PRIME MINISTER’S REPLY

Otago Daily Times, Issue 27505, 27 September 1950, Page 8

PRIME MINISTER’S REPLY

Mr Holland, replying to the debate, said the people had wanted the truth. They knew the country was in a mess and expected the new Government to remedy the situation. The Budget gave a straightforward statement of how that had been done.

Mr Holland said the payment of the public servants before the end of March was in accordance with precedent. The Labour Government had done the same thing.

The Prime Minister said that the Government, on taking office, found the country headed for inflation with a deficit of £14,000,000 in the overseas payment, with £26,000,000 of new paper money issued during the year and with the overseas funds almost down to the minimum required for the Reserve Bank reserve. It was with pride that the Government could say it had corrected the situation in nine months. A fruitful source of criticism was the removal of subsidies, yet according to the Government Statistician £8,000,000 of the total of the £12.000,000 involved was borne by the workers and their families. But the wage increases granted by the Arbitration Court gave the same section of the community more than £9,000,000 additional income. Mr Holland said it was true that prices had risen. “The cost of living is our main headache today,” he said. “We are disappointed that we have not been able to do as much as we had hqped.” He said he would admit quite frankly that the Government had fallen into error. The National Party’s election policy was written about a year ago when everybody thought that prices had reached their peak. The world forecast was tor a lowering of prices, “and on that basis he felt pretty sure that prices would come down," he said. Then came the war in Korea, which brought about a situation of war hysteria and created a demand for foodstuffs yand other commodities. v

Mr Holland said that every world expert had been proved wrong because prices had soared under conditions which could not be foreseen. The Government had found no other course open to it and had removed the subsidies, and there was not one Opposition member who would reimpose them if Labour became the Government tomorrow, nor had any Opposition member proposed an alternative to subsidies. f Mr Holland said that in not one of Labour’s 14 years in office had the cost of living been brought down. Mr Fraser: You pledged yourself to do it.

Mr Holland said there were many items which went into the cost of living but which were entirely beyond the control of the Government. He said that through the recent increased payout for butter-fat by the Dairy Commission the Government

was faced with the problem of an increase in the price of butter of 2d a lb or else paying a subsidy of £330,000 a year. Cheese, too, was affected. Last year there was a subsidy of £2,200,000 for the town milk supply, which the Government reduced by £900,000. It now appeared, because of the higher butter-fat payout, that £270,000 by way of subsidy would have to be restored. Mr Holland said that he had made another mistake so far as the age beneficiaries were concerned. Nothing had disappointed him more than that, he said. He had not been fully informed at the time the proposal was put forward, “ but we have not finished with it yet. I am going to find a way if I can. AH I ask for is a little patience. Let me have another go at this. I do not like making a promise and then having to break it.” Mr Holland said the Government had, however, tried to improve social security, and the conditions for the thrifty, who had previously been penalised, were now better and beneficiaries could earn more without having it taken away from them and their benefits reduced.

Sales tax had been reduced this year —in the Budget and earlier—by a total of £400,000. Land tax had been reduced and 25,000 persons freed from the need to fill in forms. The major cause of inflation had been stopped—going down to the Recerve Bank and turning a handle. The income tax exemption for aged persons had ■ been reduced 50 per cent. The Government had balanced the dollar trade for the first nine months of its term of office and had balanced the overseas trade as a whole in spite of a threatened deficit of £14,000,000. The works programme had not been cut down. One-third of our import trade with, the sterling area had been freed from all control, and import licences had been granted for £140,000,000 this year. Rationing had been abolished, which' probably would not have happened had Labour retained office, for Labour loved rationing. Land sales had been freed, and now there were honest sales with stamp duty paid on the whole purchase price of properties. The building restrictions had been relaxed, and already there were 1626 applications for suspensory loans to the value of £299,000. Various public works of major importance were being pushed ahead vigorously. Aready 1980 persons had applied to purchase State houses. Mr Holland said it was really amazing that the Government had done all these things and many more in i'ts nine months in office. He said the Budget would be balanced in spite of higher expenditure in various directions, including a rise in the defence vote of £6,500,000.

Mr Holland, who spoke for about an hour and a-half, was the sixtyfirst member to speak in the Budget debate.