MR. NASH CALLS FOR GREATER WORK

Chronicle (Levin), 22 August 1947, Page 6

MR. NASH CALLS FOR GREATER WORK

Dull, Dreary, Disappointing, Says Mr. Holland No major taxation relief was provided in. the Budget which the Minister of Finance, Hon. W. Nash, presented in the House of Representatives last night. Details were given of the reduction in subsidies but the amonnt still to be paid, £13,420,000, is not very much less than the amount paid out last year, £14,503,377. Mr. Nash explained that but for the steps taken the figure this year wonld have risen to £19,600,000. He added that as there is now virtually no unemployment in New Zealand, but on the contrary about 33,000 vacant jobs, greater production which was the only way to better the standard of living, can be attained only by making better use of our available resources, and above all by increased output per unlt of labour whether it is in the mines, on the farms, in the factories, on the wharves, in transportation, or in the offices. "Ways and means must be found, and found quickly, of galvanising our people into greater activity," he said. "A better understanding of the real position and a realisation that in general every worker's standard « of living is determined by his own output would-, I feel sure, be helpful and this could best be emphasised by some system of incentive payments, that is, payment by results. Whatever method, or combination of methods is in fact adopted, must have the objective of increased output per worker, which I would again stress is the only way in present circumstances of maintaining our own standard of living."

"Our standard of living depends ■ upori the ipiantity of goods and serviees available for eonsuniption, " he said 'Adequate purchasing power is required to enable the people to obtain goods, but at present it is ciear thur l>urehasing power is execssive, relative to the available supply of goods. Oi this point it is interesting to note that between 1988-39 and 194:f5-17, totai wage and salarv payments, when coj rected tc show -''real" earnings aftci allowing for changes in the eost of living, increased as follow: 37 per cent,. in Ihe Uuited Kingdom, 41 per cent. m Australia, 45 per cent. in New Zealand. In the circumstances, it is the- quantity or volume of production that is the vital facfor. .Statistics show that while there has been a substantial increase in Droduction in recent years there has been a falling-oi? in volume. "While production is now slightJy above that for 1988-39, it has falleu over the last few years, and this applie.- i particularly to factory production, the I indtx figures for which were 1-9 for j 1948-44 and only 111 (estimated) for 1 94(i-47. llxports have generaliy been maintained and imports have increased but, as everyoue is awarc, they havt beeu well down throughout the war,, and for 1915-4(3 they were only about three-quarters of the volume of 1938-39. fhe consequence is that in the aggrcgate, goods available for consump tion in New Zealand during 1945-fti were only 89 per cent. of what was available in 1938-39, and on a per liead of population basis the percentage is only 88 per cent. This means that on the average each person could obtain only about four-lifths of the goods available to hini oi: her in 1938-39. Whatever might be doue in the way of inci'easing ironey incomes cannot alter tliat fact, which is the real measure of our general standard of living." THE ONLY TAX RELIEF The ouJy tax relief reduction is a measure of relief to persons on sinai l incomes. This is in respect of the 38 1-8 per cent. super-tax on unearned income in ca:-es where a person 's totai .taxable incume (that is income aftcr deducting personal aliowance of S-'lr) and the other special exemptions for wife, children, and insurancc premiumo to which the Laxpayer may be entitled; does not exceed £9UU. Where the taxable incouie exceeds £900, but does not exceed £400, the maximum amount of unearned income exempt from the 88 1-3 per cent. super-tax will be £900 reduced by £1 for every £1 by which the taxable income exceeds £900, so as to leave no exemption frjm the 83 .1-3 per cent. unearned super-tax in cases where the totai taxable income exceeds £400. SUBSIDIES REDTJCED {lt is no w clear, " said ALr. Nash, 'that a great deal of the costs met by subsidv is not a passing phase, nnd it is considered that, as part of the postwar readjustment, the time has come to .make a move towarus normal peacetime procedures by witlidrawing or reducing some of the subsidies. Furthermore, with heavy subsidies, prices are so fur separuted from real values based ou •ost that mauy, and ofte'n absurd, inomalies exist in the price structure. "It should be clearly undcrstood that uaking these adjustments does not in my way mean that the Uovernment is ibandoning its stabilisation policy which has served this country weil .-iiice it was iirst iiitroduced in tlic emergen''y conditions of 1949. A ipecial wartime prices in.dex was estab lished covering a wide range of es-. sential cust of living goods and services I the prices of wliich, as a group, wero to be kept stabilised. This has been •iccomplished, but, because of rising overseas prices and upward movemenrs in wages and other internal factors, the cost in subsidies has been heavy. For last linancial year the expenditure on subsidies, including both consumer ami farni cost subsidies, amounted to £14,500,000. But for the adjustments now being inade it is estimated that the ligure for this year would have risen lo £19,000,000. Subsidies of this magnitude are a severe straiu on the public fmances. "The time of witlidrawal will vary for different products, having regard to seasonal factors, rationing periods, anri when the necessary adnhnistrative ' arrangements can be^ niade for review of prices. In the meantime subsidies vvill coiitinue on the present basis aua any alteration in prices will be subject to the issue of the necessary orders by the Price Tribunal. "Even though the cost of subsidies .his year for bread, butter and tnilk will amount to about £8, (500, 000, the Govennnent has decided to coiitinue hohiing tlie prices of these commodities at the present levels. The e.xisti r:g subsidv on eggs will be cont iimed. On the other hand, subsidies i.n fresn . fruits meat and Imcon, oatmeal, sugai I tind importod rau toaf tobacco uili Uo

• disconrinued. "The price of tea in overseas mar xets has risen substantially during recent months. , in part at least tlu higher cost is lilcely to continue, as it irises from higher wages paid to em ployees in the tea plantations. Lt ha^ i.ccordingly been determined to meei part of the increased cost by ndditioii.it subsidv and take the remainder inl.t account in iixing retail prices. "Coal is sueh a basie commoditv that it has been decided to continue produc tion subsidies on the present basis ru; to adjnst prices where that is nece^-'ay, lo meet any further increases in .-osrs A suitable opportunity will be takou to bring coal prices into propcr rda tionship and grade with one another. INOREASE IN RAILWAY CHARGES "During last linancial year subsidv to the amount of £994,000 was paid to meet the operating loss incurred by tlie llaihvays. For this year it was estimated that if no other action had been taken the subsidy would have risen to £1,800,000. If £3,000,000 for interest is added the cost to the taxpayer for the railways would have amounted to £4,800,000. Railway fares and freights have not been altered since 1938 and since then operating costs have increased by 45 per cent. " A new schedule of fares and freights will shortly be issued increasing fares (other than for suburhan tickets) by 15 psr cent. and freight rates generaliy by 20 per cent. Over ,3, full year's operations these changes will, it is estimated, raise Railway revenue sufficiently to cover operating costs, but will provide little towards interest on capital. FARM SUBSIDIES TO GO "With one or two exceptions where special factors arc jnvolved, it is alsd intended to eliminate subsidies on raaterials and coiumoditios associated with primary production. If .present arrangements had continued it is estimated that expenditure on, this class of subsidv, apart from any further increase in wage costs, would have amounted to £15,450,000 of which about £4,400,000 would have been recoveYable during this and next linancial years from the Dairy and Meat Industrv Stabilisation Accounts. To the extent that subsidies are recoverable from these accounts, the cancellation of the subsidies and a componsatorv increase in pavinents to the farmer will not involve altering the aggregate charges against these accounts, nor adversely alTect the dairy or sheep farmer. Subsidies 011 fertilisers is by far the largest item concerned. To obviate any injustice it is proposcd that orders for fertilisers 011 account of last year's ration which are still undelivcred at the time the change is made, because of transport difficulties will be supplicd at the old subsidised price. The whole procedure has been agreed in prineiple with representatives of the major export industries.