The Press MONDAY, JUNE 23, 1958. Economic Survey

Press, Volume XCVII, Issue 28619, 23 June 1958, Page 10

The Press MONDAY, JUNE 23, 1958. Economic Survey

The yearly Economic Survey (an innovation of the National Party Government) has wisely been continued by the present Government, and this year’s Survey is the now customary digest of information, reasoning, and conjecture about New Zealand’s economy. Most of the facts included have been available from other sources from time to time, but this does not detract from the worth of the Survey. It is most valuable at this time to have a full picture of the economic background against which the Minister of Finance must frame his Budget. As usual the Economic Survey begins with a review of world trade and of the economic conditions of countries in which New Zealand has greatest interest. The chief point made by this run around the world, of course, is that fluctuations in world economic conditions exert a major influence on New Zealand. The point is made so clearly as to leave no excuse for even the most reactionary of socialist minds to harbour illusions about insulating New Zealand’s economy. The Survey emphasises that at present New Zealand is experiencing effects of world trading conditions, and the interdependence of the economy of New Zealand and its trading associates is shown in several contexts, an example being a passage saying that an early improvement in business conditions in the United States would see a resurgence of activity in other industrial countries and “ a recovery in ** markets for our export pro- “ duce ”. Though conclusions of this sort will seem trite to many persons, it is right that they be given the notice their significance to New Zealand justifies. They bring forward, for instance, the interest New Zealand possesses in news of improvement in business conditions in the United States which has occurred in the last few weeks. The section of this year’s Survey dealing with world economic conditions naturally gives special attention to New Zealand’s difficulties with exports, and especially to the problems agricultural protectionism in industrialised countries causes nations, such as New Zealand, which are primarily exporters of agricultural products. The Survey makes particular note ,in this context of the Commonwealth Trade and Economic Conference at Montreal in September, for which officials are doing preparatory work. This conference will be an expansion of the customary gathering which takes place in North America after the Commonwealth Finance Ministers (except New Zealand’s) have attended the annual meetings of the International Monetary Fund and the World Bank. However, the Economic Survey gives no him that the odd man out will be in any better position than

hitherto to enjoy full cooperation with fellow Commonwealth Finance Ministers in world economic affairs.

The second section devotes considerable attention to the most pressing of New Zealand’s economic problems—the difficulties with balance of payments. The fall in returns because of lower prices for exports is traced commodity by commodity, and it is made clear also to what extent pronounced deterioration in the terms of trade—the relationship between prices of goods exported and the prices of goods imported—affects trade balances. The section dealing with internal economic development is the most heartening of the several m the Survey because, while there is no attempt to gloss over rough spots, the complete picture shows nothing so clearly as the basic soundness of the nation’s economy. An increased labour force has been absorbed at good rates of wages. The ?ross national product was higher in the year under review, and a significant increase in local production in the present year seems likely. Retail and wholesale prices no longer show continuing sharp upward trends. The evidence of a too high level of bank advances still is a little disturbing, and it is disquieting to notice large Reserve Bank advances to the State, even though a part is accounted /or by purchase of Government stock from the Dairy Industry Reserve Account for the purpose of financing pay-outs at the level of the guaranteed price. Retail trade turnover increased substantially, though this was helped largely by a big increase in hire-purchase transactions. Investment continued at the customary high level, though there is a demand for still higher capital creation by savings and loans if the needs of an expanding population are to be met.

To sum up, while the Survey leaves nothing unsaid that should be said about the economic difficulties the country’ is experiencing, and those it may well have to meet, it gives a great deal of factual material upon which may be built confidence in the country’s ability to surmount its problems. It may be hoped that politicians especially will study the Economic Survey and be guided by it. Rhetorical exaggeration is expected from politicians as they pursue party warfare. But it can go too far, and when it does it can be damaging to confidence. For instance, against the background of the Economic Survey, presented by the Minister of Finance (Mr Nordrneyer), comment in Parliament on Thursday by the Minister of Works (Mr Watt) that “ the “Government’s purpose was to “ restore order in an economy “ where chaos had existed ” becomes more than excusable hyperbole; it becomes*inexcusable misrepresentation.