that might be saved by the exercise of economies. When the Budget was introduced it showed that the deficit for the previous financial year had more than doubled the estimate of February, and stood at £1,639,000, which was made good out of accumulated surpluses, leaving a balance of less than £300,000. The continued shrinkage of revenues, combined with increased fixed charges and with an unforeseen expenditure in respect of the relief of unemployment, which had assumed unprecedented dimensions, led Mr Forbes to the conclusion that it would be necessary to make financial adjustments to the extent of £4,810,000 in order that the Budget might be balanced, even after allowing for the suspension, under the “war debts holiday plan,” of a payment of £870,000. After the utilisation of certain reserves and unappropriated balances of accounts, there remained a gap of £1,800,000 to be filled from the proceeds of taxation. Following Mr Forbes’s disclosure of the increasing seriousness of the position the House resolved, on the motion of Mr Coates, Leader of the Reform Party, on the appointment of an Economy Committee to investigate the public finances, and this step led eventually to a coalition of the United and Reform parties, under Mr Forbes, the financial crisis demanding for its efficient handling a stronger Government than a minority, such as the United Party was, could provide. Mr Downie Stewart became Minister of Finance, and in October he brought down a supplementary Budget in which the revenue shortage was stated at £1,250,000. This it was proposed to meet by the imposition of additional taxation. At- the same time proposals were outlined for the relief of the farming community, whose “ precarious position” was declared by,the Minister to bo the greatest problem confronting the country. That the electors recognised the necessity for the action taken first by the Government representing the United Party, and later by the Coalition Government, was shown in the results of the general election which was held in the usual course towards the end of the year. The Government was confirmed in office with a majority more than adequate to enable it to continue the readjustment of the finances of the country. The Socialist-Labour Party gained four seats, but, on the balance, these were mainly at the expense of the Independent members. That the need for strict supervision of the public finances continues was emphasised by Mr Downie Stewart a month ago, when he stated that the revenue at the close of eight months of the financial year was falling badly behind even his revised estimates. A compensating feature is provided in the overseas trade figures, which show that the value of exports for the year exceeds that of imports by over £8,000,000. The unemployment problem has been the cause of considerable concern during the twelve mouths. At the beginning of the year the number of registered unemployed was about 30,000. This figure grew steadily until in September there were 50,000 registered unemployed, of whom 36,000 were engaged each week on relief work by the Unemployment Board. The funds that were placed at the disposal of this Board —derived from an unemployment levy plus subsidy from the Consolidated Fund —proving totally insufficient, a special unemployment tax of a penny per thii’d of a pound on wages and salaries was imposed on all workers of 20 years and over,-irrespec-tive of sex, with a similar tax on income other than salaries. The public has accepted this taxation, which represents half a million per year, uncomplainingly, but the nature of the relief work provided has been subject to criticism as sterile and as even prejudicial to the self-respect of the workless. Towards the end of the year it was announced that a policy would be pursued of drafting the unemployed on to productive work in the country districts. Up to the present, however, no great progress’has been made towards this end. The latest returns have shown a slight diminution in the volume of unemployment. Railway finance has continued to prove a source of concern to the Government, losses mounting steadily as the depression deepened, and the Government, acting on the advice tendered by a Royal Commission in the previous year, secured the passage of the legislation necessary to the transference of control of the system to a Railway Board. Promptly after its institution the Board inspected the railway lines under construction, with the result that it came to the conclusion that work on most of the uncompleted lines should be immediately suspended, as they could not be operated except at sei'ious loss, and its recommendation was adopted by Parliament. In addition to its change of policy regai’ding the railways the Government during the year gave attention to the coordinating of transport services. Under a Bill which was passed during the session central and district licensing authorities are appointed, which will exercise a rigid supervision and control over the issue of licenses to all sei’viees, whether State-owned, municipal or private. A disaster without parallel in the history of the Dominion occurred on February 3, when an earthquake, followed by an outbreak of fire, was experienced in Hawke’s Bay, the effects of which were felt over a wide area,

embracing, unfortunately, two towns of considerable size, Napier and Hastings. The devastation in these towns was appalling. It was estimated that in the business area of Napier alone — an area which was virtually razed by the earthquake and fires —damage to the extent of two and a-half to three millions was done, while the destruction in Hastings reached a total of at least £1,000,000. The loss of life was very heavy, the death roll approaching 200. The bravei’y and fortitude of the people of Hawke’s Bay in the face of the terrible visitation was remarkable, and earned for them the admiration of New Zealand, and, indeed, of the world. Almost before an account could be taken of the destruction many refugees had already returned to their shattered homes to commence the task of reconstruction. The stricken towns are being gradually rebuilt, while, from a business aspect, normal conditions have been restored. Practical sympathy with the sufferers was not confined to New Zealand, and altogether a sum of moi’e than threequarters of a million for the relief of sufferers was subscribed by the public, while the Government, in order to afford prompt assistance in the task of reconstruction, drew on a special reserve securities fund to a large extent.