MEMBER SO[?] WAY OUT

Rotorua Morning Post, 31 August 1931, Page 5

MEMBER SO[?] WAY OUT

! ' ' GUARANTEED PRICES. MINISTRY OF EXPORT TO COLLABORATE WITH • OTHEES. (By Mr J. McComhs, M.P.) 1 The .crisis which New Zealand .is facing to-day has largely been created , within New ZealanVl, and could have been avoided and may yet be remedied. Had attention been given to balancing tlie farmcr's, the manufacturer'.s/and tlie wbrker's budgets, the national Budget would have automatically balanced. « Our experts are down £11,000,000 ! as compared with the previous year.- ' It does not necessarily follow that the • total national ineome is down by that amount. The farmer's income . has ; been reduced and the nation will have to reduce its imports hy that amount. Had wre set ahout to produce the goods whiph would otherwise have heen imported, there would have been no diminution in our total national ; income. It is a mistake to think th^t » wealth comes to us from overseas. J All we do is to exchange goods for goods. The national wealth is all, produced within the Dominion. Practically the whole of our agricultural products are eonsumed in the Dominion. The same is true regarding bee- ' keeping, fruit-growing and marketgardening. A total of 55,000 farmers are direclly affected hy export pinces. Balancing Endividual Budgets. These farmers _ are facing grave dlfflculties. Three-flfths of them are not directly affected by reductions in wages, and the other two-flfths are not greatly helped. A one-half per cent. reduction in interest, or even a 1 per cent. reduction, will not get them out of their difflculties. 'Wliat the farmers want is the balancing of their individual budgets, and this the State can and should do. It should also balance the workers1 4 budgets. We proteet our secondary Industries at our ports, but our primary producers are defenceless. Our primary producers can he protected. Other countrios, by means of subsidjes, seek to give some protection to the primary producers. Tlio prohlem which our exporting farmers have to face, and whicli the Government in the national interests should help them to solve, is how to restore the loss of £11,000,000 purchasing power, and I offer this suggestion tenlatively knowing that the details will have to he filled in. The per capita drop in the national income is only £7 Os 8d, and this sum will he reduced when all the wool is sold. Wrong political methods and false cconomic policy have multiplied that loss. First, there was ! tlie reduction inj wages of £12,500,I 000, wliich more than doubled the re- ; duction in -purchasing power, hrought oiiout by reduction of exports. This caused a reduction in output in all our factories occasioned by reduced demand, and our losses were again ( doubled. Last of all, there was loss to trade and industry occasioned through ppn'ic. Tlius, an original loss of £1 1 ,000,000 has heen lurned into a : loss of hetween £50,000,000 and i £00,000,000. The reduction in wages, i which we were told would cure un1 employment, lias trebled the nunibers. In Australia ihe wage reductions wero more drastic and the result to trade and industry was even more disasIrous. Beduced wages resulted in reduced demand, and reduced demand meant reduced output. There is • no reason why we sliould follow Australia. England is determined not to do so, and there is no reason why we should not retrace the steps we have already taken. Lct us united'y face the loss of £11,000,(100. A SVilinistry of Export, Our farmers should he guaranteed a reasonahly stahle price for their produce, based on a seven-year moving average. Establish a Ministry of Export, composed of seven members, three of them to lie Gahinet Ministers," ihe Minister of Finance representing the Treasury, Ihe Minister of Lands, and the Minister of Agriculture, together with representatives fi-orn the Meat Producers1 Board, and the Dairy Produce Export Conirol i Board. Let a fund he cstablished, out of which the exporters of specifled commodities shall he guaranteed fl'xed prices hased 011 a seven-year moving average index number. The seven years would cover an ordinarv trade cvcle. Six years used to be the estimated' Interval between the I uepths of a business depression and ' the summit of the ensuing boorn, but ' whether that is so or not, a sevenj year period would ensure a fairly : steady price to the farmers. With : a steady or steadied income, farmers i could get all the finance they required. j This is how the proposal would ! worlc; if the average price of a cer- | tain grade of wool were one shilling, j and in a partieular year It dropped to eightpence, the fund would have ' to i pay an additional fourpence. This ! would be refunded in subscquent j years when the price exceeded. the t average of seven years. If the price went to ls 6d in a particularly good year, the average price paid to the farmers in that year would he increased, and the effect of the high price would last for six more years. Tlie Ministry of Labour in England in connection witli unemployment insurance, is authorised to borrow against future income, the bonds being guaranteed by the State. We could go a step further in connection witli a Ministry of Export. We could auLhorise it to issue bonds in a bad year to he redeerned in better years, the State to guarantee and to pay the interest. The money in tlie last analysis would have to he spent within the Dominion on articles manu.factured in the Dominion, instead of being imported. The internal increased production would tlius off set our loss in exports and imports and employment would he found for our people. The interest charges would he very .mucli loss than what is now collected in unemployment levies and taxcs. Trade and industry would again flourish.' The national Budget would be balanced, because. everyhody's budget would be improved. Not Too Late. We committed a colossal hlunder last session hy reducing the purchasing power of the people by £12,500,000. We were told that the clause stipulating that the Arbitration Court should not reduce wages below an standard of living was not necessary. Subsequent events proved that it was necessary, because the Gourt, in making \the General Order reducing all wages hy 10 per cent., said that under the new law the paramount consideration ls no longer "tlie eost of tiving and a living wage. They are relevant, but not over-riding considerations, as was the -case under the expired legislation.11 However, the purchasing

power of these workers in perrnano.nt employment. is now 1 5 1 per cent. Iess tlian in 1914. Is it any wonder that trade and industry stagnate? It is not too late to repair some of the damage that has been done. Within our owu borders a specifle.i numl er oi' haies of wc :1 eau Lc ma l i to pay tlie farmers1 interest bilt. Nearly all of our mortgages and private debt is domiciled within ihe Dominion. Practically the whole of our local hody debt, and a large portion oi' our national debt is also domiciled in New Zealand, and the effect of my proposal would he "that the interestreceivers would reoeive the same reward in goods and services as before the slump, heeause our internal prices would be automatieally reguMed by Ihe guaranteed export price. The effect of the proscnt low prices within the Dominion has been l;o more than double our interest hurdon, measured in goods and services. The balancing of the farmers1 budgets is the simplest way out. It will automatically balance all other budgets, including the national Biidgct.