INDUSTRIAL EXPANSION

New Zealand Herald, Volume LXXVI, Issue 23277, 21 February 1939, Page 5

INDUSTRIAL EXPANSION

TRADE IN AUSTRALIA I POLITICAL STABILITY LOWER TAXATION RATES Reasons for tho maintenance in Australia of internal trade and secondary industry at a high level over tho last 18 months, notwithstanding a sharp fall in export prices, are advanced by the National Bank of Australasia in its monthly summary for February. The bank says that perhaps the most important factor causing such a high level of trading and industrial activity has been the expansion in recent years of secondary industry, which has made Australia less dependent than formerly upon imported goods, and at the same time has given work to many people who, failing that expansion, might be unemployed. Severe though the fall in export prices between April, 1937, and December, 1938, has been, the bank says it has been a fairly steady decline, that the period of high prices was not prolonged, being loss than two years, and that tho index for January, 1939, is higher than that of the year 1933 and is only about 1 per cent less than tho average for the years 1934 and 1935.

Substantial advantages accrued to Australia as a result of the high export prices of 1936 and 1937, and their good effects have carried into the present period. They are not readily segregated, but among them are the substantial investment by oversea interests in Australian industries, replacement of industrial plant with modern machinery, and a building op of stocks of imported raw materials and partly manufactured goods needed in Australian factories, as well as of those finished goods which are not made there. For these reasons the reaction to the fall in export prices is much less than would be expected to follow so pronounced a recession in the value of export commodities. The increased expenditure on defence and other public works has played a part in stimulating business activity. Other important factors are a marked political stability and freedom from major industrial disturbances. Their effect on business confidence has been augmented by various reductions in the high rates of taxation imposed during the depression period and b.v the low rates of interest current during tho last six years.