Evening Post TUESDAY, JUNE 13, 1939. CONFUSED PLANNING

Evening Post, Volume CXXVII, Issue 137, 13 June 1939, Page 8

Evening Post TUESDAY, JUNE 13, 1939. CONFUSED PLANNING

Referring on Saturday to complaints that import licences were being issued without any guarantee that the requisite sterling funds would be available, Aye pointed out that a part of the trouble arises from the division of authority. The Reserve Bank issues sterling permits, the Customs Department grants import licences, and the trading banks provide the sterling for imports and remittances. All the sterling accruing - from exports is, however, the property of the Reserve Bank and, while a proportion of this will naturally be available for imports and sterling remittances, it is not stated what part shall be thus used. It would be difficult in practice to lay down a definite proportion. Obviously it must vary according to the amount received from exports, the amount of the first call made, on the funds for Public Debt service, and the volume of the sterling reserves which ithe Government thinks it should establish against its loan obligations at the end of the year. It would lessen confusion, however, if there were a closer relationship between the issue of licences and permits and the provision of funds to meet them. As it is, the Customs Department issues licences according to a schedule; but, as the Customs Department does not provide sterling or control it in any way, it cannot know whether the licences are too liberal for the funds or too meagre. It appears that funds to meet all licences cannot be provided at once. Therefore, after the first rationing through licensing, a second rationing becomes necessary. But the system is the more complicated because the first rationing has not the simple purpose of saving sterling. It is intended also to foster local industries by granting a preference to imports of raw materials and plant. Yet the raw materials for some industries are partly manufactured goods and may make almost as great a demand on the sterling funds as finished goods. The question will then arise: * Should such materials have preference over goods which are more urgently needed but cannot be brought into the preference class because no part of the manufacturing process can be undertaken in New Zealand?

On what principles is the preference to raw materials given? What proportion of the manufacturing process must be undertaken in New Zealand? Admittedly no hard-and-fast rule can be laid down. It should, nevertheless, be possible for the authority that decides the preference to state general rules. This involves more thair the amount of sterling taken. It involves the establishment, in an emergency, of industries which will continue when the emergency is past. Then some of them may prove an incubus. But they will be with us and difficult to get rid of. We know that from our experience of tariff protection. But whereas, under tariff protection, Parliament can debate the issue ancl the people can obtain information as to the measure of protection to be given and value of the industry to be protected, under the system now being operated the, public are almost completely in the dark. The Government has not told, the country what undertakings, if any, have been given to persons establishing new industries. It is not known whether the embargoes on finished imported goods and the preferences for raw materials are to be permanent. Presumably some manufacturers are

expecting permanency. Yet the publicly-given promises of this have been most vague—such statements as that of Mr. Nasli that, when the restrictions could be relaxed ■ consideration would have to be given to the new industries that had been established.

More than this is needed if we are to have worthwhile planning. It should be stated what industries are receiving the protection and on whose recommendation, whether of Minister or Department, and on what facts as to economic value and economic cost. If the planning is well considered it should be possible to give this information. If the facts cannot be stated the inference to be drawn is that some of the local industry which is being fostered is of doubtful permanent value, and that it would be better to substitute for the double aim of industry-promotion and sterling-conservation a simple and understandable system of rationing operated principally through the trading banks.