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Chapter V
Social and Economic Trends

The passing of political power from the farmers to the trade unions followed a world-wide trend. At the end of the second world war it might perhaps have been expected that the party in power would be rejected at the polls, but the Labour Government managed to survive by securing 42 seats against 38 captured by the National Party. There was very general comment on the fact that the non-Maori seats were exactly halved while the four Maori electorates won the day for Labour, showing a lively sense of the sympathetic attitude of the Government to Maori problems and doubtless looking forward to future favours.

The Labour Government probably owed its victory as much to the success of its stabilization programme as to anything else. Social security sounded more spectacular, but regular and inexorable deductions from salaries and wages modified its appeal to the electors, even though the Consolidated Fund was called upon for heavy contributions which were in effect a gift from the higher to the lower income groups. If Labour had not applied the lessons learned in the first world war and taken measures to check rises in the cost of living, nothing could have saved it at the election of 1946. But the stabilization programme of 1942, which froze salary and wage rates as well as the principal farm costs, kept a salutary brake on the cost of living and though a rise of some 10 to 12 per cent in wages was found necessary in 1945 the cost of living was still kept down by an increase in subsidies.

The fact that New Zealand was sending everything she could to Britain, and at the same time was limited in her own purchases from Britain, saw a spectacular change during the war in the sterling balance situation. At the outbreak of war New Zealand's sterling balances were at the phenomenally low level of under nine millions. Six years later, in August 1945, they had risen to eighty-one millions. The Dominion was therefore able to make some reduction in her external public debt.

Although it probably did not expect gratitude from the page 364 farmers—and certainly did not receive it—the Government spent much thought on the application of its stabilization programme to primary industries. Consent was obtained from the farmers' organizations to retain in special farming stabilization accounts any increased returns from produce above those ruling on 15th December, 1942. The Government had, of course, to guarantee to keep farm costs steady and did this by means of subsidies, mainly on fertilizers, the cost of which was deducted from the stabilization accounts. By keeping farm costs low New Zealand is entitled to hope that when conditions of free competition return her butter will be able to sell in the British market despite the cheapness of margarine, and her other principal products—meat and cheese—compete successfully with those of other countries. Long-term contracts for main New Zealand products, signed in 1948, give New Zealand farmers greater security than they have ever known before, even though the exchange premium of 25 per cent was removed in the same year. The one main product for which there was no guaranteed price and about which some anxiety was felt was wool, but the plan for the gradual liquidation of accumulated stocks worked so well that prices were maintained at remarkably high levels and a return of forty-four millions for New Zealand wool in 1948 far exceeded expectations based on experience after the first world war. New Zealand has taken a prominent part in the International Wool Secretariat which has had great success in encouraging research into new uses for wool and making known its many virtues.

The pre-war spectre of saturated British markets and the war-time spectacle of a country almost entirely denuded of man-power, has combined to intensify in New Zealand the desire to develop secondary industries. Farming in the Dominion is so well organized and mechanization is so general that little scope for the employment of more labour exists. If a progressive migration policy is to contribute something towards the country's crying need for more people, there must be industries to absorb new workers. Up till very recently virtually all New Zealand's secondary industries were closely allied to the natural resources of the country and did not involve extensive imports of raw materials. Only by protective tariffs will it be possible to establish any major new industries. page 365 But there is little doubt that these would be a lesser evil than to leave the country with its present small population. New Zealand's prosperity was built up in an era of virtual free trade, since for most of it she could sell all she produced in Britain, and it is paradoxical that she should now pin her faith on planned marketing and guaranteed prices. But paradoxical or not, it seems the only way to cope with the complications of world economy to-day.

The Labour Government has naturally insisted that the share of farm workers in the general prosperity which has been associated with high returns for farm products should be reasonable. Paid holidays for farm workers and other innovations have helped to arrest the drift from country to town. In urban industries the trade unions have been able to secure good wages and conditions for their members, and it is regrettable that they have not always insisted that these benefits, arising as they must from the profits of the industries, can be sustained only by giving in return a fair day's work. Many union leaders seem more concerned with reducing hours of work to forty or less spread over only five days than with any considerations of the ability of the country to produce enough in the reduced hours. A five-day week is undoubtedly a tremendous boon, but if all workers are to have the same two days off the virtual cessation of ordinary amenities at the week-end robs the shortened week of some of its benefits. New Zealand depends for its very existence on its sea-borne trade. The waterside workers are therefore key men in the Government's campaign to provide prosperity for all. Their leaders indignantly repudiate charges that the men are not pulling their weight, but the fact remains that the turn-round of ships in the Dominion is so slow that liners can now make only two and a half round voyages from Britain in a year instead of three, as before the war. With the cost of shipping enormously increased, this slow turn-round means higher freights and is a direct tax on the productivity of the community.

The shadow of the trade unions often falls across the path of the Government, and at times ministers who have themselves fought hard battles for unionism in their time find themselves in wordy conflict with secretaries who resent measures they have not been asked to approve in advance or who have some other page 366 grievance. Whereas one might have expected that the bitterness of class conflict would have been mitigated by the rise to power of the Labour Party, one gets the impression to-day that there is more class consciousness than there used to be. Triennial elections tend to keep political controversies in constant motion and the gradual cutting down of Labour's majority makes each contest more strenuous than the last. Much of the heat engendered is perhaps inseparable from democracy in action, but it seems a pity that some at least of the energy spent could not be applied more directly to productive ends.