No Taxation Reductions; Five Shilling Increase For Pensions

Chronicle (Levin), 19 August 1949, Page 6

No Taxation Reductions; Five Shilling Increase For Pensions

Ihe Financial Statement presented in the House last night by Ihe Minister , of Finance"3 (Rt. Hon. Walter Nash) was mainly devoted to.a'survey of the difficulties facing JSJew Zealand, in connnon with other sterling countries, arising f rom the dollar shortage. 4 No deerease in the taxation burden is to be given, and the only increases in benefits announced are in the pensions "groups where 5s is to be added to the weekly pay of sociai security pensioners.

• The increase wilT p-Rpiy to age, widdw^ invalids', miaets', siekness, and unemployment beneiifs, and where tho benefit inciudes a portion payable on account of a wife who is not qualified to receive a benefit in her own right lier portion will also be raised by 5s a weelt, froin £2 5s to £2 10S a week. Benelician.es under 20 years of aga and orphans will beneiit froni the increase of 5s weekly in the basie rate. Mothers7 allowances payable to widows will also be increased by 5s weekly. It is not propbsed to vary the preseut rates of universai superannuation oi family benefits. The estimated additional eost of tluv above increases for the current financial year is £1,800,000. Proposals for the present year include tlre introduction of an "ambulanee benefit," and also improvemeiits to the existing procedure in dealing with the ' ' general medical services. ' ' . General Buoyancy of Finances "The financial year that' has just passed has been one of general buoyancy and success, " said Mr Nash. "There has been a conifortable surplua in the Public Account. Econonuo activity is at a ievel higher than ever before, as is manifested by the state ot full employment, the reeord volume oj total production wliich is steadily increasing — liigh levels of wages and uational income — and capital developmeni which is proceeding at a rate conimen surate with other fields of eeonomic pro gress. Our standard of living, which is reflected in our records of health, edu 1 cation, and culture, is among the liigliest in the -world. While our community caunot sliow mauy examples oi ouperabuiidance of wealth in the hands; of single individuais, yet, ou the other hand, there is 110 poverty or want." " These satisi'actory conditions have resulted uiaiuly from our own elforts in the production of goods for our local ueeds and tor export. It should be remenibered, however, that New Zealand lias been among'' the fortunate minority of nations whose production facilitie.and property were not seriously damag ed by the direct elforts of war." xVfter dealing with the eil'ects of the war ou our economy, Mr Nash said: "it should be stressed, however, that a eontributory faetor in the present conditions of prosperity has been our abil ity to sell overseas, at profitable prices, a large proportion of our production. A sense of security, and faith in the continuance of the present satisi'actory conditions can be justified only by eareful fo.rethought, cqllective endeavour, and the will to work. Mr Nash paid a warm tribute to the generous and unseliish action of the United fitates in provlding by loans and otlier means approximately £1(1,000,000,000 to assist Europe, including Great Britain, to recover from the eft'ects of war. "The aid from the Europea'n recovery programme, " he said, "eannot of itseif solve the eeonomic problem of Western Europe. By severe restriction of imports, especially from hard curreney areas; by the expansion of production and exports; and by an increasing volume *of intra-Ekropean trade aud fiuancial payments, the beneiiciaries are striving to j)lay their part in the achievement of full reeovery. "It is now evident that this recovery eannot be eompletely attained by the end of 1952, as was originally hoped. With the prevailing eeonomic conditions, particularly in the United Btates, it has been incteasingly difficult to expand or maintain present exports to the hard-currency markets. "The difficulties wliich the United Kingdom is now experiencing have significant effects on the whole sterling area, of which New Zealand is a member. Dollar receipts from exports by sterling area countries have decreased to such an extent that the gap between reecipts and payments of dollars is now too great to be covered by E.R.P. payments. The deficit has fallen on the slender gold and dollar reserves of the sterling area, of which the United Kingdom is custodian. If the present rate of decline of these reserves continues, they will be exhausted within 12 months. "It is vital tliat this should not occur, for such a development would severely impede the functioning of the sterling area system, and the achievement of multilateral trade for the world as a whole would be clrastically retarded. "The drain ou the gold and eonvertiblo currency reserves of the sterling area niust l>e arrested. To ensure tho continuity of operation of the sterling area system, these reserves must bc built up. Urgency tlierefore dictates that sterling area countries must achieve an immediate .increase in eam ings from exports to dollar countries; uid that sterling area countries must •arefully review their imports from hard currency sources. " It is obvious that cutting down imports might fetard the achievement oi the longer range objective of a balance based on full employment and a high level of multilateral trade. It. was, tlierefore, strougly urged on liehalf 01 New Zealand that everything possibl.sliould be done to meet the immediate problem by increasing dollar earnings and where appropriato by borrowing dollars. "It will he generally agreed, that without interfering with essential food supplies to Great Britain, New Zealand could make a contribution to the doilai pool. I am confident that an appreciable proportion of our contribution can take the f orui of, inqreasefi ...dollar eamings. wipflsmw, wlJJ tlmrnfow be /•

en to increase exports to United. States and Canada and to ensure that we obtain the benefit in dollars from such exports. At present we are losing dollars through operations in New Zealand goods in free sterling markets by dealers in other countries. To the extent that we need to import essential req.uirements, particularly tor capital purposes, from Ganada and United States, consideration will be given to borrowing- dollars provided loans can be obtained on reaSonable terms and conditions. ' ' -Dollar Difficulties Summarised The Government is satisfied that re-' cessions in trade canilbt be avoided by purehasing less from any given couutry, said Mr Nash. The objective should be to sell more. Price adjustment can best be aclnev-_ ed by increasing efficiency rather than by curtailing costs by wage reductions. ■ The permanent solution of the pres- 1 ent problem can be achieved only by ; expanding demand and increasing ' multilateral international trade. Raising of loans in the surplus coun- : tries for produetive purposes is the best method of overcoming the immediate difficulty. • " • • Loans should be made available on reasonable terms to the buying countries by the surplus countries. The Government has instituted inquiries as to the availability on reasonable terms and conditions of loaiis from Cajiada and the United States. The immediate and long term solu tion is the expansion of production and of exports to Canada, to the United States, and to other dollar countries. and the raising of loans to meet tiic present deficit between exports to aud imports from those countries.