N.Z. Told To Avoid Wounding Herself Financially

Press, Volume CII, Issue 30062, 21 February 1963, Page 17

N.Z. Told To Avoid Wounding Herself Financially

(New Zealand Press Association)

AUCKLAND, Feb. 20. New Zealand must take a longer-term view and avoid “the selfinflicted wounds which follow the opportunist over-trading” which was one of the main causes of the “three-year cycle.” the Governor of the Reserve Bank (Mr G. Wilson) told the annual conference of Associated Trustee Savings Banks of New Zealand today. He said that after each year of a spending boom came about two years of restriction. That could be avoided. He believed in New Zealand and its future, but there was no need to prejudice the future by the desire to make the present too good.

Mr Wilson said he believed the economy was now becoming adjusted after the hectic days of 1961 and early 1962. He said the import boom spent itself during 1962. overseas assets, were more stable although still inadequate, prices for exports were reasonable, wool prices were not only better than they were at this time last year, but were moving upward, and bank credit was more in line with the realities of the situation.

After referring to Common Market negotiations, Mr Wilson said Britain could not go on indefinitely absorbing ever-increasing quantities of exports of New Zealand primary produce, particularly dairy produce and lamb.

Importers • were often blamed for bringing in mc e goods than the country could afford to pay for, or could consume In a reasonably short time, but the cause of over-importing lay in the very high level of demand by the nation.

A year of record exports receipts and rather unexpectedly restrained private imports only came out virtually in balance.

"We have not managed to put anything away for the future, and this should give us cause for some concern.” said Mr Wilson.

There was a limit to the extent to which it was desirable to allow overseas assets to be drawn down and

to the amount of capital which could be obtained in overseas markets.

There was also, he thought, a moral question as to the extent to which New Zealand, one of the most favoured couhtries in the world and with one of the highest standards of living, was justified in adding to the world demand for scarce capital.

He suggested that there might well be poorer countries that needed more..

Mr Wilson said many people found It difficult to see the direct relation between their savings and the improvement of the country’s economic position. This was because they did not realise that the act of saving was also one of refraining from spending, which was important today.

A lower demand for consumer goods allowed more to go into investment in the income-producing assets that New Zealand must have.