MR. KEARINS URGES REINTRODUCTION OF THE SUBSIDY SYSTEM

Wanganui Chronicle, 15 September 1950, Page 6

MR. KEARINS URGES REINTRODUCTION OF THE SUBSIDY SYSTEM

PARLIAMENT BLDGS., Last Nighl (PA).—Speaking in the debate on the Budget in the House of Representatives today Mr Kearins (Opp.. Waimarino* urged the reintroduction of the subsidy system and rises in wages io cope with inflation. Mr Kearins said farmers would realise very shortly that there would be a big cut in high wool prices, and the cut would be made by the present Government. But if wool was To receive a knock what would be the position of those who had invested in stock at high prices? The Budget was nol in line with the National Party’s election pledges. There had been a terrific increase in the cost of living tor lower income groups and there had been an enormous increase in the incomes of some sections of 'the community—exporters, importers, and mercantile firms. The sheepfarmer was in no way worried about the cost of living, so long as the present high pricese for wool were maintained, and he would not worry about paying £5O for a suit. But there was need to worry about those on lower incomes. The national income would increase by another £60,000,000 to £7O 000,000 this coming year, but when Labour was returned to power again it. would fight for a proper distribution of the national income. He appealed to the Minister, who had a determining say, to see that farm labourers and shearers received ’their fair share of the higher prices that were ruling for farm products. He feared that the increase in the national income would go mostly to exporters and those dependent on them.

Mr Shoat (Govt., Palea): That is the whole country. Mr Kearins: So long as it is distributed fairly over the whole country T don’t mind if the national income goes up by £500.000 000 this year. Mr Kearins that Mr Holland and Mr Holyoake had both admitted they were worried about ’the effects of high wool prices, and so must every intelligent person be* What was worrying the Government, was the tremendous inflationary effect, wool prices would have if there were not a reasonable redistribution of the national income. Putting an exoort tax of 20 per cent on wool would not do it; nor would putting 10 per cent of the wool price into a new pool account get us anywhere. He was afraid that was the limit of the Government’s economic pc. 1 icy. Mr Sheat: What, would the honourable member do? Mr Kearins: I will tell you, and T think my opinion will be endorsed by every member on this side. Mr Kearins then decided, however, to give his opinion on this matter at 7.fto tonight. INFLATION The country was already in the grip of “galloping inflation” and drastic measures would have to be taken to prevent disaster, said Mr Kearins, resuming the debate at 7.30. The cause of inflation was high export prices and the high price wool was fetching. Mr Kearins said that Australia was “torn asunder” trying to devise ways and means of overcoming economic trouble "that lay ahead. The Commonwealth had given consideration to altering the exchange rate, putting an export levy of 20 per cent on wool and taking another 10 per cent for wool pool purposes; but that would not benefit those in the lower Income group.

“The Prime Minister will be forced to fall into line with the Australian proposal, whether he likes it or not ” said Mr Kearins, but in his opinion not one of those proposals would bring about an equitable distribution of the national income.

“The Government is faced with doing something about it and the people are very apprehensive of the policy it might adopt.” he said. Alteration of the exchange ra'te was a standard procedure in capitalist economy, but to him the fairest way of all, to en-

sure that essentials became available 'to every home at. fair prices, was the restoration of the subsidy system. It remained io be seen whether the Government would take that step, even at. the risk of losing its prestige. However, restoring subsidies would not. be sufficient, so grave was the . position. It would also be necessary for the Government 'to bring about an immediate rise in the wages and salaries of those in the lower income group. He hoped the Government would retract its steps. It it. did not it would be forced later on to take far more drastic measures.