MEANS TO FULL EMPLOYMENT

Press, Volume LXXXIX, Issue 27038, 13 May 1953, Page 12

MEANS TO FULL EMPLOYMENT

Import Control Held Essential OPINION OF TREASURY OFFICIAL (Neto Zealand Press Association) WELLINGTON, May 12. Mr G. J. Schmitt, an investigating officer of the Treasury Department, told the Institute of Public Administration today that full employment could not be maintained without import control. He was giving an address on economic stability and the balance of payments. "Full employment requires that there be an unsatisfied demand for local production,” Mr Schmitt said. “This unsatisfied demand will tend to turn, at least in part, to imports. If it is wholly satisfied by expenditure on imported goods, there will remain no excess demand to maintain full employment internally. “It therefore seems that the Government must ensure that some part at least of the demand for imports is kept unsatisfied, and so turned back to maintain excessive demand for local products,” Mr Schmitt said.

If the Government wanted to maintain full employment, it must continually apply import controls or—what was economically much the same thing—exchange allocations for imports, he said. Import control had to be maintained, irrespective of the level of foreign exchange receipts. Mr Schmitt said that the maintenance of an excessive demand for local production required that local prices should be kept below import prices by means of an appropriate exchange rate and tariff policies. Internal stability would be jeopardised unless both the demand for imports and the actual level of imports were kept stable.

Ideally, the Government should decide on the most likely long-term trend of export receipts, and keep import expenditure to this level, Mr Schmitt said. Import expenditure should not be adjusted to short-term fluctuations In export receipts. In boom times, big reserves should be built up, and then allowed to run down in slump times. The least > possible reliance should be placed on import control to restrain the deniand for imports, said Mr Schmitt. The Government should

adjust exchange rates and tariffs to maintain only a moderate degree of excess demand for imports.