CONTROL OF IMPORTS

Dominion, Volume 32, Issue 261, 2 August 1939, Page 11

CONTROL OF IMPORTS

Restrictions Temporary

INDUSTRIAL EXPANSION

Exchange control, import selection and the expansion of secondary industries are subjects discussed by the Acting-Minister of Finance, Mr. Savage, in his Budget statement presented in the House last night. He said that the import restrictions were solely for the purpose of reducing imports to the level of the country’s ability to pay for them. These economy restrictions were temporary, and would be relaxed as the need for them passed. For the past year unemployment has been virtually eliminated and the people have enjoyed a state of full employment, said Mr. Savage. To meet the drain upon the sterling resources of the Dominion, which, was accentuated to a considerable degree by transfers of capital abroad, exchange control and import selection were introduced last December. One way or another imports had to be reduced, and the Government were convinced that there was more scope for constructive action through selecting imports than in lifting the rate of exchange to check all imports without discrimination. Needs of Industry. The necessity for restriction of imports provided an opportunity and an incentive for an expansion of local manufacture, and in selecting Imports the Government have given the needs of industry preference over manufactured commodities.' In fact, the Government had to choose between standing by while the standard of living fell or organizing a drive for a greater output from local industry, both primary and secondary. Another important factor is that we must look to industry for the only possible permanent solution of the unemployment problem. The present basis upon which we have reached a state of full employment cannot be anything but a temporary phase because it is not economically sound to keep so many men engaged permanently upon works, however desirable they may be, that do not add to the present flow of consumable commodities. The standard of living depends mostly on the latter, and if public works, which by their nature can only be reflected in consumable commodities or services over a long period of years, were continued at the present level for long the present difficulties would be accentuated, and in one way or another the result would be a lowered standard of living generally. In saying that, however, 1 would like it to be clearly understood that the Government have no intention of throwing thousands of men out of employment. The problem is being tackled along constructive lines of transferring the men into industry as quickly as possible. Plant and Machinery.

Expansion of industry involves plant, machinery and raw materials, most of which must be imported, and thus adds in the short-run to the strain upon our overseas resources. Our position generally lias been eased. and more time for necessary economic adjustments secured as n result of Mr. Nash’s successful negotiations in London, and I would like to take this opportunity on behalf of the Dominion of thanking tlie Imperial Government for the help they have given us. This help takes the form of £5,000,000 sterling of export credits at 41 per cent, interest with a currency of five years for Government imports from the United Kingdom and £4,000,000 sterling of short-term credits for commercial purposes. Both classes of credits are available for the purchase of British goods. Government imports at present are being swelled by material for our defence forces, and a considerable portion of the credit granted for Government purposes will be utilized for this purpose. ...

Iu the course of the discussions iu London it became clear that a. good deal of misunderstanding existed as to Government proposals concerning import selection. It was by uo means generally appreciated that a considerable proportion of the present restrictions is solely for the purpose of reducing imports to the level of our ability to pay for them. These economy restrictions are temporary, and will be relaxed as the need for them passes. The essential point is that they are quite apart from the Government’s proposals for developing selected industries in New Zealand. We have a large export trade which it is desirable should be extended as much as possible, and over aud above external debt charges we must exchange our exports for imports. AVe waut all the imports we can afford in addition to maximum production in our own factories to raise the standard of living. This objective also renders it imperative to select for development—firstly, industries that can produce goods that we require at a competitive price, aud, secondly, those from which we obtain the greatest net advantage having regard to production costs and the necessity for finding employment for many thousands of our people in productive industry. To achieve the objective industry must be efficient, and this is not possible unless it is organized in economic units and is not over-capitalized by having too many units. In administering the import selection scheme preference is, of course, given to essential requirements for defence, for primary industries, and for secondary industries, while at the same time every endeavour is made to divert purchases to United Kingdom markets.