ECONOMY MEASURES

Otago Daily Times, Issue 22721, 6 November 1935, Page 3

ECONOMY MEASURES

THE GOVERNMENT'S TASK FOLLOWING BRITAIN'S LEAD RISKY- EXPERIMENTS SHUNNED Aspects of the economic situation during the past four years and the measures taken by the Government to bring the Dominion through the depression were dealt with by Mr W. A. Bodkin, National Government candidate for the Central Otago seat, in an address at Lawrence on Monday night. There was a fairly large attendance in the Town Hall, and although there were few interjections, Mr Bodkin was, in general, favourably received. The Mayor (Mr E. F. Batchelor) occupied the chair. Mr Bodkin indicated at the outset that the policy followed by the Government during the past four years had been modelled on that of Great Britain, which, at the present time in a world full of trouble was enjoying a period of almost unprecedented prosperity, with more men in permanent employment than ever before and a greater wages bill than at ajiy other time in her history. Could anyone say," then, that in following Britain the National Government in New Zealand had been adopting a policy that was wrong. '•' We refrained," said Mr Bodkin, " from adopting those experiments that brought desolation and ruin to the countries that followed them, but it is a noteworthy fact that those countries themselves were forced in the end to turn round and follow the lead given by Great Britain. DEPENDENCE ON OVERSEAS "What countries suffered most in the depression?" asked Mr Bodkin. Undoubtedly those which depended to the greatest extent on overseas markets. .New Zealand is dependent on overseas markets to absorb 40 per cent, of her entire production, and in fact depends on overseas countries to take 80 per cent, ot her primary products, yet we have come througu the slump with less suffering than any other country—" , . A voice: Wo are not through it yet. Mr Bodkin: We are well on the way to prosperity—a fact which is a great disappointment to the Labour Party. Labour members have capitalised the sufferings of the poor, and they are greatly disappointed that the Government has been able in the last year to restore civil service salaries and pensions. A voice: Who made the people poor? Labour members, the candidate continued, alleged that the poverty in New Zealand was due to the Governments policy of wage-cutting, but they failed to explain whv. There were 37,000 unemployed in New Zealand before the wages were cut. and that army was increasing. Governments all over the world had had to do as the Coalition had done. .Not only were wages cut, but a cut was also made in rents and in other directions, so that the purchasing price of the pound was preserved to a greater extent than m Australia under a Labour Government. That was a comparison that the Labour men neglected to mention, because the comparison waß all to the favour of New Zealand. , . . . Turning to the subject of unemployment, Mr Bodkin said that the Coalition Government in New Zealand had been more generous to the unemployed than had any Labour Government in Australia, and it was entitled to that credit, even though it regretted that it could not have done more. When we had' to go into the. lobbies and vote for reductions in pensions and wages, he continued, "we did so with very heavy hearts indeed." A voice: You did not reduce your own salaries much. ...■■»„ , , Mr Bodkin: We did. We reduced our own salaries in proportion, and let me say this, that any member of Parliament who has spent a few years representing a country electorate has certainly not got his out-of-pocket expenses back. DECLINING PRICES

Continuing, Mr Bodkin referred to the loss on exports that had'been the primary reason why economies had to be effected in New Zealand. Between 1929 and 1932 the value of New Zealands exports declined by about. £30,000,000, which meant that that sum was removed from the country's money stieam all at once. No one could possibly, imagine that a sum of that magnitude could be cut out of the country's money stream without causing suffering, loss, and unemployment. In that same period, he continued, world trade dropped by. 68 per cent., which meant that international trade was operating to only 32 per cent, of the extent of three years before.- How could that take place without millions of people being put out of work and hundreds ot factories being rendered idle? Our prosperity," he added, "is entirely wrapped up in the prosperity of the British working man, and as he suttered so had we to accept for our primary products a price far below the cost of production. That kept us poor. How, Mr Bodkin asked, could a position like that be met by legislation? The thing was absolutely impossible, ihe Government had to keep the farm lands in production in circumstances that made it impossible for it to recover the cost of production. It was to the credit of the farmers of New Zealand that they had responded magnificently in a manner that no other country could equal. UNPOPULAR MEASURES "The Government tried to bring the cost of production down/' continued Mr Bodkin, "and 1 think I can say that up to a point we have succeeded. J. he Government can spend on y the money it collects first. When the slump came, the farmers could not pay land tax, income tax, and other levies, and in a short time the revenue equal the expenditure. If the Government has not the money in the treasury, it cannot pay its debts. A Labour Government in Australia refused to reduce its expenditure. Consequently, owing to the mad policy adopted, it could not meet its commitments, and people were unable to get their money out of the savings bank. The Labour Party knows that every Labour Government in the world has had to put its house in order and live within its income. VVe realised that we must reduce our expenses as much as possible, and we knew that that road did not lead to popularity. It took a strong sense of duty to vote for measures which, although essential, were not popular; and as the way became harder and more unpopular some faded out. Included in these were Cabinet Ministers, among them Messrs Veitch and Stalhvorthy, and others, to- say nothing of the member tor Mataura." RECOVERY EFFORTS Dealing with the steps taken by the Government to bring the Dominion salery through the depression, Mr Bodkin referred to the 20 per cent, reduction in interest and rents, both of which had been of great benefit to t]ie town and country dwellers alike. Adjustment commissions had been appointed to go into the question of mortgages, with the result that the Government had preserved security values in the great by and large and had thereby rendered a wonderful service to tfie countrv. Furthermore, by preserving securitv values the Government had preserved the savings of the people. Mr Bodkin then spoke of the raising of the exchange. "At the time when the exchange was raised." he said, " I fought it. Had Irealised, however, that it was part of a plan, the remainder of which was to come later, T would certainly have supported it. I see now that it was a good thing. During my recent visit to Great Britain in connection with the Parliamentary Conference, to my utter amazement, not one member of the Ministry of the British Parliament made any reference to New Zealand's exchange. They were rather concerned, however, about the tariff policy of some of the countries within the Empire. I met big industrial men and asked them what they thought of our exchange. They said it, did not affect them, but what was essential was that the exchange should remain stable. Exchange, thev said, was merely taken from one section of the New Zealand people and given to another, whereas tariffs represented money taken from goods coming into the country and spent by the Government in the country. The exchange should have been raised a year earlier," Mr Bodkin added.. A voice: Ten yearg earlier,

ASSISTING THE FARMER Referring to the establishment of the Reserve Bank, Mr Bodkin said it had undoubtedly strengthened the position of the country, and had removed for all time the prospect of a big financial crash in New Zealand. Turning to the Mortgagors Final Adjustment Act, he said it provided for the rehabilitation of the farming community by the writing down of mortgages to their real value, as well as in other ways. It had been suggested by opponents of the Government that the Act would hobble the farmer. Who had fought it when it was being dealt with by Parliament? —a section representing the mortgagees? because it was releasing the farmer from his obligations. Objections had also been taken to the provision for the farmers to be placed on a budget, but how else was it possible to find out what contributions thejand could make towards interest? "It is impossible to determine the real value of property in any other way," added Mr Bodkin. 'ln addition we had to provide cheap money and keep down interest rates, and the Mortgage Corporation was established to provide long-term credits for the farmers. That move has been criticised because of it s effect on the State Advances Department, but while the State Advances Department was an excellent institution in its day it unfortunately was completely destroyed by politicians. The department was losing millions and largely because of the operations of politicians, who were prepared to promise anything from the State Advances Department. The advances made from the department were too great, and the Government decided not to have a mistake like that in the future. Consequently, the corporation is divorced from political control and will not be able to be used for vote-catching purposes, so that there will be none of the fearful losses experienced by the State Advances Department." GUARANTEED PRICES Criticising the Labour Party's guaranteed prices scheme, Mr Bodkin said that hardly two members of the party regarded it from the same point of view. Some claimed that it- was a repayable advance and others held that it was a straight out purchase, but all were agreed that it was going to be paid for by drawing on the national credit —in other words, by the issue of bank notes. From a reading of the pamphlet issued by Mr F. Langstone, M.P., when he was president of the party, it was clear that every citizen in the country would have to pay for the financing of the plan. Every person on a salary would find it impossible to live under conditions like that, for the Labour Party would issue notes against the credit of the State, which meant the savings of the people. A similar plan had been tried by many countries and the results had invariably been more misery and suffering than had ever been experienced before. After one year's experience, Sweden had rejected guaranteed prices because it involved an immense loss. If the Labour Party's plan were adopted in New Zealand it would mean in the final analysis that there would be an enormous burden of debt, capital would fly, and only the farm lands would be left to carry the debt. Referring to the gold mining industry, Mr Bodkin said he had been fighting consistently for the miner. The Labour and Democrat Parties said they would remove the high exchange, but by doing that they would be attacking the income of the gold miner to the extent of 22s Gd an ounce. Certainly there wae the duty of 12s 6d an ounce, but as the result of the exchange the miner still had a profit of 10s an ounce. "I am certain," Mr Bodkin concluded, "that whether the price of gold rises or falls, the Government will remove the duty next year, and I would remind you that this Government has done more for the rehabilitation of the gold mining industry than any other Government in this country." On the motion of Mr R. S. Thompson a vote of thanks was accorded Mr Bodkin, the mover remarking that the place for the people to record their confidence in the candidate was at the ballot.