PRICES AND SPENDING

Hawke's Bay Herald-Tribune, Issue 64, 2 April 1937, Page 4

PRICES AND SPENDING

Are ineomes keeping p,ace with rising prices ? If they are not, then in real earnings the people of New Zealand will soon be worse off than they were a year ago. The other day the Minister of Industries and Commerce, the Hon. D. G. Sullivan, issued a fairly long statement in which he set out to remove fa certain amount of misunderstanding in the minds of a sec- ' tion of the public as to the relationship between increased prices and increased pnrchasing power.' ' What Mr. Sullivan did succeed in proving was that wages showed a net gain of 11.9 over prices as recorded by the Statistics Office. A Government so definitely class-conscions as that at present directing the affairs of New Zealand can be forgiven for believing that the purchasing power of the community can be measured soiely by wage standards. Actually of course the farmers and shopkeepfers of Hawke's Bay have the advantage over city-bred administrators in knowing that the bulk of the spending in this country is done by those whose earnings are derived from the soil, earnings that are not subject to the same benevolent guardianship as wages. If the grower of wool and meat have to-day, after several years of adversity, more money to spend, their fortunate position cannot be attributed to the Government. The dairy farmer can thank the Government for raising his income but that same Government- has raised costs against liim so that it is very doubtful if he has a net gain. As for the fruitgrower an unkind season has left him, in this district, with a very definite debit balance. However, eVen the wage-earner would be unwise to take Mr. Snllivan's assurance that he can to-day spend 11.9 per cent. more than he did last year. Mr. Sullivah's figures are correct but they are already nearly a month old. Furthermore, cost-of-living figures have a way of excluding many little items that the worker feels must be provided for. After the half-crown has been found to get a certificate for the old "flivver," and a shilling or so spent on odds to make it Safe according to Semple, a few more pennies have to be paid for the week-end run into the country or to the seaside. An evening at the pictures costs threepence to sixpence more. If these things are not measufed in the cost-of-living figures they are part of the standard-of-living which we all wish to pre* serve. Within the past week increases have been notified in the price of sugar, milk^ eggs and benzine. The 11.9 margin that Mr. Sullivan has mentioned will soon be absorbed at this rate. And the end is hot yCt. With the findncial year just Cnded maUy firms will be examining their affairs in the light of the past year's expenditure and the coming year's prospects, which include anticipatioUS of increased taxafcioU. Dividends will have suffered in many instanCes-^-a reduction in purchasing power that will to some extent offset the gain from wage increases. Prices wi'll be advanced in some in* stances to maintain profit margihs. For the unfortunate there will be "reorganisation" which means reduced staffs and the cutting of losses. ThC vicious circie is already well under way. If our exports continue to yield good prices no ill effects will be felt and it might be possible to keep wages One notch ahead of prices. The day of Teckoning is perhaps a good way off.