WELLINGTON NEWS

Hokitika Guardian, 9 March 1927, Page 4

WELLINGTON NEWS

TIIJC BUSINESS OUTLOOK. (Special to “ Guardian.”) WELLINGTON. March 7. Now and again the trade journals published i.n the Dominion contain articles that arc of general interest, and one such article appeared in the February number of the “Accountants’ Journal,” the official organ of the New Zealand Society of Accountants, under uic captain “The Business Outlook, and excerpts front this article arc worth piloting for general information. “ The business outlook lor the- current year,” says the Journal, ”is in our judgment unsatisfactory, and while nothing catastrophic in nature is to bo apprehended, and there are no indications of such a slump as seized the country some live or six years ago. there is every probability that spending power and consumption will he re-

stricted and that the consequent relaxation of retail trade will show itself in difficult conditions generally, while | the probability of any sustained relief in the way of increased values of our staple exports is small.” It is difficult to understand on what grounds the opinion is based that the present slump will not he so severe as that experienced iri 19’20-‘2l. On that occasion relief came largely from a recovery in export values. At that time all the world except the United States was luxuriating in inflated currencies and inflation provided the remedy. In the Dominion Parliament came to the rescue with such measures as the Mortgages Extension Act and the measure dealing with fixed deposits held by various companies.

The position now is different. All the more important countries are on the gold standard, and the commodity prices must accordingly be adjusted to this basis. The “ Accountants’ Journal ” admits that any sustained relief in the way of increased value of our staple exports is small. That being so it seems clear that the depression will continue until costs of production of our staple exports are reduced so that

there may be a profit on the lower basis of values. The Journal then goes on to sav: “ In order to square our annual accounts with any degree of

comfort, the exports of the country should exceed its imports by a sum of six millions sterling per annum. The actual surplus of exports over imports for the past six years has been in fact fifteen millions, or two and a-half millions per annum, so that directly or indirectly the difference of about twenty millions sterling for the period has been so added to capital debt?” This, of course, is quite correct, but what are we going to do about it? It is of much more importance to give consideration to what ought to he done to counteract the depression, to lessen its severity and shorten its duration. Public borrowing cannot cease, hut it can he very greatly curtailed. It mu.su he remembered that our public works policy, which has expanded in the post-war period, has created a considerable class of citizens dependent with their families upon Government expenditure, so that any material curtailment of such public expenditure would throw more people out of employment. To meet the needs of the unemployed Parliament last session authorised local bodies to borrow without the sanction of the ratepayers, and what the local bodies have been authorised to do the Government cannot refrain from doing. - There is little chance of any tapering off of borrowing. Referring to the .Arbitration Court the Journal remarks: ”1 he inelasticity of wage rates as fixed by tlie Court of Arbitration, and their fixation more on a basis of presumed family needs than economic values, is bound also to cause unemployment. If the Court fixes wages higher than the economic level, then if the increase is passed on to the consumer it raises the cost of living and it diminishes sales, while if it cannot he passed on it reduces unemployment, since employers cannot afford to hire labour at a loss.” Wo have reached the hitter stage, and the Arbitration Court is at tho moment, the greatest harrier that we have to contend with, for it prevents any efforts as to economic adjustment being successful, because of its fixed uneconomic wage scale. Unfortunately politics are so closely interwoven.

with our economic life that it is impossible to deal with the subject without giving tl’.o impression tlint one is meddling in political matters. A good many of our economic wrongs arise from faultv legislation. There are too many “ thou shall not ” laws on the Statute Hook, and these require to ho repealed. Whatever else happens, drastic changes must he made in our arbitration system which is fundamentally uneconomic. It should he repealed. hut Parliament will not face that. Still, very drastic amendments can lie made.