FARMERS’ VIEW

Otago Daily Times, Issue 27096, 2 June 1949, Page 2

FARMERS’ VIEW

ECONOMIC SURVEY

TIME FOR STOCKTAKING

COST STRUCTURE TOO HIGH

Over recent years New Zealand had encouraged all sorts of new industries, with the result that the older and sounder ones that had given the Dominion such wonderful service, were being starved for labour, said Mr J. Andrew in his presidential address to Federated Farmers of Otago at the annual conference yesterday. There was a shortage of coal and this had forced the country to resort to a good deal of motor transport, when in normal circumstances, the railways should have done the job. Mr Andrew, who is at present attending a conference in Guelph, Canada, had his address presented to the conference by the acting-president, Mr J. Preston. Increased road traffic had occurred at a time when the roads were in a very bad state of repair after a relatively small amount of maintenance work during the war years, Mr Andrew said. “We have gone in for the 40hour week all through our economy,” he continued. “ This again has prevented the proper use of our railways and other transport- facilities, and we have had to put more capital into all sorts of rolling stock. These are merely instances of what has happened. In total, they add up to the fact that what we have done is simply to push up our cost structure until now it is reaching somewhat alarming proportions.

“Any one connected with farming knows how essential it is to keep our cost structure in proper proportipn,” Mr Andrew said. “ The late Mr Sinel who was a very able business man, and will be remembered as a member of the Economic Stabilisation Commission. said in a memorandum which he prepared not very long before he died: ‘ln any modern industrial economy whatever its political set-up, Socialist or Communist or private enterprise, its costs determine the standard of living because production is determined by costs.’ I am afraid that this truth is not generally realised. "The people in this Dominion have become so confused that for a long time we ‘ have been engaged in the pursuit of pieces of paper instead of the pursuit of real production. One thing that we must remember is that wealth must be produced before it can be shared out. We have all sorts of plans in New Zealand for sharing wealth, but we are totally ignoring the problem of its production. In fact we are actually going the other way. We are, perhaps unintentionally, pushing up our cost structure to what must be a very dangerous stage. Can anybody view with complacency the upward trend in our cost structure? “ I believe that the people of New Zealand, as a whole, will have to look at this question of production and with it, therefore, they must have a look at our cost structure. As a people we have become so blinded by pieces of paper that many of us cannot realise that with a low cost structure and also lower prices it would be possible for all of us to be better off because production could be increased. Surely it is worth our while to have a look at this.”

The position must be examined from a calm and detached point of view, he concluded. If that were not done, economic circumstances might force us to do it at a time when the process might be more painful than if done now and of our own accord.