A UNITED EFFORT

Otago Daily Times, Issue 24449, 7 November 1940, Page 5

A UNITED EFFORT

FACING UP TO WAR THE SPIRIT OF SERVICE OBLIGATIONS ON INDUSTRY (Special ro Daily Times) NEW PLYMOUTH, Nov. 6. That the whole weight of the Dominion should be thrown into a purposeful war effort was the main theme of the presidential address which Mr W. S. Mac Gibbon delivered before the annual conference of the Associated Chambers of Commerce at New Plymouth to-day. He also discussed the problems of war finance and made a plea for a lower level of State expenditure on civil services. “One matter that has struck me, Mr Mac Gibbon said. “is. that, while there is a good deal of lip-service to the principle that New Zealand should, as far as possible, pay for the war as it goes, there is a marked reluctance by many to pay the bill when it is presented on that principle. There is too much looking to the other fellow to shoulder the burden. On the part of some workers called on to pay war taxes there are protests and com-

plaints,, and a scouting around for means of currency manipulation to pay for the war without disturbing the comfort of anybody, with complete disregard for the chaos and misery that are inseparable from inflation. On the part of some business interests there is an idea that taxation should be so arranged as to preserve the steady profits of peace. “In saying this. I do not mean that I necessarily agree with all the taxation measures applied by the Government, or with thei rincidence—particularly when a good deal of the revenues are being devoted to a civil budget of record size, in addition to the need for financing war expenditures. “As a result of the recommendations of the National Economic Conference, I hope that the Government will speedily reduce expenditure on non-war services. “At the same time, the point I am trying to make is that a policy of paying for the war, as far as possible as we go—and I think it is a right policy —is one which must fall heavily on all within the country. The Transfer of Manpower “In peacetime most of our manpower and most of our material wealth is engaged in providing goods for exchange and consumption,” Mr MacGibbon said.- “ and is devoted to the maintenance of our standards of living and our own individual and general welfare, in war the national welfare and the national existence are at stake To preserve them we take men from industry and trade and use them directly in war. where they become, in the ordinary sense, non-productive. But they are still consumers, and we must produce in order that they may consume. We must produce more in order to provide them with the materials for war, and after that must still produce more to maintain ourselves If .should be the object of public finance, working through taxation, loans and public expenditure, first, to stimulate the maximum of production of the most necessary goods and the maximum earnings of income; secondly to encourage thrift and saving: and, thirdly, to transfer the purchasing power that can be saved from the surplus achieved through more production and less consumption to war purposes. , “ What. we can contribute as commercial people is goods—goods produced in New Zealand and sent overseas, not wholly in exchange for those we import and consume, but something more than this We might aim to provide a surplus which would be lent to Britain to assist her in the present crisis. We can make this contribution. if we will, quite simply—by exporting more and importing less, and by leaving the receipts for our. excess of exports in the form of sterling exchange in London. From sterling funds built up in this way, we might pay our war expenses overseas rather than borrow them from Britain: and, if we could do this and still accumulate funds, we would strengthen our own monetarv position and reserves, and. by lending these funds on the shiprt loan market in London, we would increase London’s liquid assets and ease the financial burden a little for the Mother Country. Need for Sacrifice in peacetime the first object of government should be increased consumption and the welfare of the people/’ Mr Mac Gibbon said, JjLu not in war-time. During war. consumption must Ik reduced to essentials. The welfare of the People must take second place to the welfare of the fighting forces and the provision of fighting equipment. A country, cannot fight for existence and remain concerned about the comforts and little luxuries of life, especially when the adversary has starved for years so tnat he may have guns At the same time, the workers must have something to fight for. No family should be forced below the subsistence level, even though relief payments be a strain.

“ On the other hand, there is the consideration that spending may be restricted to the point where men will be thrown out of employment, thus depressing business and senou&ly reducing: the amount raised by taxation. ‘‘The primary aim of the country should be to expand the output of produce and materials. needed for war purposes. There is nothing to be gained by discharging employees, or so curtailing spending as to result in iobs being lost unless men can be absorbed in work which increases our essential production. The end of all taxation, of all saving, should be the expansion of our war effort. Case for Sane Spending “While it is undoubtedly necessary for individuals to reduce consumption and to save, in order that a larger part of the national income will be available for war, it is also necessary. ‘ Mr Mac Gibbon said “to spend, in order that production and trade, and the national income dependent on them, may be maintained at the highest possible level, and that there will be a higher national income from which savings may be drawn In war-time, total national expenditure by the Government and the people combined is likelv to increase rather than dimmish, and the higher the income can be pushed without inflation and rising prices the less will be the sacrifice imposed on the community But it is inevitable that in war-time the Government should spend more than in peace-time, and it is as true in war as in peace that whatever the Government spends the people must pay for K Saving, and the transfer of savings to the Government, reduce individual expenditure, but do not reduce total expenditure. Rather they transfer the power to spend from the people to the

Government, and provide for increased Government expenditure. Since one man’s expenditure is another man’s income, expenditure must be maintained in order that income may be maintained. But expenditure, whether by Government or individuals, should be economical; that is. the money should be spent where it will do most' good. And it might be added that the Government needs to enforce, in its own administration of the people’s affairs, the same strict economy which the Government's demands for tax and loan money enforce upon the people who pay the taxes and provide the loan money. Deferment of unessential spending must react adversely on some business turnovers, others will be increased ny higher Government spending, and over the whole field it must be recognised that purposeful thrift and real economy are essential if a dangerous wartime situation is to be avoided State Lead Desirable "Restriction of purchases which require foreign exchange is already operating in New Zealand under the import control machinery,’’ Mr MacGibbon said. “ I know how badly importers have been hit by the progressive restrictions in this connection, out I cannot see what other recommendation the recent National Economic Conference (in which the Associated Chambers participated) could make, in the light of war conditions, than the one it . did make on this subject—namely, that ‘it is necessary that the policy of import control should be continued.’ “The question of thrill in the form of reduced expenditure on commodities produced in our own country is also difficult,” he concluded. "We must cut our expenditures, but only in those directions where some good —and no bad—will result. We, as individuals. may find it hard to know where and how to reduce spending. Here wo must look to th Government for guidance. The Government will itself reduce our individual expenditure by the taxation it imposes. We might reduce it further in order to subscribe to war loans. But the Government. through its administration and its expenditure, must stimulate that production which is most useful in present conditions, discourage that which is less useful, and in this way transfer resources of both men and materials from uses that are less essential to those that arc more essential. It is only in this way that true economy can be achieved.”