Tighter Curb On Credit Thought To Be Inevitable

Press, Volume XCIX, Issue 29398, 28 December 1960, Page 8

Tighter Curb On Credit Thought To Be Inevitable

(From Our Own Reporter) WELLINGTON, December 27. Advice that the economic position of the country should be closely examined before any further relaxation of import restrictions is considered by the Government is likely to be given to the Cabinet by its economic policy sub-committee. Import licences granted during the past two months have been so numerous that the position can only be restored by more stringent restrictions and heavy overseas borrowing in 1961. Some authoritative economic sources believe recommendations have already been made to the Government that the present import licensing system must be retained, exchange control must be tightened, and credit within New Zealand must be further curbed. These measures, according to one high authority, should be supplemented by an internal financial policy designed to reduce demand.

These measures, together with others even more stringent, were recommended by the Secretary of the Treasury (Mr E. L. Greensmith) when the Labour Government took office three years ago. At that time the recommendations were accompanied by others which advised a heavy curtailment of capital works programmes and an all-round reduction of expenditure on projects initiated by Government departments. The Labour Government did not implement this plan completely, preferring to keep works programmes moving in the interests of full employment. It is understood that members of the economic policy sub-com-mittee of the Cabinet showed some concern when told recently by the Customs Department that import licences worth £l5O million for the year 1961 were issued

during the last two months. If these are all used within the next few months, the situation may be regarded as considerably more serious than has been thought. The bill for imports for 1960 is expected to be £255 million The number of licences issued for 1961 would permit private importing on a much bigger scale than was allowed this year. In the first 11 months of 1960. the cost of private imports was £230.1 million, which is £45 million higher than for the comparable 11 months last year. In 11 months of 1960, New Zealand has spent nearly £24 million more than during the whole of 1959.

Even if it wishes, the Government can accomplish little in 1961 by cancelling unused import licences or imposing exchange control.

The volume of licences already available to importers has committed the country to spending above the current scale throughout 1961. Most ~of these goods, it is understood, have already been ordered.