SPIRAL OF INFLATION

Otago Daily Times, Issue 26543, 19 August 1947, Page 6

SPIRAL OF INFLATION

MINISTER ADDS A TWIST ABOLinON OF SUBSIDIES TAX RELIEF OVERLOOKED P.A. WELLINGTON, Aug. 18. “The naming of a ceiling wage rate increase by the Arbitration Court is neither unexpected nor, unreasonable in view of the increases already made under some awards since March, 1945, and in view also of the notice given by the Government of the cessation of certain subsidies totalling £7,000,000 to £8,000,000,” said Mr Haskell Anderson, president of Associated Chambers of Commerce, to-day. Not all workers had had the benefit of increases since 29 months ago, Mr Anderson said, and the procedure now declared by the court would mean that the anomalies which existed between different sections would now be ironed out and a more equitable relationship established between them. . This could not have been achieved if a flat general increase had been declared over various awards as they at present stood. At the same time, Mr Anderson said, it was greatly to be deplored that the Minister of Finance, Mr Nash, should have intervened and virtually given the court no option but to declare a wage increase by his intimation that heavy subsidies were to.be abolished. The Minister had no need to refer the matter to the court at all. He could have abolished the subsidies and at the same time reduced taxation by an equivalent amount so as to hold the position of costs and prices level. Instead of that, the Minister had given the inflationary spiral of wages and prices another twist. Mr Anderson said that the ceiling increase named by the court represented another increase in production costs which industry would have to face. 'lt now remained for the employers to be given a similar stimulus to the wage earners, but that rested with the Government either through its price tribunal policy with regard to the allowance of cost increases or through its taxation policy in giving an incentive to enterprise and production by an easement of taxation. The result of the court’s decision must mean millions more money in circulation with no corresponding increase in the volume of goods, which was a further inflationary development which could not be viewed with equanimity.