Role Of Manufacturing And Farming In N.Z. Economy

Press, Volume CVI, Issue 31195, 20 October 1966, Page 4

Role Of Manufacturing And Farming In N.Z. Economy

He did not dismiss as irrelevant the statistical evidence which suggested that pre-war New Zealand was characterised by a greater increase in efficiency than post-war, said Professor B. P. Philpott, professor of agricultural economics at Lincoln College. He was replying to criticism by Mr C. R. Larsen, an Auckland manufacturers’ management consultant, of a paper given by Professor Philpott at the annual meeting of the Canterbury Manufacturers’ Association in August, and published by the Agricultural Economics Research Unit.

In his paper, said Professor Philpott, this contrast in efficiency was suggested as being only in part due to the “goad of threatened unemployment,” but also because the post-war period had been

marked by a cosier and less competitive business climate, due largely to inflation and import controls. ‘The only people who have suffered from this are consumers in whose interests alone economic policy should be framed, and not, as Mr Larsen suggests, in the interests of a small farm minority,” said Professor Philpott.

“I don’t need to remind Mr Larsen that unless we get continued and substantial increases in farm exports, to buy imported raw materials, not only will consumers suffer, but there will be enforced unemployment in manufacturing, on which Mr Larsen’s livelihood depends. “Mr Larsen may, if he wishes, accuse me of justifying farm prejudices, but he would be a much more effective critic if he paid one-tenth of the attention to the status of his own statements as he does to mine.”

Professor Philpott said that his paper was concerned with the relevant place of agriculture and manufacturing in the New Zealand economy over the next decade and far from being based on “farm prejudices,” the conclusions reached were based on economic research, the results of which were fully documented with appropriate statistical evidence, none of which, incidentally, did Mr Larsen take the trouble to challenge. “The conclusion arrived at, as reported in the paper, was that alongside a rapidly growing agriculture there was an important place for normal and not over-stimulated growth of efficient manufacturing industries in the next decade,” he continued. “The efficient growth industries over the next decade were likely to include those which:

“(i) Have large potential economies of scale;

“(ii) Can rapidly absorb new scientific research development and exhibit rapid rates of technological change;

“(hi) Use New Zealand’s natural resources, including the human resource—the trained intelligence; “(iv) Have a low import content in the capital equipment required; “(v) Economise on New Zeachange per £lOO of resources used, to roughly the same extent as estab-

listed exporters like agriculture, forestry and tourism; “(vi) Economise on New Zealand labour content. “I fail to see how, unless he is justifying his own prejudice, Mr Larsen can possibly conclude from this quotation that I consider all New Zealand resources should be concentrated in agriculture and that there should be a curtailment of manufacturing industry. “All that my paper aimed to suggest was that we must try to secure, in the future, the best and most appropriate types of manufacturing industry, according to the above list of criteria. I do not believe that the use of import controls as a basic means of protection necessarily secures the sorts of Industries we requires and to achieve this I said, to quote from my paper:— “In place of import control I would substitute a flat-rate tariff on all imports. The proceeds of this tariff, or part of them, could be used for a flat rate subsidy to exporters, or indeed to reduce income tax, thus conforming to the current drive for the substitution of indirect for direct taxes. “ ‘Such arrangements would produce a greater degree of competition . . . and by providing open recognition, through the price system of the shortage of foreign exchange. they would ensure that efficient and economic saving and earning of foreign exchange were secured, and that industries which did not conform to the desirable characteristics listed above, would not be encouraged to expand.’ “I cannot accept Mr Larsen’s rather naive objections to this policy, one of which was that labour diverted from manufacturing would tend to flow into servicing industries rather than into farming. “No-one has suggested that there would necessarily be any diversion of labour from manufacturing, least of all into farming. “I should have hoped that industries which cannot match up to the flat tariff (and are therefore ones which New Zealand should not have) would eventually have to release resources to those industries which, as a result of the tarriff, or indeed of an export subsidy, can now become exporters of manufactured goods, which is just exactly what New Zealand requires,” 1 concluded Professor Philpott.