Consumers consolidate efforts to fight rising prices

Press, 31 August 1977, Page 38

Consumers consolidate efforts to fight rising prices

SANDY 1 SOUTHON

Consumer action in New Zealand, its history, its place in today's economy, and its future, is such a wide subject, that I will attempt only to cover it within the framework of what is most worrying consumers at the present time.

A check with Consumers’ Institute, and other consumer action groups, indicates that their major bugboars are the rising interest rates on mortgages (a subject in itself) and rising prices.

Also, there have been more inquiries about the realising of insurance endowment policies. This third concern can be largely attributed to the first two, and both of these to the state of New Zealand’s economy.

The history of consumer action in New Zealand seems to have gone along very quietly, with the Consumers’ Institute checking the quality and safety of I goods, much as the Stan-1 cards Association does in 1 Britain.

Formed in 1959. the In-' atitute was, until 1966. under the wing of the then Department of Industry and Commerce. Now, it is a separate body affiliated to the Department of Trade and Industry. but receiving a Gov-j ernment grant as well as' subscriptions from about: 130.000 members.

It is interesting to note that 75 per cent of people | who sought advi e from the Institute’s complaints advisory service over the last) year were not subscribing members. This would indicate that much good information is used by those who subscribe to the Consumers’ Institute magazmes.

The institute has no power over price rises, which are dealt with solely by the Department of Trade and Industry, the Government department also responsible for consumer interests. This department has the unenviable task of looking after the interests of companies and consumers. The two would seem to be! incompatible, as you must; take from one to give to the other. The Government and the Consumer

How the Government can protect consumers’ interests as well as those of industry

r i is hard to ascertain. Its, present policy for reducing I inflation is to limit con- j ■ sumer demand, with it, con-: sumer spending. But, to keep industries; bouyant, especially export; j industries utilising imports, extra costs ha'.e to be re-' covered through higher; prices. usually on the' domestic market. This prompts consumers Ito spend more, in the belief; that as goods are bound to! keep getting dearer, they 1

may as well buy all they can now.

Thus higher prices lead to maximum consumer spending. When it costs more to pay for things, consumers’ budgets are stretched to the limit. There : s no money left over for saving.

If price rises only applied to luxury items, like cars and television sets, perhaps consumers would do without them. But, as more “basic” items rise in price also, the whole exercise is negated. In simple terms it means that goods and services are being priced beyond consumers’ pockets all in the name of reducing consumer demand and inflation. How the Government, which has pledged itself to reducing inflation, can come up with a policy that is “in the interests of consumers” is very hard to figure out. Consumer Action Groups If a consumer group receives a Government grant it may well fell that it is put in the position where it cannot bite the hand that feeds it.

Independent consumer groups, however, need plenty of public support, which may explain why this country has lagged behind the consumer action. It is not until times are hard and consumers are hit squarely in their pockets, that they are roused into action.

i The Housewives’ Boycott Movement is an example of j this. This group chose to boyi cott chocolate biscuits, coffee. and tinned fruit — a i choice of items which caused the movement to I come under some public i ridicule. However, any consumer group would be unwise to boycott more stapel foods. ■or less “luxury” items until la fair measure of public 'support was assured.

Once the movement gains strength and support it could then boycott more “basic” foods, but why stop with food? Women's clothes, for instance, have been reduced in quality while continuing to rise steeply in price. What Does A Boycott Achieve? I At best the boycott could I help keep prices more [stable, through promoting I industrial awareness of strong consumer resistance Ito certain products. At least, it will draw attention to the fact that consumers are finding the going pretty tough, though this may have become evident through falling sales of some goods. Some companies have become more concious of the need to justify price increases to the public. The Housewives’ Boycott Movement engendered sharp public response from at least two companies affected by the boycott.

Two discount furniture supermarkets have opened in Christchurch, and one busii nessman is selling grocery [items, working on a unit [cost mark-up instead of a :percentage mark-up. Whether an organised boycott of goods is needed ■ to promote consumer resistance is debatable, as many [consumers will be boycottring on a personal level when I prices have become too high

for them. But it all helps to I get the message across. Future Economic Policy

[ Consumers have little to) be happy about in the recent; Budget. There is much incentive for companies to export,; I but, as virtually no in-1 dustries in New Zealand are; self supporting (in that they) don’t need to import com-; jmponents for their final! [product) more exports must! [lead to higher domestic; ; prices.

If industries became more competitive on the world market, prices may be held. If not, the not uncommon practice of subsidising exports by raising prices on the home market, will increase.

The Government’s future policy for consumers may be to do nothing. It has. at least, not raised profit margins while under mounting pressure to do so, and this must be seen as holding prices to some extent. However, subsidies have been removed.

For example, when electricity was subsidised, the consumer paid by means of a power bill, and some of his taxation was also used to offset electricty charges.

After the subsidy was removed the cost went up directly through higher power bills, and indirectly when extra power charges were passed on by industry through price rises to the consumer. If a wage rise is gained to compensate, more tax is collected, some of which will no doubt be used for electricity costs. A vicious circle. Consumer support Opposition parties — Labour, Social Credit, and Values — have aligned themselves to the consumer action groups. They are using each other and the movement to promote their prrti "ar anti-gov-e intent policies. Unfortunately, once an opposition party has be- < me the Government, and has to balance the Budget, former alliances are usually forgotten. The future of consumer groups? The future of consumer groups looks healthy, but the future for consumers is perhaps not so good. The Consumers’ Institute will continue in its role of consumer protection.

The Housewives Boycott Movement along with C.A.R.P. and the Working Womens’ Alliance, is looking to the formation of food co-operatives, for which there is a great deal of public interest, they say.

Also, shopping budgets are in the offing, and a shoppers guide to prices is starting to circulate. The boycott movement also has indications that the price of some goods it is boycotting may be lowered, albeit not by much. This being the case the aim of the boycott will have been achieved.

Consumer groups might even consider forming a wholesale company.

The future for the vast number of consumers is something else. We could hope for a glut of goods on the domestic market, and a subsequent lowering of prices, if we cannot sell all of our exports. But, no-one wants to see the country’s balance of payments problem enlarge, so it will be hoped that we can find markets for all of our exports. Consumer resistance to high prices will continue, and it may have some effect. at least on those companies who are not relying on exporting. Union involvement? One possible advantage to consumers would be if the unions decided to go seriously into discount trading for their members. Unions would then be offering something practical and helpful to members. And with thoughts of voluntary unionisn. in the offing, it may not be such a bad idea for the unions to consider. Over all, most consumers will still be looking to the Government to ease the strain on them. With all the extra taxation to be collected, and assuming our balance of payments deficit falls considerably or is even wiped out, perhaps the Government will think of putting some subsidies back on. Or, even some tax relief, bearing in mind that perhaps, after all, consumer resistance is most felt through the ballot box.