GOVERNMENT GRAVELY CONCERNED ABOUT RISE IN COST OF LIVING

Wanganui Chronicle, 17 October 1950, Page 7

GOVERNMENT GRAVELY CONCERNED ABOUT RISE IN COST OF LIVING

The question of subsidies was close* ly bound up with that of the cost of living, a factor which was hard to control and //hich was giving the Government, a great deal of concern, I Mr. W. B. Tennent, M.P. for Palmerston North, told a large meeting of members of the women’s section of the Wanganui branch of the National party yesterday. Mr. Tennent .zid living costs had admittedly risen since the new Government took office, but they had been rising since Labour went into power and were still rising when Labour went out. “We knew this and we knew that there had been a tremendous amount of Reserve Bank credit pumped into circulation, causing great inflation, but we did not know that more than £80,000,000 had come from this source,” Mr. Tennent stated. “We knew that we had a tremendous task ahead of us, but 1 don’t think any oe us thought that for nine months we would be compelled to make decisions which would result in such unpleasant temporary consequences.” On top of the increasing cost of living, the new Government had to face the position that only a short time before it was elected sterling had been devalued and the effects were just beginning to be felt. The devaluation meant an increase of 44 per cent, in the cost of goods imported from hard currency areas. The Labour Government had done nothing to anticipate or cushion the effects of devaluation.

The new Government had found that all the trading departments were losing heavily and that the Labour works policy for the next seven years was going to cost £250,000,000 more than could be met by 'he normal method of loan finance. The structure of i/üblic expenditure was ready to collapse at any time and the new Government had had immediately to set about reducing the gap between expenditure and revenue. More criticism had been levelled at the Government over the removal of subsidies than over anything else it had done, but the Opposition did not remember to tell the people about the subsidies that *;ere removed by Labour in 1947, nor did they recall that Mr. Nash, at that time, explained that subsidies gave rise to serious anomalies in the price structure. The new Government had removed exactly the same amount of subsidies, Mr. Tennent said.

Mr. Tennent stressed that the Arbitration Court's cost-of-living award was an interim order only and that when the Court considered there was sufficient evidence available to provide a basis for conclusions it would make a permanent order. The Court had assessed the increase in the cost-of-living at four per cent., but the order covered a five per cent, increase. REVIEW OF ACHIEVEMENT Summaris'ng the National Govern*’ ment’s achievements in its 10 months of office, at the end of his address, Mr. Tonne it . ,tu the following items:— Taxation had been reduced. The rate of income tax had been lowered. The 33 1-3 per cent, penalty on unearned income—approximately £500,000—had been cut out. Sales tax had been reduced by a total of £400,000. Land tax had been reduced, releasing 25,000 people for paying the tax and filling in forms. The Budget had been balanced without printing any money. The allowable income for age beneficiaries and invalids had been increased by 50 per cent. "The Labour people say they would have done it, but they had 14 years to do it, and they did not." People of 65 and over had been exempted from taxation on incomes of £3OO instead of £2OO. Domestic workers had been permitted to earn £3 a week without age benefit being affected—an effort to help mothers to get assistance in their homes. The allowable income of beneficiaries at the age of 65 had been Increased by 12s 6d a week, and Social Security had been improved for superannuitants.

Defence funds had been built up. Trade had been balanced, even though a deficit of £14,000,000 was predicted for this year. Dollar trade had been balanced in contrast with the deficits of 43,000,000 dollars and 52,000,000 dollars in 1948 and 1949. This year £44,500,000 was being spent on works, as against £38,800,000 last year. A loan of £21,000,000 had been successfully floated with 14,000 subscribers as against 3000 subscribers to the last Labour loan. Most of the trading departments had been placed on a sound financial basis. Import control had been lifted from 326 lines—more than a third of total imports. The value of imports had been raised by £31,00,0,000. Rationing of butter, cream and petrol had been abo'/ished. Honest property transactions had been made p<Zssible by the removal of land sales control from town properties. The compulsory acquisition of land had bes»n almost abolished. Shopping sites and competition had been provided in State housing areas. Building restrictions had been relaxed, a generous scheme to encourage home building mtroduced, and a scheme for the sale of State houses devised.

Expansion of hydro - electric generating capacity had been carried forward at Waitaki and on the Waikgto. Debt services amounting to £1,000,000 had been paid, and £6,650,000 had been found for defence and the Korean war. Expenditure on education had been raised b'y £1340000; on housir/g by £1,900,000. and on Social Security and hospitals by ±4400,000. y ’ President of the Wanganui womens section, Miss Elaine Newton presided over the meeting and the president of the Wn/.ganui branch of the National Party, Mr. S. J. Sullivan, thanked Mr. Tennent for his address.