The Press TUESDAY, OCTOBER 31, 1967. Lessons From Across The Tasman

Press, Volume CVII, Issue 31514, 31 October 1967, Page 16

The Press TUESDAY, OCTOBER 31, 1967. Lessons From Across The Tasman

While, In the last year, the New Zealand economy has gone through a balance-of-payments crisis the Australian economy has shrugged off the drop in wool prices almost as if it were of no significance. Why, it may be asked, has Australia been able to prosper while New Zealand has faltered? Are there any lessons to be learnt from the Australian experience? Before attempting to answer the second question, it is as well to point to some of the things which work in Australia’s favour—notably its size and its new-found mineral wealth. Australia already supports a population four times New Zealand’s and this disparity may increase rather than diminish. The larger domestic market in Australia makes some industries economic there which would not be economic in New Zealand, which must either import the products of those industries or manufacture them locally, in small runs and at high cost. To maintain the same standard of living here as in Australia it is consequently necessary for New Zealand to export more, proportionately, than Australia. New Zealand has, in fact, relied more on exports than Australia has; our exports in recent years have represented 22 to 24 per cent of the Gross National Product, Australia’s only 15 or 16 per cent. A drop in export income would affect the Australian economy less than the New Zealand economy. Australia’s exports are more diverse, both as to products and markets, than New Zealand’s. In 1965-66, before the current recession in world textile prices, wool represented 30 per cent of-New Zealand’s export income and 28 per cent of Australia’s Australia’s exports of dairy produce and meat, however, are less significant than New Zealand’s. Wool, dairy produce, and meat represent 80 per cent of New Zealand’s exports, only 45 per cent of Australia’s. Wheat, metal ores, and manufactured products of a wide variety make up the rest of Australia’s exports. Non-pastoral exports are growing faster than wool, dairy, and meat exports: and prices for these exports have been firmer. New Zealand still earns 46 per cent of its export income on the United Kingdom market, Australia only 13 per cent. Japan is now Australia’s biggest market, accounting for 19 per cent of export income.

New Zealand has too many eggs in too few baskets—frail baskets, at that By comparison with Australia, New Zealand is much more vulnerable to changes in world demand for a single product, or to changes in a single overseas market Producing negligible quantities of wheat and minerals, New Zealand cannot match Australia’s exports of these products, though much more could, and should, be done to encourage mineral exploration in this country. But even if large deposits of oil or other minerals were discovered in New Zealand tomorrow it would be years before they began to earn export revenue. New Zealand’s balance-of-payments situation demands an immediate and sustained rise in exports. Producing more lambs for a saturated English market, or more wool for a depressed world textile market, will not serve the purpose. The world market for beef, however, will absorb all that New Zealand can produce in the next few years without any appreciable effect on prices. Japan wants more New Zealand mutton; Australia can take more New Zealand fish; other markets already exist, or could develop, for sea products, flowers, fruit, the newer dairy products, dried lucerne, jet boats—a wide range of products as yet barely recognised as export earners.

The Australian example shows how new export products can be developed and how new markets can be found for traditional products. Above all, It shows how businessmen, given the appropriate stimulus, can promote exports. The New Zealand experience shows the dangers of complacent dependence on a narrow export base. Complacency has at last been shaken; it should now give way to action. As a guide to action, Australia’s performance should be studied by New Zealand’s legislators, administrators, and businessmen.