Comment from the Capital

Press, 19 September 1977, Page 18

Comment from the Capital

imports and the money realised from exports fell from $1067M in the year ending June 1975 to S7O4M in the June 1976 year, and to SS3IM in the last June year, the pattern has not returned to that of the year ending June 1973, when New Zealand’s export earnings exceeded the cost of imports by $325M. In this Micawber situation the most frightening fact is that the “recovery” may have tapered off.

“Moment of Truth” has some blunt words concerning our prospects: “It is obvious that, unless we are to have a very large balance-of-pavments deficit indefinitely (and ’hat is feasible only until overseas lenders weary of us), the carnival is over.”

Without going into figures in any more detail, it seems that we must increase exports. decrease imports (wherever this is possible) and correct inefficiencies in production. The reduction of imports is not as simple as it seems, for only 12 per cent of our imports are finished consumer goods.

It is obvious, however, that any New Zealand industry which replaces imports would be as valuable to us as an export industry would be. It does seem that under the nresent Government this has been overlooked.

Recently. I spoke with the Prime Minister (Mr Muldoon) about the nrospects of beginning two admittedly small enterprises. trout farming and rabbit farming. He discarded both, basically on the exnected reactions of the farming bloc and the angling and acclimatisation bloc.

But his other points revealed a wav of thinking which annpars to cut across anv e*Fort to

perspectives. He told me that the overseas notenrial was not hi"h in either case and that nrocessine woi'M send the cost skv-high. Sneaking of the premium export of trout, he said: “As soon as vou lav a finger on anything in this country, the price goes up. We do well with

wet-fish and other lines, but as soon as they start to proces it, it prices itself out of the market.” This is a damaging admission to be made by the leader of a country which is exporting vast quantities of ironsand, logs and other valuable .products to Japan for processing overseas, while our own young men leave the country for lack of jobs and the unemployment rate climbs.

Independent inquiry has convinced me that a large market within New Zealand exists for both these enterprises, a dual market in the case of rabbits, for the production of rabbit fur would save the annual expenditure of some $250,000 for the importation of rabbit fur for our garment industry. We are making little attempt to initiate internal production towards selfsufficiency. It can be done, as witness the success (when permitted by pragmatic Labour-National government policies) in the wheat and flour industry. For some years now, we have been told that the establishment of a sugarbeet industry in New Zealand is “marginally not economically viable.” This was said when we were paying $ll4 a ton for our sugar (about 24 per cent of which comes from Fiji). Since then, however, New Zealand’s five-year contract with Fiji has been constantly under attack by Fiji, as to both price and quantity taken bv New Zealand, and the island democracy has always won. The price went to $3OO a tonne in 1974. Our Cabinet Economic Committee decided on an amount of 40.000 tonnes this year at $3OO a tonne, but Fiji warned still more.

Meanwhile. Fiji’s case for access to the European Economic Communitv was being considered at the Lome Convention. F<ii held un deliberations in Wellington until the result was known. When Fni learned that it had obtained permission to sell 163,000 tonnes of sugar on the European

market at $390 a tonne, the Fijian representatives were quickly back in Wellington. As a result, we are committed to buy 42,500 tonnes of sugar this year and 47,500 tonnes in 1978. The new cost to New Zealand of Fijian sugar has not been revealed, but it is understood to be close to the $320 a tonne asked for by Fiji in May. It is stressed that this is in no way a “welfare deal” for Fiji, but a straight commercial transaction, conducted on the New Zealand side by the Department of Trade and Industry. The funds used have no relation to the assistance funds given by New Zealand for various development projects, which are administered by the Ministry of Foreign Affairs. New Zealand Governments have steadfastly refused to entertain the idea of a sugar-beet industry in New Zealand. Invariably when a government announcement on this is made. our assistance to developing countries is mentioned as a reason for not setting-up in competition with Fiji. Statements such as these are hardly tenable. If there is a welfare element in highpriced Fijian sugar, it is paid for by the New Zealand housewife and not out of Foreign Affairs funds. If a New Zealand sugar-beet industry could be described as “not quite economically viable” ten years ago, surely the balance has changed now.

A home-grown sugar industry would cut our overseas payments for sugar by the amount of its output. This would be true even if Fiji’s contract were not affected, because we still have to buy some 70 per cent of our sugar imports from other sources.

If Sir Frank Holmes and his dedicated group could secure acceptance by the Government of these facts, thev would do much to establish the self-sufficiency of New Zealand. A domestic sugar industry would also be of great regional assistance to Canterbun- and the South Island generally.