N.Z. ‘must co-operate with Aust.’ to develop trade

Press, 5 December 1979, Page 27

N.Z. ‘must co-operate with Aust.’ to develop trade

PA Wellington Closer co-operation with Australia is necessary for the development of New Zealand’s overseas trade, says the Deputy Minister of Finance (Mr Templeton). “In a world increasingly regionalised, New Zealand, like Australia, found itself left out in the great multilateral trade negotiations that were completed in 1979,” he said in a speech to the Hutt Valley Charter of Commerce. “For the 1980 s we must organise ourselves in the South Pacific,” Mr Templeton said. “New Zealand linked with Australia, and in cooperation with our Pacific Forum partners, must link together, to further our interests in relation to the major trading blocks and the A.S.E.A.N. countries,” he said. Provided both countries follow an outward looking development policy, based on the efficiency of the market, he believed it should be possible to accelerate the development of both countries towards greater international competitiveness in their manufacturing industry, the goal of both countries at present. “Closer ties, on the basis of complementary development policies, will

lead to considerable changes in the composition of our trading flows, both within NewZealand and across the Tasman,” Mr Templeton said. “There will be a greater trade within industries, more specialisation, and a higher proportion of goods entering New Zealand, reflecting a more rationallybased economic structure in New Zealand.” But, he said, the fact that there were advantages of closer ties should not obscure the serious problems involved for both countries in moving towards freer trade. “Undoubtedly’, as far as New Zealand is concerned, the biggest single advantage of closer ties, leaving aside the possible expansion of agricultural exports, lies in the larger market size and the greater efficiency a more intense level of competition should bring. “What we can do at this stage is consider the historical experience of other regions and look at the broad possibilities inherent in three major issues — the larger market, the larger trading bloc and broader based market and resource strategies,” Mr Templeton said. A larger market would

provide for increased growth, larger-scale industry, and for modernisation and rationalisation of the most effective industries. Mr Templeton said the review taking place with Australia was designed to ensure that both countries followed similar aims. The review was a preliminary’ exercise aimed at closer economic co-operation between New Zealand and Australia. It covered trade, industry, agriculture, marketing arrangements, foreign policy and financial issues. Already it came up with questions which needed detailed study.

“Both countries need to check their positions carefully,” Mr Templeton said. “Our studies are aimed at putting us in the position of assessing in some detail the advantages and disadvantages of a closer economic relationship.” But, he said, New Zealand’s capacity to survive as a nation depended on the development of internationally competitive industries. Accordingly, the Government had formulated a policy which would keep the economy on a stable growth path in the short term and promote more directly the growth of exports and efficient import substitutes in the medium term. The process of import replacement was likely to lead to industries that would be competitive after their establishment, and be able to enter international trade. “We cannot afford to be limited by industries which merely service the local market at an unacceptably high cost. It is in fact a shift in emphasis from inward looking import substitution to an outward looking strategy,” he said. “Those who demand freedom in the name of enterprise and risk-taking should exhibit those qualities and simultaneously not depend on protection or guaranteed rewards. At the same time. I believe that we cannot withhold from entrepreneurs the recognition they deserve, or erode the rewards for risk-taking, or frustrate initiative — and then worry when the system fails to fulful expectations.” Turning to the issue of wage settlements, Mr Templeton said the Government was concerned that bargaining parties realised that wage increases in excess of productivity

growth mean higher prices. “That leaves no-one better off. Indeed, they will reduce the chances of sustainable growth in the future. In short, our standards of living will not improve.” Mr Templeton said.