‘Encouraging Picture’ Of New Zealand Economy

Press, Volume CII, Issue 30042, 29 January 1963, Page 11

‘Encouraging Picture’ Of New Zealand Economy

“I am glad it has been possible for the Monetary and Economic Council in its third report to present a somewhat more encouraging picture of the New Zealand economy.'* said Mr R. H Stewart, president of the New Zealand Manufacturers' Federation, commenting on the council’s report, yesterday 'The report rightly says that the balance of overseas exchange transactions which is the key to th» whole situation. has shown a dramatic improvement but the present balance Mill cannot be regarded as adequate Policies should therefore be directed to preventing a further decline in overseas funds and preferably to

s< curing an increase “The report,” said Mr Stewart, “makes some practical recommendations how this could be achieved and in particular I would mention two of them One is the recommendation by the council that there is pressing need to offer greater financial incentive than now exists to develop markets overseas or expand sales in established markets for primary products. manufactured goods and for services

"The New Zealand Manufacturers’ Federation has continually advocated need for greater export incentives and has made submissions to the Minister of Finance pressing that the required increase in exports is of an order that is very difficult to achieve without direction, an action to increase the profitability of exporting as such

“An increasing number of New Zealand manufacturers is giving serious attention to exporting some of their products and are meeting with success But’the export market is a highly competitive one and manufacturers are up against large overseas industries with vast resources They also find that other countries provide assistance to their exporters in a number of ways, including export, financing, liberal depreciation allowances or other tax concessions freight concessions. etc The Government has gone part of the way by allowing the special tax deductions for export mahket development expenditure but my federation sincerely hopes that it will go further this year with greater financial incentives

"The second point with which the federation is fully in agreement is the need to avoid the go-stop-go cycle' in trade and imports. This means that even though it may sometimes be unpalatable. Governments must re r.st the trend to stimulate importing In an election rear beyond a level the country can afford to pay: otherwise we will be faced again with th«. necessity to cut back more strictly later. Overcoming DMBenlties

"With this hope in mind the council has recom mended that the Government should be firm in its administration of the existing import licensing schedule and in the policy on the new schedule to be issued shortly. It should, how-

ever, be pointed out that the current level of licensing, for raw materials is based in the main on manufacturers' output continuing at the same level as in 1960. This is not possible in every case as some manufacturers are being required to meet increasing demand for their product, often brought about by import restrictions on similar overseas articles. “The report rightly aims to overcome some of the present difficulties by increased production rather than by unnecessary restrictions ’’’his includes the development of industries which can export or which can substitute efficient local production of goods which would otherwise have to be imported. The council also confirms that it will pay New Zealand handsomely to continue to increase th-* output of meat and wool rapidly for a number erf years ahead.

“Un-like a number of other countries. New Zealand has no problem of accumulated surpluses and I believe the goal which the council has set can be reached. If. as the repor. suggests, production of these items is increasing too slowly in the national interests and investigation discloses that more positive policies are required to stimulate production of meal and wool, the Federation would support the introduction of greater incentives in that direction. "1 have some reservations on some of the other points raised in the report." said Mr Stevart. ‘ particularly the suggested tax on overseas exchange Such a tax would be indiscriminate in its ap plication in that it would apply equally to essential im ports as well as to less essential goods It would increase the cost of many items tha’ have to be Imported including many capital goods health supplies. 'md would also add to the cost of the exporting industries."