Mr Lake Sees Need For New Economic Policies For N.Z.

Press, Volume C, Issue 29467, 20 March 1961, Page 16

Mr Lake Sees Need For New Economic Policies For N.Z.

If New Zealand was not to be left behind in the economic race which was going on throughout the world, it would have to think of new policies. Until recent years, the climate and intelligent labour forces, combined with a ready market for its produce in the United Kingdom, had given the country a high standard of living without too much effort. But the policies which were adequate for the forties were not adequate today, said the Minister of Finance (Mr Lake) when addressing the Chartered Institute of Secretaries in Ashburton on Saturday. Over the last decade, New Zealand had not performed very well by world standards, and in a recent paper. Dr. Blyth had pointed out that the country had one of the slowest rates of growth in the world. “Our objective in the next 10 years must be to strengthen the balance of

payments, increase the rate of economic growth, and ensure greater stability and increased standards of living,” Mr Lake said. Dynamic, Not Static Policies were needed which would encourage exports, and stimulate industry. With the rapid technological and scientific progress. New Zealand must have a dynamic policy—not a static one. Results of the last 10 years showed that the country had not done as well as it should Too much had been consumed. and not enough put into increasing stock of productive assets to provide a rapid rate of growth. For most of the period. New Zealand had been beset by inflation, which had shown itself in rising prices, labour shortages and balance of payments deficits, said Mr Lake. Little Prospect of Improvement Turning to the future, Mr Lake said that during the next decade there was little reason to expect improvement in terms of trade Britain, which was the country’s main market, was a question mark at present. It was also the only real market for the country’s lamb, and the saturation point was approaching rapidly. Neither were butter prospects hopeful, and New Zealand would have to face subsidised dumping by the “rich treasuries” of Europe Although it looked likely to suffer from growing production of synthetics, which would put the prices down, wool did have a wider market, Mr Lake said. Prospects tor beef looked better, but the search for new markets must continue, because over-all. hung the threat of European economic integration, with its inward looking policies and tariff walls. It would be a bold man who would forecast as good a market for our primary produce during the next decade, as we had for the last one.” he commented. New Exports Essential In the next decade, New Zealand would have cause to pin its hopes on exports other than the traditional ones—such as the export of timber. pulp and paper, which were certain to grow. There was a greater export potential in the aluminium industry than there was in the dairy industry. “This is now an established fact." Mr Lake said. Further fields with a good export potential were the frozen vegetables and fish industries. To obtain the objectives he had mentioned, Mr Lake gave the following points: Build up overseas reserves as a cushion against fluctuating prices. Encourage the import of skills and capital into New Zealand. Provide incentives for the establishment and expansion of the right sort of industries. Have as a basic aim of fiscal and economic policy the encouragement of savings, and the attainment of high rates of capital investment, especially in productive resources. Make the Government play its part by holding the level of expenditure on welfare services and adopting sound financial policies, which do not create or accentuate inflation. To achieve this, the first step must be to build up exchange reserves, and institute a policy of planned overseas long-term borrowing. “We need not fear that the weight of servicing this debt will strain our resources If we use money for investment to increase our national

income, the burden of debt gets proportionately lighter all the time,” said Mr Lake. Also the country would have to step up the immigration of skilled workers, he said. “Much of the labour shortage today, is artificial and results from inflation. But the problem of establishing new industries will involve the employment of many new workers, with skills we do not have at present. We have to increase technical and technological training to meet the future demands of our expanding industry.” he said. "Troubled Waters Ahead” Only by building up overseas reserves to cushion against fluctuating prices could many direct controls be removed, and not have to resort to deflationary and restrictive policies to meet the crisis. Such policies, as Britain and Australia had found recently, stultify economic growth and disrupt industry, and cause great political unpopularity. he said. There was a great need to produce a policy which would be adequate to meet the challenge of the sixties. “There are troubled waters ahead and if we do not use all our efforts, to devise right policies, we are going to be left behind.” Mr Lake concluded.