Salient. Victoria University of Wellington Students' Newspaper. Volume 31 Number 16 July 16, 1968
Now Mr. Cracknell is a qualified accountant widely respected in Northland for local body work carried out over many years. Examination of his careful parliamentary record in his first session makes such attempts to portray him as a radical innovator of ruinous financial schemes look more than a little silly.
What are the policies that Mr. Cracknell and the Social Credit League advocate? The short answer is that Social Credit means the full implementation of the Reserve Bank Act, 1964.
This sounds awfully unexciting, but it's the truth. Because of the provisions of the Act. which outline the functions and powers of New Zealand's central bank, Social Credit policies could be put into effect without any new legislation. No more personnel would be needed because existing agencies would be used.
Social Credit will use the bank's statutory powers to "regulate and control money, banking credit and currency", with regard for the "highest degree of production, trade and employment, and the maintenance of a stable internal price level."
In terms of practical policy, this involves the increased use of Reserve Bank credit at cost of issue for government and local body capital works. (The total volume of credit issued by both government and private institutions would be kept in balance with the value of the production of gods and service.)
What is the reasoning behind the advocacy of the greater use of "costless credit"? The Social Credit analysts of the New Zealand economy reveals these major defects:
1. An unnecessarily high cost structure, resulting from high charges for credit available to the private sector, and high public debt servicing charges (when expressed as a proportion of the budget.)
2. A tax load sufficiently burdensome to act, together with high costs, as a severe disin centive to increased production both in agriculture and industry.
3. A shortage of capital for local government industry, resulting from Government commandeering of the people's savings through enforced savings investment in central government loans.
4. A lack of Government enterprise in seeking bilateral trade agreements with a variety of countries, to expand the narrow base of our overseas trade.
Social Credit believes its policy would alleviate these defects in the following ways:
1. The cost spiral would be cut back, because the cost of credit in both the private and public sectors would be reduced.
2. Taxation and local body rates could be reduced.
3. Production would be stimulated by these incentives (reduced taxes, rates, costs) and by careful selection of projects to be financed by Reserve Bank credit.
4. More private savings, at present used largely to finance local and central government, would be released for investment in industry. (At the end of last year trustee and private savings banks alone had investments of $426 million in Government securities, $36 million in local government securities, $86 million in mortgages and only S19.5 million in business loans.)
5. The people, through their elected government, would have greater control over the total issue of credit, which after all is made possible because of their combined efforts.
Such a policy is often condemned as inflationary, but there need not be any more credit created over-all.