EXPORT VALUES

Evening Post, Volume CXXVI, Issue 2, 2 July 1938, Page 14

EXPORT VALUES

INSULATION PROPOSAL

The Labour Party believed that i; could, to a very considerable extent, but not absolutely, insulate New Zea land from the effects of a serious decline in the value of exports, said Mr. C. M. Williams (Government, Kaiapoi). There was no intention to repudiate interest payments on the overseas debt.

"If the value of our exports falls the obvious effect will be that unless we resort to a borrowing policy we will have to reduce the amount of our imports," said Mr. Williams, "but it does not follow that we should reduce the standard of living of the people of New Zealand so far as that standard is supplied by goods or services produced in this country. Because the market for ou£ exports is reduced, is that any reason why we should reduce the consumption of those goods inside New Zealand? It is a reason rather why we should stimulate the consumption of those goods in New Zealand, but the previous Government, because prices for our exports fell overseas and New Zealand had less foreign exchange to purchase imports, reduced wages instead of substituting for those imports goods produced in New Zealand. It is only in that way that we can insulate New Zealand from the effects of a fall in overseas values. Briefly, if prices fall we will have to reduce the quantity of imports and increase the quantity of . goods produced in New Zealand for our own consumption." EXCHANGE CONTROL AND RATIONED IMPORTS. It was a fallacy with many people that most of the goods consumed in the Dominion were imported. Actually, most of the consumable goods were or could be produced in New Zealand, Mr. Williams continued. If the export demand for wool fell, for instance, there was no reason why less wool should be produced; rather, production should be increased. There was no need to raise the exchange rate. Probably the most effective method was that followed by Germany of exchange control and rationed imports.

An Opposition member: Is that what the Government will do?

Mr. Williams: I am not saying what the Government will do. There are two alternatives. The inflation method is the one that the previous Government followed.

If New Zealand followed a policy of exchange control it would have certain advantages in that the country would import such goods as it needed and would produce those goods which it had" no longer the foreign exchange ,to buy, said Mr. Williams. The credit of the Reserve Bank, the country's ! internal credit, could be used to! S encourage production and replace exports. . Because there was no longer prosperity overseas would be no reason why the people of New Zealand should I be deprived of their ability to con- j sume the goods they produced them-! selves. ! NOT CONVINCED. Mr. J. A. McL. Roy (National, Clutha) said that as a working farmer he had been particularly interested to listen to Labour's plan for insulating New Zealand against an economic storm. Mr. Williams's argument had failed to convince him that the plan would relieve or prevent the full extent of such a happening. It was all very well to talk of increasing local consumption, but it should be remembered that New Zealand was to a predominate extent dependent upon the return from the sale of her exports. If the Government could insulate the farmers as it claimed, it might well have put its polity into operation during the past year. The average farmer who had been able to pay fairly large sums in taxation last year was today just about breaking even between costs and income.

The adjournment of the debate was moved by Mr. W. J. Broadfoot (National, Waitomo), and" the House 'ose at 5.30 p.m.