After-Thoughts On Industrial Development Conference

Press, Volume XCIX, Issue 29235, 20 June 1960, Page 10

After-Thoughts On Industrial Development Conference

[Ay Our Commercial Editor]

What can a conference of 380 men from business and most other walks of life achieve in five days? To expect unanimity, or even substantial agreement on the moat important issues before it would be unrealistic. If the conference promotes a better understanding of “the other fellow’s” viewpoint that is perhaps M much as could be hoped for. The industrial development conference in Wellington last week did achieve this limited goal. As a “listening post” for politicians and senior public servants, this gathering of senior executives from most sections of business, of leaders from such diverse organisations as Federated Farmers and trade unions, and of university lecturers, provided a unique opportunity for sampling opinions.

The opportunities, both in the conference hall and outside, for all delegates, alternates, and observers, of learning of the problems of others, were fully appreciated. Few of the delegates could have read all the background papers, official records of the proceedings and rapporteurs* reports that came to hand during the week, but most studied the documents of particular interest to them and discussed them with others holding different views.

On the opening day of the conference it was apparent that various delegates and sections had different views of the objects of the conference. One or two delegations, for instance, obviously had Instructions from their membership to use the conference as a sounding-board for sectional grievances matters which could more properly have been raised by a deputation to the appropriate Cabinet Minister, or head of department Some of the industrialists seemed put out at the presence of farmers’ representatives and university people, who would keep “butting in” to the conference. Scientists and technologists felt that their representation was too small; economists complained that the businessmen kept raising their individual problems in a conference which was basically a debate on economic principles. Farm And Factory These were minor under-cur-rents, however, compared with the main issue which ran through most sessions: the antagonism between farm and factory. Farmers’ interests were defended by a small but vigorous section of delegates and alternates from Federated Farmers and from the* producer boards. With occasional support from importers, accountants and Chamber of Commerce spokesmen, and more consistently from university economists, the “farm bloc” exercised an influence out of proportion to its representation.

The spokesman for this group justified their representation at an industrial development conference by the argument that unsound promotion of industrialisation in New Zealand would detrimentally affect the farming sector, whose prosperity was of prime importance to the rest of the economy. The manufacturers replied that only by an assurance of the whole of the New Zealand market—or a substantial proportion of it—could be desirable aim of industrialisation be reached. Confidence and security promoted investment in the expensive capital equipment needed for efficient, low-cost factory production. The “farm v. factory” debate came to a head on Thursday. In the discussion of “the rcie of Government" in committees tn the afternoon, Mr A. P. O’Shea (Federated Farmers) and Professor B. P. Philpott (Lincoln College) attacked the principle of protection by means of import control. The rapporteur’s report of this discussion was confined mainly to one paragraph, which read as follows:

“The only feasible means of giving effect to this policy (economic expansion of industry) is by a properly designed and adequate tariff, supplemented as required by a flexible system of import licensing. This would enable industry to operate at efficient and economic levels without imposing burdens on the community in general.”

When this report came before the committee on Thursday night, Mr O’Shea claimed it was not an accurate account of the afternoon’s proceedings. Dissuaded from walking out of the conference by the chairman, he took a leading part in a debate which ended at- 11.40 p.m. in a compromise. The following paragraph was substituted for the original paragraph in the rapporteur’s report:—

“The feasible means of giving effect to this policy is by a properly designed and adequate tariff supplemented in special circumstances by import licensing, but having regard always to the costs involved to the whole New Zealand economy. This would enable industry to operate at efficient and economic levels without imposing burdens on the community in general.” The slight change in wording may seem a small matter for a two-hour debate, but the economists and the farmers’ representatives regarded it as the minimum concession acceptable to them. Outworn Shibboleths?

Two theories about New Zealand development which have been commonly accepted in recent years were attacked so authoritatively that their supporters are unlikely to put them forward again. One was the “import substitution thesis”—the theory that encouraging the production in New Zealand of commodities formerly imported necessarily saves foreign exchange.

As Mr W. Rosenberg (University of Canterbury) commented the apparent saving of overseas exchange is a real saving cnly if resources are not diverted from export-producing activities, and only if no other import expenditure . (e.g., on capital equipment) is required. Of more recent development is the theory that the projected increase in the labour force over the next 10 years or so will be fully employed only If industrialisation is accelerated. ‘•Thirty-six thousand children will leave school this year,” said an advertisement for the current Government loan.

published on June 3. "Only bv the rapid development of industry can thia growing number of ambitious youngsters find worth while jobs.” The Government Statistician (Mr J. V. T. Baker), in , brief but telling speech, analysed projections of the labour force and of employment to demonstrate that no Increase in the ratio of employment in secondary Indus, try was necessary. A promising line of invwttg, tion into employment trends was proposed by Dr. H. B. Low (Ma*, sey College), but scarcely me,, tioned in later speeches. Dr. Low claimed that roughly half of jfvw Zealand’s labour force was employed in service industries which, by their nature, needed no protection in the form et tow> or import controls—“you send your car to Australia fa. servicing.” A further quarter was employed in farming, wHeh had no protection (apart from mtaor provisions such as the prohibition of margarine imports). There remained a quarter of labour force in manufacturinghow many of these workers pended on protection from imports for their jobs? In Dr. Low’s view, a “modest” tariff—about 19 per cent.—would safeguard ths employment of all but a —a proportion of factory wtAwT Much more detailed analystowf employment figures is needed fore definite conclusions ean reached on this subject. Ongdefogate has already done some work on the subject He ciaissa tw of 190 "manufacturing units” wflb annual turnovers exceeding £500,000, 150 are orrwwlng Wai primary produce. They tarinfo dairy factories—and employees of dairy factories are "employe # manufacturing industry” for statistical purposes.

' Firm Chairmen Dr. Low’s was not the only attempt to find common ground for the various sections represented at the conference. The committee chairmen, without exception, were men of moderation and conciliation. Mr N. T. Gillespie (chairman of committee 3) and Mr W. G. V. Fernie (acting-chairman of committee 1) were most successful in combining firmness with impartiality.

It is too soon to see clearly what the conference will be best remembered for. It is unlikely tbit it will—as one Government speaker claimed it would—provide a “blueprint for New Zealand’s industrial development” But it may have provided a basis for ths better understanding of the respective roles of Government and private enterprise, of farming and of factories, in the New Zealand economy.