RIDING THE STORM

Evening Post, Volume CXIV, Issue 120, 17 November 1932, Page 12

RIDING THE STORM

ECONOMIC OUTLOOK

OUR POLICY APPROVED

(From "The Post's" Representative.) LONDON, 11th October.

Another leading article in the " Financial Times" is devoted to the eeonomie position in New Zealand.

''That New Zealand as well as Australia enjoys a firmly re-established reputation," says the writer of the article, "is sufficiently indicated by the price levels of its outstanding loans; The market -and tha. investing public alike are- pretty shrewd appraisers. More important therefore than an advance of 30 per cent, or over in many New Zealand stocks from their lowest points is the extent to which the gap which separates r their- level from., that of British. Government securities has been narrowed. It is impossible to draw an exact parallel, but to. take two four and a half per cents!, New Zealand 1944 stands around 104, while "British Conversion Loan"l94o-44 is about 111."

Thecwriter then explains the remedial measures adopted to improve the position 'in the Dominion: "While.the deficit persists," the writer continues, "New Zealand admittedly is not conforming to the strict canons of finance. At. the same time, the decision to allow the country a respite from further taxation, in order to encourage trade and hasten the recovery of which there are some few signs, must be read in conjunction with the fact that the Government is steadily bringing down its expenditure toward current income. It has been all too often demonstrated that taxation can become so oppressive as to diminish its own productivity. Revenue depends ultimately upon trade prosperity, and from, this point of view the improvement in the country's overseas trade position is encouraging.". He goes on to explain that an actual expansion of exports is helping to establish a favourable balance on a sound basis. •' This means more money for the local producer and a fillip to trade generally.

"That is a movement which should be hastened when the Ottawa agreements become operative. ■ These are intended primarily to foster trade within the Empire, and New Zealand, with, a- generally unfavourable balance with other Dominions at present, looks to obtain real benefit. The prospect should be brightened by the trade agreement previously entered into with Canada which terminated outstanding difficulties. The need for internal-ad-justment has not been overlooked. Measures taken for the express purpose of affording relief to the primary producers from some of their burdens will have the added effect of helping- to increase their competitive powers through a lowering of their overhead charges. Borrowing in the past for unproductive expenditure has helped to increase the weight of taxation, and the Government's decision to adhere as closely as practicable to the policy of carrying out only such works as will cover the interest charges they -involve is a wise one. With so much evidence to adduce in justification of the country's improved credit, it is not surprising to read that the New Zealand Government will tako the earliest opportunity of securing the conversion of £5,000,000 of bonds issued here last year which are costing it over 6 per cent."