CHANGED PRODUCTION

Taranaki Daily News, 24 June 1935, Page 11

CHANGED PRODUCTION

GROWTH OF DOMINION NEED FOR TERTIARY INDUSTRIES. WORLD DEMAND FOR LUXURIES. < ■ - A. considerable slackening of the rate t>£. primary production must be regarded as inevitable in considering the trend of Nfew Zealand’s economic policy in the next 10 to 20 years, it was stated by Dr. A. G. B. Fisher, Professor of Economics at Otago University, in an address to the Economics Society recently. Dr. Fisher said that this inevitable slackening was not generally admitted, and was of terr accepted as merely a temporary embarrassment. “It is often accepted as being temporary, or as caused by the foolishness or obstinacy of Mr. Walter Elliot,” he said. “It is accepted with hopes of a return to the-' conditions of production of the last 50 years. That seems to be a mistake. Mr. Walter Elliot is merely expressing a trend which would have important consequences for New Zealand even without the restrictions Imposed by Great Britain. The very fact of material progress itself makes it a desirable thing that the rate of growth of primary ’• production should be slower. “The rate of growth increased very rapidly formerly because the world as a whole wanted the things which we could supply. Now the pressure of want is less keenly felt. It is no use pressing on people things of which they have enough. NEW MARKETS.

“The opening up jof new markets Is an important consideration,” he continued, “and it is quite proper for us to seek an outlet for our products elsewhere. But to a great extent the newer markets which might be developed in the East or elsewhere iVould merely replace the parts of the older markets which we are in danger of losing.Jl doubt whether the opening up of new markets would be effective. • Probably the advantages would be limited and in any case the process would be slow. An incidental complication is that to secure markets in China or Japan it may be noceggary to make changes which will disturb and annoy those people in New Zealand who' are now’producing things which China and Japan might want to offer in exchange for our goods.” Dr. Fisher said that in New Zealand, as .in any other country, an essential condition of material progress was a rapid development of what he named “tertiary” ■ products. These were goods and services which were demanded whenincomes passed a stage when the. demand for primary and secondary products was satisfied, and they comprised - 'certainluxuries; the arts, and other attributes of culture. \i

“One tertiary product of the greatest impbrhuice is educational activity,” he said. ' “Everyone - knows that in New Zealand more. than in most countries, one of the reactions,.to the depression was to cut expenditure on education. I suggest that that was entirely the opposite ' of what the situation demanded. . It-is essential that if people are to supply the good which a wealthy world demands their educational standards should be not lower blit higher. When you find in a country, increased efficiency in ; the production of things which in the past have been regarded as necessities, then the sensible thing is to turn to the production of things which have been regarded as luxuries. WHAT ABOUT •• DEBTS? ' • “Many people will ask, if we go slow on agriculture, and expand tertiary production, what will pay bur debts?” Dr. Fisher said. “A partial answer to that question is that a decline in the rate of primary production is explainable in two ways. It is partly because of improved methods of. production—in that case you are ‘maintaining the rate of production while the amount of labour and capital expenditure is declining. ■ . ' “While New Zealand’s external debt is of great importance, we should not be frightened of it. New Zealand has been paying its debts, and paying them much morafrom the sale of its surplus products in the last few years. The alarm about debts is not justified unless we contemplate a revival of the borrowing policies 'general before the depression. I \ am not one who believes that borrowing from abroad' is evil. A condition of recovery iS' a return to' the freedom of capital movements which existed in' the; past. But it is not desirable that New Zealand should borrow on a large scale—first,: because the need for capital importations for developmental works is less than in the last 50 years; and second, because the 'difficulties of raising capital in New , Zealand itself are iesjs than in the early days. “Where shall we discover a new outlet for investment?” asked Dr. Fisher. “If we - look for it in terms of prices and profits the answer is, We should seek to introduce capital which is no longer wanted in the traditional fields into any industry where the level of profits is above the average. That is simple enough, but the application is . difficult because of the absence of accurate and reliable information. If is desirable that some record should be made available to be a guide to those industries into which it is advantageous for capital to Sow.” A HOPEFUL OUTLOOK, < ' ’ ’ . - .1. "I believe that the conditions exist in the world to-day which will enable us to continue the progress of .last century,” said ■Dr/ Fisher. “There is no sign' of slackening in the - growth of ' science and .in the advancement of knowledge. ■ On the contrary, to-day there is . much niore systematic work being done to enable us to control our material environment than in any period ot the world’s history. The ; rate of population, increase has skewed down considerably, and in many countries ■there is a certain prospect of a stationary population in a few years’ time. This means that instead of the benefits of scientific discovery being spread over an increasing area they will be available in a concentrated form. We should look forward to considerable improvements in economic standards in the next generation.

“It is natural to ask, If these things are possible, what is checking their realisation? The first check is that the very existence of high standards of income makes people less willing to face up to the risks involved in the production of new things. The things which people with rising incomps want to buy,.which I would define as ‘tertiary’ products, have to be defined specifically, and it is easy for producers to make mistakes which may lead them to ruin. Naturally they want to stick to the old paths.” Another check to progress mentioned by Dr. Fisher was the resistance to transfers of capital and labour from industries where they were redundant to new fields, which might be offered either by those whose interests were in the older industries or by those who wished to secure large profits in new ventures. Such attempts to attain to an artificial stability would end in upsetting the