Help for the car industry

Press, 31 August 1977, Page 26

Help for the car industry

The Government is probably not particularly happy about the political effects of the restrictions it imposed IS months ago on the hire purchase of new and used cars Car assemblers and dealers have complained that they have been unfairly treated by the Government: some workers have lost their jobs and the credit limits have upset prospective buyers. On broader economic grounds the Government should be delighted by this evidence of success for policies intended to reduce consumer spending, especially consumer spending on goods which are expensive to import

The Government now, however, faces a difficult decision. Should it ease its restrictions in order to please the car dealers and assemblers and those who want to buy cars but in so doing run the risk of stimulating both internal inflation and the demand for imports’’ The Government has already responded to pleas from the building industry to stave off “collapse.” The same arguments that were used to justify limited support for the building industry also apply to the car industry—that jobs should be protected and that the industry should not be allowed to become so run-down that its recovery will be difficult when the economic climate improves. A very cautious easing of the requirements for deposits and repay-

ment on both used and new cars might be acceptable, improving car sales sufficiently to keep the industry afloat without creating a runaway demand for cars.

The Government might exploit the needs of the car assemblers and sellers to encourage the industries to consider the long-term development of the car industry in New Zealand, If some changes in the patterns of car production in New Zealand are not encouraged, the country may be soon paying dearly for having too many cars of too many different models. A gradual contraction of an industry that showed signs of becoming over-extended, providing the country with more cars than it needed or could afford, could well make long-term economic sense A gradual shift of resources, investment, and jobs into urban public transport would not harm the existing car industrv but would ensure that the country has a transport system sometime in the future which is more efficient. Such long-term questions should be m the back of the minds of the Government and the car industry as they discuss how the industry can be "rescued" over the next few months without the country losing what has already been gained from the short-term contraction of the car industry