STABILITY RESTORED

Otago Daily Times, Issue 22719, 4 November 1935, Page 2

STABILITY RESTORED

THE GOVERNMENT’S RECORD ADDRESS BY MR T. GOLDEN Mr T. Golden, the National Government candidate for the Mataura electorate, delivered an address in the Public Hall, Kelso, on Friday night, 40 electors being present. Mr C. E. Forsyth occupied the chair and briefly introduced the candidate. Mr Golden began by stating that as a result of the economic position brought about by the depression, which first seriously affected the Dominion about five years and a-half ago, the people had come more closely into touch with politics than ever before. Every electors and every section of the community had been affected by the enormous fall in the value of primary products, which had resulted in a reduction, between 1929 and 1931, of approximately 40 per cent, in the value of the exports of the Dominion. At that time the United Government was in power, but Mr Forbes, appreciating the seriousness of the position, had appealed to the Reform and Labour Parties to meet him in conference with a view to forming a strong National Government. The Labour Party had refused to sacrifice its identity and platform, and there -was formed a Government representing the Reform and United Parties, which agreed to sink all party differences and face the problem. It had been necessary to go to the country, and as a definite policy could not then be put forward the electors had been asked to give the Government a free hand. The Government was returned with a substantial majority, and immediately took up the task of grappling with the situation. DECLINE. IN REVENUE. Unfortunately, said Mr Golden, a serious drift had occurred, and for 1931-32 a deficit of no less than 8,000,000 was revealed in the Budget. Steps were at once taken to reduce public expenditure, but this was by no means such an easy matter as might have been imagined. The estimated expenditure was £24,500,000 per annum, and since, of this amount, £12,500,000 represented fixed charges for interest on overseas and internal loans, and £7,500,000 was required for social services, there remained only £4,500,000 on which economies could be effected. Realising that the position required expert guidance, the Government set up a National Expenditure Adjustment Commission, which was responsible for economies amounting to £10,000,000 per annum. Even this was found insufficient to bridge the gap, as revenue was still declining rapidly, especially in Customs duties Interest from State mortgages and advances and Crown rents had fallen seriously into arrears, and as most of the money had been borrowed by the country the State was still responsible for the interest, although tire occupiers and tenants were in default. The Government had therefore to get more money, either by borrowing or by increasing taxation. It was agreed that the former alternative was not sound policy, and was, moreover, scarcely possible, as the London money market was, at that time, closed to New Zealand. The Government realised that an increase of taxation would be unpopular, but there was nothing else for it, and while this course was taken, an endeavour -was made to spread the taxation as equitably as possible. PRIMARY PRODUCERS’ DIFFICULTIES. The bulk of the revenue was absorbed by interest, but the Government could do nothing with that portion of the debt held overseas, and it therefore undertook to arrange a conversion of loans heid in New Zealand at rates up to 5h percent. to 4 per cent, for the taxable portion, and 3i per cent, for the non-taxable portion, and thus effected an annual saving of £935,000. The alarming increase of unemployment necessitated the finding of sufficient money for relief measures, and special taxation was levied which brought in about £4,000,000 a year. There was no doubt that this taxation had imposed a heavy burden on the ratepayers, but it was very necessary, more especially as. before it was introduced, more than £4,000,000 had been taken annually for relief purposes from the Consolidated Fund. Having put its own house in order, the Government had to face the problem of the primary producers, who had been placed in an impossible position through the reduction of income from their produce, while costs remained, the same as before. Interest, rates, and rent formed the principal charges, and relief had been given through compulsory reduction in rates of interest, a conversion of local body loans, and a subsidy on county rates. A moratorium of mortgages had been proclaimed as there was a danger of farmers who could not pay their interest being evicted, and this measure, Mr Golden considered, was more necessary than it had been even in the war years, as during that period good prices -were received for primary iproducts. Mortgage adjustment commissions had been set up, and up to the present these had dealt with approximately 14,000 cases, with, in many instances, definitely satisfactory results. THE MORTGAGE CORPORATION. Touching on the Mortgage Corporation, Mr Golden explained that this institution had been established to stabilise mortgages, lower the rates of interest, eliminate political control of State lending, and so bring about a more satisfactory permanent arrangement for mortgage investments. The State Advances Department, which was constituted about 40 years ago, had proved a very useful institution, but it had, unfortunately, come under political control, and more money had been lent on land than it could bear in times of adversity. When the corporation was formed, the interest of the private investor was invited so that the corporation might be made the success that would be impossible under political control. The newly-formed body would take over all State mortgages at valuation, and, while the State would, of course, have to bear the brunt ot over-lending in tiie past, it could conti dently be anticipated that there would be no over-lending in the future. The lending rate of interest had been fixed at 4J per cent., which was considerably lower than any State loans in the past 15 or 20 years. The Government had also brought down a Final Adjustment Act, which gave a farmer the right to a stay-order against his creditors, to enable him to remain oh his farm for a further five years. The Act had met with a great deal of opposition, as it was considered that farmers would be subject to the dictation of inspectors and trustees, but generally speaking mortgagees were reasonable men, and, no doubt, would be willing to accept the advice of inspectors and trustees if it would assist them in any way. THE OTTAWA AGREEMENT. The Ottawa agreement, Mr Golden continued. was one of the most satisfactory arrangements come to in years, and had done much towards ensuring that farmers received the best possible prices for their produce. English farmers had, as a result of glutted markets, been faced wit.o reduced prices, and in return tariffs, levies, and quotas were threatened against New Zealand produce. Realising tin' position, the Government had opened negotiations with the British Government, and at Ottawa Air Coates was successful in coming to a satisfactory agreement in return for what practically amounted T to free entry of British good,? into New Zealand. It had been claimed by the Opnosition that the agreement had not been carried out in its entirety, but statistical facts revealed that of 103 British articles considered for a revision of tariff the duty bad been removed from 50. substantial reductions had been made on a number, while in only three cafes had the tariff been increased for the purpose of protecting local industries On the approach of the termination of the Ottawa agreement, further negotiation had been found necessary, and when Mr Forbes and Mr Coates wore recently abroad they carried this out with outstanding success the EXCHANGE RATE. Dealing with the question of the exchange rate, the speaker said that when tilc Government, iu order' to assist faimcis, had framed legislation raising the rate of exchange to 25 per cent., the Laoour Party and the majority of the Independent members of the House had strongly opposed the measure, which, they predicted, would destroy New- Zealand’s credit in London, and antagonise British manufacturers. As a matter of fact, results showed that the Dominion’s credit now stood higher than ever, and a conversion loan of £8.000,000 had been arranged at 3 per cent., with a discount of 30s—the most favourable terms received

this century. Moreover, imports had risen from £24,761,000 iu 1932 to £32,568,000 for the year ended on March 31, last. All other countries competing with New Zealand on the English market had raised their rates of exchange, and if the rate were lowered to par, the Dominion would be at a distinct disadvantage with her competitors. Included in the assistance given to the primary producer by the Government were such items as £9,000,000 through the raising of the exchange; £1,600,000 for the reduction of mortgage interest, remissions under the Mortgagors Relief Act amounting to £700,000, and £250,000 from unemployment funds. In addition, assistance to the extent of £900,000 had been given to local bodies, and there were, besides, such benefits as road subsidies, rebates on rural rates, reduction of country interest, fertiliser subsidies and cheap railage on fertilisers. Admitting that the sales tax was an irritating levy, the speaker pointed out that it was nevertheless a very necee,sary one, and New Zealand had been one of the last countries to impose it. It was a tax, however, that did not apply to the necessaries of life, and it was probable that New Zealand would be one of the first countries to remove it. TAXATION NOT INCREASED. Although the Government had been criticised for increasing taxation, it should be emphasised that during the past two years there had been no such increase, and revenue from taxation had risen as a result of the general revival of trade and industry. In the past four years, borrowing by the Government had been reduced very considerably, and during that period the national debt had actually been reduced by £1,361,000, as a result of the operation of the Public Debt Extinction Fund. No other country in the world had reduced its debt during the depression. A RECORD OF ACHIEVEMENT. The present Government, Mr Golden said, had been in office during the most critical period in the history of the country. If it had made mistakes, they were Impest ones and small ones. The Government had balanced the Budget, and its policy had been progress, so far as finances wmuld allow, without heavy borrowing. A particularly attractive programme ot guaranteed prices had been offered by the Labour Party, which, however, had not yet shown how it was going to make up the deficiency that must result from such a policy. The Democrat Party appeared to represent vested interests, and not every section of the community, and, in promising everyone something for nothing, pledged itself to wipe out the high ex-, change and the mortgagors’ protective legislation on which the farmers were defending for improved prices and protection. If elected, concluded Mr Golden, he would do his best for the electorate and for the Dominion as a whole, but if defeated he would have no regrets. The chairman’s call for questions elicited no response, and the candidate was accorded a unanimous vote of thanks and confidence.