The Southland Times SATURDAY, JANUARY 14, 1939. Import Control

Southland Times, Issue 23716, 14 January 1939, Page 4

The Southland Times SATURDAY, JANUARY 14, 1939. Import Control

Retrenchment is not a popular word with the Labour Party or, indeed, with any section of the people in New Zealand. It was not surprising, therefore, that the Prime Minister should deny a suggestion that the “picnic years are over, and that it may soon be time to “tighten our belts and pay for the fun we have had. Ido not agree with that philosophy, said Mr Savage bn Thursday, “and all I can say is that we are not going to tighten our belts. There is reason to - ' suspect, however, that unless the import control plan is handled with more wisdom than has been shown in the past few weeks the country may have to encounter, in a time of alleged prosperity, an increasing number of the economic difficulties which usually accompany a policy of retrenchment. If the restrictions were applied wisely, and as temporary means of relieving the pressure on the London sterling funds they might do a great deal towards restoring a natural balance to the country’s economy. But so far there is no evidence that they have been applied ini anything but a hasty and illconsidered fashion. The basis of; the plan remains a close secret, and an astonishing state of affairs is revealed by the contradictions and anomalies of the licence I system as announced every day j by bewildered importers. Even the manufacturers, who not unnaturally are welcoming the regulations as an opportunity for expansion, are finding that restrictions have been imposed on raw materials needed for local industries. They are assuming that such restrictions are merely a “matter of routine” and that they will be lifted when explanations have been made. But the mere fact that these delays (if they are nothing worse) should have been possible in the first place is a significant commentary on the way in which regulations that were supposed to have been the result, of a “carefully-thought-out plan” were hastily framed to deal with a situation that seems to have taken the Government by, surprise. The important question, however, is whether import control is to be an isolated measure, or whether the Government understands and accepts the implications of the economic position and is prepared to modify its policy I accordingly. While the country has to support the present rate] of expenditure on unproductive works the import and currency ] regulations will merely check the drift without removing the cause. The Government appears to believe that all difficulties can be overcome by increasing production. But new industries cannot grow up like mushrooms; and even if this were possible there would still remain the problem of an adequate supply of skilled labour. It should be remembered, too, that there are rigid limits beyond which New Zealand industries are not able to expand; and these limits are fixed by the potentialities of the internal market. Most goods manufactured in this country must be sold here, or not at all: the cost of production excludes them from markets where they would have to meet competition from countries with lower standards of living. The primary industries and the semisecondary industries which depend on them for materials remain the basis of the country’s wealth; and it is on the farms that there is most need to maintain a steady rate of production. But price fluctuations in overseas markets remain the unpredictable factors. Although the guaranteed price system can cushion the effects of lower prices on the farming industries, the effects of an unfavourable market must be sustained by the total economy. It should be obvious, therefore, that a Government which seeks to protect the country from conditions over which it has no control has a special obligation to live within its income and to maintain a proper relationship between production and expenditure. Otherwise its protective schemes could not withstand the test of an economic recession, and “insulation” would become a dream of what might have been. Everything now seems to depend on whether or not the Government intends to restrict the policy of internal credit expansion which has been the major cause of the present difficulties. Until there is evidence that the Dominion is to live within its means the import and exchange restrictions can be nothing better than expedients, to be followed in the near future by further measures, equally drastic, and by a period of anxiety and economic disturbance that might usher in a new kind of depression, strictly of local manufacture.