JUNE 28] THE NEW ZEALAND GAZETTE 821

One of the first duties of my Government on assuming office was to examine the country’s finances, the soundness of which they firmly believe must always be the very foundation of the living standards of the people and the best safeguard of their earnings and savings.

After this examination, my Advisers found that in order to keep the Budget within manageable proportions and restore reality to the structure of prices it was desirable to abolish certain subsidies and reduce others.

My Ministers consider, however, that, without some compensating adjustment in wages and other forms of fixed income, the corrective measures they have initiated would fall too heavily upon those least able to bear the strain. Steps were therefore taken to enable the Court of Arbitration to make an interim wage order, without prejudice to the making of a final award later on, when the full effect of the removal or reduction of subsidies upon costs and prices can be gauged with more reliability. Furthermore, various benefits under the Social Security Act are being increased by cost-of-living bonuses in consonance with the anticipated increase in prices of items in the basic food and other groups.

MR. SPEAKER AND MEMBERS OF THE HOUSE OF REPRESENTATIVES,—

As has already been announced, the new Administration found that, in order to provide for that part of the capital programme which could not be financed from other sources such as National Savings, a loan of £20,000,000 was needed. The use of Reserve Bank credit at a time when the volume of money in circulation was already expanded, when both production and prices were at record levels and when there was full employment, would, in the opinion of my Advisers, merely have served to aggravate inflation. They therefore deemed it wise that the moneys required should be borrowed within the country. The generous response which the people have made in over-subscribing the recent loan affords unmistakable evidence of public confidence in the measures which my Government are taking to promote economic stability and social well-being. The funds so provided will enable the Government to meet essential capital requirements without the creation of new money.

Although the state of the country’s finances holds out little prospect of major tax reductions this year, it is, nevertheless, proposed to make some adjustments. My Prime Minister has already announced the abolition of the 33⅓ per cent. penal tax on certain classes of income. It is considered by my Advisers that this measure of relief to a considerable section of the community will remove a long-standing injustice. Another matter for which legislation will be introduced will be a change in the basis of assessment of land-tax.

Legislative provision will be made at an early date to remove the Reserve Bank from direct Ministerial control, and vest in the Bank the responsibility for action in the monetary field consistent with the policy of economic stability for which the Government holds a mandate from the people. This proposed legislation will, however, ensure that the Reserve Bank shall be obliged to heed the wishes of the people as expressed from time to time by resolution of Parliament.

HONOURABLE MEMBERS OF THE LEGISLATIVE COUNCIL AND MEMBERS OF THE HOUSE OF REPRESENTATIVES,—

It is the intention of my Ministers to place before you legislative provisions designed to apply as soon as possible the principles upon which they have been elected to office.

In order to avoid an accumulation of legislation at the end of the session, my Ministers have given considerable attention to the preparation of Bills and some forty are either ready or almost ready to be introduced. This practice will, it is hoped, give Members and the public ample time to consider the measures laid before Parliament.