NO REDUCTIONS IN WAGES

Southland Times, Issue 23818, 16 May 1939, Page 6

NO REDUCTIONS IN WAGES

Mr Savage Rejects Recommendations

GOVERNMENT’S CHOICE OF ALTERNATIVES MAINTAINING STANDARD OF LIVING (Special to The Times) WELLINGTON, May 15. Justifying the steps taken by the Government to restore the overseas trade balance and stimulate internal production, the Prime Minister (the Rt. Hon. M. J. Savage) in an interview this evening replied to a report that recommendations had been made to the Government from responsible quarters that certain drastic readjustments should be made in the Dominion’s internal economy!

“Recommendations have been made from many different sources that the Government should rigidly curtail expenditure,” Mr Savage said. “I took it that these recommendations meant that the Government should reduce wages, retrench civil service staffs and stop all major public works. 1 can say now,” added Mr Savage, “that the Government has not the faintest idea of putting any of these suggestions into operation. If we fail in the policy we have been carrying out we will have to make room for someone else. “Recommendations of that sort point the way to the destruction of the foundation of industry, and that is not the policy of this Government. We want to build New Zealand by maintaining for the people that standard of living which was brought to them when the Labour Government assumed office.” , , ,_ T Mr Savage said the people of New Zealand had an easy choice. 'Diey had to make up their minds whether they would support the present Government with its forward policy or go back to the old order of reduced wages. PREVIOUS METHODS “Under previous Governments,” continued the Prime Minister, “it was the custom io balance overseas trade by borrowing and by reducing wages. At certain times and in certain cumstances overseas borrowing may be unavoidable, but for many years successive Governments, in New. Zealand have reduced taxation in times of prosperity and have borrowed lavishly abroad. That sort of thing is not going to occur again.” The Prime Minister said the Government had had to make a choice on behalf of the people of New. Zealand, between making a reduction in wages all round, with substantial cuts in the civil service, and operating a policy of selecting its imports to bring about the needed readjustment of its overseas trade balance. On its assumption of office in 1935 the Government had begun the preparation of its plans to reverse the policy of low wages and low standard of living which had been followed by its predecessors. It was obvious to everybody at that time that trade could not be expanded on the basis adopted by the old Government. The Labour Government’s policy was designed to give the people an immediate increase in their purchasing power. This had been brought about by increasing wages. The first result of increased wages had been a substantial increase in importations. DIFFICULTY EXPECTED “We knew that ultimately we would be faced with difficulty as a result of this policy,” continued Mr Savage, “but we went as far as we could with it. It is now necessary for the Government deliberately to plan the selection of the country’s imports. We have chosen for ourselves a method of importation that will assist us to adjust the trade balance of New Zealand and at the same time develop in this country those industries that are necessary to its progress. Conscious regulation of imports is preferable to reducing the income of the people. Our opponents can choose for themselves any other method for bringing about the necessary change in the country’s economic position. I believe they would act on a recommendation to reduce wages and that they would fall back on the old principle of borrowing in London. They would adopt a policy of curtailment and restriction of income within New Zealand. This Government does not propose to do that. TWO BIG ISSUES “Today the Government is facing two big issues: One is to meet its obligations overseas and the other is to maintain the strength of New Zealand’s secondary industries. Realizing this, the Government will turn a deaf ear to those who are advocating wage reductions.”

Mr Savage said that curtailment of public works would not be considered. The Government intended to shift men from public works to secondary industries when opportunities were available, the object being to bring about better-balanced production. Expansion of the Dominion’s industries and payment of economic wages were two important factors in the progress of New Zealand.