The Press WEDNESDAY, JULY 21, 1954. Economic Survey

Press, Volume XC, Issue 27407, 21 July 1954, Page 10

The Press WEDNESDAY, JULY 21, 1954. Economic Survey

{This year’s Economic Survey (which j was presented in Parliament yesterday) contains the now customary yearly meal, in readily digestible form, of fact, conjecture, and reasoning, about New Zealand’s economy. Except for one ingredient, this year’s meal is rather dull; but for good measure there is a special I historical survey .of marketing j arrangements for New Zealand’s ; principal exports—dairy produce, .meat, and wool. A foreword explains that the marketing survey has been i prepared because, after 15 years of ■ bulk selling, meat, butter and cheese will in future be sold in (Britain on a free market, in which (rationing and price control have (been abolished.

The survey -opens with a review of world economic events, which, of (course, vitally affect the economy of a trading nation such as New Zealand. A marked improvement in the world economic situation is noted. A damping down of monetary inflation has occurred in most countries; international raw material prices have been more stable; easing of restrictions on foreign trade has. been general as countries have attained a better balance in their transactions with other countries. The survey directs attention to the Commonwealth Finance Ministers* conference in Sydney early this year; and this section includes passages that arouse some curiosity. Discussing convertibility of sterling, which can now be discussed ’ “ for “ the first time since before the “war in the knowledge that real “ progress can be made the survey is at pains to emphasise that support by the International Monetary Fund will be “essential” to convertibility. “The Commonwealth “ Ministers at Sydney ”, the survey declares, “ reaffirmed their inten- “ tion to work as far as possible “ through existing international “ organisations dealing with trade “ and finance It is remarkable, in fact breath-taking, to find the survey calling attention to New Zealand’s representative at Sydney having been a party to’ a declaration to - work with an international organisation which New Zealand helped to form but with which it has since resolutely /efused to have anything to do. It may be natural to think that the vital part the International Monetary Fund must play jn Commonwealth financial affairs is emphasised in the Economic Survey to prepare public opinion for an announcement that New Zealand is, shamefully belatedly, tp join the fund and the International Bank. Otherwise, it would be sheer hardihood for New Zealand to speak, as it does, in the sections referred to, but particularly in the section about international measures to .avoid a recession. After discussing the pros and cons of the question, the survey arrives at the conclusion that; ... if Commonwealth and other important trading nations are prepared to play their part in maintaining trade, and if the International Monetary Fund is willing to assist its member countries as it has indicated “by supplying credit early on liberal terms and in adequate amounts,” a future moderate decline in business activity in the United States, if it should occur, need not affect us seriously, either directly or through repercussions on activity and employment in the United Kingdom or our other overseas markets.

This says, in other words, that if the International Monetary Fund does its duty by New Zealand, this country need have little to fear. There is surely something to be added about New Zealand doing its duty by the International Monetary Fund. Will the addition be made in Mr Holland’s Budget statement? The survey points to economic trends which, in general, lead to a better balance in the economy of this country. During the last financial year the labour force increased by 21,000 (10,000 from immigration); but in terms of vacancies notified there was still evidence of substantial over-employment at the end of the period. Sections of the report deal with prices, wages, stocks, and terms of trade—wlych turned much more in New Zealand’s favour' during the year. The section of the survey dealing with capital is of special importance, because economic progress in New Zealand depends upon sufficient capital being available to support the basic industries and services necessary to serve the larger population and to maintain its high standard of living. In the 1953-54 financial year gross capital investment was the same proportion of the gross national product as the previous year. As the survey mentions, 23 per cent, of the gross national product is a high proportion of resources to use for building up capital assets. Moreover, it is a very high level of investment to sustain when some 30 per cent, of the gross national income is absorbed by direct and indirect taxation. It is certainly difficult to think that the proportion of investment money could be increased. But if the population is to increase at the rate predicted, and if standards of living and. services are to be maintained, the present level of investment will not be enough. In fact, this year’s Economic Survey, like last year’s, points strongly to the conclusion that New Zealand’s limited internal resources for capital development must be supplemented by external loans. But the survey fails again to draw the obvious and logical conclusion. It does mention that within available resources (which are anything but adequate to the demands ( on them) Britain is ready to consider approaches to the London market for loans in support of

general development; and the survey holds that this “ could be of use “to New Zealand because we have “few large-scale individual pro- “ jects, but an extensive general “ development programme ”, But what this means or implies the survey leaves to imagination.