TOPICS OF THE DAY

Evening Post, Volume CXII, Issue 91, 14 October 1926, Page 10

TOPICS OF THE DAY

The comments on revenue by the Acting-Prime Minister (the Hon. W. Downie Stewart) are a reminder that the ordinary cycle of a primary producing country is: (1) High produce prices, excess of exports, excess of deposits in banks; (2) big borrowing, big importing, big Customs revenue, excess of imports; (3) oversea competition by' low cost countries, export values f all« ing, imports perforce contracting, excess of advances by banks, Customs revenue declining, less borrowing; (4) readjustment on'basis of new values, reestablishment of excess of exports, and rebuilding of deposits in banks. New j Zealand is somewhere in the third phase of the cycle. The Acting-Prime Minister to-day reports two features: (a) Eevenue not yet declining ("holding up well"); (b) expenditure hard to keep down. To some extent (b) is the result of (a). What is not known yet is the exact angle of decline of imports and revenue. Tor eight months of 1926 imports appeared to be over a million and three-quarters lower than for the eight months of 1925, but these details are inconclusive; by the end of the financial year—owing to big borrowing—the figures may tend to flatten out, or on the other hand a sharp angle of fall in both imports and Customs revenue may develop. The sequence, according to the" cycle outlined above, would be decreased borrowing, and ultimate readjustment. Mr. Stewart already projects the former, for he "hopes to keep this year's loan expenditure substantially below last year's." The fact is that excessive borrowing creates imports which the country cannot afford and provides through Customs a false revenue. * • * The question of levying a protective duty being far too complicated to be settled by a discussion of abstract principles, it hag become the habit to set up investigating machinery—temporary or permanent—to take evidence, analyse the facts, and expertly advise Parliament or the Government. The Commonwealth has a standing Tariff Board with extensive powers, but hitherto New Zealand has refrained from creating such a body, ostensibly on the ground that its existence would lead to uncertainty concerning the tariff and to the unsettlement of trade and industry. In Britain, however, the Board of Trade apparently holds investigations—sometimes indefinite—to which the same objection appears to be equally applicable. A business man in the hosiery trade (not a manufacturer) writes from London to a New Zealand friend that "the Board of Trade Committee appointed to inquire into the application for an import duty on knitted goods and hosiery "lias, fortunately so far as we are concerned, decided against it." But, he adds, "the incident is not yet finally closed," for "it is agreed that if the tendency to import these lines increases, the applicants should bo permitted to offer fresh evidence." And this in "freetrade England"! • • • In an address to the Industrial Corporation at Christehurch yesterday the Minister of Customs m&de reference to this question of tariff revision and suggested the appointment of an investigating body such as that which prepared the last revision proposals. In this instance, however, he favours the inclusion of a representative of the Department of Industries and Commerce. The need for some such expert investigation must be admitted by all who know how Parliament works. Left to itself, Parliament would quickly I inako a pretty mess of any tariff such as ours, when there is no fixed singlo principle of protection, preference, revenuo collection, or free trade to steer by. Our tariff is designed to provide revenue, to foster Empire trade, and to help local industry. Only a small body of experts, examining .evidence and investigating claims for protection, can prevent such a tariff from becoming a hopeless jumble. The only point upon which some tar"? economists will differ from Mr. Downie Stewart is as to whether the tariff investigating body should work continuously or at fixed intervals. Bevision of the tariff too frequently is undoubtedly unsettling, and the prospect of such revision detracts from the benefits which the tariff is designed to give— whether by highv duties or absence of duties. What Mr. Stewart terms "tinkering" should certainly be avoided. If protection is given, importers and manufacturers are both entitled to an assurance that it will not be increased or withdrawn without fair notice. But there is much to be said, at the same time, for continuous investigation, so that when the time arrives for a periodical revision the whole facts bearing ! upon that revision will be known.