DEVELOPMENT REPORT Call for greater competition

Press, Volume CXII, Issue 32861, 9 March 1972, Page 2

DEVELOPMENT REPORT Call for greater competition

(New Zealand Press Association)

WELLINGTON, March 8.

New Zealand’s poor productivity record would be improved only if Government policy set an economic environment in which efficiency in all sectors were encouraged and rewarded, and inefficiency penalised, said the Targets Advisory Group in its report to the National Development Conference today.

The group is an independent advisory group to the National Development Council.

The report said that such polices within the framework set by appropriate monetary, fiscal and exchange rate policies would positively aim to foster competition and reduce or eliminate restrictive practices resulting from Government, business or union actions.

Part of the cause of New Zealand’s low productivity growth rate was the way some policies encouraged scarce economic resources to flow into inefficient industries and firms.

These policies included assistance by means of direct subsidies, tax concessions, low interest rates, import controls and tariff protection. As a general rule, assistance should be given only to industries and firms which would, in time, be internationally competitive. Within such a competitive environment, positive action should also be taken in specific areas to improve productivity.

Some of this was already policy; other action required new ground to be broken in whole or in part. Specific steps should be taken to place greater emphasis on:

The development of managerial technique and education, and the introduction of modem management techniques in the private and public sectors.

The further development of technical and trade training at the tertiary edu-

cation level and within industry. Where necessary, improvement in the range of advisory and ancillary services to be provided to the primary, secondary and tertiary sectors. The encouragement of investment in new plant and machinery by realistic depreciation and other allowances. A speedy shift to a properly designed tariff system, in line with a recommendation of the 1969 National Development Conference.

Devising measures to reduce industrial accidents, labour turnover and absenteeism (preliminary estimates by the Labour Department suggest that industrial accidents cost New Zealand sBom a year, labour turnover sloom and absenteeism slsom). The report said that the adoption of fiscal, monetary and productivity policies along the lines it indicated would almost certainly improve the present low productivity of much of New Zealand’s capital investment. But even after a noticeable improvement in investment efficiency, a substantial increase in investment would still be required.

Social needs Social investment in housing, schools and hospitals would continue to absorb a large share of total fixed ininvestment, given the high priority New Zealanders place on social goals, but economic performance was unlikely to reach target levels unless greater investment

occurred in businesses and farms. The Targets Advisory Group comprises the Governor of the Reserve Bank (Mr A. R. Low), the chief economist of the Bank of New Zealand (Mr L. C. Bayliss), the principal executive officer of the National Development Council (Mr W. E. A. Green), Mr D. E. Homewood, of the Department of Industries and Commerce, the research officer of the Federation of Labour (Mr D. B. McDonald), Mr H. E. J. Martin, director of the Manufacturers’ Federation, the general secretary of Federated Farmers (Mr J. G. Pryde). Mr J. Kominik, the Assistant Government Statistician, is also a member but is not involved in advocating policy.