DOUBTFUL SAYING

Waikato Times, Volume 127, Issue 21243, 14 October 1940, Page 9

DOUBTFUL SAYING

PETROL RESTRICTION LOSS IN DOMINION STERLING EXCHANGE ESTIMATE The conclusion that too little consideration has been given to motor transport in New Zealand is reached in a paper on the petrol position, prepared by the Canterbury Chamber of Commerce in consultation with Canterbury University College. In recent years, about 60 per cent of New Zealand’s petrol was imported from the Dutch East Indies, which are part of the sterling bloc. Since stocks and tankers are available, the paper states that it seems probable New Zealand could get abundant supplies of motor spirit without making any direct demand on ddllar exchange. The indirect demand, however, could not be disregarded. Part of the sterling acquired by Eastern petrol suppliers would be used to make payments in foreign countries, which would deplete Britain’s holdings. It was possible, therefore, that the Dominion might make some contribution to Britain’s conservation of foreign exchange by petrol restrictions. Exports and Imports Apart from the foreign exchange question, however, New Zealand's sterling exchange position should offer no serious barrier to importing sufficient petrol for full requirements. This could be increased either from the larger funds available from the increase of £9,500,000 in export receipts or by reducing less desirable imports, particularly those for State expenditure on uneconomic capital works, such as new railway construction. The paper estimates that the present restrictions involve a reduction of 28,080,000 gallons a year. Assuming that this could have been bought at prices ruling in the first half of the year, and that Eastern suppliers spent half the sterling exchange received in buying foreign exchange, the saving in dollar and foreign exchange would be £300,000 sterling. Losses In New Zealand On the other hand, the direct loss to petrol vendors in New Zealand would be £3,500,000 and the loss to the Government in customs tax alone would be £1,720,000.

Each pound saved directly by petrol restrictions meant the loss of a pound’s business to petrol vendors, probably a greater loss to other motor trades and a loss of 9s 7d to Government revenue from petrol tax and more from other tax revenue, in order to save perhaps 2s in dollar or foreign exchange. The paper adds that all parties would gain if New Zealand used part of the sterling received from exports to buy more petrol from the East, which would use it to buy more British exports. Britain then might use it again to buy more New Zealand goods. By transactions such as these, markets were expanded and trade increased. By restrictions, such as imposed in New Zealand, markets were contracted and trade reduced.