COST OF EXCHANGE

Wanganui Chronicle, Volume 77, Issue 150, 27 June 1934, Page 8

COST OF EXCHANGE

IMPORTERS’ FIGURES REPLY TO MR. COATES PEOPLE ENTITLED TO KNOW ( Per Press Association ). WELLINGTON, June 26. The executive of the New Zealand Importers’ Federation has made the following statement in reply to- tree Jit. Hon. J. G. Coates with regard tu the cost of exchange to New Zealand:— “Last week we issued a statement containing an estimate of tile costs, both direct and indirect, of lire nign exchange for the twelve montiis ended March 31, 1934. Commenting ou these figures Mr. Coates airiry dismissed them as fantastic ana con Hued his criticism almost entirety to one point, the inclusion of the sales tax as an indirect cost. This i edeiatton expected that the Minister would treat more seriously a matter which has a vital bearing on New Zealand's financial position, but no thoughtful or reasoned comment on the position haa been made by Mr. Coates. The figures are alarming enough, quite apart from the sales tax, whicn accounts lor only a small portion cut of the total. •■As quoted by the Federation, the estimated direct costs were £7,440,000 and indirect costs £7,130,000, making a total of £14,570,000 iu round figures. It would be very interesting from the public point of view to be shown in what respect the estimates were fantastic. Mr. Coates has referred to only £1,847,000. ignoring the balance of £12,730,000. Surely the Minister ot Finance is in a position to give the country the definite direct costs. It is mc-re difficult to arrive at tne Indirect costs, but f the sales tax is omitted, these certainly exceed £5,000,000 for. the period under review. “No business can be run successfully of the costs are not closely watched, and New Zealand is incurring enormous costs through tne exchange policy'. The public is the snareholders who will have to pay, and The members of Cabinet, as the directors, should not hesitate to place before the shareholding public detailed information regarding the financial policy which is being pursued in tne name of the people of New Zealand. “The Importers’ Federation Has no desire to harass the Minister, but is genuinely alarmed at the liability which has already been incurred by the exchange rate, and it cannot sec that th c cost of this financial exper:.mentalism will be any less an ring the current twelve months than tor the financial year just complctea. One section of* the community is receiving a subsidy from the rest of the communitv, which is fully entitled to know 'every cost in connection therewith.”

MINISTER'S REPLY MAIN ITEM CRITICISED I Per Press Association. 1 WELLINGTON, June 26. • Fhe New Zealand Importers’ Federation, in a statement now issued, state that the former statement whitw professed to set out in figures the cost of the exchange rate adjustment, was not treated seriously enough,” stated the Minister cf Finance, lion. J. G. Coates, to-night. “They do, however, admit in their supplementary statement to-day that one error of nearly £2,000.000 came into their calculations. The federation falls back on the allegation that even after this blunder oi theirs has been corrected, the figures still show the alarming cost of the exchange rate adjustment. “Let me take one other item iu their first statement, and it is the , main item, and show how basc/ess it is and how readily' figures can be used . to fool the public. As cost of exchange adjustment, they mention 25 per cent, on surplus funds taken over (£20,094,000). £5,023,000. How is this figure arrived at 1 Presumably 25 per cent, is the difference between the present exchange rate of 125 and the old parity of 100, and the federation assumes that funds will be disposed of at a loss of 25 per cent. Thc exchange rate was raised in January, 1P33, from ilO to 125. and has since neon stabilised at a higher lev el. W hat basis has the federation for arguing that the loss will be 25 per cent? Why not 15, or 20 or even 40 per cent? Indeed, it is clear enough that the imagination of the Importers’ Federation or its spokesman could put thc calculated ; loss up to any astronomical figure at all and shock the public accordingly. “Unlike the federation. I do not wish to complain about the reply given to the statement issued. I merely mention that the federation has overlooked my suggestion that when warning the public of New Zealand against the perils of ‘inflation.’ tney stiould tell us what they mean by mat word; •inflation.’ Their reply is completely! silent on the point. The Importers' | Federation must surely be aware as a | body, as observant individuals arc , aware, that the important thing about . the exchange rate is that it should be stable and given a level appropriate to ; the economic conditions. Q.nd 125 per . cent, was the level accepted by the I Government after a most exhaustive . enquiry and under conditions that have not since materially altered. The endeavour must be to ensure stability, and it is most satisfactory to note that this is being widely' accepted.”