LIVING ABOVE INCOME

Timaru Herald, Volume CXLVI, Issue 21360, 1 June 1939, Page 5

LIVING ABOVE INCOME

Financial Position of New Zealanders

Business And Politics Combination May Be Beneficial The financial position of New Zealanders as a whole in relationship to their dealings with the rest of the world was a matter discussed by Mr M. Myers, of Dunedin, president of the Federated Chambers of Commerce of New Zealand, in the course of an address to the annual meeting of the South Canterbury Chamber of Commerce last night.

“The true position as I see it is that collectively we have been living above our national income and that a continuation of such a course is impossible if we are honest with ourselves and desire to remain solvent,’’ said Mr Myers. Looking ahead—and assuming no major international troubles arose — it would appear that in the year 1940 exports from New Zealand were likely to be down quantitatively while also there was nothing at the moment to suggest higher prices for exports—indeed in budgeting cautiously one needed to assume that lower prices might quite possibly rule. To whosoever be dealing with the control of the country’s finances the following problem would therefore seem to be set. Returns from exports in 1940 as measured in sterling would probably be appreciably less than the average return of the last three or four years. Now tofore determining the purchasing capacity for 1940 there must be deducted from the foregoing estimate of income the Dominion’s overseas interest bill—an amount in round figures of about £lo,ooo.ooo—then must be deducted the amounts the trading banks had just been asked to borrow in England to enable them to meet the demands for goods bought so far this year, and for which import licenses had been issued for a total sum which would appear to exceed the amount available from the Reserve Bank during this calendar year. Then, as most people knew, whisky, some lines of tobacco, and certain other commodities are being imported this year “for payment later.’’ That was to say the Government had in effect, lifted its restrictions upon the importation of certain goods t. those overseas vendors who were prepared to sell to New Zealand on what was i. >thing more nor less than deferred payment terms.

Higher Freight Charges Mr Myers said that to al' these debits for settlement presumably this year, higher freight charges (which were paid for in sterling) must also be added. Deducting the sum total of these anticipated charges against the estimated overseas income for 1940, it would appear that unless borrowing for the importation of consumable goods be resorted to, there must be a great reduction in the volume of goods imported from the high average imported during the past three or four years. Just as it was unsound for an individual to borrow for the purchase of consumable goods so, too, was it unsound for a country to do so. “Let us therefore set aside the possibility of this course which, at best, could only stave off for a period a situation that sooner or later must be faced,” said Mr Myers. If that was so, what problems were before them? First of all was the problem of replacing the curtailment of importations by the production in New Zealand of goods presumably of an equivalent value to those which the country could no longer afford to import. Progress—indeed much progress—in this direction could and doubtless would be made. If, however, as seemed certain, this could not be entirely accomplished —anyway in any short term period—then a really honest Government would presumably make the position clear to all citizens, to its supporters, and to its opponents alike and would not resort to any expedients to cloud the facts.

Opportunity to Co-operate “If our standard of life, of welfa e, of comfort and luxury has been stepped up rather more rapidly than is within our productive capacity to afford. we should all be made to appreciate the situation, and be given the opportunity to co-operate to right matters on as broad a basis as possible and thus with the minimum of hardship to any one section of the community," continued Mr Myers. “To me it does, however, seem incongruous to find a Government which presumes to possess almost a monopoly of the desire to do social justice, allow more favourable terms of trade to large and powerful interests than to smaller and less well endowed units and individuals —for this is the result of allowing importations to some only on a deferred payment basis." The speaker went on to say that it was anomalous, too. that a Government which opposed—rightly or- wrongly did not matter—a New Zealand rate of exchange of £125 to £lOO sterling was now allowing additional licenses to import goods in cases where overseas funds had been bought by certain individuals and firms at rates varying from 135 to 140 pounds New Zealand to £lOO sterling Apart from discrimination between units, surely the effect of the importation of such goods would be a substantial rise in the selling price to the ultimate consumers of commodities so imported and paid for with such funds. Business and Polities Concluding. Mr Myers said: —“Political expedients such as these suggest that the time is overdue when business in its broad sense should be asked to co-operate with politics in its broad sense, to find the best and most practical solution for rather a serious situation. Experience does counb-theory doesn't always work out in practice. A combination of the two may improve upon the results of e ther—it's worth Irving. I hope it will yet be fried. Business will, 1 am sure, not be found

wanting provided its experience and advice be really needed and genuinely sought and with a view to its help being used fairly and justly and for tire good of the Dominion and all its people.''