N.Z. FINANCE POLICY

Hokitika Guardian, 30 December 1933, Page 6

N.Z. FINANCE POLICY

WIDE -EFFECTS OF LEGISLATION

BUSINESS AT LAST 'SESSION,

There has been virtually two sessions of Parliament during the present year (says the Christchurch “Star”). The first, which h;.d been adjourned from the previous year, was resumed; for the purpose of ratifying the arrangement made by the Government with the’banks to rais e the rate of exchange.; t 0 £125; the second had for its. primary; purpose the passage of the Reserve, Bank of New Zealand-Bill. Ye / j the ponderous legislative machine, was set in motion, it could .not bg. allowed; to Stop until "laws affecting, in 'some way or another, every man and woman in the Dominion, had been passed. Government policy was changed, new laws were made, and established principles were upset. The first session of the year saw Par* Lament approve of the Government’s decision to raise the rate of exchange. On both sides of the House wer, e members who disapproved of the measure, but the Bill indemnifying ~ the banks against loss on exchange transactions was passed. The exchangers still £125 and there is little likelihood of . any alteration for a -considerable period. Dairy produce is still selling at very low prices in Britain and any move to lower the exchange rate would meet with violent opposition from the dairy farming interests. Another factor that is an influence in maintaining the present rate is that importers, who brought as- little as possible into the country in an effort to avoid the additional impost of 15 per cent., are now in the position that to replenish stocks .they are being compelled to order from o.verseas.

SALES TA(X. The anticipated loss due to the Government’s exchange policy required the raising of .further revenue in order to maintain th e national finances in a satisfactory condition, and to this end a sales tax of-5 per cent, was imposed. The tax wa s an essential sequel to thd ■ high exchange policy. On the last day of the autumn session the Reserve Bank Bill was circulated. At that time it was proposed to take over the gold reserves : of trading banks at a value ‘to. be fixed -by arbitration. When the Bill came down in the session just ended this 'proposal had been changed and it was made clear that the Government had determined to take over the gold at .the book value of £3 17s d per ounce. Parliament generally approved o.f the principle of establishing a reserve bonk, but opinion was sharply divided, on the propriety of Liking over the gold*. a* book value when -its actual value was nearly twice as much. Despite fierce opposition, from both inside ?nd outside the House, the gold was taken'over at £3 17s- 101-d per ounce.

WORK OF THE BANK. It is the expectation of the Government that the bank, when established, and that cannot take place for at least six months yet, will play a big -pare in establishing improved economic conditions in New Zealand. . Briefly, its purposes may be summarised *s: (1) The control of monetary policy-; (2) strengthening and co-ordinating existing banking policy ; (3) ‘the provision of cheaper credit for the community. To the man in the street the initial ■arguments concerning the bank will probably be forgotten by the time that he feels the effects of -its operations. It Wil] 'hbve to- pursue a -policy of caution ■at the outset, for the methods of operation suitable to other countries will have to be adapted to the peculiar con-diti-ong existing in New Zealand. Of -much -more moment at the present time, ,as far as the .lives of the members of the community are concerned, was 'the decision reached by the 'Government a fortnight ago to take power to itself t-o fix the price of petrol. This was a reversal of recent policy which has tended in the direction of not interfering with ordinary trading operations. Already the ,effects of this legislation have been felt and it I s likely that if the importers -of petrol agree among themselves as to the prices to be charged the Government will stay -its. hand and not issue an •Order-in'-Council fixing the maximum arid minimum prices.

SMOKERS AFFECTED. Every smoker is affected by the decision to remove tobacco from the operation of the Commercial Trusts Act, which prohibits price-fixing. The object of this move was to enable manufacturers, wholesalers and retailers, both large and small, to confer anti agree upon retail prices. The Government has still, in the case of emergency, the sweeping powers of the Board of Trade Act, under which it can decree prices, hut as all parties are believed to be willing to reach an agreement mutually acceptable, it is not expected that Government intervention will be necessary.

Another action of Parliament, from which no one, unless he be a deep-sea mariner or a hermit,' can .escape, was the passage of the Summer Time Amendment Bill, which decrees that summer time shall beg n bn the last Sunday in September instead of the second Sunday in October and shall ■continue until the last Sunday in April instead of the third Sunday in March. This enactment is now in force and its effect will be that for many year's to come 'Easter will -fall within the daylight saving period.

Two heavy consolidation and'amending measures were passed By both Souses, One was the Act,

which put§ ' the 'long,' out-of-date New: Zealand legislation on a basis equal to meeting present condkions and incorporates the experience of the British Act of a few years ago, together with improvements found to be necessary in Queensland, where a Companies Act was passed two years ago, as well as new provisions designed to sui; the Dominion alone. The other piece of legislation was the Municipal Corpora,tions Act, which overhauled the whole of th, 8 municipal law of the Dominion 'and extended the lives of local bodies to three years, as from 1935, thus bringing the tenure of office of both county, councils and borough councils into line. Many Bills of lesser importance to the general public were passed, the. only one likely to have fairly widespread application being the Poultry Runs Bill, which means, that after June 1 every person who ■owns twenty-five or more hens and produces eggs, for sale must register and pay a license fee.