Farmers welcome move

Press, 16 August 1984, Page 1

Farmers welcome move

The Government’s economic package was far reaching and should benefit the whole economy, said the president of Federated Farmers, Mr Peter Elworthy, yesterday. “The ultimate effect of the move from import licensing to tariff based protection will be to channel more resources into efficient, internationally competitive industries and away from highly protected and internationally uncompetitive industries. The result will be increased real growth in the economy, a wide range of goods for the consumer, and increased job opportunities,”- he said.

The decisions were a significant move away from the cost plus policies which had fuelled inflation in New Zealand for many years, reduced the competitiveness of export industries, and resulted in slow economic growth. If the advantages of the decisions were to be retained, it was vitally important that the Govem-

ment reinforce the benefits of the devaluation by containing cost pressure on the economy including in the wages area, Mr Elworthy

“The 20 per cent devaluation has already benefited those export industries receiving export incentives, whereas assistance to the farm sector has virtually

been eliminated through the phase-out of S.M.P.S. To ensure that this disparity in assistance levels does not seriously disadvantage investment in agricultural exports over the phase-out period for export incentives, the farming industry will look to the Government to redress the balance,” he said. ; Manufacturers accepted the inevitability of the phase-out of export incentives, said the president of the Manufacturers’ Federation, Mr Earl Richardson, yesterday. A phased withdrawal of the incentives was related to the effects of the recent devaluation and recognised the volume of exports sold in New Zealand currency. “After the devaluation it behoves manufacturers to use the new-found price .flexibility to increase the volume of export production rather than to just accept higher returns. “Manufacturers have two responsibilities in the months ahead. The first is

to use their advantage to create more jobs through exports, and the second is to do everything in their power to hold prices and thus carry their share of the fight against inflation,” he said. Manufacturers should resist the temptation to build inflationary expectations into their pricing, Mr Richardson said. The president of the Export Institute, Mr J. G. Lister, said he was pleased a decision had been made after two years of consideration. . “Exporters can _ create jobs and earn foreign exchange, both of which are priorities under the Labour Government, but a correct environment must be created.” Mr Lister said he would like to see some form of tax drawback so that exporters were not forced to export the tax content on New Zealand labour to the international market. “Representation, promotion, and advertising overseas costs a lot of

money, and although the devaluation has given us a breathing space it has also raised those costs about 25 per cent. “They must be underwritten. It would be a disaster without some form of market development incentives,” he said.

According to the Opposition spokesman for industry, Mr P. R. Burden, and the spokesman for commerce, Mr P. C. East, the new Government had failed to appreciate the need to sustain and encourage manufacturing export growth, so that more jobs could be provided, and the standard of living maintained by overseas exchange earnings. “Essentially what the Labour Government is saying is that devaluation is all our export industries need to continue expanding. This is a bad miscalculation as the benefits of devaluation will be rapidly lost through increases in wages, transport, and import costs,’ they said.

In spite of an international recession, the exKrt manufacturing sector d expanded considerably to earn millions of dollars for New Zealand and provide thousands of jobs, they said. “Export incentives have been a vital catalyst for this growth and their abolition will be a tremendous blow, to an industry which has' made a significant contribution in employment and the maintenance of living stand-

ards,” Messrs Burdon and East said. New companies with their sights on the Australian market may be badly hit by the phasing out of the main export incentives by 1987, an Auckland accountant predicted today. Mr Roger Harvey, an accountant for companies with export revenue totalling almost $5O million, said that more-established exporters would probably be able to adjust to the new system by “But among new companies, which are just gearing up for the Australian

market under Closer Economic Relations, there could be a significant loss of employment and capital investment,” he said.

“Some companies may' actually go to the wall as a result.”

Mr Harvey said that industries hardest hit would be those producing bulky items, such as carpets, furniture, and boats, which would now be cheaper to make nearer the overseas market.

“They will look very seriously at manufacturing in Australia.”