Wairarapa Times-Age MONDAY, SEPTEMBER 18, 1939. WAR FINANCE AND PRODUCTION.

Wairarapa Times-Age, 18 September 1939, Page 4

Wairarapa Times-Age MONDAY, SEPTEMBER 18, 1939. WAR FINANCE AND PRODUCTION.

ALTHOUGH details remain to be filled in, essential features of the financial -policy the Government proposes to> carry out during- the war period were outlined clearly by the Mimstei of Finance (Mr Nash) in the House of Representatives at the end of last week. The more important of these features, are that the costs of the war are to be met as far as possible irom revenue, though borrowing will also be necessary; Reserve Bai credit is to be used, with safeguards against inflation, and the Government will endeavour to encourage the greatest possible expansion of production, both to increase the volume o expoi able foodstuffs and materials, and to add to the available volume of consumers’ goods within the Dominion. «

At a broad view, this programme evidently should be approved. New Zealand is already so burdened with debt that every effort consistent with an efficient prosecution of the war plainly should be made to limit additions to its oversea- obligations. ‘ The expansion of internal production at the same time, evidently is the only means open to the people of the Dominion of modifying the economic deprivations and sacrifices the war will entail. The root of the whole matter is that the available agencies of production, which inevitably will be diminished meantime in a vital particular by the withdrawal of men for military service, must be and used to the best advantage. It follows naturally that as this withdrawal proceeds, public works and other works that do not immediately assist production should, as the Minister observed, be curtailed.

Looking only at factors of finance and production, it is clear that the Dominion must put forth an exceptional effort, and overcome serious difficulties, if it is to avoid inclining a more or less overwhelming addition to its debt as a result of the war. Prior to the outbreak of war, this country was committed to a programme of taxation and expenditure making what might well have been regarded as extreme demands on its available resources. Taxation under all heads levied in 1938-39 amounted t0,£37.7m. Under peace time conditions, the total yield of national taxation this year (including social security taxation) probably would have amounted to something over £4oni—this in a country in which, in 1937-38, the estimated total value of. production was £135.6m and aggregate private incomes were estimated to amount to £167.0m.

Making every allowance for the extent to which expenditure now provided for can be diverted from peace to wai purposes, no light or easy task will be entailed in carrying out such a programme as the Minister of Finance has outlined. It becomes in these circumstances supremely important that, the most should be made of every opportunity of increasing useful production. One of the major problems to be dealt with is that of organising the labour force that will ensure farm production being lifted to a maximum. It is very necessary also, however, that production in s various branches of secondary industry should be expanded. At an immediate view, much may be done in this way to compensate for an inevitable shortage of many kinds of goods hitherto imported.

At a rather longer view, an efficient expansion of production and internal trade, besides easing the immediate problems and difficulties of the Dominion, will strengthen progressively its national economy and place it in a better position to cope with the increased oversea obligations which the war is bound to leave in its wake. A considerable amount of opposition has been offered to the expansion of. secondary industries within the Dominion, particularly where the use of imported materials is involved. Even in the ease of these industries, however, the factor of added value bulks large in the total value of manufactured goods.

It is not reasonably in doubt that both in meeting war conditions and in preparing to meet the conditions that may be expected to arise when the war is over, New Zealand will be wise to take every opportunity of expanding its secondary as well as its primary production. We have something to learn in this matter from the ejyierience of Australia. In recent years the Commonwealth has been building up and extending ’its manufacturing industries in a splendidly enterprising way. On this subject the “Sydney Morning Herald” observed the other day:—

There is no evidence this time of the dislocation of trade which followed August, 1914. Reserves of materials have been provided, and we are now in a position to supply for ourselves a large variety of requirements, thanks to the development of manufactures since the depression. Existing factories have been extended, and many new industries have taken root and flourished ’in Australian soil. It is estimated that new industries established since the depression supplied goods to the value of £3om last year which would previously have had to be imported. There is scope for further development along these lines—indeed a recent official report estimates that it would be possible to extend the range of manufactures so that this figure would be doubled.

What lias been and may be accomplished on similar lines in New Zealand necessarily is on a more modest scale, but the case for an enterprising expansion of industrial production within the Dominion is strengthened and not weakened by the outbreak of war.

The great immediate difficulty is that of an effective mobilisation of the ■‘labour forces that are needed in order that both primary and secondary production may be lifted to a maximum level. It is a relieving factor that, in our existing economic organisation there undoubtedly is a great deal of slack which may be taken up with profit and advantage. Much labour, both male and female, is at present ineffectively employed which might be employed far more effectively. Even in face of war demands, a methodical organisation of our total working force should make it possible to expand very considerably all forms of useful production. Immediate interest is likely to centre on new taxation .demands and other aspects of national finance, but the fundamental factor involved is that of production. This suggests, amongst other things, that one of the first steps the Government should undertake in order that th'e country may be in a position to cope with war conditions, and with the conditions that will arise when the war is over, is the compilation of a comprehensive national register.