TURNBULL & JONES, LTD. CHAIRMAN’S ADDRESS

Press, Volume CVI, Issue 31129, 4 August 1966, Page 18

TURNBULL & JONES, LTD. CHAIRMAN’S ADDRESS

65th Annual General Meeting 29th July, 1966

The Directors’ Report and Accounts having been circulated to members, I propose with your consent to take these as read. This year’s net profit of £69,898 is about 12% lower than last year’s record figure of £80,123, but nevertheless is still easily the second highest profit ever earned by the Company.

Members will notice that provision has been made in the Profit and Loss Account for the expenditure of £3OOO to cover the cost of decimal currency conversion. The necessary administrative factors involved are receiving the attention of the management

Government taxation by a special committee of independent experts. Companies generally will welcome this decision and will expect that the order of reference to the committee will not be circumscribed by any special conditions that would limit in any way the scope of committee’s investigations or findings.

Factory operations at Lower Hutt and Christchurch showed satisfactory profit results. Some technical matters of organisation at the former received attention during the year with a view to improving efficiency. The main items of interest are covered in the Directors’ Report and Accounts, consequently they do not call for repetition by me. I propose however to deal to some extent with the economic climate existing in New Zealand where the operations of this Company are carried-on.

In last year’s address I stressed the need for urgent consideration being given to oppressive company taxation and, in the light of the crucial importance of industrial productivity to the New Zealand economy, it is hoped that the present system of dual taxation on company profits wUI be abolished. Also the low income figure of £3600 at which the maximum personal tax-rate is applied should on world standards be revised and adjusted to a more equitable higher figure without further delay. The present lack of incentive to companies and others engaged in secondary industries and the high internal demand for goods has resulted in too much money chasing too few goods and so accounts for the pressure of import licences to control the resultant demand for overseas funds. It is difficult to understand why the Government hesitates to tone-down the pressure of internal demand by greater resort to indirect taxes and so assist to relieve the burden on overseas funds. It is of interest to note that of the total taxation, viz £497.5 million to be collected in New Zealand during the financial year ending on 31 March, 1967, some 70% is by way of direct taxation whilst only 30% is by way of indirect taxation. After a general external trading balance which carried on until the end of 1965, business confidence has suffered a check through the lack of domestic and overseas resources and the general reflection of this is now becoming apparent Trading bank’s curtailment of credit following anti - inflationary action by the Reserve Bank and the Government is likely to create problems in commercial circles unless palliatives arise during election year influences. Some external factors which may have a bearing on the internal welfare of the Dominion in the current year are:

The Importance of the availability of overseas funds in relation to New Zealand’s internal trading and living standards has again highlighted the gaps in the Dominion’s uneven economy. Relief by Government has been sought by borrowing in Great Britain, in New York, from the World Bank and by drawings on the International Monetary Fund. This procedure is no doubt justified for the purpose of facilitating national development works, but if used to purchase abroad consumable goods that should be financed out of export earnings, then the charge that the country is living beyond its means is justified. The temptation to live up to the standards of older and more advanced nations may and probably does at times over-ride political courage and thus injures sound national economic progress. The clamour of some 80 individual Members of Parliament plus numerous organisations for provision for Government expenditure in the annual Budget has at times led the Dominion to exceed what in certain quarters is regarded as a judicious rate of expansion. This in turn has fostered overfull employment, shortage of labour, rising costs and general inflation, plus a large slice of burdensome direct taxation. Government attempts to improve export earnings by increased primary production include tax and other concessions to producers and exporters and to livestock breeders, as well as preferential credit treatment and drought relief, but these provisions are at times offset by overseas market fluctuations, as recently indicated by the drastic fall in prices for our exported dairy-products. It is agreed that national progress cannot be obtained without effort and to accelerate this requires not only the creation of greater incentives but also the removal of deterrents imposed by the general tax structure. Encouragement of research and investment, thi creation of new and improved products, new miterprises and new jobs are essential elements to attain permanent expansion. Increased productivity results from investment which is induced by profit earnings and this necessitates a tax system designed to encourage human effort and risk of capital.

(1) The new free trade agreement between N.Z. and Australia. (2) The new trade agreement between Great Britain and Ireland. (3) Possible lower earnings for our primary products in overseas markets. (4) Great Britain’s entry, if successful, into the European common market (5) Expansion of markets outside Great Britain for NX exports. Internal credit is likely to continue under strict control and trading conditions maybecome burdensome. This Company’s manufacturing and merchandising operations will involve continuous efforts on the part of our production and sales staff so that our long record of stable progress and expansion may be maintained, in which objective our executive officers and employees have the Company’s full confidence. I now formally move the adoption of the accounts and call on Mr McKillop to second the motion. A. D. PARK C.M.G. CHAIRMAN. —PXA.

During last year the Minister of Finance announced that data was being compiled to enable a decision to be made on the need for a full inquiry on taxation. This year’s Budget premised a comprehensive review of the whole field of central