The Press THURSDAY, JANUARY 2, 1958. Back to Controls

Press, Volume XCVII, Issue 28474, 2 January 1958, Page 6

The Press THURSDAY, JANUARY 2, 1958. Back to Controls

The announcement by the Prime Minister (Mr Nash) of a sharp tightening of import controls, including the virtual prohibition of imports of such items as clothing, footwear, soap, and carpets, will cause no surprise. Some corrective to over-importing would have been required in any circumstances this year—probably no more than a slight tightening of credit. But the return of the Labour Government with an inflationary policy has left little alternative to direct restrictions, w’ith all the anomalies, injustices, and trade frictions they entail. The reason for this policy was partly given by Mr Nash when he described the rapid depletion of overseas funds in the last three months. What he omitted to mention was that this buying spree coincided with the knowledge that Labour was prepared to give away £ 18 million that had already been spent, with no apparent motive except to obtain office. Mr Nash delicately described this as the nation living beyond its means. His remedy, perhaps the only one available while New Zealand obstinately refuses to avail itself of the facilities of the International Monetary Fund, will create new privileges as well as new hardships. While some small concerns usefully serving a public demand face

extinction, others will find themselves in the happy position of having their business practically guaranteed. The need for efficiency and enterprise has been reduced by the creation of these vested interests.

This can be only the first instalment of Labour’s economic policy. The cutting down of imports in selected categories and the blanket protection offered to some industries must add substantially to inflationary pressure. To restrain this the Government will have to introduce other controls. Price control will have to be attempted, .in spite of the obvious danger that it will divert scarce labour and resources into uncontrolled luxury industries. In a variety of ways the Government must try to direct labour into the most useful occupations. Either in higher prices or lower quality costs will tend to rise. So will land and building values. Black marketing will be encouraged The solution of these problems is much more difficult than the calculation of how much to reduce expenditure on imports. The public may be irritated by the disappearance from shops of goods they want to buy. They may find the other consequences of Labour improvidence more irksome before economic stability is restored.