MAIN POINTS OUTLINED

Otago Daily Times, Issue 26783, 28 May 1948, Page 6

MAIN POINTS OUTLINED

Dominion’s Economic Policy For Current Year

NO ADDITIONAL CAR IMPORTS

PJL AUCKLAND, May 27. Four major announcements of Government economic policy for the current year were made by the Minister of Finance, Mr Nash, in an address to the Chamber of Commerce. The Minister’s main points were: No more import licences for motor cars will be issued for the current year, although extra licences for essential trucks may be issued. Irrespective of availability, additional import licences will not be issued for non-essential commodities. Although import licences already issued for this year total £109,000,000, compared with the figure of £95,000,000 set by the Government as the maximum, additional essential imports may increase the total by another £20,000,000 or £30,000,000, and negotiations with Britain to this end are in progress. Instead of repaying this year the London loan of £24,000,000, the Government is negotiating for a renewal of most of it at a reduced interest, but may repay about 20 per cent, of it.

A broad review of import licensing and of the Dominion’s trade over the last two years was given by the Minister. He emphasised that there was no secrecy concerning the figures unless these were likely to affect the trade of other countries. Imports Below Allowance Mr Nash said that last year the Government issued £l6o,ooo.ooo'worth of import licences for goods in general declared to be essential, and the Government itself imported £ 13,000,000 to £14,000,000 worth. Out of the licences for £160,000,000, however, private imports actually made totalled only £115,000,000. This amount, with the Government imports added, totalled a' record of £128,750,000, or 53 per cent, more than the previous year's figure and three times as much as the 1938 total. Although traders brought in goods worth £115,000,000, they could not pay for them all, and the trading banks had to increase their advances by £30,000,000. Let alone being able to pay for goods to the full value of the licences issued, traders could not pay for the smaller quantity actually imported and advances rose to £99,000,000. but were now down to £92,000,000. “At the end of the year our exchange was £28,000,000 less than at the beginning,’’ Mr Nash said. It would not be right to say that this was due to imports, it berng due largely to the fact that an overseas loan of £14.000,000 had been paid off, and in addition everyone knew that New Zealand had given Britain £12,500,000. The final result, however, was that the Dominion was £28,000,000 on the wrong side. Imports in volume were 15 per cent, more than in 1938 and 53 per cent more in volume than in the previous year. In value they were 114 per cent, in excess of the average for the three years, 1946 to 1948. The total external trade last year broke all records in value and in volume, he continued The external trade equalled £143 3s lid per capita and there was no other country in the world that could look at this. Taking 100 as the basis. New Zealand went down to 52 in 1942 but had climbed to 115 last year. The overseas funds at March this year were just on £85,000,000, he said, but prices had risen to such an extent that this sum would buy only what could have been bought in 1948 with £34,000,000. Agreed Figure Exceeded New Zealand was asked in the middle of last year by the United Kingdom Government to keep her imports to the value of her exports. That meant that New Zealand could afford to issue licences to the value of £95,000,000. The last figure available, however, showed that there had been issued so far this year licences up to £109,000.000, or £14,000,000 in excess of what was considered safe if the Dominion were to keep her undertaking with the United Kingdom. “We will discuss this figure with the United Kingdom,” he said. “ There is more than that. It is imperative that we should issue more licences, but it is a case of finding out what for I have talked with some of the people who are insisting that we should issue more licences, and there will be a figure in excess of that £109,000,000. I do not want to give the figure, but I think that it will meet some of the requests that must be made by those who are manufacturing essential goods and giving employment to our people and those who require to import essential goods for maintaining our own economy. We are planning, when we have issued some more, that there will be some carry-over.

“We are now planning to negotiate with the United Kingdom Government with regard to the licences that we will have to issue, but in nine cases out of ten they will not be for goods that people have been told are available. There are many motor cars waiting to be exported to tteis country, but there will not be any more licences for motor cars during the current year. There will be licences for trucks if they are essential, but if we did what some of the motor people arc asking then we would have to issue licences for another £13.000,000 worth of motor cars. We are going to keep our licences to essential goods, “Up to the present the Government had over-issued by £10,000,000, and the final figure might be between £10,000,000 and £20,000,000. Items included in this additional issue would be builders' hardware, engineering equipment for plant maintenance, clothing, food and medicine. “ Irrespective of availability, licences will not be issued for luxury and non essential commodities,” the Minister continued. “It would not be fair to Britain, and we cannot afford to do it. To do so would prejudice our ability to pay for essential goods we need. We have to keep our economy going and also help the United Kingdom. The supply of goods in New Zealand is greater than in any other country in proportion, and the living standard for the great mass of the people is not to be compared with that of any other country. Repayment of Loan

“ It was at iio time my intention to pay off a single penny of the loan this year out of current income,” he said. It had been intended to repay two loans, but there was no need to pay out of current income, but from the balances. The Government could, however, not even pay £24,000.000 out of the balances that it had been decided not to touch because overimporting this year above the credit of the exports meant that the country would be trespassing on overseas balances, and to trespass on them too much would be dangerous.

“We have over-imported and have reduced our funds this year and last year,” Mr Nash added. He was negotiating with the United Kingdom over renewal of a part of the loan and intended to repay a small amount —he did not think more than 20 per cent. Interest would be reduced from the original 5 per cent., resulting in the saving of some hundreds of thousands of pounds a year to New Zealand.

“We should not extend our overseas indebtedness, I think,” he said. “There is something wrong when a country like ours is borrowing from ■ country that requires its assets jnore than we do. We should be reducing our debt rather than increasing it.” The Minister said that the Government could with advantage co-operate with the manufacturing, trading and primary industries and the general

importing section of the country. It could not get through half so well without that co-operation, and in certain sections it had had it. The Government wanted to check where there were flaws in the administration as to who should get licences and for what, and it would discuss with some of the sections its planned procedure for the issue of licences to clear up 1948 and proposals for 1949. “We are the most fortunate country in the world,” he concluded, •“ and we should not be thinking how much more we can get by borrowing money while others, are short of essentials in their own land.”