Increased Production Helps Dominion

Press, Volume XCVI, Issue 28463, 18 December 1957, Page 19

Increased Production Helps Dominion

A.N.Z. Bank Chairman’s Statement The Seventh Annual General Meeting of Australia and New Zealand Bank Limited will be held in London on Wednesday, Bth January, 1958.

The following is an extract from the Statement by the Chairman, the Hon. Sir Geoffrey C. Gibbs, K.C.M.G.

The past year has been a prosperous one for New Zealand. High levels of production, have been maintained and the country has. to a large degree, been free from the inflationary forces which have hindered balanced development in the post-war period. The year has not been without its share of problems, particularly in relation to exports of dairy produce, but, over-all, the economy has attained a position where it has been able to enjoy the fruits of high levels of domestic output and a very large measure of freedom from controls upon imports. Prices have remained relatively stable, although more keenly competitive conditions have prevailed.

In generally favourable conditions farm output reached very high levels in the past season. Wool production attained a new peak, and both dairy and meat output have been running very close to the high figures reached in the previous year. A particularly useful feature of meat production has been the further increase in beef products, which are so important in catering for markets outside the United Kingdom. < LABOUR CONDITIONS

In the easier labour conditions the Government and local bodies were able to recruit workers more readily than in earlier years. In consequence, Government expenditure rose while private activities were being held in check through monetary controls. In some respects this was a natural movement, for, in many activities, government services had been operating with insufficient labour during the years of high inflationary pressure. But, oh the other hand, it is clearly important for the Government to ensure that in standing ready to absorb any labour which becomes available, it does not unnecessarily prolong the need for restrictive monetary policies. CREDIT POLICY

During the year the Central Bank shifted the emphasis of its control over trading bank credit from one of enforcing sharp reductions in credit, through the imposition of severe penalties on the banks, to one enabling the banks to maintain their advances,

apart from seasonal fluctuations, without having recourse to central bank loans at high interest rates in meeting minimum reserve requirements. It had become apparent earlier in the year that continuing downward pressure on the scale of the previous year could not be continued without serious repercussions for the eednomy. Nevertheless, further reduction in bank lending was sought, in order to help reduce demand for Imports and to off-’ set the high level of Government spending.

Government expenditure in the past financial year was again not fully matched by receipts from taxation and loans, and it seems that, in the Current year, the authorities will need to receive a good flow of investment moneys in order to provide adequate support for monetary policy. PROGRESS

We continue to make progress: one yard-stick in our progress is that the trading bank, apart from the Savings Bank, has increased very substantially the number of accounts during the last six years. If we are to be prevented from making reasonable profits we shall be unable to continue this expansion. In these days we read in all countries and in many industries of profit margins narrowing, and tanking is no exception to this trend. The cost of providing the sort of service that we are proud to provide has risen enormously in the last few years and out of all proportion to the very small rises in charges we have made to our customers.

If the 'trading banks are to continue to serve the community

they must be allowed to make sufficient profits to enable them to continue to give undoubted security to their depositors, to expand their network of branches, to improve their premises and to maintain their services at the high standard the public requires. (Extended report by arrangement.)