asked the Minister for Finance whether his attention was directed to the statement made by the New Zealand Finance Minister when introducing his Budget on 16th July last that between 1939/40 and 1940/41 the aggregate of wages and salaries had increased by 9½ per cent. while, as a consequence of the measures taken by the Government of New Zealand for stabilising the prices of essential commodities as well as wages, the retail price index of essential commodities showed, since the outbreak of war, an increase of only 6½ per cent. compared with 8½ per cent. in Australia and 27½ per cent. in the United Kingdom and, whether, in view of the fact that in the same period the index figure in this country showed for all items an increase of 27.2 per cent. without a compensating rise in wages, he will consider adopting such measures for stabilising prices and raising real incomes as have been so successful for both purposes in New Zealand.
Ceisteanna—Questions. Oral Answers. - Stabilisation, of Prices.
I have seen the Budget statement referred to, but I do not think it possible to deduce from anything in it that a general raising of real incomes can be secured during wartime by Government action. The Hon. Walter Nash, Minister of Finance, did not claim, as the Deputy implies, that the measures taken by his Government had the effect of raising real incomes. Indeed, in many parts of his statement he was at pains to point out that, owing to the difficulty of obtaining imports and to the diversion to the armed forces of man power and productive capacity, civilian consumption could not be maintained at pre-war level.
I may add that the positive measures mentioned by the New Zealand Finance Minister as having been adopted in his country, correspond closely to what we have done here, viz., control of prices and wages, rationing, and the subsidisation of certain commodities, to ensure the equitable distribution of scarce goods and to prevent inflationary tendencies which would accentuate, particularly in the case of the poor, the severity of reductions in real income inevitable in war conditions.
In view of the last portion of the Minister's reply, will he say why the New Zealand measures have resulted in increasing wages, while prices have increased to a lesser extent? Is he not aware of the fact that in this country prices have increased very substantially while the purchasing power of wages has actually fallen?
What the Deputy says about the increase in wages may be true, but there has also been an increase in prices.
To a lesser extent.
In fact the New Zealand Minister does not claim, and did not say, that there will be an increase in real income. In his statement the Minister was fully aware of, and made reference several times to, the difficulties that would arise, and that were arising in New Zealand, similar to difficulties that had arisen here. He took stock of things and emphasised the importance of taking measures to prevent inflationary tendencies obtaining there, as they might have obtained here, if we had not taken similar measures.
Does the Minister realise the essential difference between the two countries, that while we are exporting tens of thousands of people to enrich other countries at productive work, New Zealand has been able to maintain its own population, to pay decent rates of wages and to have a good standard of living? Would not that fact urge the Minister to emulate what has been done in New Zealand?
We have emulated New Zealand, as we have got similar results to those they got there, but there is a difference in degree. Conditions are not exactly similar in the two countries. New Zealand is a vast country, very much undeveloped, and with a very sparse population. We have different conditions here, but to show that the Minister there had in mind similar conditions to what we have here, and a similar method of dealing with these conditions I should like to quote one or two extracts, other than those to which the Deputy referred, from the same Budget speech. In one of these he said:
"As the war effort in New Zealand and in other parts of the British Commonwealth grows in magnitude and intensity, the reactions on trade and industry will inevitably become more widespread, and in one way or another major adjustments will be necessary. It is the policy of the Government to ease the difficulties arising out of the war as much as possible, and to ensure that its burdens and costs are spread as equitably as possible over every section of the community."
We have tried to do the same. Again, he says:
"Realising this"—the difficulties in obtaining imports from abroad and other matters—"the Government took early action in setting up a Price Tribunal which has done good work in checking avoidable increases in retail prices."
He does not claim too much for his tribunal. He continues:
"Increases in the cost of articles imported from overseas are beyond our control."
The same applies here. He goes on:
"The Government are considering ways and means of stabilising, within limits, the cost of the principal essential commodities that enter into the day-to-day living cost of the average citizen. It is a very thorny problem, and different methods will, probably, have to be adopted for different commodities. Payment of subsidies is one method that has already been used to stabilise the prices of bread, sugar, and coal, making an aggregate annual cost of £728,000. The objective we have in mind is protection of the standard of living of the rank and file of the people by stabilising retail prices of essential commodities as well as wages."
The steps taken are similar to those taken here.
With different results.
With a difference only in degree.
What is the old age pension rate there?
The conditions are different there. The New Zealand Finance Minister went on to say:—
"It might appear that the objective could be achieved much more easily by offsetting price-rises with cost-of-living bonuses or wage increases but that provides no solution at a time when goods for consumption are in short supply."
That is exactly the same policy which we have put into operation here.
Is not the outstanding fact that there is a 6½ per cent. increase in the cost of essential commodities in New Zealand and a 9½ per cent. increase in wages, while here, wages have risen by, at most, 3 per cent. and prices have risen by 27 per cent.? Surely that is a difference.
There is a difference in degree but not in the method.
Life is only a matter of degrees.
Would the Minister quote the maximum rate of interest charged by the New Zealand banks for loans for development works?
They vary, as they vary here.