‘Industry-drift to Australia possible'

Press, 27 March 1980, Page 2

‘Industry-drift to Australia possible '

New Zealand could suffer from a drift of industries to Australia similar to the drift from the. South Island to the North Island, said the president of the Manufacturers’ Federation (Mr F. Turnovsky). . . The transference of industries to l the larger and more affluent market across the Tasman could bring disinvestment, . unemployment, and migration “to the point where the social structure of our society could be in jeopardy,” he told the federation’s convention. Mr Turnovsky was spelling out the federation’s stance on the equality of opportunities with Australian manufacturers under closer economic ties between the

two countries. The New Zealand manufacturers. could not subscribe to an interpretation of free trade that would have the effect of such an industrial drift, he said. ■ ■ > ■ He suggested that equality of opportunities meant something different to the Australians.', . ' . ; Mr ' Turnovsky.; said the term embraced more ’ than just import restrictions, where the federation had cooperated fully in removing anomalies. It included such matters as transport costs, and relative advantages

accruing from economies df scale and proximity to large markets. New Zealand could not disregard the possibility of an east-west Tasman drift in industries, he said. “Nor can we look upon our present lower wage structure relative to Australia as anything more than a

temporary advantage in pricing our products.” , Cost advantages in New Zealand’s international trade should result from the best use of resources and skillful management, rather than a depressed standard of living, said Mr Turnovsky. Trade with Australia was important; he said, but not the over-riding element in the economic strategy of the Manufacturers’ Federation. “We have as much to offer the Australians as they have to offer us.” He said the introduction of free trade would have to be gradual and the phasingout of Customs duties between the two countries could not apply to .all goods until further study was made of certain industries. While the federation was happy with the communique issued after last week’s talks between the New Zealand and Australian Prime Ministers, Mr Turnovksy said it would reserve its stand on a range of issues yet to be studied. Mr Turnovsky told the convention that New Zealand .faced a problem of turning State-domination of the economy into more equal partnership with private -enterprise. A reversion to a free market economy was not the

issue and New Zealanders would firmly reject the “shock remedy” suggested by economists such as. Milton Friedman and vbn Hayek as an answer to econs brine problems, he said. Like Britain, which had a “dismal economic performance,” New Zealand had a "monolithic State machine,” Mr Turnovsky said. Countries in which government control was at a peak were experiencing the lowest growth rate.

Yet State intervention in economic affairs had become unavoidable and it was now a matter of reducing the degree of such intervention in a private enterprise economy. “This mood is reflected in a growing awareness among political leaders, senior officials and entrepreneurs of the need to change the interrelationship between the partners in our mixed economy, by scaling down the role of the Government on the one hand, and allowing more room for private sector initiative on the other,” he said.

This required the private sector to “assert itself strongly and constructively at the level where policies are being formulated,” said Mr Turnovsky.