Comments By Economists

Press, Volume CI, Issue 29770, 13 March 1962, Page 16

Comments By Economists

The level of imports, up to £250 million was “probably almost right,” said Professor A. J. Danks, professor of economics at the University of Canterbury, commenting on the 1962-63 import licensing schedule yesterday New Zealand could not afford £250 million for its next importing year; perhaps £215 million would have been nearer the mark, he said. ’

“Some of the gap is likely to be met by borrowing, and we must think carefully about bow long we can continue to balance our transactions in this way.

“Nevertheless, very repressive import controls would work badly as a means of keeping us living within our income, and Mr Shelton is probably hitting a level which is almost right in the circumstances.

“If, now. a tough Budget this year and sustained credit pressures keep down internal demand, the whole £250 million might not be needed and we should have to borrow less.” It was better, Professor Danks said. to reduce demand in general than to

cut Imports so severely that arbitrary shortages, bottlenecks, hidden premiums and mark-ups emerged to distort further the country’s already bard-pressed economy. Professor H. R. Rodwell, former associate professor of economics at the University of Auckland, said the new schedule provided for a higher level of private imports than the country’s overseas earnings could support, says a Press Association message. “It is inevitable that oversewborrowing will be nicOMiy 4a, finance private imports of between £240 million and £250 mißlon,” be said.

"The finance from the International Monetary Fund on very easy terms will be available, but it would be unwise to allow deficit balances to persist and finance them by short-term borrowing “If an effectively tight monetary policy is continued in New Zealand, as it should be, then the full amount of the licences issued may not be utilised and the trading gap consequently narrowed. “Indeed, thia would be a very desirable development.

tor it would attack the real cause of lack of balance in our international payments that is, an unduly expanded money demand here. Raw Materials

“Raw material imports are to be maintained at high levels, cuts falling upon finished consumer goods, thus reducing still further their already small percentage of total, imports,” said Professor Rodwell.

“This is the penalty we are now paying for the overrapid industrial expansion which has occurred during recent years. “The dangers inherent in this policy are now being recognised and protection by quantitative limitation is becoming increasingly suspect “The present schedule does, however, continue it and great care must be taken to ensure that the further reduction in imported consumer goods will not result in deterioration in quality and variety and rises in price of local substitutes. “It is also to be hoped that the limitation of consumer goods imports will not prejudice our efforts to expand our markets in such countries as Japan.”