Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, SATURDAY, SEPT. 10, 1938. N.Z. AND THE EMPIRE

Poverty Bay Herald, Volume LXV, Issue 19732, 10 September 1938, Page 6

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, SATURDAY, SEPT. 10, 1938. N.Z. AND THE EMPIRE

It is a matter for regret that the discussions of the British Commonwealth Relations Conference in Sydney have not been held in public, for

it is possible that had this been the

case New Zealanders might have gained some valuable impressions of their future relationships with the rest of the Empire. As it is, the resume made available by the official spokesman indicates that some im-

portant points were raised in regard to the Dominion, and sufficient has

been said to provoke considerable thought. It was stated that delegates had made it clear, when speaking about New Zealand, that the traditional attitude in the Dominion to-

wards Britain was undergoing a change; there was now a realisation that New Zealand’s interests were not always identical with those of Britain. This statement says either too much or too little. It is true that it was

amplified to the extent that there was no desire to weaken the strong Empire

ties, but that New Zealand was growing up and thinking more independently, but even this does not go nearly far enough. The general opinion in this country is that its interests are indissolubly linked with those of the Mother Country, and from an economic point of view this fact is simply demonstrated. The loyalty of the Dominion to the Empire remains unquestioned, and while there may still be room for differences of opinion it would be a grave injustice to (he people to suggest that on any major issue the great majority are not at one with the Mother Country.

The conference’s discussions on economic questions were more to the point and, in some respects, more important. It was stated, for instance, that there had been a flight of capital from New Zealand, but that the Labour Government could not be held responsible as it was due to the attractive investment market in Australia. This statement inevitably provokes the question of why the Australian market should be more attractive for investment than that of New Zealand itself, and it requires only the barest investigation to show that it is due almost entirely to the policy of the Labour Government. In the first place, I he Government has fixed the borrowing rate for local bodies at the arbitrarily low level of 3£ per cent—although the local bodies arc allowed to pay the trading banks 4J per cent—whereas the rate in Australia for the best securities is 4 per cent. In New Zealand, Government policy has stifled private enterprise in

every direction; in Australia it has been stimulated. The steel industry is one notable example. In Australia this has provided a wonderful outlet for private investment; in New Zealand the State proposes to hold a monopoly. The tax on company profits in New Zealand is more than double that of any Australian State, and it is now proposed to impose increases ranging from 13 to 100 per cent.

Most important of all, were the discussions regarding the future of New Zealand trade. The question was asked whether New Zealand would become a rival of Australia in the field of secondary industries. The answer was that it was felt that New Zealand’s destiny was bound up with the primary industries, but that it was essential that fresh markets should be found. There is no occasion to complain at this reply, because it seems to express the obvious, but it raises vital issues which demand consideration. Certainly, on the present ■economic basis, there can be no question of the Dominion competing with Australian secondary industries. On the contrary, only this year the people of New Zealand have been compelled to pay higher prices for locally-made goods in order that a higher import, duty could be placed on Australian manufactures. It is apparent that the industries of the Dominion, necessarily operating on a small scale, working the shortest hours and paying the highest wages in the world, and then taxed more heavily than those of any other country, cannot possibly hope to compete in the world markets. Proof of this is not required insofar as manufacturing industries are concerned, but it needs to be realised that exactly the same principle applies to the primary industries upon which the Dominion is so vitally dependent.

It was stated at the conference that it was essential that fresh markets should be found for primary products, and it was added that efforts to find new outlets in the East had been without success. This failure is not surprising, firstly,' because, once again New Zealand cannot hope to compete with countries on a much lower cost basis, and, secondly, because the price the potential consumer can afford to pay will not nearly compensate the New Zealand producer for his artificially high costs. This is demonstrated by the experience with butter. It is repeatedly asserted that the consumer in Britain, where living standards are compaartively high, cannot afford to pay more than Is a pound. On the other hand, it is claimed that the New Zealand farmer requires Is 5d a pound to give him a reasonable return. How is this gap to be bridged? If it is not bridged it is apparent that New Zealand cannot expect the expansion of markets that is so essential to her future development. This, in fact, is the crux of New Zealand’s economic problems—what applies to butter applies more or less equally to every other item of produce—and the mere statement of the position makes it clear that if New Zealand is to continue to progress something must be done to adjust her economy to that of the rest of the world.