8.—6.

which has clone good work in checking avoidable increases in retail prices. Increases in the cost of articles imported from overseas are beyond our control, but the Government are considering ways and means of stabilizing within reasonable limits the cost of the principal essential commodities that enter into the day-to-day livingcosts of the average citizen. It is a very thorny problem, and different methods will probably have to be adopted for different commodities. Payment of subsidies is one method that has already been used to stabilize the prices of bread (£288,000), sugar (£240,000), and coal (£200,000) making an aggregate annual cost of £728,000. The objective we have in mind is protection of the standard of living of the rank and file of the people by stabilizing retail prices of essential commodities as well as wages. It might appear that the objective could be achieved much more easily by offsetting price-rises with cost-of-living bonuses or wage-increases, but that provides no solution at a time when goods for consumption are in short supply. Short supply of consumption goods is inevitable while the whole British Commonwealth of Nations is making a gigantic war effort involving the loss to industry of millions of men and the call upon industry for enormous quantities of supplies to equip and maintain our armed forces. An illustration of the effect on New Zealand is provided by an analysis of the import figures. During the calendar years 1938 and 1939 the value of consumers' goods imported was £14-8 millions and £10-9 millions respectively, while the value of producers' imported goods remained practically stationary, and when the analysis of 1940 imports becomes available 1 have no doubt the downward trend in consumers' goods will be found to have continued. I would also draw particular attention to the table which appears in the appendix to this statement showing the satisfactory growth during recent years in farm and factory production and showing also that since the outbreak of war the reduction in goods available for consumption is due solely to the reduction in imported goods. The cheerful and resolute manner in which the people of the United Kingdom have accepted drastic curtailment of their consumption of many classes of commodities excites our admiration, and I have no doubt that our people also will willingly do without things that might stand in the way of our part in the war effort. The average citizen, perhaps, does not realize the extent to which he can help the war effort and at the same time assist in maintaining stable prices by curtailing his consumption of goods, and particularly imported goods or goods made from imported materials, that he can reasonably do without. His saving in such goods consumed can be made available for the war effort by paying the money into a National Savings Account or by using it to buy Bonds or other war loan securities. Accumulation of small savings by the mass of the people is of the greatest importance at a time when commodities are in short supply. That the efforts of the Government to keep retail prices steady have been reasonably successful is shown by the fact that since the outbreak of war the retailprice index in New Zealand has shown an increase of 6| per cent, only, compared with 8-|- per cent, in Australia and 27| per cent, in the United Kingdom. PUBLIC ACCOUNTS. Let tis now consider the position of the public accounts for the current financial year. To appreciate the picture fully, three separate budgets must be examined— namely, the Consolidated Fund, wherein are recorded the main taxation receipts and out of which the administration expenses of the Government are met; the Social Security Fund ; and the War Expenses Account. These three budgets, while separated for clarity of accounting, are all interdependent. The War Expenses Account is now the most important of these budgets not only on account of the fact that in this account is reflected our financial contribution to the war, but because the total amounts involved eclipse the other two accounts put together. In logical sequence, however, it is necessary to consider the Consolidated Fund first.

National savings.

Public Accounts.

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