Overseas Exchange Still Biggest Problem

Press, Volume CII, Issue 30054, 12 February 1963, Page 15

Overseas Exchange Still Biggest Problem

(New Zealand Press Association)

WELLINGTON, February 11. “The problem of increasing our overseas earnings is the biggest challenge facing the Government and the people of New Zealand in the immediate future,” the Prime Minister (Mr Holyoake) said today. “The considerable improvement in current overseas exchange transactions in 1962 marked a further successful step in the Government’s policy of economic readjustment, but continued care will be necessary in the use of overseas funds,” he said.

“Government economic policies during the year ahead will continue to be directed at maintaining adequate overseas reserve funds, expanding overseas earning capacity, and encouraging a faster rate of economic growth,” said Mr Holyoake. "As a result of the £55 million improvement in overseas exchange transactions last year, there was a surplus of £2.6 million in the current account balance at the end of the period. This was the first year in which the present Government had been responsible for the issue of import licences and the control of overseas exchange transactions. "This modest, but encouraging. surplus follows upon current account deficits of £23.8 million in 1960 and £52.5 million in 1961. Deficits in 1961 were due mainly to the extravagant and unwarranted issue of import licences prior to the General Election in 1960.” Mr Holyoake said net overseas assets on January 23 stood at £62.5 million, £14.5 million higher than the same period in 1962. and £6.5 million higher than in 1961. These reserves were not yet adequate, and the Government would continue to give high priority to conserving overseas exchange and building up export earnings. "We have made substantial and heartening progress in overcoming overseas exchange difficulties, and we can look forward to a continuation of this trend as long as export prices do not deteriorate,” he said. •The major economic weaknesses which had been allowed to develop in 1960 have been substantially overcome. This has been achieved

without recalling import licences and dishonouring commercial contracts, without increasing rates of taxation, and without disrupting production and impairing capacity for growth. The economy is now in much better shape to meet the challenges and opportunities which lie ahead of us in overseas markets.

•"The Government has introduced a range of measures to encourage more production, particularly in industries which earn overseas funds. Tax allowances for

farm development have been liberalised; land tax has been reduced; depreciation allowances on plant and machinery have been extended and liberalised; tax concessions have been introduced on topdressing marginal hill country, and special tax deductions have been introduced for certain classes of export promotion expenditure. Every effort is being made to preserve access and to develop existing markets, and to open up new outlets for our exports. Considerable success has been achieved in this field.

“A scheme for special replacement import licences and bonus licences has also been introduced to cover the use of imported raw materials which are used in manufacturing exported goods.

“The Government will welcome, and will fully consider, other practicable schemes for increasing overseas earnings. “The Export Promotion Council, which the Government established last year, is examining a number of proposals, and the special conference the council is organising later this year should yield valuable information and suggestions.

“There are no rapid and simple answers to the problem of building up our overseas earnings. but new schemes have been adopted and are being considered. We have made a good start by getting our overseas finances re-established on a sounder basis,” said Mr Holyoake.