PRODUCTION COSTS

Evening Post, Volume CXXVI, Issue 127, 25 November 1938, Page 15

PRODUCTION COSTS

INCREASED TAXATION

BURDEN ON COM-

PANIES

IMPORTERS' GAIN

Discussing the position of manufacturers at the annual meeting of the Wellington Manufacturers' Association last night, the president of the association, Mr. H. H. Higgins, referred to the burden of taxation on producers, and said that the increased spending capacity of the workers had been more of a gain to importers than to manufacturers. The policy of the Government had tended to restrict rather than to increase production, he said.

"The past year has been a difficult one,, in many respects," said Mr. Higgins. "The political situation in Europe has created a position of great anxiety, and it is gratifying to note that the New Zealand Government is taking steps to stiffen up the defence of New Zealand. In many quarters, however, it is felt that much more should and could be done to protect this Dominion against the risk of invasion. In any such measures taken by the Government,- they can rely on the hearty cooperation of manufacturers. s, "Turning to internal troubles. We have, as you know, during the past year, had to contend with steadily mounting costs and falling production, and a most unwelcome increase in taxation. • I refer in this regard, of course, to the company tax under the Social Security Bill. When this tax was announced vigorous protests were lodged by this association, in conjunction with other sections of the community, but I regret to state these protests were ignored by the Government.

"The examination of the balancesheets of many companies manufacturing in New Zealand today, shows that taxes form by far the largest part of the costs, in many cases the Government taking more by way of taxation than the shareholders .receive by way of dividends.

"The Government's laudable efforts to raise the standard of living of New Zealand workers is fully recognised, as is the fact that the increased purchasing power of the workers —due to higher wages and steady employment —has increased the consumption of manufactured goods, but, unfortunately, far too high a proportion of this increased consumption has benefited the importer rather than the New Zealand manufacturer and his employees. IMPORTED GOODS. "The fact that too great a portion of the workers' wages are being spent in imported goods has recently been admitted by the Prime Minister. We have been warning him of this trouble for the past two and a half years, and it is at least satisfactory to know that he , and his Cabinet now realise the danger. / "Another handicap with which manufacturers have had to contend during the past year, and one ; the manufacturers have in common 'with the farmers, is the difficulty in obtaining unskilled and semi-skilled labour, in competition with the Public Works Department. "The fact must be fairly faced that neither an individual nor a nation can lift itself up by its boot straps. Just as soon as the Government realises that true prosperity is based on production alone, both primary and secondary, and xtakes the necessary steps to encourage that production, a new era of prosperity—true prosperity —will dawn for New Zealand. "I want to emphasise the point that it is not only in the field of secondary industries that the policy of the present Government has tended to restrict rather than increase production. The farmer finds it increasingly difficult to hold his production at the old level, let alone increase it, due to the everrising costs, and the competition of the Public Works Department for his available labour. It is gratifying to know from a recently-published statement of the Prime Minister's, that the Government has set up a committee to inquire into the whole position and report regarding remedial measures. Why such a committee—if it is necessary—was not set up two years ago, is a question that only Mr. Savage can answer." .