Limit On Protection For Industries Suggested

Press, Volume CIII, Issue 30471, 19 June 1964, Page 1

Limit On Protection For Industries Suggested

(From Our Own Reporter) ■. HAMILTON, June 18. Urging the setting of a predetermined annual limit on the amount of protection which will be given to any industries by import licensing or tariffs, Professor W. E. Candler, professor of agricultural economics at Massey University, told the Ruakura farmers’ conference today that New Zealand was standing still under the import licence system.

The country needed to get away from import licensing that restricted initiative, he said.

Import licensing was inefffi cient and inequitable. At .best it led to inefficiency, and at worst to corruption. It inevitably led to prices of imported goods being raised to the consumer.

Import replacement, involving New Zealand manufacture of previously imported goods with a content of imported materials, usually resulted in extra overseas exchange and also greater New Zealand resources being used. Where a manufacturing industry required protection the net effect of providing this protection was likely to be a reduction in the country’s net trade balance. Professor Candler said, under questioning, that he believed that the fundamental belief in full employment was wrong. People who were unemployed might be doing a valuable job by waiting for the job that might want to be done at some stage. Con-

cern should rather be felt that no-one should suffer from being unemployed.

He saw no reason at all why unemployment payments should not be raised to the level of the basic wage. But he said that there should be no mistake about a lack of jobs in New Zealand. Professor Candler suggested that a decision might be made each year about the level of protection that would be given industry, and it should be lowered progressively. With this knowledge it would be surprising how many people would find that they were able to get by with lower protection. New Zealand stood little prospect of competing with low-income countries such as India and Hong Kong in the production of light consumer, goods for export, because the high-income markets of the world were increasingly restricting their imports of these goods. He concluded therefore that there was virtually no alternative to continued reliance on primary exports.

He suggested that the increase in labour productivity which had been recorded in agriculture in recent years was unlikely to continue, and that if in the future a 4 per

cent increase a year occurred in agriculture there would be a 4 per cent increase in numbers of farmers and of those in allied services.

To bring about this Upsurge of agricultural production. ’ Professor Candler suggested, there would have to be an upper limit on protection afforded to industry by import licensing or tariffs of 60 per cent. Additional protection could be given by bounty, but one of the most significant reasons why Governments were not prepared to meet the cost of protection out of the Consolidated Fund was they were not prepared to face the cost. He also proposed that Import licences might be auctioned to the highest bidder. Professor Candler also advocated the extension of increased export incentive deductions to primary industries so that profits from any increase in agricultural production would not pay tax, and a complete taxation write-off for increases in capital livestock.