§ I now turn to our internal economic situation and to the problem of securing a balance between our internal resources and the demands that are made upon them. The steps taken during the past year to strengthen our administrative machinery for handling this problem of planning the nation's resources have proved of toe greatest value. It is just about a year, the Committee will remember, since the Central Economic Planning staff came into being and the Economic Planning Board was set up. The latter body comprises representatives of industrial employers and trade unionists, together with the permanent heads of the principal Government Departments concerned with economic affairs. It has come to play a most effective part in helping to shape our economic policy. The achievement of a satisfactory internal balance is, of course, fundamental to a healthy economy. If demand is grossly excessive or, as has been the case too often in the past, grossly deficient, the economic system cannot work smoothly. In the particularly difficult situation in which we find ourselves today, our internal situation is bound to affect our external balance of payments. If inflationary tendencies are not controlled, exports will suffer from the too strong drag of the home market and the too high prices at which they will have to be offered overseas.
§ Excessive and uncontrolled demand also makes all planning a matter of extreme difficulty and renders it impossible to carry out the plans that are laid down—especially in such a democracy as ours, where we all desire to preserve a large measure of freedom of action for the individual. Today, all industries tend to show an abnormal appearance of prosperity, which exaggerates the real insufficiency of capacity and labour. Competition for scarce resources of all kinds exists, in which the most desirable 45 products from the national point of view are by no means necessarily successful, and there arises, as a result, a demand for increased controls over resources and investment because of the heavy pressure upon them.
§ The balancing of resources and needs is a continuing process and is one of great complexity. As a first stage, we need to achieve an over-all balance, measured in monetary units, but that alone is by no means sufficient. Needs vary in importance, absolutely and from time to time. Some are more essential for the good of the country; others are less so. We must see that the principle "First things first" is carried into effect; and it is not always easy to agree upon what the first things are, though we should, I am sure, all agree that the ultimate welfare and happiness of our own people is the first demand upon our resources.