Much of society were largely effected by cuts in government expenditure by the United government lead by George Forbes. This
sparked bitterness because people felt that the government were not doing enough to support the country through the Depression.
sparked bitterness because people felt that the government were not doing enough to support the country through the Depression.
The beginning of the Great Depressiin brought a severe Fiscal imbalance to the New Zealand economy. This was due to the rapid contraction of the economy, as well as reduced offshore borrowing. Export prices fell by over 40 per cent from 1928 to 1931, resulting in a significant drop in government revenue. Historian Michael King suggests revenue dropped £5 million in 1930 and a further £8 million in 1931. From a base of £264m in June 1929, gross central government debt peaked at £352m in 1934. The government responded with extreme cuts in expenditure, from which the public sector was particularly hard hit. The cut across all expenditure totalled 24 per cent.Government expenditure was reduced from £28 million to £26.5 million between 1929 and 1930, before being slashed even further to £22.5 million in 1933.
Public income support and pensions were cut by 10 percent, and war pensions reduced by a third. The impacts of the reduction in government expenditure meant that many households were significantly worse off. The fall in their income meant that they reduced their consumption spending. Shopkeepers began to go bankrupt as customers could no longer afford to make purchases. This worsened the issue of unemployment because it meant that many people were laid off during this time. |
Changes to the Industrial Conciliation and Arbitration Act further depreciated the situation for employees by lowering wage rates and abolishing regulations regarding conditions of work.
In 1931 changes to the arbitration legislation allowed the Arbitration Court to review wages. In May the Employers Federation reduced private sector wages by 10 per cent, the same reduction that had previously impacted public servants. In early 1932 the recently elected Coalition Government set about to completely remove the arbitration system. In April 1932 the Government removed the general jurisdiction of the Arbitration Court. It allowed employers to avoid going through the arbitration system during industrial disputes, which effectively gave them free reign on wage cuts and the ability to alter other terms of employment. As a result of these actions the employees and unions became powerless in refusing the demands of the employers. By 1933 the previous minimum wage and working conditions regulations ceased to exist. It has been recorded in wage data that there was a reduction in the nominal wage rate for adults of 17 percent between 1930 and 1934.