AUSTRALIA'S PROBLEMS

New Zealand Herald, Volume LXIX, Issue 21359, 7 December 1932, Page 13

AUSTRALIA'S PROBLEMS

PROTECTION AND EXCHANGE EFFECTS OF HIGH RATES COSTLY SMALL INDUSTRIES [by telegraph—own correspondent] WELLINGTON, Tuesday Commenting on conditions in Australia Mr. J. Fletcher, head of the Auckland branch of the Fletcher Construction Company, who returned from Australia by tlia Mararna to-day, was definite in his belief that high exchange has far from solved Australia's farming and unemployment problems. lie considered that the position there was still unhealthy. On the other hand, he spoke of wonderful development in the exploitation of the mineral resources of Australia and said ho considered there was a wide possible field for such development in New Zealand. Building in Australia to-day was generally at a very low ebb, said Mr. Fletcher. In 1928, when he last visited Sydney, the skyline was broken everywhere by the arms of electric cranes. To-day practically the only crane reared up was that over the big war memorial. Outside of that there was not a building of any size being erected. Melbourne presents quite a contrast, however, for there several big buildings were in course of erection, chiefly office blocks. In Adelaido the conditions were much the same as in Sydney. An Incessant Clamour "One of the outstanding features of industrial conditions in Australia at present," continued Mr. Fletcher, "is the growth of small industries which have secured a footing purely on the basis of the tariff protection, which has a minimum of 25 per cent, plus 10 per cent primage, to which is to be added the tariff represented in the 25 per cent exchange rate. There is thus a considerable amount of manufacturing going on, but the prices of manufactured goods, even with the protection given by the tariff and the exchange, are such that there is difficulty in competing with imported goods.

"There is an incessant clamour for an increase in the tariff and protection of these minor industries, with ever-increas-ing costs to the consumer. This condition is reflecting adversely on the verv people who in the early stages regarded the exchange rate as a bounty on their production. Wheatgrowers in South Australia who discussed this aspect with me admitted quite candidly that they would lie better off with a straight-out bounty than with the exchange premium on the prices of their produce. An Unhealthy Position

"The opinion was widely held that itwould be better if many of these uneconomical industries were discontinued altogether. Australia has undoubtedly a very serious problem to face before her economic problems can be regarded as settled. I am strongly of the view that the increase in the exchange rate has not been a solution of Australia's problems and it would certainly not be any palliative so far as New Zealand is concerned. The position in Australia is probably just as unhealthy to-day as at any time in the country's history in that the employment problem is being met only by means which must ultimately be the country's undoing." Those remarks, continued Mr. Fletcher, perhaps represented a pessimistic side of Australia's position. Healthy and advantageous development which was taking place was in the development of the mineral wealth of the country, when; large scale manufacture was carried on in tha utilisation of natural resources. The development had in some lines been undoubtedly advantageous to Australia.