INDUSTRIAL DESTINY.

Auckland Star, 2 January 1931, Page 2

INDUSTRIAL DESTINY.

NEW ZEALAND'S FUTURE

SELF-SUFFICIENCY NOT

ADVANTAGEOUS

PROFESSOR BELSHAW'S VIEWS

It was clear that a benign Providence intended us to produce butter, cheese, wool and Canterbury lamb for the hungry multitudes of Europe, and receive manufactured goods in return. So- said Professor H. Belshaw, Professor of Economics at Auckland University College, in a lecture ou "New Zealand's Industrial Future," at the W.E.A. Summer School at Paerata. New Zealanders should realise that there were few advantages and many disadvantages arising from attempts to develop a self-sufficing economy, and that, after all, by developing a rural economy and culture, they might escape many of the difficulties and avoid many of the social evils which were associated with large scale indxistry and the concentration of population in dirty and noisome cities.

Dr. Belshaw said that the high degree of specialisation in farming in New Zealand had only been possible by the development of a considerable external trade, almost one-half of the goods produced locally being exported annually, New Zealand having probably the largest per capita external trade in the world. Since 1919 over 90 per cent of the value of exports had consisted of pastoral products. Naturally the main markets for pastoral products was found overseas, about four-fifths 6f the total pastoral production being exported, the remainder consumed within the country.

Almost the wliole of the production in agricultural, factory, fishery, and' miscellaneous groups was consumed locally. Only about one-fourth of the annual forest production and about one-eighth of the product of mines' was exported The main market' for New Zealand produce was the United Kingdom, but other countries were increasing in relative importance. In 1921, 86.4 per cent of the exports went to the United Kingdom, 93.4 per cent to the British Empire as a whole, and C.fi per cent to foreign countries. In 1928 the relative figures were: 72.1 per cent to United Kingdom, 84.1 per cent to the Empire as a whole, and 15.9 per cent to foreign countries. After the United Kingdom, the United States was the main market, followed by Australia, Canada, France and Germany. Dealing with import trade the lecturer pointed out that the characteristics of economic organisation within the country, and particularly the great importance of primary production, naturally had their reactions on the import trade. In 1928, of a "total of £44.9 million, £35 million consisted of wholly or partly manufactured goods, £7 million of food, drink and tobacco, and £2.4 million of raw materials and articles mainly unmanufactured, the value of the manufactured imports being significantly about the same as the value of factory and miscellaneous goods produced within the country. Sheep Farming and Dairying. While changes in the relative importance of different branches of productive activity would undoubtedly continue, the predominance of sheep farming and dairying was likely to persist. New Zealand was by -far the most important external source of supply to the United Kingdom of mutton and lamb, particularly lamb, and was the most important source of supply for dairy produce. Sheep farming, being almost

the only feasible method of' utilising large areas of light land, would always be an important mainstay. The technique of the industry was well developed, and the quality of the product was high. Apart from a permanent drop in the demand for sheep products,, the only factor likely, to make for a permanent decline in production wa« the encroachment of dairying. Conditions of soil and climate being probably unrivalled in large parts of the country, with increasing population it was probable that dairying, with its more intensive methods, would encroach upon areas now devoted to more extensive types.

Timber had fallen on evil days, whereas as late as 1853 it was the chief item of export. The depression had heen recently intensified by reaction from over-building, also the substitution of other materials for building, and increased foreign competition. Of much significance was the rapid development of afforestation. Dr. Belshaw gave a number of facta and figures illustrating both State and commercial activities in connection with afforestation, and pointed out that the success or failure, particularly of the commercial would have important reactions on the economic life of the country. If the present rate of planting continued, there would in a few years be more available than estimated requirements in the next 40 or 50 years. If the" present activity in afforestation continued, there might be a possibility of a new export trade developing, particularly in paper. More Population Needed.

The population was virile and intelligent. Ninety-one per cent was of British stock, and there was no racial friction. The rate of increase had been rapid, but the population of 1,500,000 could scarcely be said to be large enough to utilise the economic resources to maximum efficiency. A large home market would permit of the economical working of larger manufacturing units, while in many areas closer settlement would permit of the more effective utilisation of the land and cheaper community services. Thus a larger population would be advantageous. One important faetor affecting industrial development is financial organisation. There were certain Aveaknesses, dependent partly on the smallness of the country, such as the absence of a central bank, and in consequence the regulation of currency and credit 'became more difficult. There was also the absence of an organised money market, making control of foreign exchange more difficult. A further weakness lay in the absence of adequate machinery to finance agriculture. A beginning had been made in meeting j this by the establishment of a rural advances branch of the State Advances Department and a rural intermediate credit system. In spite of these difficulties, , financial organisation was likely to develop satisfactorily. The steadily increasing indebtedness of national and local hodies might prove a burden owing to our being faced with the probability of falling prices. There was heed for a more careful control over public finance than had been the case in the past, and some check on the growth of the number of public servants. ' Customs Policy. A.factor of some importance was the Customs policy. To protect home industries by Customs, taxation, and at the same time endeavour to increase revenue in the same way, were two entirely incompatible things. The effect .of Customs policy had been to- artificially encourage local manufacturing, and at the same time raise farming costs. ' Dr. Belshaw said he saw no reason why pastoral industries should not retain their position of pre-eminence. The market for mutton, lamb and dairyproduce should expand for 40' or 50 years, and then stabilise. The only serious increase in competition likely was from the Argentine, and possibly Siberia. There were also important markets in the East which might be developed. The future with regard to wool was uncertain owing to the competition of artificial fabric. The speaker expected that with closer settlement dairying would encroach still further on sheep farming, which, however, avouM always remain important, as there were many areas of light land suited only for sheep. Arable farming should retain its present position, but was not likely to expand. The fruit industry had passed ihe experimental stage, and should slowly build up an export trade. Secondatry Industries. Although at first sight it might appear that New Zealand, possessed adequate foundations on which to build "large and flourishing manufacturing industries, such was not the case. Easy access to, adequate power and raw material \,as necessary, also skilled labour and large markets. It was no accident that woollen goods made in England from New Zealand wool would pay double costs of transport, meet Customs duties and compete with local products on the Ncw Zealand market. It seemed likely that secondary industry would increase with population, but 'could never compete very effectively with British, American and even Australian goods. The New Zealand of the future would still be dependent mainly on rural industries. Secondary industries might grow in relative importance. The proportion of population engaged in permanent professional services would ' probably increase, and a larger proportion of the population would doubtless be found in the_ cities. Both farming and manufacturing industries might become more diversified than they were at present, and the proportion of goods imported and exported was likely to fall.