CABINET PROPOSALS

Hokitika Guardian, 24 January 1933, Page 2

CABINET PROPOSALS

AID FOR FARMERS

REDUCED BANK OVERDRAFT,

WELLINGTON, January 22

A rebate of up to 25 I> er on county rates, a general reduction of railway freights for primary produce, and a reduction in tho bank overdraft rate from 6 to 5 per cent., will probably be three of the principal measures, apart from the increased exchange rate, which the Government will propose for the relief of the farming industry when Parliament, resumes next Thursday.

In 1031’, it /will .be recalled, tlrd’Government granted .v : rebate pf per cent on county rates, securing ' flfc money to cover this concession from the Highways Fund. According to figures then quoted, a full 25 per cent rebate would require approximately £500,000, and there is some doubt whether it will bo possible to take such an amount from the same source. As for the reduction in railway freights this has long been sought by the farmers and farming organisations .throughout .New Zealand as a readjustment essential to the changed conditions in the industry.

INTEREST RATESReduction of the overdraft rate will probably be part of the Government's move to secure a further general reduction of interest rates, As has already been indicated, there is now a general belief, that the Cabinet hopes to secure 1 this' reduction without compulsion. Voluntary or compulsory conversions are being considered as a means’To the sameend,- since over £5,000,000 of Government and Departmental debt fails due in New’ Zealand during the present' year, and nearly £15,00,000 in 1934. Now that their, emergency legislation is evidently planned, and the decision to increase the exchange rate has been made, the members of the Cabinet : have not ’ been . so severely pressed during the- last few days. On Saturday the majority of them spent the day at the iTfentham races, and since to-nforrow is Wellington’s Anniversary Day and a public holiday, there seems- - little l likelihood of any further developments in the political situation until the Coalition caucus meets on Tuesday morning.

Several members of the House are arriving in Wellington earlier than usual, and conversations with some of them indicate-,that this caucus will he the most momentous in the history of the Coalition. Both there and in the House there will be some plain speaking by jnembers of the Government Party, and 'although the Cabinet has 'evidently taken pains to assure itself of victory in the event of a no-confi-dence motion, the victory may not hfe a very notable one. Those Government members who have lqeon - ivritat■ed by the sudden increase of the exchange rate will no doubt be consider* ■ably influenced in- their final opinions by the -other relrf measures which the Government has yet to reveal. Cfi SBULT- ■ -

HINT OF A SALES TAX. If these measures are also largely for the- benefit of the farming industry alone—as on, prerent indications the} 7 are—itliey may accentuate the growing difference between the town and country representatives which have for some time been obvious in the House* of Representatives. In these circumstances, it seems hardly conceivable that the Government would impose upon city interests the burden of a sales tax in addition to high exchange, but it is difficult to see how otherwise the Minister for Finance will be able to make up even part of the deficit created by the increased debt services on account) of high exchange and such considerable concessions to the fanning industry.

It appears quite ’ definite at least that no further wage cut is conteifi-, plated. The Government’s attitudein raising the exchange rate was that it had carried deflation of wages as far as possible, and must now seek to bridge the gap between farming costs and produce prices by inflation. The Labour Party will probably meet in caucus at Wellington on Thursday. It may find itself in rather a difficult position when the raising of the exchange position is discussed in the House, for while it is bound to oppose any action of the Government that seems to lead to an increase in cost of living, it is also bound to applaud; greater protection for secondary industries which high exchange undoubtedly gives. 'Apart from this difficulty there is believed to be a division on opinion on the merits of high exchange within the Party itself.