Manufacturers call for policy of expansion

Press, Volume CXI, Issue 32801, 29 December 1971, Page 2

Manufacturers call for policy of expansion

(New Zealand Press Association)

WELLINGTON, December 28. A dynamic policy of industrial expansion and implementation of an eight-point national development programme are called for by the Manufacturers’ Federation in a New Year message.

Mr H. H. Saunders, president of the federation, said the last year had shown rapidly rising leasts, a levelling-off in production, a decline in L profitability, and a fall in investments for I future expansion. « New' Zealand was capable 1 of rapid growth in real production from manufacturing as a solid base for enhanced prosperity. But manufacturers approached the New Year with some pessimism. “Inflation has not been contained, the value of money has declined sharply, and industry has been confronted with a continuous tightening in the availability of working capi- . tai and investment finance, ‘•The attempt to impose restraints on the economy as a whole has concentrated on measures which have retarded • production, particularly in , manufacturing. “Management has been compelled to devote a dis-

proportionate amount of time to industrial problems, to the. mechanics of price justification and price control, to coping with liquidity problems, and in preparing to meet the series of deadlines arising from the review of protection,” he said. PAYROLL TAX “Payroll tax has, in our view, been an abysmal failure, it has aggravated the financial problems rather than eased them, particularly in labour-intensive industries which provide many basic necessities of life. “This tax has added to costs at every stage of production and distribution, and has been a potent factor in price inflation. “While it is true that prices have risen, they have not risen enough to recover the increased cost of wages, payroll tax and other costs,” said Mr Saunders.

“While the monetary value of sales has reached record levels, profitability has declined and investment has tailed off. The whole manufacturing sector has had to bear the brunt of restraint and the present plight of the building industry and its suppliers is but an example of this. •

“LACK OF CONFIDENCE” “While some limited action has been taken to improve prospects, including the announcement of a reduction in company tax, the year ends in an atmosphere which reflects a marked lack of confidence.

“Manufacturers believe that the best prospects for an improvement in the national economy in 1572 can be obtained through a major shift of emphasis towards a dynamic policy of industrial expansion. “Manufacturers are ready and willing to accept targets far beyond those which have been set for them by the National Development Conference,” Mr Saunders said.

“The New Year could see a rapid improvement in economic growth, but this will not come about either by pious hope or by noble resolutions. There are a number of prerequisites that must be implemented for this to happen. “Inflation must be contained and this involves many sectors of the economy working more closely together than in the past—the Government, the Public Service, employers, and the trade union movement.

“Every section must be prepared to put aside its own selfish interests, for these can only be pursued at the expense of others and of the economy as a whole,” he said. “The Govememnt must set out boldly after real growth in the economy which, in our view, can best be achieved through rapid industrialisa-

tion. To achieve this, positive policies must be applied in a comprehensive programme of national development.” GROWTH PROGRAMME Mr Saunders said the key points in this programme included: Relieving the pressure on liquidity. More vigorous action to review taxation. The potential for the tax structure to revive incentive should be exploited, through relief of tax on personal incomes to encourage people to work longer and harder, and, through depreciation or investment allowances or other alternatives, to encourage the expansion of production. A review of export incentives, the value of which was diminishing and which had been further affected by the change in the scale of company tax. Assurances of continuing and adequate protection of industry. The review of import licensing and tariffs which would begin in the New Year had further weakened confidence about the future among manufacturers. A hasty change in the form of protection for industry at a time when manufacturing was becoming so important to the economy of the country could be disastrous.

Renewed and continuing efforts to improve industrial relations, and a recognition by all negotiating parties that reason and restraint on all sides were the best counters to inflation. A critical look by the Government at its own activities that had contributed to inflation. The Government must surely be aware that few sec-

tors of the private segment of industry could now match the wage rates and other forms of remuneration offered by the Government, and that the Government had shown little inclination to hold at reasonable levels, prices of services which it provides. There must be a critical review of costs in the tertiary and servicing sectors, where produc-tivity-had shown almost no growth, and where costs have risen disproportionately to other sectors of the economy.

More rapid growth of supporting services fot industry in such fields as export market development, industrial research, improvement in management techniques, and incentives, to encourage expanded training of staff at all levels. Mr Saunders said if action along these lines was taken promptly and energetically, 1972 could be a year of real growth and progress.

Popular train.— The popularity of the Kingston flyer was firmly established yesterday, when 194 passengers made the journey from tumsden to Kingston and 195 passengers made the return trip.