EFFICIENT INDUSTRY AND IMPORTS

Evening Post, Volume CXXXVIII, Issue 125, 23 November 1944, Page 6

EFFICIENT INDUSTRY AND IMPORTS

So far-reaching are the effects of a policy of import control on trading practice that it was natural that the . conference of the Associated Chambers of Commerce should devote early attention to the question. In approaching the matter, it is necessary to bear in mind that the policy was adopted before the war. The financial policy of the Government between 1935 and 1938 had rapidly dissipated the country's overseas funds and had dictated the application of drastic emergency measures. The fact that import control was necessary was a clear indication that New Zealand's trading relations with other countries in consequence of internal currency expansion had drifted on to an unsound basis and, whatever immediate measures had to be taken to rectify the position, the obvious long-term remedy was to restore those relations to a satisfactory basis by correction of the internal position. New Zealand has now had almost six years' experience' of import control, mostly under •war conditions, but it has been made plain by leading members of the Government that, so long as they are charged with the administration of the country's affairs, restrictions on imports will remain a permanent feature of the policy to be followed. However necessary such controls may be under war conditions—and, again, it should be emphasised that in New Zealand they were not originally applied as a war measure—they cannot be justified under peace conditions. If they are then they can only be regarded as an artificial measure needed to counter the fact that the internal financial position is artificial. As we have said, the obvious remedy is to restore soundness in internal finances so that external relations will also be firmly based without the need for artificial props.

In their operation import controls are restrictive, cumbersome, and dictatorial. They are a direct interference with the rights of individuals. The right of the people to decide the type of goods on which they will spend their own money is taken away, and, instead, the Minister of Customs and a handful of ! advisers are empowered, without refer- ! ence to any other authority, to make a selection of goods that may** be imported. Instead of the wants of the J consumers being met through normal .trading channels, and by importers ; with many years of experience, the \ people must purchase only those goods which the bureaucrats decide.' During the discussion at the conference of the Associated Chambers of Commerce, some speakers expressed concern at the possible effects of a removal of controls on New Zealand manufacturers. It can be readily agreed that secondary industries have made remarkable progress during the war, and that a strong case can be made out for protection, particularly of those which are natural to the country and have shown that they are able to produce articles of a high standard and at reasonable cost. But can a case be made out for the protection of all by a policy of import control? . The effect of-such control would be not only to protect the efficient industry but to bolster up the inefficient and uneconomic industry. As several speakers pointed out at the- conference, the correct way to protect New Zealand industries which have to contend with high wages and high production costs is by tariff adjustments. By using the tariff it would be possible to take into consideration all factors and make adjustments accordingly. To use import controls would be to afford a blanket protection which would operate without retaining the competitive possibility so necessary for efficiency.

But there are ways of- assisting industry other than by import control or by tariffs. In his address to the conference the president (Mr. Stronach Patefson) referred to the heavy burden of taxation to which industry is. subjected. The State, he said, was the biggest partner in industry and commerce by virtue of the share of profits it took from it. Yet industry and commerce had to accept all the risks, the State taking none—except that of •cessation of tax revenue, which was quite a different matter from loss of capital. It has been made perfectly clear that industry does not object to meeting its fair share of war taxation, but it does ask that it should receive such relief that will enable it to make its own plans for meeting the problems of the post-war period. If industry is to make a maximum contribution to national reconstruction, it must be assured that the rewards it receives j are reasonable. "It appears to be taken for granted that under post-war | conditions industry and commerce will be prepared to accept the position allotted to it of maintaining a high scale of activity irrespective of the reward," said Mr. Paterson. "Political opinion apparently fails to take into account the possibility that capital, whether that of small or large savers —and it is the small savers who must provide the capital of the future— might find industry insufficiently attractive to provide for the develop.ment of new industries, having regard to the limit on reward with no limit to possible loss." If New Zealand industry is to compete on a reasonable basis with the industries of other countries, it must receive a sufficient incentive. As one delegate to the conference asked, are local manufacturers paying 15s in the pound taxation to be expected to compete with those In another State not far away paying 6s in the pound? The question of protection for local industries cannot be divorced from the question of taxation relief. We are indeed following a vicious circle when Government demands so add to the deadweight on enterprise that industry can be propped up only by the arbitrary and indiscriminating policy of import restriction.