THE OTAGO DAILY TIMES FRIDAY, NOVEMBER 4, 1949. SAUCE FOR THE GOOSE

Otago Daily Times, Issue 27229, 4 November 1949, Page 6

THE OTAGO DAILY TIMES FRIDAY, NOVEMBER 4, 1949. SAUCE FOR THE GOOSE

In the political wardrobe there are many costumes, but the Prime Minister has made a dull choice in selecting the garb of an itinerant quizmaster to wear in his election campaign. At New Plymouth he produced again the list of questions with which he is conducting a somewhat unprofitable long-range interrogation of the Leader of the Opposition, but in expounding these points he revealed a singular inconsistency with a financial policy which he has already approved. “ Deflation under the National Party is a thing the people dread,” he declared. “On all the evidence the National Party’s financial policy is a policy of deflation.” If by deflation the Prime Minister infers the restoration of money to its real purchasing value the charge would no doubt readily be admitted by the National Party. Our present inflated currency is an economic peril of the first magnitude, and though the inflationary process can prove profitable to the taxing authority, both the Prime Minister and his party are well aware of . the dangers they are courting. Equally aware are they that in many devious ways they have already instituted the deflationary policy which the people, apparently, dread. The authority on the perils of inflation and on the methods employed to combat them is none other than the Finance Minister in Mr Fraser’s Cabinet. In his 1947 Budget speech Mr Nash pointed out the disproportion between the amount of money and the quantity of goods available, and stated that the basic objective of the Government’s economic policy would be “to avoid depreciating the purchasing power of money through inflation.” In 1948 he admitted “ distinct inflationary pressure,” and stressed the urgency of restoring a balance between supply and demand. In his last Budget address he claimed that the inflationary pressures had receded to some extent as a result of the Government’s policy. What was this policy but a tentative approach of deflation, carried out as inconspicuously as possible and disguised at every step? It included such tactics as- claiming back from the people some £11,000,000 to £14,000,000 a year to “stabilise” and control prices at artificial levels; savings campaigns to withdraw money from circulation; the alteration of the exchange rate as a check to soaring prices and wage demands, and restrictions on bank advances. Admittedly these efforts have been offset by other actions of political expediency, but they were, nevertheless, attempts to bring about a measure of deflation. If Mr Fraser now finds the idea of deflation repugnant was he sincere in approving the deflationary measures ‘ undertaken by his own party?