The Press SATURDAY, JUNE 20, 1959. Primary and Secondary Industries

Press, Volume XCVIII, Issue 28926, 20 June 1959, Page 12

The Press SATURDAY, JUNE 20, 1959. Primary and Secondary Industries

The zeal of the Minister of. Industries and Commerce (Mr 1 Holloway) for what he conceives to be a principal function of the department he administers—the expansion of industry—is undoubted. Mr Holloway’s address to the Wellington Manufacturers’ Association and the Wellington Chamber of Commerce on the recently-established £ll million industrial development fund gave more examples of the Minister’s enthusiasm. But zeal must be matched with discretion, and many who follow Mr Holloway’s pronouncements must feel that he is losing sight of the real fundamentals of New Zealand’s industrial economy. Mr Holloway is right in believing that industry will have to be expanded and diversified to provide employment for a growing population expected to reach about 3.200,000 in 15 years. But if it is part of his belief that primary industries must share in—let alone lead —such an expansion, Mr Holloway is singularly unsuccessful in conveying this impression. Soundly-based secondary industries able to stand on their own feet in a reasonable time are clearly desirable; if they can export and earn money for New Zealand overseas, so much the better. But for the foreseeable future, New Zealand’s economy must be based upon the established primary industries. The farming industries will have to earn most of the exchange to import not only consumer goods but raw materials for manufacturing industries also. Unfortunately, New Zealand has few of the basic

I industrial raw materials. Even ' its cheap and abundant elecI tricity may be a declining advantage as the costs of atomic ; power are progressively ; reduced; its ironsands may produce a satisfactory steel—but only after huge amounts have been spent for capital plant. From this it follows that expansion of secondary industries must be preceded by expansion in primary industries. The Director-General of Agriculture, in his 1953 report, estimated that farm production must increase 2 per cent, per annum (cumulatively) in order to protect the standard of living. The Director-General envisaged an increase of 60 per cent, in livestock production in 25 years. The rate of increase would be dependent, of course, on the terms of trade. If a trend against agricultural products in relation to manufactured products were to continue, the burden on the primary industries would be greater because a greater volume of exports would be necessary to build earnings to the required level. In all the Government’s present discussion of economics little is heard about the need to expand primary production. The Government seems in danger, also, of losing sight of the fact that industrial policies unduly favouring secondary industries must add to the costs of the primary industries and reduce the competitive advantages (on overseas markets) of relatively low costs which the New Zealand farming industries have secured for themselves by intelligent and unremitting effort.