The Southland Times. PUBLISHED EVERY MORNING. “Luceo Non Uro.” SATURDAY, NOVEMBER 2, 1935 DEMOCRAT ARGUMENTS

Southland Times, Issue 22728, 2 November 1935, Page 4

The Southland Times. PUBLISHED EVERY MORNING. “Luceo Non Uro.” SATURDAY, NOVEMBER 2, 1935 DEMOCRAT ARGUMENTS

Mr Hinchey repeats the Democrat assertion that in consequence of the elevation of the rate of exchange to 125 New Zealand’s exports have suffered. He contends that this alteration in the exchange was a contravention of the Ottawa arrangement; but he produces no facts in support of the statement that the United Kingdom has been less ready to buy New Zealand’s produce, and his assertion in the face of evidence showing that exports have not dwindled and that the prices for New Zealand products indicate no “set” against them by British buyers, is not enough. It would be valuable if the Democrat spokesmen would produce to the public some facts to overcome the evidence of the trade statistics, because in the meantime the public has nothing more than wild assertions. According to Mr Hinchey the task of reducing the rate of exchange will be placed “in the hands of those most capable of doing it —the banks.” At the moment the rate of exchange is controlled by the Reserve Bank, and that institution does not consider a marked reduction in the interests of the country. As a matter of fact, to trading people stability is of more importance than the rate, and Mr Hinchey’s adoption of the Democrat policy indicates that he favours a change. There is to be a reduction in the Wages Tax, which is to be cut down to 6d in the £, but in its place a compulsory contributory pension scheme is to go into operation, designed to provide, according to figures produced by Mr Veitch a few days ago, something like £1,800,000. Thus it will be seen that the reduction of 2d in the Wages Tax will be replaced by compulsory contributions which, it would appear, are to fall on people with incomes lower than £267 per annum. That does not look like a reduction in taxation. Of course, Mr Veitch declared that this contributory scheme would save enough money to allow the elimination of the Sales Tax and the Gold Export Tax, and a reduction. of 10 per cent, in the Income Tax. At the same time the National Debt is to be jumped up by £8,000,000 to be spent as a Development Council directs. How long will that new board or council take to act decisively? And while it is considering schemes brought forward by anybody what will happen to the unemployed? The Democrat idea is to put the country back into prosperity with borrowed money. There is one interesting feature in the Democrat plan to replace the high exchange by bounties: it will open the way to political patronage. One of the objections to a scheme of assistance which permits discrimination is that the way is opened for favouritism, and the incompetent farmer can obtain more than the competent one. If the bounties are applied to exports indiscriminately the effect, if the same amount of aid is to be given farmers, is that it will cost as much as the high exchange rate. One of the Democrat speakers recently got all worked up because the depreciation of the currency was “dishonest” and he contrasted New Zealand with solid Britain; but Britain depreciated her currency and possesses a large fund established to keep the exchange at the level she has decided is suited to her interests. In answering questions Mr Hinchey said that the Democrat would vote with Labour to put the Government out, and would not support Labour unless it did

what the Democrats wanted, adding “I do not think that would be for very long.” Evidently the idea is to plunge the country into another election, with all its uncertainty and dislocation of trade. The influence of the election and the talk about interfering with exchange, guaranteed prices and other get-rich-quick plans on the shares of the Reserve Bank should not go unnoticed. Talk of the cost of the exchange should not deceive fanners. The “cost” was anticipated, and it represents the distribution which gives the primary industries the benefits arising from the change. Let farmers consider that a reduction in the exchange will reduce their receipts from exports, and their spending power. If the exchange went down to par the farmer’s return from his exports would go down 20 per cent. He can ask himself if the overseas market level would leap up in full compensation, or whether his production costs would be lowered sufficiently to meet the loss. Perhaps Mr Hinchey with adequate* figures, not mere assertions, will convince him.