FRIENDLY ADVICE

Evening Post, Volume CXXVI, Issue 153, 2 December 1938, Page 10

FRIENDLY ADVICE

Some resentment has been expressed by the Prime Minister when critics, both in New Zealand and abroad, have pointed to dangers likely to arise from the policy which the Government is pursuing. Warnings, issued . with the best of intentions, have been regarded as impertinent and as an unwarranted interference in New Zealand's own affairs. Now the official voice of the English Labour movement, the "Daily Herald," which has adopted a friendly attitude to the Labour Party in New Zealand, and has presented Labour's case in the most favourable light, has seen fit to suggest that the time has arrived to moderate momentarily the New Zealand Government's expansionist policy as one way of meeting an admittedly difficult economic situation. Mr. Savage is unlikely to dismiss the advice as impertinent or as an attempt to embarrass the Government which he leads. Actually the "Daily Herald" is giving expression, in most friendly manner, to the apprehension which exists in this country regarding the effects of Labour's policy on the economic life of the Dominion. Capital does not leave the country merely because a Labour Government is in office; it leaves because it is unable to earn a reasonable return under the conditions which the policy of the Government establishes. To argue that the transference of capital abroad, where it is able to earn a just return, is unpatriotic is to ignore fundamental facts. Whatever flight of capital there has been from the Dominion prior to arid since the General Election—and it is .evident that the loss has continued since the election—has been due, not to a desire to embarrass the Government, but to a feeling of nervousness as to what the future holds in store. People who, through-their own initiative, have been able to build up some reserves of capital have,^ discovered that the avenues available to them for the employment of that capital to the best advantage are limited by high taxation and restrictive measures. The Government's desire to arrest the flight of capital can best be achieved not by further restrictions applied to exchange but by a realisation that there are limits to a policy of expansion under which an army of men are employed by the State on public works, many of which are of doubtful productive value, and under which the Reserve Bank, controlled by the State, is used as a ready means of replenishing the public purse. Admittedly it takes courage for a Government, whose general policy has so recently received the endorsement of the electors, to call even a momentary halt in the programme it has mapped out, but economic factors cannot be ignored and the main concern must be the welfare of New Zealand. The advice given by the "Daily Herald" is timely and, in some degree at least, points to a way out of the difficulties which the Government is encountering.