HIRE PURCHASE IN N.Z.

Press, Volume XCIII, Issue 27924, 22 March 1956, Page 17

HIRE PURCHASE IN N.Z.

EFFECT ON SALES OF HOME APPLIANCES

WARNING AGAINST OVEREXPANSION About four refrigerators and three washing machines are produced in New Zealand for every new house completed. Even if other household durables are produced, thus taking up the slack in productive capacity, some doubt must be felt as to the possibility of maintaining these high production figures, says an article in the latest Reserve Bank bulletin on "The Economics of Hire Purchase.” The article quotes figures to show the increase in New Zealand in recent years in the production of home appliances. Refrigerators produced in New Zealand in 1949-50 totalled 13,689; the 1954-55 figure was 66,053. Figures for other appliances were: washing machines, 10,136 in 1949-50, 57.376 in 195455; vacuum cleaners. 24,701, 41,273; electric ranges, 21,591. 28,707. Figures taken from the Statistics Department’s quarterly survey of retail trading show that turnover of household appliances and electrical goods in the calendar year 1954 exceeded the 195253 average by 28 ver cent., and last year they exceeded th,e 1952-53 figure by 34 per cent. “There are only about 550.000 houses in the country, and new houses are being constructed at the rate of about 17,000 a year,’’ says the article. "It is just as much in the manufacturers’ (and their employees’) interests as in the interests of long-term economic stability of the country as a whole to see that certain industries do not overexpand through excessive use of hire purchase financing. Many manufacturers realise this, but the pressure of competition forces them to expand output in order to maintain their relative 'position.” Hire purchase credit is a useful part of a modern developed economy and plays an important role in raising the demand for consumers and ■ durables and capital goods, says the article. “Movements in the volume of hire

purchase credit outstanding can significantly influence >. ronomic stability—a problem which in New Zealand is : already difficult enough to cope with . because of movements in the terms of ! trade, bank credit, and Government finance. During boom times there is ' also a danger that consumer durables . industries may over-expand and then have excess capacity when times are not so good. "Until inflationary pressures are 1 eliminated, restrictive measures on ’ bank credit and hire purchase credit ; will be necessary along with other , disinflationary policies,” the article j concludes.