Laisez Faire Triumphant

With the recent departure of the World Bank Mission we are left wondering what sort of report they will be taking back to the Bank Directors. If they say very much about the way we are running our economy it will hardly be complimentary.

For dealing with our present economic crisis the Government seems to be relying on only two weapons in its economic armoury, masterly(?) inaction, and pious pleas for voluntary restraint. To do it justice it has made some attempt to cut bank advances and imports, but since it has at the same time done almost nothing to restrain internal demand it is fairly obvious that these policies will prove ineffective. Within a year we should really be in the cactus (unless export prices rise). However, since 1963 will be an election year again, it is difficult to see how the Government will be able to pluck up courage to take firm action at such a politically inopportune time. So Quo Vadis the New Zealand Economy?

It is of course relatively easy to understand why the Government is frightened to take action. It took over the economy in the same sort of mess it had left it in three years previously, due this time to Mr. Nordmeyer's belated attempts to win the election. However since National Party spokesmen had denounced every step taken by Nordmeyer in 1958, they were left emasculated when the same policies became necessary in 1961. Nordy's famous "black budget" may have managed to (temporarily) right the economy, but it made Labour's defeat in the next election certain. Harry Lake understandably hardly wishes to do the same thing to his own party.

But this is not a good enough reason for letting things slide. New Zealand in the next decade faces formidable economic problems. The effortless prosperity of the 1950s looks like vanishing as International terms of trade turn against primary producing countries. Market prospects for our Dairy products look increasingly shaky with Britain's proposed association with the E.E.C. since production of these products in Western Europe is rising faster than consumption. Our "new hope" industries (Pulp and Paper, and Aluminium) also look like facing oversupplied markets in the not too distant future. Added to this our population increase looks like adding at least half a million more people in the next decade. Any rational man would think that this called for urgent action to speed development, but our Cabinet thinks otherwise. It has "more important" things such as elections to think of.

So we are left with N.Z. in its present economic position—slowly sliding downhill with the Government too frightened to put on the brakes. Despite the urgent recommendations of the Government appointed Monetary and Economic Council calling for immediate tax increases and further stringent measures to straighten out the economy it looks as if nothing will get done, The Prime Minister has spoken hopefully about restoring economic balance over three years or more, a sure indication that he doesn't intend to do anything in the immediate future.

In the meantime we will all have to hope that something will turn up (especially export prices). Still, we can always migrate en mass to Australia and join their unemployed.

—O.P.