Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, MONDAY, JANUARY 3, 1938. N.Z.'S ECONOMIC POLICY

Poverty Bay Herald, Volume LXV, Issue 19522, 3 January 1938, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, MONDAY, JANUARY 3, 1938. N.Z.'S ECONOMIC POLICY

There are ever-growing indications that the time is not far distant when New Zealand will have to give serious consideration to the economic policy which it is going to pursue in the future. There are some people who resent the suggestion that the Dominion should be regarded as a sort of super dairy farm to supply the needs of Great Britain and argue that the country should be able to produce a much larger quantity of the goods which are now imported. There is a good deal to be said in favour of the widest possible diversification of industry, thus spreading the risk ol market fluctuations, but there is a vast difference between this policy and one aiming at any substantial degree of self-sufficiency. The correct course for any nation to pursue is to concentrate upon the production of those goods for which it is best suited.by natural factors; on the establishment of natural rather than unnaturpl industries. In this way the best results are obtained at the lowtest cost and the country as a whole is reaping the benefits of the resources with which it is endowed, instead of extending its energies on artificial activities for which it is not suited. The old saying of "every man to his own trade" can be applied with almost equal force to the economic policy of any country, but instead of the slogan being adopted there is a tendency on the part of all countries to become Jacks of all trade.

There can be no question that the industry of the Dominion must, for many years to come, be bound up with the products of the land. It is essentially suited, in every way, to export dairy produce, wool, and meat, which ;irc needed by the (great industrial countries which have not the facilities for providing their own requirements. At the same time, it cannot be forgotten that these commodities have to be produced at a price which will compete with the produce of other countries and also at a price which the peoples of consumer countries can afford to pay. Another factor which is of supreme importance is that New Zealand can only dispose of her products providing that she is willing to take other goods in exchange for them. To the extent that secondary industries are increased and expanded, the scope for maintaining this exchange of produce for t;oods becomes limited, and it is not necessary to proceed very far before a serious position is reached. Carried to the extreme of self-sufficiency, New Zealand would be producing everything that she required, and if this position were to be created—which, of course, is impossible—how would she be able to dispose of her surplus produce, since there would be nothing for her to lake in exchange? This principle applies without going to the extreme limits, and already it is necessary to ask how far we are restricting our export prospects by eliminating imports. If the Dominion is not going to concentrate on her natural business of growing primary produce, she is going to build up a very insecure economic structure and seriously jeopardise the standard of living of the people. There are some secondary industries which are logical and more or less natural developments, and these should be encouraged, but when it comes to fostering industries behind

high tariff walls and producing goods which can be obtained infinitely cheaper from overseas, in exchange for the primary products of the country, then the people must be seriously penalised. To some extent that position has been reached to-day, because the public is compelled to pay twice as much for articles as should be necessary were there no import restrictions, and, in some cases, perhaps, compelled to go without goods because the cost of them has been rendered prohibitive. The reasoning is that this protection is providing work for New Zealanders, but in many cases its validity is doubtful. It is not good business, or even good socialism, to provide work for two or three hundred tradesmen when the cost of it is an added charge on the goods purchased by a million and a half people. To-day, the Dominion has been placed in a position, through its artificial economic system, where practically none of its industries, natural or otherwise, are standing on their own feet. So far as the export industries are concerned, all the producers receive the benefit of the currency depreciation, which is merely a disguised form of super tariff. In addition there are subsidies of one sort or another to the dairy farmer, the grower of wheat, the fruit grower and the tobacco grower, concessions to all farmers on the carriage of lime and fertiliser, assistance with labour, and contributions towards ' the cost of eradicating noxious weeds. Secondary industries are protected firstly by the exchange premium and secondly by customs tariffs. In round figures, the industries of the Dominion are being subsidised, directly or indirectly, to the extent of £20,000,000 or £25,000,000 a year, or equal to one-fifth of the total national income. This is a charge that is added to the cost of living of the people, and its existence serves to show the extent to which the industrial life of the community has become artificial and costly. It is time that there was a complete stocktaking with the object of returning to sounder economics and giving to the people a standard of living built on firmer and more secure foundations.