N.Z. BUSINESS CONDITIONS

Press, Volume LXXXIII, Issue 25242, 22 July 1947, Page 8

N.Z. BUSINESS CONDITIONS

SECONDARY INDUSTRIES EXPANSION

NATIONAL BANK’S REVIEW General business conditions of the Dominion are surveyed by the chairman of the National Bank of New Zealand, Sir Sydney Parkes, in a statement attached to the report of the directors, to be presented at the annua] meeting in London on July 24.

Trading conditions, it is noted, nave been good in spite of of many commodities and the continuance oi iationing in certain lines. Although demand for all types of goods has been high, the cost-oi-living has lemained comparatively stable The substantial deposits in the trading and savings banks bear witness to tne plentiful supply of money in the hands of the public. This continues to exert inflationary pressure on prices which have only been held in check by the retention of war-time controls. There is still a large unsatisfied demand for both male and female workers, and practically no unemployment The Dominion’s external trade statistics for the year ended December 31, 1946, show exports at the record total of £ N.Z.99.407,000 and imports £N.Z.71,634,U00. The increase in exports compared with the previous year was mainly under the headings of wool and meat. Although the total value of imports was 38 per cent, above pre-war, the actual volume was considerably below the 1939 level. The net overseas assets of the Dominion stood at £N.Z.99,508,000 in March last, after payment of the contribution of £10.000.000 sterling made by the New Zealand Government to the United Kingdom Government. The continued high level of overseas funds is partly the outcome of increased prices paid for New Zealand exports and partly the result of the difficulty of obtaining imported commodities under present conditions.

Reference was made above to the pressure on prices caused by the plentiful supply of money. The stabilisation scheme has been successlul in keeping the price level reasonably stable, but the system introduced as a war measure was necessarily rigid on account of the conditions ruling at the time. The retention of economic controls in some form is essential until a more plentiful supply of goods is available, but dissatisfaction with the stabilisation scheme as at present operated and the need for re-examination of its basis in the light of post-war conditions has been voiced in a number of circles. The Government has shown itself interested and some healthy discussion on the question has already taken place between the organisations representing the major economic and social groups in the community. Any changes made should if possible provide controls that will’ permit the Dominion’s business structure to attain the flexibility so essential to a growing and healthy peacetime economy. The position would, of course, be relieved by a more plentiful supply of consumer goods but. apart from a higher flow of imports, this can be achieved only by an increase in productivity per man hour. It is not only the duty of all sections of the community, but it is also in their own interests that everyone should co-operate in attaining the maximum degree of productive efficiency. The maintenance of individual savings at the highest possible level is essential until ample consumable commodities are available. Savings piaceu at the disposal of the State are an indispensable help during the period of reconstruction and development and are invaluable as a safeguard against inflation. In fact, they are just as indispensable now as they were during the war, although the compelling reasons are not so apparent. The expansion of secondary industries continues to be a marked feature of the Dominion’s economy. In addition to the industrial development which has taken place with local capital, many British and other oversea companies have recently established units in New Zealand, and others are contemplating doing so. The bank shall continue to play its part in aiding this development. Unfortunately the power situation has become serious, but a programme of expansion of generating nlant is now being actively pursued. Primary Production The season tor primary production has been mixed, but, on the whole, returns have been satisfactory. Dairy production has been better than last season; butter graded for export in the eight months ended March 31, 1947, was 18.5 per cent, higher than for the same period last year and is practically up to the quantity produced in the eight months to March 31, 1945. The recent announcement of the Government to set up a Dairy Commission, which will have full responsibility for the fixing of the guaranteed price and marketing of dairy produce, marks an important development in the industry. The Government has promised early legislation to bring the proposal into effect.

Reports from all parts of the Dominion confirm that the season has been good for fat stock raising, and meat export figures are expected to be higher than last year. It is now just two years since the Joint Organisation (U.K.-Dominion Wool. Disposals, Ltd.) took over the responsibility of disposing of the accumulated war-time stocks of wool. At that time surplus stocks amounted to 10,500,000 bales, and it was expected that it would take 13 years to dispose of them without disturbance to the market for current clips. The extent of demand since then has exceeded all exnectations and it is indeed gratifying to learn that more than half of the surplus stocks has already been sold. It reflects great credit on all sections of the trade and on the Joint Organisation that this has been accomplished so smoothly and efficiently. Restocking of the trade would seem, however, to have been completed. and remaining stocks, of which a large proportion is of inferior types, are, likely to be more difficult to liquidate. Although there has been a good clearance of New Zealand wool, it has not commanded such a keen market as the finer wools from Australia and South Africa. There was. nevertheless, almost a complete clearance of the current clip, and it is understood that surplus stocks of New Zealand wool are now down to about 1,000.000 bales, or roughly a year’s production.

The main factor in *ie increase in consumption relative to pre-war has been the enormous rise in the consumption of wool by the United States of America and in this lies the key to the future The wool producing countries are therefore specially concerned with any action the United States might take that would have the effect of reducing its imports of wool. Publicity has been given by the Government to a 10-year plan for national

development drawn up in conjunction with the local authorities affected, and covering large scale public works involving much new construction, as well as some maintenance work deferred from the war period. The scheme is, however, still in the planning stage. Much of the work has been made necessarv bv industrial growth in the Dominion, but there will be much which can be deferred until the time when the present high demand for consumer goods falls off and labour can be diverted to national development without placing an undue strain upon the economy.