N.Z. Must Learn To Live Within Its Means

Press, Volume XCVII, Issue 28530, 8 March 1958, Page 8

N.Z. Must Learn To Live Within Its Means

New Zealand was going to have less “housekeeping money” this year, and would have to cut its housekeeping expenses accordingly, said Mr A. R. Low, economic adviser to the Reserve Bank when he addressed members of the Canterbury-Westland branch of the New Zealand Society of Accountants. Last year, the Dominion showed a £32 million deficit, after importing £299 million of goods, and receipts from exports were going to be even lower this year. Accordingly, the country would have to reduce its expenditure, mainly on imports, if it was to balance its budget and build up its depleted reserves. “We are in a spot of bother,” he said. “Until the last two or three years, things have been pretty good and are still not serious, but people must be made aware that we need to move carefully if we are not to get into deeper trouble.” Ratio of Trade New Zealand’s terms of trade. had deteriorated over the last two or three years until they were now one third less favourable than they were in 1955. This meant that for a given quantity

of exports we could now buy only two-thirds of the quantity of imports we could afford three years ago.

There was little to show any likelihood of an immediate improvement in New Zealand’s terms of trade. Since September last year, prices for New Zealand butter on the London market had dropped by 22J per cent., cheese by 10 per cent., lamb by 20 per cent., and wool by about 33 1-3 per cent. ‘‘So the chances of our obtaining anything like that £299 million for our exports this year are pretty remote. It is obvious that we shall have to cut our expenditure by more than that £32 million if we are to break even and build up our reserves, which are low.”

Some of that 1957 expenditure was because of over-ordering and pre-payments on this year’s goods, so a little relief could be expected there.

Local manufacturing could be expected to make up some of this deficiency, and primary production was expanding. ‘‘The main thing is that the community must be made aware that we can’t expect things to be quite as smooth as they have been,” said Mr Low. “The lesson is to adapt our internal economy to the change in circumstances.”