LABOUR FINANCE

Wairarapa Times-Age, 7 June 1938, Page 7

LABOUR FINANCE

MR HAMILTON’S CRITICAL SURVEY SERIOUS DROP IN LONDON FUNDS. POLICY OF HIGH COSTS CONDEMNED. (By Telegraph—Press Association.) HAMILTON, This Day. These last few years had been fairly prosperous, the Hon A. Hamilton, Leader of the National Party, said in his address here last evening, and New Zealand should have been strengthening her resources. Instead they found many items of a disturbing or disquieting nature. He would give three of these, though there were many more. “The first item,” Mr Hamilton went on to state, “is the serious drop in our overseas credit, or the drop in our London funds. It is not easy to get the exact figures but I have compiled what I consider a reasonable estimate based the figures as at the end of March, 1936, and again at March, 1938 —being the first two years of Labour rule —we find the position to be somewhat as follows: —

Overseas interest payments £ for 2 years at £11,000,000 a year 22,000,000 Paid off London debt to the amount of 2,707,000 Or, a total overseas payment of 24,707,000 Then, take from this amount the excess of exports over imports for the 2 years, which amounted to 19,500,000 This leaves a shortage of exports to meet overseas needs for the 2 years, of 5,150,000

:i “This means that even during boom times such as we have had our exports were not sufficient to meet our overseas purchases and interest payments,” said Mr Hamilton. “But worse than this, our overseas funds fell during these last two years, not by the above £5,150,000, but by over £17,500,000. From this we find that over £12,000,000 of money must have left New Zealand in the two years—a flight of capital in two years of about £12,000,000. EXCHANGE AND BORROWING. “Many people were disturbed when the exchange went up to 125, but if we are not careful this problem of high exchange will again soon be a burning question. These figures are all tending in- that direction. This, no doubt, was the reason why the Minister of Finance, the Hon W. Nash, took legislative authority to take control of overseas credits, which placed in the hands of the Minister full autocratic control of all overseas business and personal requirements. If this power has to be exercised, and events point in that direction, then the people of New Zealand will get a real taste of personal submission to State dictation.

“The large amount being borrowed today, together with extra credit expansion, in a time of boom prices, is a second serious situation today. The Minister of Finance told us in his broadcast speech that the new borrowings for last financial year amounted to £7,492,000. This large borrowing at a time of high prices and record export income is surely not warranted.

“When we realise that a very large proportion of this borrowed money is being spent on a very costly basis building railways that are estimated never to be able to earn any interest on the investment, we can readily see how we are piling up a costly debt burden. Borrowing is not so bad, if the money is invested in interest-earning assets, but that cannot be said of the present policy.

b HUGE CREDIT EXPANSION. ’ “On top of the large borrowing and record export income there is the extra £10,000,000 collected from the taxpayers. In addition to these items, the note issue has been expanded by £4,000,000, and further advances' from the Reserve Bank to the extent 'of another £4,000,000, making a total credit expansion of over £8,000,000. We have had a record export income of £65,000,000, extra taxation of £10,000,000, further credit expansion of £B,000,000, and they still borrowed a further £7,500,000. Yet the Prime Minister states that they are the only Government that has lived within its income. The public can draw their own conclusions from such a reckless statement. Never in the history of New Zealand has money been splashed about by the State as is being done today. FACTOR OF HIGH COSTS. “The third serious and disturbing factor today is high costs,” Mr Hamilton continued. “This problem is met with at almost every turn. High costs are embarrassing nearly all, if not all, of our industries. This factor is throwing New Zealand out of gear with its main competitors—Australia and Great Britain. It is rather interesting to observe how people like to handle more money, even though that extra money will not purchase any more, or perhaps not so many goods as the previous amount.

“High costs, as well as embarrassing industries, are causing large amounts of capital to be idle, which should be in use employing labour, building industries, and developing and subdividing our farming lands. Compared with 1937, there is about £36,000,000 more money deposited in our savings banks.

“I am bound to conclude that this policy of high costs is a quite deliberate part of the Government’s policy for two main purposes —first, to make it as difficult as possible for our industries so that they will be easy for the State to acquire, and secondly to provide an ample supply of idle money for the Government’s own use. This is at least the way the present policy of high costs is working out and I am convinced it suits the Government. “Take the sawmilling industry as an example. Its costs have been so in-

creased by the present Government that we have practically lost our export trade of timber. The higher costs are being reflected in higher costs of building houses and therefore higher rents for the tenants. On the other hand it is enabling the Government to jump into the sawmilling industry. It was reported lately that a State sawmill was being erected at Rotorua at a cost of up to £lOO,OO0 —the second State sawmill to be erected. “High costs are certainly the farmer’s bugbear. There is no other single factor that cuts right across the farmers’ hope and security as do high costs. This policy of high costs may be attractive in certain quarters, but anything that tends to push New Zealand up on to an artificial basis is bound to have its injustices and reactions. The high costs policy being pursued today must be responsible for preventing large quantities of undertakings from being started by private enterprise, which is the main hope of our success and the employment of our people.”