Wairarapa Times-Age WEDNESDAY, APRIL 8, 1942. STABILISATION OR INFLATION?

Wairarapa Times-Age, 8 April 1942, Page 2

Wairarapa Times-Age WEDNESDAY, APRIL 8, 1942. STABILISATION OR INFLATION?

QOI\IE observations that were decidedly practical and to the point were made by the Prime Minister (l\lr Fraser) in his address to the animal conference of Hie .Labour Party on dionday, on the importance of avoiding inflation under the new conditions brought about internally by the war. .In. the twelve months ending in December last, Mr Fraser said, wage earning alone had increased by £12,500,000 on the preceding twelve months and the total was still going up. The. money incomes of farmers had also increased. On the other hand, the value of goods available for civil consumption had fallen from £114,000,000 in 1939 to £93,000,000 in 1941. Because of price rises, the relative decrease in volume would be greater still, the Prime 'Minister added, and in the present year a further curtailment would take place. It may reasonably be asked whether, against this background, it is possible to .justify the recent general increase of five per cent in award wage rates (to a maximum of 5s a week in the case of adult male workers, 2s Gd a. week in that of females and Is Gd a week in that of .juniors and apprentices). This adjustment no doubt will he defended as relatively improving the economic position of some of the lower-paid groups of the community. Plainly, however, the ultimate effect of the adjustment—Hie second of its kind since the war began—-is bound to be. inflationary, to the detriment of all concerned. In face of the facts and figures cited by (he Prime Minister on Monday, the prospect thus opened is very serious indeed. Al the same time, the wage-adjustment is inequitable in that no corresponding immediate benefit is to be conferred on other sections of the community, many of whose members are no better off, and some of whom are much worse off, than award wage-earners. It has been intimated that civil servants are to get some increases in pay, but there is no talk of any similar concession to pensioners, soldiers, people of fixed income at any level, oi' Hie not inconsiderable body of producers who occupy a comparatively low place on the earning scale. In light of what the Prime Minister had to say about inflation dangers, it may be supposed that the Government will be prepared to admit Hie existence of elements of weakness and injustice in its own economic policy. The expansion of purchasing power at a time when the volume of consumers’ goods is contracting rapidly is definitely unsound. It is additionally objectionable that this expansion should favour some sections of the community only, even though the numerical strength of these sections may be very considerable. In his address on Monday, Mr Fraser referred to the Government’s stabilisation policy. The prices of 38 essential commodities have been stabilised, in some instances by means of subsidies. In addition, the Price Investigation Tribunal has permitted only approved increases in cost to affect the prices of other commodifies. An all-round increase in award wages runs directly counter to this policy of stabilisation and it is to be noted that the Court of Arbitration has fastened responsibility for the increase on the Government. .In the memorandum to its general order making the increase, the Court stated that it was exercising powers conferred on it by an amendment of February 18, .1942, to the Rates of Wages Emergency Regulations. Since this amendment was made subsequent to the capture of Malaya and the fall of Singapore, the Court observed, it did not consider that it would be justified in declining to use the extended powers conferred by the amendment. The Government, the Prime Minister stated on Monday, fully intended to proceed “with the stabilisation of whatever further essential items are practicable.” What is really needed, however, is an overhaul of internal, economic policy looking to Hie broadest extension of price stabilisation in conditions fair to all sections of the community, and not least to all on the lower income levels.