ECONOMIC STABILITY

Wanganui Chronicle, Volume 86, Issue 296, 16 December 1942, Page 3

ECONOMIC STABILITY

GOVERNMENT PROPOSALS OUTLINED BY PRIME MINISTER The economic stabilisation policy of the War Cabinet was launched last night, a statement outlining the proposals and reasons therefor being broadcast by the Prime Minister, the Rt. Hon. P. Fraser. “Seven years ago the Government of this country pledged itself to the ideal of social security, to the ideal of a society in which the fear of poverty should be banished from every home,” said Mr. Fraser. “That ideal is well on the way to being realised. Under our social security legislation the destitution which used to come with sickness, unemployment, and widowhood is a thing of the past. “And lately we have become conscious that we are not marching alone along this road. The ideal of social security is accepted in Great Britain and the United States and has, indeed, passed into the post-war programme of the United Nations. “Now social security implies something much more than a system of money benefits for people who have suffered unemploy-1 incut or some, other economic misfolrtune. It implies an order of.’ I society in which every citizen—wage-earner, trader, professional man, or pensioner—is safeguarded against economic fluctuations.

“It is rny plain duty to tell youj to-night that social security in this wider sense of the term is in danger. .It is not in danger because it is opposed by any large part of the community, for I think I can now say that social security has become a national policy. It is in danger because the impact of war has let loose forces which, if they are not firmly checked, will throw our economic system into disorder,’’ he continued. “It should be unnecessary for me to tell you that if social security is not built on a stable currency it is built on sand. If the wage-earner is not sure that his wages will buy approximately the same amount of goods a month or a year hence as they buy to-day, there is no real social security. “The Social Security Act and the minimum wage are only one side of social security in this country. The other side is the measures we have taken, particularly since the outbreak of war, to control the cost of living. Let me remind you of some of thosw measures. In September, 1939, all prices were brought under control through the Price Tribunal. In September, 1941, 38 of the more important commodities entering into the cost of living were stabilised. Meat, bread, and butter, for instance, have not increased in price since the beginning of the war. But perhaps the most important factor in controlling our cost of living has been control of farm prices. “The Government soon saw that these measures ought to he crystallised into a pian and in September, J 940, referred the whole matter to the most representative conference of economic interests ever held in this country. This economic stabilisation conference; unanimously urged the Government ‘to stabilises prices, wages and costs so that the cost of the war is not thrown unfairly on one group to the benefit of another.’ “The Government made this pro posal its policy and appointed a committee to carry on the work thus begun. The present stabilisation plan has emerged from this committee’s day-to-day grappling with the practical problems involved. “So far, the result of this work is one of which we can be proud. In no country now at war has there been less economic dislocation through changes in the value of money. "But the Government has for some months been anxiously aware that its control measures are no longer adequate. Pressure by economic interests for increases in the prices of their products is becoming more and more insistent. Hitherto manufacturers and traders have been absorbing much of the increase in their costs, but their profit margins are narrowing and the process cannot go on much longer. Effective price control is becoming difficult; and already the phenomenon of the ‘black market,’ with all its demoralising consequences, has begun to appear. Inflation Threat. “Why are these things happening? The answer is simple. Our people are working harder and earning more money, but the supply of things they < aii buy is not increasing. It is growing less because of the inexorable needs of war. Since 1939 the national income has increased by about £50,000,000, but the supply of goods people can buy has decreased by moreIlian £40,000,000. That is, the gap between the supply of goods and purcnasing power is of the order of £100,000,000. This excess of purchasing power has begun to swamp our price controls. The inescapable alternatives before the Government are to turn off the stream at its source or to let events take their course—and the course would be inflation and the destruction of all that we have attained in the way of social security. For inflation means economic insecurity for everyone except the small minority of wealthy persons who have the means to make profits out of any monetary upheaval. The duty of the Government is plain and it will not flinch. “We are going to do two things, each of which will depend for its success on the other. We are going to extend the policy of stabilising the prices of a large group of the essentials of living and we are going to stabilise individual rates of pay. You will recall that, in addition Io the general measures that were brought into force on the very night war was declared to restrain any undue rise in prices, there have been a number of commodities and services which have been fixed in price. There are at present 38 of them and by various means their prices have been kept fixed. The only exception was that a iise of 2d was allowed in the price of eggs. Now the list of stabilised commodities is to be greatly increased. There will be 110 items in all and the purpose of the Government—indeed tnc determination of the Government —is that the prices of these, taken as a whole, shall remain stable. If there are any variations—and we shall do our utmost to prevent any—then a rise in one will be offset by a fall in another. The whole purpose of this is to ensure that over this range of commodities and services, and they are alt very important in every family, the pound will buy the same next month and the same next December as this December. I will not read the lull list of commodities that will nowise covered, but it includes a wide range of groceries, dairy products, meat, seme fresh fruit and vegetables, fuel and lighting, clothing, footwear, drapery, furniture and a large num- : her of miscellaneous articles which a’l of use have to buy. I think that 1

vhen you see the list you will agree hat it is surprisingly large and comirehensiye. There are no luxuries in t, but it is not the business of our government to make it easier for people to buy luxuries in wartime. “Black Market” Penalties. “We are also taking care to ensure that the purpose of the plan is not frustrated by ‘profiteering and ‘black marketing.’ The penalties for these offences have been made very severe, with minimum fines as well as maximum for both individuals and companies, and provision for imprisonment as well as lines and confiscation of the goods concerned. “The great majority of those commodities which will be fixed in price ire made in New Zealand. They are produced with the skill and labour of New Zealand workers using New Zeaar.d materials, power and transport. Fhe cost of labour and materials, and ilso the rents of business premises 3 nd land, determine prices, therefore .vhen we wish to keep the prices fixed .ve cannot do it without fixing within narrow limits the price of labour, ..inch is wages, and also the level of .'cuts. The one cannot be kept stable f the other is unstable. Therefore ac must stabilise wages and rents. Chis is the main part of the decision )f the War Cabinet which I am announcing to-night There will be detailed explanations published in the newspapers to-morrow by the Hon. D. 3. Sullivan, the Minister in Charge nf Stabilisation. My purpose is to tell ,'oi; the nature of the decisions and ,o explain their importance. “You may be thinking why should vages be stabilised? Isn't everybody n this Yes, everybody is in this. Stabilisation applies to all rates ol remuneration, including time and '.’tee wages and overtime, allowances, oes, commissions, travelling expenses ind directors’ fees. Not only wages ind salaries but all incomes have been dp are to be stabilised by one means Dr another. The price the farmer receives for all the main farm products, many of them stabilised now, will not dg increased. This means in effect nternal prices divorced from export parity and any excess will be paid into pool accounts. The major items oi farmers’ costs will correspondingly be leld and the cost of holding them will be debited to the appropriate accounts. The incomes of companies ind individuals are held down hrough the combined operation of income tax, excess profits tax and price orders. No classes of persons are able :o say truly that the war measures Df the Government leave them uncouched and no classes of persons should be able to say it. “But, you may ask, why is all this lecessary now? Why cannot we go did doing without it? The reasons are ill round you. We have a small country making a great war effort. Phis is acknowledged by everybody. “We are making a great effort/for he war, militarily and economically, v’ast supplies of commodities are reluired for the armed services. We .herefore have less with which to proide for ourselves. There is no escape rom that; but what we can do is to ensure that what we have left altev var requirements have been met is equitably distributed; that, labour and naterials are used, first of all to proluce essentials, and that nobody goes short of those essentials. That is the >urpose, and the sole purpose of the neasures I have announced. They are vartime measures, made necessary by he war and essential if we are to •ontinue to play our full part in the var. Interdependent Measures. “I wish to stress again the interlependence of these two measures. IL vill not be possible to hold down the irices of essentials in the shops unless ents and incomes ot all kinds, includng wages, are held down, 100. It vould not be possible, and if it were jossible it would not be fair, for the >bject, let me say again, is to lix the Durchasing power ol the pound insofar .s it is spent on buying essentials. The jlan might be called a collective bargain which the community is to make vith itself. If the prices don't risehen wages will not. If prices of essentials rise, then wages must rise ilso. The two are to be tied together. .1, therelore, there is a marked flucuation in prices after a period oi hree months, provision has been nade to offset it. In general, what las been decided is that, if the avertge prices of the whole group of essentials rises by more than ier cent., then the Arbitration Court vill issue a general order raising or owenng wages. After that there will be no adjustment of wages up •>r down unless prices rise or fall by more than 5 per cent. The farmer will be treated in the same way. In the event of a general Drder affecting other forms of renuneration, the farmer also will receive an adjustment in his price. But. the whole purpose of the plan is to avoid any such marked fluctuation and the Government is confident that t vith your co-operation and goodwill it can be avoided. “The success of this great enterprise—for it is a great enterprise —- lepends on all of us pulling together. It would be quite easy to obstruct it. It would be quite easy for any section of the people to decide selfishly or blindly that they should have special treatment, that the plan might be good enough for the community, sound enough in principle, but wouldn’t suit them. What .vou’d b n the effect of that? The effect would be and could only be that the attempt to stabilise prices for all would fail. Everybody would suffer for the selfishness or blindness of a few. That would be the position, and if this is clearly understood by all. as I hope it will be. then we shall have no such miserable sabotage of the collective effort. Looking Forward. “In conclusion, I would say this: rhe War Cabinet and the Government are in this matter looking forward. Fhey are looking to the end of the

war and beyond it. All of you are doing the same. There is no single - one among us who does not think, ' and think often, of New Zealand o after the war. What kind of country • do we want it to be? What kind of © New Zealand do we want our soldiers, ® sailors and airmen to come back to? o First of all, we want it to be a New • Zealand unsullied by enemy hands— • that is the first purpose oi’ our war ® effort and it will continue to be until 9 the end of the war. That is why our e men fight abroad. That is why other • men, and women too. stand ready in • New Zealand. That is our first objec- o live. “Our men abroad are doing their • part how well they are doing it you ® know—and to the best of our ability & the people of New Zealand are sup- e porting them. But it is not enough to © ensure the safety of this country from ® the enemy. We must also preserve its © economic stability. What, a poor re- • ward it would be if our men. return- ° ing eagerly to New Zealand after ® their war service, found their home- 0 land economically deranged; if they o found that, through our failure to © pull together, our failure to do what ® we expect them to do every day, their a wives and families, their nex'-of-kin, o were suffering all the hardship and a deprivations that come about in- ° evitably first, through an uncontrolled e rise in prices and then through c economic collapse and depression. « They could say truly that ’ we had let them down. Thev could say that they had incomparably the s I harder part and had done it - and we 4 had the easier part and had failed. * “This shall not happen. So far we < have averted all serious danger of its 1 happening. Now we must do more. ] Th? war effort is not. going to be ] easier because the United Nations 4 have lately won great successes. It < is. going to be harder. The necessity ] for sacrifice is not going to grow less. It is going to increase. But sacrifices can and will be borne if they are equitably distributed and shared. The measures I have outlined impose s.DcriJices of some kind on everyone with a definite object in view, rn oh- i ject which all of us desire and which < all of us can reach, if we pull to- ( getter! “Let me say in conclusion that it is < not in this country alone that drastic : measures of economic .stabilisation are being found necessary 1o avert inflation. President Roosevelt has already said bluntly to the American people: ‘You will have to forego higher wages for the duration of the war.' In Canada also there is now a ceiling on wages, salaries, and profits. And I could not finish better than by repealing to you some words used by President Roosevelt when he presented his stabilisation programme to the Corgress of the United States: ‘Next to a military and naval victory, a victory along this economic front is of paramount importance. Without it our wai piocmctinn programme will be hindered. Without it we would be allowing our young men, now risking their lives in the air, on land, and on the jea, to return to an economic mess of our own making.’ ” RENTS AND REMUNERATION SUMMARY Ol REGULATIONS. (P.A.) Wellington, Dec. 15. A special Gazette issued to-night contains emergency regulations concerning economic stabilisation which was the subject of the Prime Minister’s statement. The Minister of Industries and Commerce is charged with the general administration of the regulations. An Economic Stabilisation Commission is to be appointed by the Minister, and to have the powers of a Commission of Enquiry. A Director of Stabilisation will be appointed as the chief executive ofiicer. Stabilisation of Rents. This part, of the regulations binds the Crown. It covers ail business and farming rents, i.e. all types of real property other than those at present included in the Fair Rents Act and its amendments. New bodies to be called Rents Commissions are to be set up, and the Courts may refer rent applications to them for investigation. Commissions will be authorised to act both under the Fair R.ents Act and under these regulations. The regulations prohibit the charging of any rent in excess of the rent payable on September 1, 1942 unless a fair rent has been fixed, in which case it is an offence to charge more than the fair rent.. If a property was not let on September 1, 1942, then the basic rent, will be the rent last payable before that date, and in the case of a property first let after September 1, 1942, the basic rent is the rent first payable. Any amount in excess of the basic rent or fair rent that has been paid may be recovered within a period of six months or may within the same period be deducted from rent accruing. Jurisdiction is given to the Magistrate’s Court where the rent is £lO per week or less, or where the parties agree to accept the determination ot the magistrate. All other applications are to be made to the Supreme Court. Either the landlord or the tenant may at any time apply to have the fair rent fixed, and the landlord may apply even though the property is not then occupied. If the Court fixes a fair rent lower than the basic rent payable on September 1, 1942, the landlord must reduce the rent, and if the fair rent is fixed higher than the nasic rent the landlord may increase the rent. In dealing with applications for a fair rent to be fixed, the Court will disregard the particular circumstances of the landlord and tenant, and a iso any increase in values since September 1, 1939, but will take into account the general purpose of stabilisation, any improvements made to the property and any other relevant matters. It will be an offence for any person Io demand or accpet a. permium from a tenant, in consideration of granting them a tenancy or renewal of tenancy, and it will also be an offence for any outsider to demand or accept a premium for obtaining a tenancy for another person. A charge for chattels included in fhe tenancy of a property in excess of their fair value is also an offence. IL will not be possible for a tenant Io contract, out of the regulations, but if landlord and tenant agree in writing as to the rent of any property and that agreement is approved by a Rents Commission that figure becomes the fair rent. Immediately after the commencerff.ent of these regulations every landlord of any type of properly, whether a dwelling or a business or farming lease, must keep a register giving a description of the premises, the name of the tenant, the dates when the tenancy commences and terminates, the rent payable and any alterations made to it. the basic rent of the property. and any fair rent that may have been fixed. The register is to be produced for the inspection of any authorised person or a tenant upon demand. Stabilisation of Rates of Reni u neration. Remuneration for the purposes of the regulations includes time and piece wages and overtime, and bonus and other special payments,, and also includes allowances, fees or commissions and every other emolument whether paid in money or not. travelling expenses and directors’ fees. The basic rate of remuneration is the rate actually being paid for any particular position or employment at the date of the regulations. If the position happens to be vacant, on that date the basic rate is the rate last

paid, and where the position or employment is new the basic rate is the rate payable for a similar position or employment, either in the employer's own firm or in another firm. Where the basic rate is ascertained on the basis of a. similar position notice must be given to the Conciliation Commissioner, who may decide the maximum rate that may be paid. ' Any amount paid during the previous year by way of bonus may be included as part of the remuneration. If there has been an increase in any rate of remuneration between November 15, 1942 and the date of the regulations, the Arbitration Court may make an order reducing the basic rate to that paid on November 15, 1942. It will be an offence for any employer to pay or for any emplowe to accept a higher rate of remuneration than the basic rate after the commencement of the regulations. Exceptions to this rule will be:— (a) Where a higher rate may be prescribed by an award, an apprenticeship order or industrial agreement, made in •conformity with the regulations, subject to any general order for an increase or reduction in wages. (b) Any higher rate fixed by a contract or classification scheme made before the date of the regulations. (c) Any higher rate approved by a Conciliation Commissioner. The Conciliation Commissioner may approve on the grounds of additional work or additional risk to life or health being involved, or where it is necessary to remove an anomaly. If a general order is made alter the 1 date ot the regulations increasing the rates payable under awards, the basic rate for every type of remuneration will be increased by an appropriate amount. Appeals from any decision of a Conciliation Commissioner may be made to the Court of Arbitration within 21 days. During the period of the war no variation will be made in the minimum rates of remuneration or the principal conditions of employment uiiler any award, industrial agreement or apprenticeship order, except such adjustment of anomalies as the Court thinks fit, having regard to the general purpose of economic stabilisation. The Minister will cause a new wartime prices index to be established in order to record from December 15, 1942, any increases or reductions in the prices of the range of commodities and services included in the index. The Government Statistician will publish at the end of every quarter a statement showing any movement in the index. If an increase of not less than 2i per cent, is shown in the index the Arbitration Court, will make a general order, and thereafter a general order will be made as soon as there is an incease or reduction of 5 per cent, in the index.