GOVERNMENT'S AIM

Evening Post, Volume CXXVI, Issue 138, 8 December 1938, Page 10

GOVERNMENT'S AIM

STANDARD OF LIVING

BUILDING IT UP

MORE PRODUCTION

ESSENTIAL

Mr. Savage said that first and foremost it was the aim of the Government to build and maintain the standard of living of all New Zealanders. It was no use trying tc lift the standard of living- under the old economic system of "go as you please and the devil take the hindmost." It was necessary to have a clear idea of what should be done. First of all they had to see that the purchasing power of the people was distributed so that all had a chance to provide for their needs. The Government had gone a long way towards achieving this. In the past three years many economic and social records had been attained. "We have also got to ensure that more and more goods are produced to meet our wants and our needs," said Mr. Savage. "We must increase production. That is essential. The appeal we have made to workers in industry is not made merely for the sake of producing more. All sections will benefit by increasing production, and if people produce more they must all gain. The Government will see that everyone gets his or her share. "The Government wants to give everyone a chance to work who- is able to work. We do not want unemployment in New Zealand, and we want everybody who is employed to be working at a productive job, not a job chipping weeds by the roadside, but one which is producing an asset and one which preserves a man's selfrespect. "In the past New Zealand has depended on expanding farm production and expanding markets overseas. This has had the effect of developing our rich farm lands, but it has also meant that we have been more subject perhaps than any other country to alternate booms and depressions with great poverty and unemployment. Falling overseas prices have been allowed to affect New Zealand far too much. TOO MANY KNOCKS. "We talk about insulating ourselves against overseas knocks; we have suffered too many of them in the past to want any repetition of their evil effects. But unless we have some control over our overseas trade we just cannot prote t ourselves. There is at the moment a very good example of this; the price of butter in the London market has fallen heavily in recent •weeks, but the income of the dairy farmers has been kept up by means of the guaranteed price. The dairy farmer suffers no longer from falling overseas prices. The benefit is not likely to be overlooked. This system of guaranteed prices is a first step in cushioning New Zealand against the effect of depression overseas. Let dairy farmers themselves think of the. effects of an unregulated market. "Now we are taking a second step. Whenever overseas prices have fallefc we have had to go without goods from abroad. And we have not been able to supply them from our own productions The second step obviously is to make these goods ourselves. This can't be done all at once; it will take some time, but industries are essential to our growth and existence. We must see to it that New Zealand manufacturing industries are in a position to supply our needs. "There are many more things which are now imported that we can make here. New Zealanders are just as intelligent and capable 'as are other people. Given the raw materials they can acquire the skill. Our job then is to build New Zealand industries and build them so that they are • efficient. In doing this we must safeguard their growth so that they can be assured of a larger proportion of the New Zealand market and not be undercut by unfair competition. "While we have our first duty to our own people we also have obligations to Great Britain. And these will never be lost sight of by the Government. TRADE WITH BRITAIN. "In carrying out our policy of industrial development, we will see to it Great Britain will not suffer. In 1936 my colleague Mr. Nash made that clear on his trade mission to the United Kingdom. He offered them more trade with New Zealand, not less, and we have repeatedly assured the British Government that we are prepared to buy from .them to the full extent to which they buy from us. That is, after our debt services have been met. And •there has never been any question concerning the payment of the interest on our debt service. Tha' is taken for granted. "It is on the trading side that we are adopting a new policy. We want to increase our trade with Great Britain. To the extent that we are able we want to spend every penny of the sterling proceeds of our exports on buying British manufactured goods. We are going to buy from those who buy

"On the other hand, there are countries which do not take many of our goods, but we buy a great deal from them, and we buy goods which, in some cases, Britain could well supply. There must be some readjustments with these countries.

"Buying as much as possible from the United Kingdom and making the adjustments necessary with other countries cannot be achieved by Customs tariffs and preference duties alone. We want to see that the Old Country gets our trade to the full. Tariffs will not do that. The only sensible way to do this is to select the goods we want to buy from Britain. It is all a question of scientific selection of imports. IMPORT SELECTION. "This same method of import selection is the most effective way of building up our own industries. We are going tb give New Zealand manufacturers a definite market if they can turn out the goods. To the extent that they can't we will import the goods from abroad. It is thus obvious that we must select the imports we need if we are to build up a more balanced economy. "Then there is the question of raw materials and equipment. We must make sure that our industries are provided with all the raw material arid machinery they need. Each year we will set aside a certain part of our overseas funds for essential materials, so that our workers and factories may be continuously employed. In dealing with applications for import licences for the purchase of goods and materials, j preference will be given to those which | constitute essential requirements, and which cannot be produced in the Dominion. "I want to say most emphatically that what we are introducing is not a barrier but a regulative procedure. All that we are doing is to introduce an element of planning into our economic life where formerly things were left to chance." THE EXCHANGE POSITION. Referring U the exchange position, the Prime Minister said that the Government was going to conserve sufficient funds to meet the country's overseas debt commitments on their due dates. It was intended to prevent any further and totally unnecessary flight of capital. Mr. Savage said that each year they received from the country's exports a certain amount of sterling money. This was used to pay the interest on overseas debt, to provide debt repayments, to pay the freight on exports and imports, to pay for imports, and to pay the expenses of New Zealand travellers when abroad. Also when people wanted to transfer money abroad they used up New Zealand's sterling money to do this. In fact, these people could, by sending unusual sums abroad, use up the money required to pay for necessary i imports. New Zealand had suffered to some extent by the capital funds being sent overseas. These things were occasionally done for economic reasons and sometimes for political reasons. Stock exchange circulars and elec- I tion propaganda had not been without their effect. This was the latest model in patriotism, and it was as foolish as it was unnecessary, because the money was quite safe. "I have given my word of honour to the people that their interests will be safe," continued Mr. Savage. "That pledge stands. The point is that we are not going to let people embarrass the financial structure of the country and, incidentally, the interests of the people as a whole in this way. It will be clear that if we are to conduct our affairs sensibly and maintain the production and standard of living of our people that we must control the use to which our money held overseas is put. In short, we must select the uses of this money. "Briefly the position is this: Because we want to transfer much of our imports to Britain we are adopting a policy of import selection;. because we are going to build New Zealand industries we need to select our imports; because we want to protect our standard of living especially when overseas prices fall we have chosen the method of import selection; and because we want to pay off gradually our ovei'seas debts and conserve the amounts necessary to do this we are going to select our imports. RESERVE BANK SUPERVISION. ' "We must make sure that all the money due to New Zealand" overseas every year will be under the supervision of the Reserve Bank. To do this everybody wishing to export anything from New Zealand must have a licence. In practice this will not apply to goods sent overseas by post. Actually there is nothing new in this particular procedure. It was also done in 1931 by the then Ministei of Finance, Mr. Downie Stewart, in order to conserve sufficient sterling in London to cover debt services. Today there will be no hindrance to exporters and the procedure is simple. "The next step is to see that adequate amounts of our overseas money are set aside for our debt service, our regular commitments, our needs in the way of equipment and raw materials, and our other imports. This means that everybody desiring to import goods will require a licence to enable them to fit in with the Government's plan and to see that the imports are bought fron the countries decided on. In actual practice this will not alter

the regular routine of business. Imports will go on as before. It is impossible to build all the necessary secondary industries in a year; our needs in the meantime will be met from regular imports. But while the change over to New Zealand production will be gradual, at the same time it must be as quick as possible. LICENSING IN DENMARK. "Similar measures to these have been in practice abroad for a number of years. One of fhe most noted is that of Denmark. The import licensing system introduced in 1931 was quickly successful in conserving their sterling funds. Moreover, the system has been instrumental in causing the growth of Danish industry; new manufactures have been established and old ones have been expanded. This policy of import selection is perhaps the biggest step forward in New Zealand's economic history since the invention of refrigeration. We are truly on the road to more secure living standards and greater well-being. "We are faced with this position," said Mr. Savage. "There is depression and uncertainty of the most ominous kind overseas. We have to defend our country in more ways than one. We want to keep depression, poverty, and want out for one thing. And we can do it. "We are not going to follow the socalled orthodox method of deflation. V"« fought against that in similar circumstances when we were in opposition from 1931 to 1935. That policy means the curtailment of public works with unemployment and the reduction in wages. "Ours is a positive plan to maintain a high standard of living. We are going to conserve sufficient funds to meet our overseas debt requirements. We must ensure that our debt commitments are met on their due dates. And I mention at this stage that the Government and local bodies have loans of many millions falling due in the next year or so. That is a matter which must be kept in mind. This Government is not responsible for the creation of the debt. We are responsible for the repayment of debt charges. "At'the same time we intend to prevent any further and totally unnecessary flight of capital. And, of course, the payment for selected and essential imports must be fully provided for. We do not want to cut down our imports, but we do want to commence building up a balanced economy. NO ALTERNATIVE. "I say there is no alternative to our present plan of regulation except to reduce our standard of living, and the Government is totally 'opposed to that. It is for this reason that we appeal to the people to stand behind us, and we assure them that we will maintain and lift our living standards still higher. INDUSTRIAL DEVELOPMENT. Before he concluded, the Prime Minister mentioned the publicity campaign for the development of New Zealand industries. Mr. Savage said it was the duty and privilege of all citizens to assist in the expansion of industries by exercising a preference, and it was only a voluntary preference, in favour of New Zealand-made goods. He was not asking people to give a blind, unreasoned preference, as he could confidently recommend the purchase and the use of New Zealand-made goods. If people would specify "New Zea-land-made" when they make their purchases, they would not only keep their fellow-countrymen in employment, but they would create additional openings for other New Zealanders, particularly the young people who would be leaving the colleges at the end of the year and would look for openings in industry. Those openings could be made not only possible but an assured fact. It could be stated with a reasonable degree of accuracy that assuming the number of households in New Zealand to be equivalent to not less than onethird of the population, a sum of 5s a week diverted by every New Zealand household from the purchase of imported goods to the manufacture of New Zealand-made goods would provide employment for 6500 persons. He commended the appeal to purchase New Zealand-made goods, and invite the public's wholehearted and enthusiastic co-operation.

"We place in the forefront of aims and achievements the security of the people." said Mr. Savage. "Men, women, and children are more important to the nation than profits. The Government will continue to seek a greater measure of welfare and social happiness for all classes. The people want good homes, dependable means of livelihood, and individual security in sickness and old age. These can be obtained only by co-operation between the people and the Government and by willing effort on the part of every individual to do everything possible for the advancement of a young nation with great resources.

"It is the duty of us all to strive hard for real economic development and expansion. We must not be content with experiments in social welfare. We must also excel in individual and collective effort to make this little country a great nation." INTERNAL LOAN. Referring to the Government's intention to issue an internal loan to meet capital expenditure on railway and electrical equipment and other public works, Mr. Savage said that the Government's policy was t;- use the public credit and to provide an opportunity for patriotic New Zealanders to invest their savings in the development of the Dominion's resources.