Wairarapa Times-Age FRIDAY, OCTOBER 4, 1940. WAR COSTS AND PRODUCTION.

Wairarapa Times-Age, 4 October 1940, Page 4

Wairarapa Times-Age FRIDAY, OCTOBER 4, 1940. WAR COSTS AND PRODUCTION.

A NUMBER of questions, some of them highly eontroversia , were touched upon in the course of the general debatej on war finance which took place m the House of Repiesentat . on Wednesday night. Naturally there are some acute ences of opinion in regard to compulsory borrowing, the emie scale of civil and war expenditure, and other important deta is. Although they have their own claims to serious attention, thes questions are overshadowed in practical importance by that of promoting an expansion of production. It is m dealing with production that we have as a community the greatest opportunity of doing what may be done to ease the strain and modify the demands imposed by the war. Against the contention of the Minister of Finance (Mr Nash): “That the war and civil life of the Dominion can only be carried on out of prior and current production” there is to be set, it is true, the fact that a substantial part of our war costs is being met by external borrowing. Although the Minister s statement as it stands is to this extent invalidated, it is who y true that the volume of current and continuing production in the Dominion will determine what proportion of our war costs must be borrowed, abroad and within the Dominion, and therefore must remain as a burden to be shouldered by the people of this country when the war is over. The same factor or current and continuing production will determine, also, how far our living standards as a people must be cut down meantime in order that we may meet war demands. Production is vital from this standpoint, whether it be production from the land for export, or manufacturing am other secondary production directed chiefly to the satisfaction of internal needs. In the extent to which we are able to expand our exports to Britain, we shall establish the means of meeting a part of our external war costs out of current production. A former Finance Minister, Dlr Downie Stewart, has asked how our London funds can be increased by raising loans in New Zealand. In that form, the achievement no doubt is impossible. But if we increase exports without increasing imports, the balance of London funds will be increased and the transaction can be rounded oft’ by loan-raising or taxation in this country. An increase in other forms of production within the Dominion is important, too, both from the standpoint of meeting war requirements and from that of keeping up as far as is practicable the supply of consumers’ goods and setting limits to inflation. Considerable quantities of military clothing and boots are being manufactured in this country and the production of some other kinds of military equipment and supplies is also being undertaken, though little information has yet been given as to the progress made in this branch of enterprise. It is, of course, desirable that the Dominion should develop on the greatest scale of which it is capable the production of military supplies and munitions. Progress in that direction, however, with other factors — amongst which restrictions on imports are prominent —must tend to cut down the available volume of consumers’ goods and thus to lower the general living standards of the community. To an extent this lowering is inevitable and unavoidable and must be accepted as a part of our war sacrifice. The only means we have of setting limits to the deprivations thus involved is to maintain and if possible increase production. The factor of internal production is of the utmost importance from this standpoint, as well as from that of our current national contribution to war outlay. We have, or should have, strong incentives to do everything we can to increase production both because we shall in this way achieve our greatest possible war effort and for the reason that in this way something appreciable may be done to maintain living standards. The need for action is plainly emphasised. As the Minister of Finance observed in the debate on Wednesday evening:— We are faced with the loss of the labour of 20,000 men and some 40,000 more are in camp. Then ther-e is the cost of the material they are using. We in this country can get ample food and, I believe, ample clothing, and fairly decent houses, but we will have to work hard to maintain the standards we have. The scarcity of goods is already making itself felt and positive action is needed directly to modify this state of affairs and to do what we may to prevent its being aggravated and accentuated by inflation. Mr Nash said on Wednesday evening: “I can see iio evidence of inflation.” Not many other people, it is lo be feared, are likely to experience the same difficulty. Inflation cannot but occur when, as the Prime Minister (Mr Fraser) pointed out recently, “though the total of goods and services for civil use has decreased by some 14 per cent, the amount of money that is available for spending by individuals, after taking into account increased taxes, is still about the same this year as last.” The savings scheme to be launched may do something, in conjunction with the compulsory loan, to modify this state of affairs, but much must depend on what is done to increase production. In a recent newspaper article, Mr Nash stated that one of the fundamental facts on which the policy of the Government is based is:— That every possible natural resource of the Dominion, human and material, will be used to the maximum to provide materials necessary for the war and civil life of our people. Much undoubtedly might be accomplished by vigorous and decided action on these lines in the interests of the whole community, which of course implies a due regard for the interests of all’sections constituting the community. We shall not use our human and material resources to the lull however, by taking only limited and hesitant action. Bold and comprehensive measures are needed to open the way to the greatest practicable expansion of all forms of useful production.