PARLIAMENT

Rotorua Morning Post, Volume 2, Issue 386, 22 November 1932, Page 5

PARLIAMENT

hustling business? WIDELY DIVERGENT VIEWS ON THE EXCHANGE QUESTION. BATTLE FOR MOTUEKA. (From the "Post's" Special Parliamentary Commissioner. ) Wellington, Saturday. Th'e phenomenal * progress being made by the House of Representatives is now commonplace, but in view of the vigorous " obstruction that the programme of the last two or three years has been subjected to, the rapidity with which the House of Representatives is disposing of tbe business is astonishing. Indeed there now exits a dange'r that th'e legislation being placed before Parliament may be passed without sufficient scrutiny. Slipshod laws are worse than no laws, and when th'e Legislature puts on a spurt anomalies and inconsistencies slip through which have undesirable repercussions. The House of Representatives has now dispoS*ed of the whole of the main Estimates, and as far as thte expenditure policy of the Government is concerned, there now remains only the Public Works Estimates and the sup- ' plementary -Estimates to be disposed of. Both these items will be much smaller than usual, and tpb discussion on tiiem is not likely to be prolonged. Electoral Amiendment. The most contentious measure at present on the Order Paper at present is the Electoral Amendment Bill, which will be proceeded with next week. There is bound to be a Labour Party protest against this msasure, which is designed to extend permanently the term of Parliament to four years. The Bill, however, does not provide many talking points and the discussion is not likely to be lengthy. Moreover, the ranks of the Opposition are depleted just now by the eontingents which afe being sent in relays to Motueka. Every effort is being made by Labour to spread the gospel of the party throughout the 'electorate, and, as far as the speech-making part of the contest is concerned, the advantage seems to lie with the Opposition. The Government has also reinforced "its candldate with a talking squadron, but so far none of the front benchers of the Coalition have taken part in the by-election. It is rumoured that the Leader of the Opposition will spend most of the final week in the electorate and that the Minister of Public Works will also enter the fray, so that the electors will not be! able to complain that they have been neglected by the interested parties. The Exchange Rate. There is no doubt that the proceedings of the House this week have been completely overshadowed by th'e high exchange movement initiated by members of the House representing rural constituencies. It would appear that the movement has gathered momentum with almost startling rapidity. It has been common knowledge for some time that at least two members of Gabinet have been strongly in favour of a high pegged exchange, but it was not generaljy realised that the forces in favour of this course of action were rallying and consolidating. When the news spread that a deputation _ of over thirty members of the Coalition had waited on the Cabinet with a strong request for relief for the primary producer by exchange manipulation, the Iobbies buzzed with excitement. It was realised on all sides that this was the most ticklish problem that had yet faced the Governni'en since its inception. The views of such an influential deputation could not he ignored, .and it is evident that the Government is placing the representations which have been made in the forefront of its deliberations. Divergent OpinionS. In the exchange controversy there are two antagonistic schools of thought. Neither the bankers nor the economists are unanimous, and the issue is also tending to align town against country. One the one hand it is claimed that the pegging of the exchange will arrest the downward movement of prices, stimulate the primary industry, and generally stabilise internal conditions. On the other hand, it is held that the benefit to the farmers will be nullified by the depression of the business community and th'e increase in the cost of living. Both sides are producing facts and figures in an endeavour to prove their case, and there is a dangei* that deeision will be guided, not by which system will prove the more beneficial to the Dominion as a whole, but by the self-interest of either carnp. When doctors differ the patient generally dies, and it is to be hoped that the analogy will not apply to New Zealand in its economie and social ailment. Thq strongest evidence on the side of the high exchange advocates is the recommendation of the majority of the Economie Committee which was set up by the Government to examine the budgetary position. This committee, with the exception of the repTresentative of the Treasury, Mr. A. D. Park, contended that a high pegged exchange policy was necessary in the interests of all sections of th'e community^ and it would appear that they have the support of the famous Macmillan Commission which was last year set up by the British Government. The commission held the view that England could not alford to impoverish h'erself by rigid adherence to the gold standard, and that she must endeavour to find a more stable price level.

No Benefit to Farmer. In New Zealand the anti-exchange inflationists argue that an artificially high exchange would not benefit the farmer, as the premium he would receive would be collared by his mortgagees and creditors, and that the cancellation of the primary producer's dehts in this way would decrease the volume of internal eredit. It is also contended that the Government would lose much' of it?/ customs revenue, which is the biggest source of budgetary income — it would disappear because of the shrinkage in imports — and that the State finances would be further embarrassed by the liability of the Government to buy up any. surplus London credits which the banks might hold owing to/ the discouragement of importers. ■ It is evident that the banks could not take the responsibility of maintaining artificial exchange if surpluses began to accumulate overseas. • Against this it is held that, if the

exchange does not rise, the farmer will not be able to pay his way, and the country will have to face dec|ining export balance which would give the importer little to work on, and that the inflationary effect of the high' exchange would not only stimulate primary 'production, but also give an impetus to the secondary industries, -for which the high 'exchange would mean an additional 'tarjff. Foljowing this line of argument, it is contended that the encouragement thus given' to commerce and industry would- increase purchasing power, creating a "bigger d'emand for imports jn spite of the adverse exchange, and that the ne£ effect would be that any budgetary disadvantage* which resulted from the policy would be more than nulhhed by the ability of all se'ctjons of ihe community to carry a heavjer load of taxation. There js no doubt that tjxe position should be competently and thoroughly examined inj the light of reason ahd that every care should be taken io see that there ' shoul4 be no 'emotiofial stampede.