THE OTAGO DAILY TIMES MONDAY, DECEMBER 2, 1935. A POLICY OF CAUTION

Otago Daily Times, Issue 22743, 2 December 1935, Page 8

THE OTAGO DAILY TIMES MONDAY, DECEMBER 2, 1935. A POLICY OF CAUTION

Those who, according to cable messages from London and elsewhere, have been apprehensive concerning the possible outcome of the Labour Party’s accession to power in New Zealand will have some reason to be reassured by Mr Savage’s earnest statement, already made several times since the election, that the new Government will act with a full regard for the interests of the community as a whole. Labour will take office with a determination to put its programme into operation as circumstances permit. To use its leader’s own phrase, it will not “ rush its fences.” This is, of course, what reasonable people would expect from a party which, wholly untried in the actual task of government, realises that it has an extremely difficult duty to perform if it is to keep faith with those who indicated their preferences so emphatically on polling day. Mr Savage need have no fear that the co-operation of a vast majority of the people will be withheld from his Government when it gets down to work. Those who put Labour into power will, or should, be prepared to await results

patiently, while the minority which opposed it at the polls will show no inclination to prejudge the new Government or to employ criticism that is purely factious. When the Government begins to function it must receive from the electorate as a whole that consideration and forbearance to which its entire lack of administrative experience entitles it. This, it is to be recalled, will not be the first occasion in modern political history in New Zealand of the assumption of office by a Government composed entirely of men without any previous experience of Ministerial responsibility. When the Reform Government was formed in 1912 by Mr Massey, there was no member of it who was not new to office. While, however, Mr Massey had only a slender majority behind him, Mr Savage will have a majority of almost embarrassing dimensions. The Labour leader is making no attempt to minimise the difficulty of the task that confronts him. Better still, he appreciates to the full the need for extreme caution in translating his promise ' into performance. He repeats that both the sales tax and the high rate of exchange must be abolished, but he says that their disappearance must be so gradual as not to cause any loss of confidence or dislocation of business. He is not going to invite chaos by precipitate action in one direction or another. Questions affecting monetary policy are obviously to be considered from every possible angle before any definite course of action is adopted. What Mr Savage apparently has in mind is to reduce the exchange rate very gradually—stages of 2-J per cent, or even lower stages are. suggested —and to allow an adequate lapse of time between each reduction. By this means he considers that it will be possible for importers and traders to adjust their businesses to meet the changed circumstances. So far as the primary producer is concerned, it will be the aim of the new Government to introduce its system of guaranteed prices piecemeal—in instalments corresponding with the exchange reductions. So much appears at this stage in broad outline; the details, which, Mr Savage explains, have yet to be worked out, the country will await with considerable interest. Mr Savage also proposes, for equally sound reasons, to move warily in the matter of eliminating the sales tax, which, in the last financial year, produced over £2,000,000 in revenue, and which has yielded £1,170,000 for the first six months of the current year. One of Mr Savage’s problems will be to devise the means of overtaking the substantial loss of revenue that will have to be faced when the tax is finally abolished.