Wairarapa Times-Age MONDAY, NOVEMBER 13, 1939. A BALANCED ECONOMY

Wairarapa Times-Age, 13 November 1939, Page 4

Wairarapa Times-Age MONDAY, NOVEMBER 13, 1939. A BALANCED ECONOMY

QOME more or less invidious comparisons between farmers and other people were drawn by the Prime Minister (Mr Savage), in his comments on a statement by the New Zea lam Farmers’ .Union that production was threatened by high cos s and insufficient labour. Amongst other things, the jime Minister contended that there was nothing the farmer could say about high costs that could not be said by other sections of the community, and that farmers now had more stability than ever. As to this, farmers are in a position to point to official index numbers which show that their net returns have fallen away considerably in comparison, for example, with those of the body of wage-earners. It is true, however, that the burden of rising costs is not felt by farmers alone. Whatever may be the precise position with regard to one section of the community relatively to another, it is establishec plainly that high costs and prices are working out with detriment to the community at large in cheeking production and reducing the effective purchasing power of monej. Eveij purchaser of almost any kind of goods now knows that prices are rising, and the total interests of the community evidentlj demand that this trend should be checked by the expansion o production and in other ways. At the moment, however, not only is there a falling-off in farm production, partly on account ■of seasonal factors and partly, as farmers maintain, on account of high costs and a shortage of labour at wages they can afford to pay, but there is no such free expansion as could be desiied in other branches of industrial production. At a time, for example, when the need is plainly emphasised of manufacturing more goods within the Dominion and depending less on imports, it might be expected that woollen manufacturing would be expanding apace in this country. According to the latest “Abstract of Statistics, however: “The salient features of the woollen-milling industry for the year 1938-39 are the falls in the quantum and value of production as compared with the year 1937-38.” Reductions in 1938-o9 as compared with the two preceding years are shown in the foliowine' table:—

Of boot manufacturing, another industry which might be expected to expand rapidly in times like these, it is reported that the physical volume of production was slightly higher in 1938-39 than in the preceding year. The position thus disclosed of two of our oldest-established manufacturing industries can hardly be called encouraging in itself or as it. bears on the prospects of general industrial expansion. The explanation no doubt is that the factor ol high costs, as the Prime Minister suggested in his reply to the Farmers’ Union, is being felt by all sections of the community. Obviously, however, it becomes on that account so much the more imperative in the national interests that the problem ol high costs should be dealt with. In some observations in general terms on the need for a better balance in our interna) economic affairs, Mr Savage has said that the whole face of things cannot be changed over a weekend. True as it no doubt is, this does not. touch the question of the Government’s participation in and responsibility for the economic organisation and development of the Dominion. For the expansion of industrial production we are, and it is likely that we shall continue to be, dependent on private enterprise. What is fairly to be asked of the Government is that it should concentrate on establishing the financial and other conditions in which private enterprise will be enabled to do its part effectively in expanding production to the advantage of all concerned. The Prime Minister has said, for example, that:— Anyone who has to face exchange control with its possible results must have had their minds on making a transformation in New Zealand—of shifting men from public works into industry, where they would be producing goods now coming from overseas. The transfer of men from unproductive to productive* work is tin important part of the total remedy that is needed to enable industrial production to expand much more freely in this country than it is expanding at present. Government expenditure on public works more or less of a luxury character and on other undertakings of a non-essential kind goes far to account for the monetary inflation and other work out in this country in rising costs and prices and other impediments to the expansion of production. The Government cannot be expected to achieve magical transformations, but it can and should bo expected to concentrate steadily and methodically upon the reduction ol public expenditure on non-essentials a.ml to show, from month Io month, .just what progress is being ma.de in that desirable direction. The best encouragement and assistance the Government can give to both primary and secondary production is to cut out out what must in existing circumstances be regarded as waste and set the narrowest limits possible to monetary inflation.

lUWUL.g LclUJU ; 1936-37 1937-38 1938-39 Total of persons engaged .. 2,792 2,748 2,406 Value of products .. £1.230,829 £1,258,319 £951,636 £653,292 £654,773 £573,651 Greasy wool used 8,374,1291b. 7,529,5031b. 6,492,9161b.