REPUDIATING RETRENCHMENT.

Wairarapa Times-Age, 17 May 1939, Page 4

REPUDIATING RETRENCHMENT.

he is reported, the Prime Minister (Mr Savage) spoke very decidedly indeed in declaring that his Government, confronted by existing difficulties, would not reduce wages, retrench Civil Service staffs or stop all major public works. He was a shade, at least, less confident than he has been on many past occasions, however, in his added observation: “If we fail in the policy we have beeli carrying out, we will have to make room for someone else.”

It would be merely foolish not to recognise that the Dominion is in a measure “up against it” and that something more than an expression of good intention is needed to overcome existing and developing difficulties. Apart from the problems of farming industry, about which a great deal has been heard lately and much more is likely to be heard in the immediate future, New Zealand rather obviously is in the position of having spent itself into difficulties. Symptoms of trouble, and , indeed trouble itself, appear only too plainly, not only in the depletion of the London funds, out of which we must meet our obligations and pay for all imports, not only of consumers’ goods, but of producers’ equipment and materials, but in an all-round and continuing increase in internal working and living costs —increases to which items are being added from dav to day.

Most people will sympathise with the Prime Minister’s dislike of retrenchment, and a good many people will agree that in the past in this country the policy of retrenchment has been carried at times unwisely far —to the point indeed of extending and accentuating the conditions which originally were held to make retrenchment necessary. If there are better methods than retrenchment of getting out of our existing difficulties, by all means let us try these methods and make the most of them. We shall not overcome and dispose of our difficulties, however, by denying that they exist. A positive policy and positive action are needed.

Those who desire to face and deal with realities will take some comfort from the fact that Mr Savage dismisses with contempt the idea of finding a remedy for existing ills by drawing on “costless credit,” which no doubt would mean in practice turning out paper money with nothing to back it or give it substance. “I am bound to say here,” he is reported to have staled on that subject,

that some people have funny ideas about finance, and keep telling me to use the country’s credit. These people seem to forget that they are living in New Zealand and not in London, and that it is in London where we need the credit.

How far this squares with some of the past utterances of leading members of the Labour Party is a matter which those who are interested may settle for themselves. It is satisfactory at least that the Prime Minister appears to be alive to the fact that the Dominion must rely on production and not on currency manipulation in finding a way of escape from its present difficulties.

On the other hand, the Prime Minister’s position, in the extent to which it has thus far been defined, has some obvious weaknesses, lie affirms emphatically that he will have nothing to do with cutting wages and incomes, but at the moment wages and other incomes are being cut from day to day by rising costs and prices. In these circumstances, industry and trade are checked, with progressively adverse effect, and meantime high taxation operates with increasing severity as a handicap and burden.

“The expansion of the Dominion’s industries, and the payment of economic wages,” Mr Savage is quoted as declaring, “were the two important factors in the progress of New Zealand.” Broadly speaking, the Dominion undoubtedly will be better off in the extent to which its industries expand in a more varied development of production. Letting other important questions stand over for the time being, it may be asked whether the state of affairs ruling and developing in New Zealand today .does not demand much more intensive and purposeful efforts than have yet been made to extend and enlarge industrial production. It is certainly not. least in the interests of wage-earners and their families that the most should be made of every legitimate means of expanding production. and making it more economical.