SECONDARY INDUSTRIES

Southland Times, Issue 21650, 11 March 1932, Page 6

SECONDARY INDUSTRIES

NEW ZEALAND’S POSITION. TOO MUCH PROTECTION INADVISABLE. “It has always appeared to me that New’ Zealand’s problems are much more simple than those of countries combining primary and secondary industries, and complicated financial world relations,” said Mr D. Rutledge, when delivering a post-presiden-tial address at the annual meeting of the Invercargill Chamber of Commerce yesterday. i

"A few optimists' would force the pace in their advocacy of the practically indiscriminate development of diverse secondary industries in this country; evidently they do not sufficiently reflect on the conditions necessary to success. "The Governor-General states the case very much better than I could. He says:

Tn the face of mass production of other countries the multiplication of relatively small-scale industries of the same type with no mutual rationalization, and augmenting their overhead costs with excessive variety of output may prove in the future, however well conducted, difficult to justify in the public interest’ and ‘uneconomic secondary industries buttressed by abnormally high fiscal protection are calculated to put an undue burden upon other industries and to reduce the purchasing power of the whole population.’

“The time will surely come,” Mr Rutledge continued, "when it will be sound business to develop in a big way such secondary industries as the raw materials nature has endowed the country with can supply, but that time is not yet and the safe and sane policy for us to follow is to develop to the highest point of efficiency our farm lands, meantime leaving manufacturing to follow and grow naturally. Our population is too small to permit of the large demand necessary to manufacture on a big enough scale to be economic. "It is the duty of everyone of us to support and lend aid in extending the demands for goods manufactured in New Zealand under sound economic conditions, but if manufactured goods can only maintain their hold on our market by the assistance cither of a subsidy or a tariff specially designed to buttress them, then the community is simply contributing money -and receiving no service,” Mr Rutledge stated. “It is claimed that by fostering secondary industries we will increase the opportunities for those now unemployed to secure remunerative jobs and that the crop of young people coming on the market for employment yearly from the schools will also be more likely to get a good start in life. My reply is that such reasoning is unsound and bad economics. If it be admitted that as Lord Bledisloe argues, an industry in order to meet successfully the competition of overseas merchants requires buttressing by high tariffs is uneconomic, then the contention that such industries would provide employment for those at present unemployed' fails, it could only do so by a continuation of the dole system suitably camouflaged. “It has been stated that many secondary industries now actively in operation in the Dominion in competition with one another might considerably improve their chances of success if the. varying interests co-oper-ated and limited the varieties of goods produced by each to the line or lines most suited. As organized at present small quantities of innumerable varieties are produced by each company and this must of necessity increase both costs of manufacture and distribution. Since many of these industries have been and arc kept going mainly by the help of a tariff, it becomes a public duty that the avenues of rationalization be explored with a view of co-ordination. Some of my friends may be disposed to demur at this conclusion as being in the nature of ’interference with private enterprise,’ but is it?”