EXCHANGE BILL

Taranaki Daily News, 1 February 1933, Page 7

EXCHANGE BILL

DEBATE IN PARLIAMENT LABOUR CONTINUES ATTACK ALTERNATIVE POLICY GIVEN JDIRECT FARMING SUBSIDY DEVELOPING OF INDUSTRY -• By Telegraph.—Press Association. Wellington, Last Night. The debate on the second reading of the Banks Indemnity (Exchange) Bill was resumed when the House of Representatives met at 2.30 p.m. to-day. The legislation represented one of the greatest political tragedies witnessed in New Zealand, said Mr. M. J. Savage (Lab., ■ Auckland West). He could not find one legitimate argument in favour of raising the exchange rate, .but if one were to seek arguments against such a course .one would, only have to look up Ministerial statements of the past. The Ministerial statement underlying the Bill now before the House was sufficient to condemn any Government in the eyes of the people. The Government by its vacillating attitude with respect to the exchange rate had done more harm than would be done, by the Bill itself. The raising of exchange could have no effect on prices abroad, but would react against the Dominion as a seller in Britain because New Zealand could not have one-way trade.

Mr. Savage said he. had come to the following conclusions: Raising the exchange rate would give very temporary assistance to a section of exporters who needed it least; it could make no provision for exceptional cases where help was most needed; it was the, equivalent of an indirect taxation which was inequitable in incidence and was paid by everyone irrespective of income, and in accordance with the consumption of imported goods large families suffering most; it struck a blow at Britain as a seller of manufactured goods and other services in . New Zealand, and consequently weakened the main market in which the Dominion’s exports were sold; it was the equivalent of a reduction in wages and incomes which could be measured only by the extent to which the increased rate was added to the cost of goods imported into the Dominion. ALTERNATIVE POLICY. Mr. Savage declared the alternative policy was for Parliament, pending the constitution of the State as. sole issuing authority, to give authority for raising sufficient money in New Zealand to subsidise the farmers according to their needs for legitimate current farm expenses, such subsidy to be paid direct to the farmers concerned. The Government and primary producers should cooperate in arranging for a guarantee of price for primary products based on a periodic moving average. The Government should take definite action for the improvement of daily herds and farming methods, and should formulate definite plans along modern lines for the development of primary and secondary industries with a view to establishing a more evenly-balanced industrial system within- New Zealand. There should be a complete reversal of the policy of deflation through wages and salary reductions, and credit, through existing banking machinery should be carefully used for the purpose of national reconstruction.

The Hon. E. A. Ransom (Minister of Lands) said the Labour Party had simply confused the issue by its impracticable suggestion of a guaranteed price for primary products. The only primary product to which it was at all possible to apply such a scheme was wheat, the bulk of which was consumed in;the Dominion.' The outcry throughout the Dominion against the sliding scale of duties on wheat was an indication of the exception that would be taken by the public in the event of the Government’s endeavouring to subsidise other products. He estimated that at least £20,000,000 a year would be required to furnish sufficient subsidies for farmers to enable the Government to guarantee them the same prices as they, had received in 1929. TIDING OVER THE PRESENT? . The Government’s view of the higher exchange rate, Mr. Ransom said, was that it would tide the country over the present difficulties so that farmers would still be on their holdings and able to take advantage of improved world conditions when such improvement * was effected as. a result of the world conferences to be held in the near future. Labour speakers had failed to mention the operation of the higher exchange rate in Australia, where, according to a Labour Prime Minister, it had been of material advantage.

Mr. Ransom asserted that in the last fortnight farmers’ credit had been enhanced to the extent of £10,000,000 as a result of the increase in the value of their exports. That money would be put into circulation and would accrue to the benefit of the whole Dominion. Wool that had been held for some time would be released and would be turned into money. Mr. Ransom declared it was not the intention of the Government to stand by and see the backbone of the country smashed, which would certainly happen if the primary producers were not given assistance. Mr. F. Jones (Lab., Dunedin S.), said the Government was opposed to guaranteed prices, but it was quite prepared to give a guarantee to the New Zealand banks. The big problem was the fall in the purchasing power of the mass of the people, and the raising of the exchange rate would not alleviate the position. Wages were still being reduced, and as a result the workers would not be able to buy as.much as they could previously. With decreased sales there would be reduced turnover, reduced staffs, and more unemployment. PARITY WITH COMPETITORS, Mr. C. H. Clinkard (Co., Rotorua) said he was prepared to accept his full share of responsibility for raising the exchange rate. It was highly desirable that New Zealand should be on a parity with its competitors, and he believed the fixation of exchange at a higher rate was the best method of making the adjustment. Mr. E. J. Howard (Lab., Christchurch S.) said any increase in income that would be received by sheep-farmers and others as a result of raising the exchange rate would have to be at the expense of the wage-earners, relief workers and others. He declared the policy had been dictated by the sheep-farmers and other producers. Mr. W. Downie Stewart stated his position in regard to the exchange question.

Mr. Walter Nash (Lab., Hutt) said that if the county was to provide bonuses for farmers and relief for workers without any endeavour to remedy the evil from Which it was suffering they could not expect to get anywhere. The high exchange policy was l not a new one as it had been advocated 18 months ago and if it had been adopted then it might have done s6me good.

Mr. Nash declared the Government’s

policy was not the Prime Minister’s policy. The Minister of Finance should be Prime Minister because the man who dictated the major policy of,the Government should lead it. It had been admitted that exchange would cost the country £2,050,000 and would mean a loss in customs revenue of over £1,000,000, and all that was to be borne to enable the farmers to pay their way, although only £640,000 was outstanding on State advances accounts at the end of March last. WORKERS WHO BORROWED. If that was to be done for the farmers something should be done for the workers who had borrowed from the State. Eighty per cent, of the money that would be raised by the higher exchange would never reach the farmer because it would go to the mortgagees. While Mr. Nash agreed that farmers should pay their interest if they could, it was grossly unfair that they should be able to do So at the expense of the workers and unemployed. Mr. A. D. McLeod (Co., Wairarapa), supporting the higher rate of exchange, said he was not concerned with the fate of individuals but with that of the community as a whole. He was satisfied the new rate would spread the load the farmers had been unsuccessfully attempting to -rry in recent years. Mr. F. Langstone (Lab., Waimarino) said the purchasing power of the mass of the people was to be reduced to provide assistance for the farmers. He contended that courageous use of the country’s credit would solve unemployment and all other economic problems. The debate was adjourned and the House rose at 11.27.