Wairarapa Times-Age WEDNESDAY, APRIL 26, 1939. POLICY AND PROSPERITY.

Wairarapa Times-Age, 26 April 1939, Page 4

Wairarapa Times-Age WEDNESDAY, APRIL 26, 1939. POLICY AND PROSPERITY.

, AT the Easter conference of the New Zealand Labour Party, the Minister of Finance (Mr Nash) declared that. would be difficult to find in any other part, of t lie! world a reeoid in the field of financial reform equal, to that , 1 d firct vpor of the Labour Party in Government in New zeaianu in 1936 ” On the same occasion, Mr Nash defended strong; y the policy of import selection and exchange control instituted by the Government at the end of. last year. , Takiirn- a very different view of the position and outlook a special committee of the New Zealand Farmers’ Un.on and the New Zealand Sheepowners’ Federation affirmed m . statement issued on Monday last, that with farm and prices falling and costs rising, another depression is imminent and that prosperity m farming industry and the Dominion will best be restored by freeing the ov exchange rate and allowing it to rise until it ie D iste . level most appropriate to the present conditions. From the point of view of the people of the Dominion o-enerally, a great deal evidently depends on whether the feais thus expressed by representatives of farming industry are o ar" no? well-founded: It seems likely that the Situation will come to a head in one way or the other in the very near future. In the extent to which farming industry made unprofitable, the country at large of course will suiter because of the consequent reduction in its total economic resouices the increased proportion which oversea debt, freight and. other charges will bear to these total resources and the effect on employment and in other ways on the large proportion of our industries and trading and other services that are dependent, directly or indirectly, on primary industry. It is an adverse factor of serious importance that general working costs and'living costs have risen and are rising. W Nash has himself of late stressed the necessity ol preventm o a further rise in internal prices and of making good, by increased internal production, the.lowering ol living standards which otherwise will follow on the curtailment of some classes of imports. In the extent to which increased wages and other payments have been offset and neutralised by increased hvmg costs, and have increased working costs, the economic position of farmers selling in. an unsheltered overseas market has been undermined without conferring benefits on. wage-earners, pensioners, or anybody else. An immediate effect, of freeing the oversea exchange rate, in accordance with the demand now made by representatives of primary industry, would be to give farmers an increased share of the available national income! On the other hand, alt oversea payments, measured in New Zealand currency, won c be increased correspondingly, as would be the prices of al imports. More or less substantial additional protection would be given to Dominion industries in their internal, market, save in the extent —a. very important extent, in some instances—m which that protection was offset by the need ol importing materials, machinery and other supplies which must be paid for in sterling or some other foreign currency. As against this admittedly drastic and in some respects damaging”policy, the Minister of Finance and the Government favour import, selection anil the stimulation of local production. Mr Nash has said on this subject that for a time at'any rate the stress would have’to be oil finished consumers’ goods —these, valued at £14,000,000, constituted 25 per cent of our imports in 1938 —- which would have, to be replaced locally by New Zealand commodities. It may be taken for granted that the Government will refuse to adopt the policy of raising the oversea exchange rate unless its hand is forced' by events. Time must show whether alternative measures will suffice. It may be noted, however, that the production within the Dominion of a proportion of the consumers’ goods hitherto imported touches only a part of the problem raised. The essential demand of the existing situation is that costs and returns in primary industry should be reasonably reconciled —that they should be so adjusted that production from the hind can be maintained or increased. So long as the bulk of our primary produce has to be sold for what it will bring on. oversea markets, it will remain, a condition of o'eneral prosperity in this country that working costs in land and other industries should hear a fair relationship to the prices obtained for exports. This slate of affairs is modified in some degree by every expansion of the produel ion locally of <>’oods that can. be exchanged for primary products. That expansion will have to go a very long way, however, before New Zealand will be in. a position to regard the factor, of production for export as of secondary importance in its bearing on national prosperity.