SPENDING BY N.Z. OVERSEAS

Press, Volume XCIII, Issue 27883, 3 February 1956, Page 7

SPENDING BY N.Z. OVERSEAS

“Selective” Control Advocated MANUFACTURERS’ REQUEST (New Zealand. Press Association) WELLINGTON, February 2. “The New Zealand Manufacturers’ Federation has little faith that the operation of credit restraint will cure the country's balance-of-payments problem, and it calls upon the Government to introduce immediately selective expenditure of overseas funds * as the only satisfactory means of rectifying the deteriorating monetary situation,” said a statement issued today by the president of the federation (Mr F. C. Penfold). “Though we concede that some form of credit restriction may be necessary to halt inflation within the country, the federa-ion disagrees with the Government’s policy of relying solely on credit restraint to reduce the expenditure of our overseas earnings,” said Mr Penfold. “The federation feels that the Government is gambling on an unknown factor, in the form of credit restrictions, to right the present overseas trade position, whereas it should introduce immediately some form of selection in the expenditure of overseas funds. Moderate action taken . now is infinitely preferable to drastic action later. “The plain facts are that we are spending more money overseas than we can afford, and the credit restrictions. designed mainly to correct this position, are pressing heavily and often needlessly on many sections of the community. Farmer’s View Endorsed “The federation,” said Mr Penfold, •endorses the views of the Wairarapa provincial president of Federated Farmers, who, in speaking this week of the ‘credit squeeze,’ stated that a measure that had the effect of reducing the amount of fertiliser some farmers could buy to increase production was not the way to stop importers irom importing non-essential goods. “The federation is seriously concerned over the effects of these excessive and often needless imports on various sections of industry,” Mr Penfold said. “Cases have been placed before it of factories being forced to close down departments or reduce production, with consequent waste of trained operatives and increased unit costs. This reduced production causes repercussions in other sections of industry, and the constant whittling away of the whole manufacturing structure has a very serious cumulative effect. “We shall probably be accused of self-interest in making this appeal for quick action to avert irreparable harm being done to the nation’s economy at a time of uncertainty for the sale of our dairy products abroad,” Mr Penfold said, “but it seems essential that New Zealand should not rely on credit restrictions alone to rectify a trading position that showed a deficit of £26,500.000 in 1955 and £16.600,000 in 1954. and has reduced our sterling balances below what has long been considered the safety limit.”