Preference And Its Risks

NZ Truth, Issue 978, 23 August 1924, Page 6

Preference And Its Risks

Misuse of \Cheap Loans . They Should Not be a Means of Dictating Acceptance of Tenders If Manufacturer Uses Pressure from Lender's Angle, He Defeat His Own End 1 i \ ■■] _ ■•].'■ ' ••' ;'' !__ The Customs preference that New Zealand , gives tp British manufacturers, and the loan preference that the Old Country promises to give to Dominion works that are helpful to British manufacturing industry, are clearly intended to be administered m an Imperial spirit. Imperial spirit is not helped by British manufacturers (or their agents) who say: "Because 5 to 10 per cent, of your contract will benefit Swedes, we will try to prevent your participating m our' new loan preference." ' Nor is Imperial spirit, helped by manufacturers who get on the blind side of the New Zealand Customs preference by means of articles that are 60 to 75 per cent, of Continental or United Btates origin. ' v . If the real dictator of the British preferential loans is to be an advisory committee of British manufacturers, and if, relying on that fact, some manufacturers at Home make a practice of bringing pressure to pear on responsible New Zealand Ministers by means of pointed cable messages, the real interests of Imperial unity vyill not be served. t : , ;

The argument that developed last v.'eek between the Prime Minister and the Minister of Public \ Works on the one side and a deputation ..of agents of British'; manufacturers on the other elde, concerning the Swedish element m the accepted tender, (Armstrong, Whitworth and Company's) for the hydro-electrical installation at Arapuni (Waikatq River),!! serves to em--1 husise the importance of" the principles stressed by "Truth" m an article published on August 2, under the heading "Not a Tied H^use "Empire." There is not space to go into technicalities' or. excessive detail, but. we will endeavor. to summarise as fair!y as possible, from the published reports, the p^ounds on which the acceptance by the Government 6f , Armstrong, Whitworth and Co.'s tender was criticised by this deputation of the British Manufacturers' Agents' Association. (In passing, it may be remarked that the association includes. Armstrong, Whitworth and Co. m its membership; and yet the spokesman of the deputation, m referring" to ■ the Swedish element, referred: to the Armstrongs Whitworth Col's v tender as ;"a smoke screen.") i ' v ! Swedish Proportion. i The same Spokesman, Mr. Scott,'contended (1) that the accepted tender included "a large prbpbftlqn" of Swedish manufacture (the j"large proportion" was Btated by tb>- Minister of Public Works to be £^4,000 worth m a total contract of over £1,000,000; (2) tlv.it the other tenderer^, whose prices were based on all-British, .should have been preferred to "the partly-foreign tender, or should have jbeen given opportunity to quote on' foreign prices < the Minister ."'J pointed out that this would mdan calling fresh tenders, and delay); (3) that the Accepted tender should not receive the (Ihclud> ing an interest concession for first five years of loan) of the if Act .'passed by the House of Commons -to facilitate' credit for Dominion undertakings that provide employment , m British . industries. ■ -■ : ■ ■ r' ;M ' " . . : '" With regard to points No. 1 and No. 2, the Minister of Public Works, Mr. Coates, stated that the Swedish elempnt m the accepted tender had been reduced, after the tenders were opened, from £160,000 to £64,000. He repudiated , a statement by the deputation's spokesman thiiit "after ' the Government opened the tenders they arranged with- Armstrong, Whltworth's that the value of foreign work m their tender should be £04,000." , Summed up, the case for the Government, as stated by the association and the Prime Minister, .seems to be that, after the tenders wer.e opened, the question of place of manufacture a! once, and Inevitably, arose; and questions were quite properly put to the tenderer, by Vthe Government's advisers, for information on that point. It then became a question whether the proportion of the foreign element could be reduced to a more acceptable figure. And so tho reduction took place,, to the figure (£64,000) stated above. Efficiency is the Tost.

Mr. Coates emphasises that this readjustment of the foreign element did not affect the price quoted by ArmBtrong, Whitworth and Co. one way. or the other. Any alteration that occurred m price resulted from an entirely different factor, the acceptance by the Government of a more heavily powered generator, above the minimum power mentioned In the specifications. The alteration m respect 'of this gen-ni-uior i.'as no .infringement of the specifications, and left the Armstrong. Whitworth Co.'s tender, relatively, •till better. ! \

ll r. Coates told the deputation that "ho would calculate- on 'efficiency every time" And, from the standpoint of cfileloncy, nothing has been adduced so far by unsuccessful tenderers, -aby «»iy other critic, to show that the Public Works Department has made a bad bargain, , What constitutes efficiency m hydro<lrttri<:.)l matters Is a technical question, not to be answered hero. Nor U it intended In this article to regard the itfaue of merit (an Lot ween British and Swedish manuOicturerrt) as being raised at nil. But rfnclrney as a principle is a concern of the 'whole public, and the public interest demands that efficiency be the llr-st consideration. The quest for efficiency Is not to be abandoned for fear of compromising the objective of iiH-Brltlah manufacture—certainly not for fear of compromising l .hnt objocilve tr. the moderate degree of £G4.000 In ovor a minion. The principle of efficiency In worth more to the people of Now Zealand. Is worth more to the Empire, and :h worth more to the moneylenders themselves, than Is a 100 por cent, ndherence to a blind preference for a limited number of British manufacturers, among whom collusion Is by no means n wild impossibility. Imperial preference means competitive advantage, not HO-competlUon-at-nll. It does no* mean a close preserve for the manufacturers of' a free- trade country that

itself claims— quite properly— the right' to buy ih'the- cheapest, market. „ .\ }\ Where is His Con^isteiipy? / , The, British manufacturer's ' .strict 1 view of an All -British? tender is. hardly j

A wise physician, skilled. our wounds to heal, ia more than armies to the public weal. — Pope. ; , consistent with his very tolerant attitude towards an All-British article of export. . . . When British manufacturers are receiving the advantage of Customs preference m Australia and New Zealand on the strength of 25 per cent, of British workmanship (balance of value being some* times due to Continental manufacture, with aid of depreciated currency) it seems odd that British manufacturers should wish to deny, loans (under the British trade facilities law) to Dominion undertakings m which the foreign interest is a mere 5 to 10 per cent. It the 25 per cent, of British workmanship is raised to 50 per cent., Dominion tariffs will still be more liberal than British manufacturers' agents are inclined to be. The position that has arisen has its elements of danger. Side by side there are two preferences — a Customs preference by the Dominions and a loan preference established under Britain's special legislation (trade facilities, etc). But the loan preference seems to V>e operable mainly (perhaps solely) through an advisory committee that appears to be dominated by interested British manufacturers. - Apparently tl>e British Government has its finger on its own machine to only a very limited extent, because the other day the Chancellor of the Exchequer (Mr. Philip Snowden) was reported to have stated that no application for a loan had -Wn received from the New Zealand Government. But. prior to^that date (August 5). the New Zealand Government had made application for a loan for Arapuni. Where is this application sticking? Is It side-track-oo at the office of the Advisory Committee? And is n committee, dominated by interosfod manufacturers, to bo the real dictator of Britain's loan preforence? The situation singly needH to b(1 handled with more tact. Bombarding Minister by Cable The Minister of Public Works, who is the responsible head of rvsnonsihlp technical advisers, should nKe subjected to direct appeals by cable from interested Hrltfeh firms. But cable" grams of partisan quality, from su>h sources, have reached him This V morally, if not legally, wrong. ' ' Pressure on Ministers and "dlroct notion" senernlly an* linraiy compatible with the high tone »inrt -solf-roxtraint to by expected from the magnates of British industry iin'rl commerce