PUBLIC SERVANTS' ECONOMIC POLICY

Rotorua Morning Post, Volume 1, Issue 159, 27 February 1932, Page 6

PUBLIC SERVANTS' ECONOMIC POLICY

PLAN IN DETAJL SUGGESTED ALTERMATIVES \ TO FURTHER ; WAGE CUTS I BANKING AND CURRENCY Acting on behalf of other public service qrgan'isaticns, the exeetxtive I of the Post and Telegraph Employ- j ees' Association has forwarded to the ; Prime Minister a long and compre- . hensive statement of the views of civil servants, regarding the Domiriion's economic situation generally and the possible further wage and salary cuts in particular and xnaking suggestions for certain changes in Government's policy which, it is eontended, would assist in restoring economic stability to the country without- the necessity for further cuts. The chief points in the morandum, which is too long to publish in full, are as follows: — "We thank you for giving us this opportunity of placing our views before you, and, as we recognise that the present financial crisis has added so heavily to your load of responsibility, we wish to assure you that we come in a helpful and constructive spirit. It will clear the way for what follows to explain that, while we are partieularly anxious to protect the interests of our thousands of members — who are State servants — we are fully alive to the fact that the very general nature of the country's economic troubles makes it imperative that remedial action shall be on broad lines, ealculated to relieve the general tension, and that special consideration of sectional interests would be unfair and impracticable. Citizens First "In a sentence, our status as citizens is pre-eminent over our -positions as State servants. In passing, however, we wish to refer to the tendency, frequently demonstrated by

deputations to the Governmont and by way of published statements, to specially single out public servants for attack, which. perhaps, indicates a fairly general opinion that normal rates of salary and conditions 'of State employment are comparatively so good that they should be the first to be reduced in the cause of eeonomy. Such opinion is very ill-inform-ed. We will content ourselves by saying that, in consideration of the efficient and useful servii.es they render, any further inroads on the economic position of Public servants should be the last resort oc a Government faced with difficult. ies in balancing its Budget. Past Twelve Months "We believe we are only stating a fact when we say that the steps taken last year to meet the financial situation, namely, salary and wage re- • ductions, taxation increases and alteration of Arbitration Court awards, have failed to produce the resu.ts expected of tliem. Internal purchasing power has diminished. Imports have fallen away to the point where Ihe loss in Customs revenue almost counterbalances the Treasury gain from the wage reductions, and the ability of the payers of income tax to meet the elaims against thern has been very substantially affected. "In addition, local manufacturers, experiencing reduced demands for their products, have paid off their staffs, thereby adding to the expenses of unemployment relief. The restriction of trade in all directions has added thousands to the unemployed, and has accentuated the resultant hardships of poverty and its attendant evils. In addition to the effect on the adult population, the influence of unemployment and of blind alley occupations upon the future citizens of this country is a grave responsibility upon the Government.

• "Our association m their desire to assist in the bringing about of a general economic improvement, at the same time easing the burden of the Government, direct the attention of the Government first, and then of all sections of the community, to the following points which are aimed. firstly, at affording the Government temporary relief without the hardships of wage reductions, and, secondly, at incr easing production and industry, the stimu1atinv of consumption combined with the regulation of currency and, within certain limits the stabilising of internal levels: — "1. The issue of Treasury notes as legal tender to a limited extent not greater than the Budget deficit, or, «pref erably : — "2. Control of currency by a con tral bank or currency and exchange board having statutory instructions to use the recognised machinery of central banking in order to maintain our local rn'ioe irdex within reasonable linvts, such bank or board to be the only issuing authority in the Dominion. "3. MobiPsation of gold, State monopoly of gold purchase, and utilisation overseas of gold reserves. "4. A closer land settlement policy "5. Redu"tion of Government's in tere«t bill hv coPection of income ^olf-vearly.

Treasury Note Issue "The dangers at+endant upon the indiscriminate issue of inconvertible notes are well recognised, but the safeguard of a defin'te limit removes the main objection. This system has worked successfully, and it would enable the Government to negotiate its J deficit temporarily, with much less detriment to the country than the continuauce of its policy of last year. The placing of the notes upon the market at inteiwals would not cause inflation because Ihe already restricted mouetary circulation is inadequate — in short, it would help to restore the orevious monetary balance. "The restricted currency in actual circulation to-day is shown by the following tables: — Value of expovts. Money in circulation. 1913 — £213 millions £13 million notes plus gold coins. 1930 — £55* millions £6 million notes, no gold. Faetory output Wage bill 1911 — £163 millions £5* millions 1929 — £93 millions £17 millions Currency Control . ; . "The realisation of stable prices is Tir f ; " ■

interests oi producers, businessmen and wage-earners generally. This is c-ndorsed by numerous prominent autaoiicies on banking and commerce. The disadvantages of ever-changing priee levels and the consequent effect on industry, commerce, farming and business are obvious. The present index of stability is falsely taken as the exchange rate instead of the 'allgroups' price index. It is just as easy . to control the mean price level as to alter wages. "Currency control will ensure stable prices for primary products, ntimulate industry, and enable it to iunction without fear of depression and unemployment. All currency being issued and controlled by a central bank or statutory board, the only legal tender would be that issued by the State, the community through the bank or board would be enriched by all new issues, value being taken from no one's pound, and taxation would be correspondingly reduced. Confidence would be restored and a return to internal prosperity obtained. "The Government's encouragement of the search for gold should be followed by the purchase under State monopoly of such gold and of gold ornaments and trinkets, the organised buying of which is already being undertaken for private profit. Tho acquisition of and use overseas by the Government of gold reserves held in New Zealand would be of immense benefit to the country. Closer Land Settlement "A most practical suggestion is the adoption of a policy of closer land settlement. We believe the real hope of our unemployed lies in a vigorous and practical policy of developing small holdings. Our population has increased by 33 per cent. since 1912, but our land holdings have only increased by 16 per cent. and most of this increase in holdings is in urban areas. Indeed, the acreage held shows this, for the 40,000,000 acres of 1912 has only increased to 43,000,000, or an increase of 7£ per cent. "Some means must be f ound whereby men can have access to pieces of

land adequate to provide for the sup-r-ort of themselves and their dependants. If this were supplemented by a system to make available (say) acre holdings for men engaged in casual woik in towns, and cities, a big step would be taken toward finding sustenance for tbe many families now dependent on public funds. "Even if these small holdings are Vt rent free for a year or two, and the rest capitalised for later payment, 'Jie State stands to gain almost immediately by the lessened calls upon its funds. Collection of Income Tax "What the Government needs sorely it the present time is ready money, nd we submit that if income dues were accepted in half-yearly instalnents this need would be met to a ;-ertain extent, while the circulation of currency would also be speeded up co a considerable degree. We realise that hardships might accrue in some cases, but, on the other hand, it would provide for the practical demonstration of patriotic help by those with the means, .of which Great Britain recently set a striking example. "We give precedence to these pronosals, because in them lies the greatest good for the greatest number. In our opinion a return to higher and dabilised levels is imperative in the interests of the country, and we are fully prepared in the meantime to pay the higher prices resulting from an upward trend which will benefit ail in the long run, if accompanied by an increase in the spending power of the people. "Only by these means, by the restoration of confidence, and the use of capital now locked up, can the present situation be improved, while on tbe contrary further wage reductions will react with disastrous effects on almost every section of the cnmmunitv."

As altertanives to the above proposals should they not prove- acceptable to the Government, the Association suggests the floatation of a new internal loan at a reduced rate of interest, h conversion loan and conversion of tax-free bonds to taxable bonds and the reduction of interest rates by legislative action. These proposals are supported by a statement of the Association's views of ;he relative effects of such action in oontrast to that of wage and salary •uts, to the disadvantage of the latter. Conclusion In conclusion, the Association dates : — "There is no virtue in bankrupting a, large perqentage of the community in an attempt to enable the State to meet its commitments. The State de•;:ends' on the prosperity of all secions of the community, yet the spectacle of a solvent State consisting in .he main of bankrupted individuals is one which will be realised if a change ;n policy is not forthcoming. "The rejecton by the Government of all or any of tbe suggestions made will not convince tbe public in genoral, and organised bodies in particu'ar, that the Government's inaction nd possible continuation of their

>?.st policy is for the betterment oi '/he country. Public opinion is being 'ormulated on all sides in a steadilygrowing recognition of the need for mrrency control, and for different methods of improving the current economic position from those in pracfcice. "We believe that the views we have taken the responsibility of putting forward are held by a large proporfcion of the community. From this standpoint alone they should prove useful — as an indication of what the ueople are thinking. Our own members think that their direct interests are best served by taking into account the interests of their fellow citizens, and it is from this angle we earnestly hope there is sufficient that is useful in what we have put forward."