DEPARTMENT OF INDUSTRIES AND COMMERCE (THIRTY-THIRD ANNUAL REPORT OF THE)

Appendix to the Journals of the House of Representatives, 1950 Session I, H-44

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1950 NEW ZEALAND

DEPARTMENT OF INDUSTRIES AND COMMERCE (THIRTY-THIRD ANNUAL REPORT OF THE)

Presented to Both Houses of the General Assembly by Command of His Excellency

Your Excellency,— Wellington, 25th September, 1950. I have the honour to submit for Your Excellency's information the report of the Department of Industries and Commerce for the past year. I have, &c., C. M. Bowden, Minister of Industries and Commerce. His Excellency the Governor-General of New Zealand.

Sir, — Wellington, 6th July, 1950. I have the honour to submit the annual report of the Department of Industries and Commerce for the year ended 31st March, 1950. I have, &c., J. E. Stokes, Acting-Secretary. The Hon. C. M. Bowden, Minister of Industries and Commerce.

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CONTENTS PART I—INTRODUCTORY Page 1. Trade During 1949 -. • - • • • • • • ' \ 2. General .. .. - • • - - • • • • • " r 3. Staff and Organization .. .. • • ■ • • • ° PART lI—INDUSTRY 1.- Expansion .. • • • • • • • • • • ® 2. Nature of Expansion .. -. • • .... 7 3. Labour .. .. • • • • • • • • • • '" a 4. Plant, Materials, &c. .. • • • • • • ■ ■ ' * e 5. Motive Power .. . • • • • • • • • • " o 6. Building .. .. • • • • • • • • • • " n 7. Decentralization of Industry and Development of Industrial Areas -. 9 8. Transport . . • • - • • • •• •• in 9. Import Licensing .. .. • • • • • • • ■ " 11 10. Bureau of Industry .. • • • • • • • • "To 11. General .. .. • • • • • • • • • • PART HI—OVERSEAS TRADE 1. Developments in World Trade . . .. • • ■ • .. 14 2. Review of New Zealand's External Trade .. .. • ■ .. 15 3. Overseas Trade Representation .. .. • • • • .. 23 PART IV—OTHER DEPARTMENTAL ACTIVITIES 1. Accounts .. .. • • • - - - • • - • 24 2. Motion-picture Industry .. - - • - • • • • 24 3. Gas-manufacturing Industry .. • • • • - • "ok 4. Exhibitions and Industrial Fairs .. .. • • - • " a 5. Library and Information Services .. .. • • • • 26 PART V—ORGANIZATIONS ASSOCIATED WITH THE DEPARTMENT 1. Price Control Division .. • • • • • • • • 27 2. Rationing Controller .. • • • • • • .. 28 3. Wheat, Flour, and Bread Industries .. .. • • • • .. 29 4. Tobacco Board .. .. .. • • • • • - .. 35 APPENDICES Appendix A .. .. .. • • • • • • • • • • 39 Appendix B .. .. .. • • • • • • • • " li Appendix C .. .. • • - - • • • • • • " \ Appendix D .. .. .. • • • • • • • • " o Appendix E .. .. .. • • • • • • • • . : *

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PART I- INTRODUCTORY 1. TRADE DURING 1949 During the year world production and trade made progress towards more normal conditions —if normality does exist in an ever-changing world —and goods, with a few exceptions, are again available in quantity from overseas. Naturally, with the concentration of demand in the non-dollar countries, supplies from these sources are not always so plentiful as from the dollar area, where, in fact, some surpluses exist. The sterling area, with the invaluable assistance of Marshall Aid, persevered. in its struggle to attain dollar viability, the most notable step in the year being the dramatic devaluation last September of sterling, followed by the New Zealand pound and many other currencies. Devaluation has inevitably meant to New Zealand increased costs in our money for dollar goods and some sterling-area goods affected by world market conditions —e.g., wheat and oil. Further, the United Kingdom index figures for export and import prices since September last, given below, show that we must expect the prices of goods from that source to rise as the higher cost of imported goods makes its presence felt in its cost structure.

Table 1—United Kingdom Price Indices

With export receipts higher than ever previously and with a large Government capital works programme, business activities within New Zealand continued at a high level. As a result of the appreciation in 1948 of New Zealand currency, the upward trend of the wholesale price index figure was arrested and decreased from 1012 in 1948 to 1005 in 1949 (1939 = 590). However, despite this appreciation, the retail price index figure increased to 1009 in 1949 from 992 in 1948 (1939 = 748) and the quarterly figures for 1949 showed a continued upward trend. These figures are, in some degree, a reflection of the vast increase in the volume of money in circulation which rose from £5l-4 million in 1939 to £2Ol-0 million in 1949 and £220-3 million in January of this year. Whilst this country's exports increased from £(stg.)46-9 million in 1938 to £(stg.)ll7*2 million in 1947-48 and £(stg.)l44-8 million in 1949, the reserve ratio of the Reserve Bank of New Zealand, at the end of 1949, was 27-7 per cent. —only slightly above the statutory reserve of 25 per cent. Despite the vast increase in export receipts, because of the high level of purchasingpower in the country and the consequent heavy demand on our London funds, import control has had to be retained. Foreign exchange expenditure on imports in 1948 and 1949 was £96-4 million and £ll6-9 million respectively.

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(Base, 1947 = 100) Month. Exports. Imports. 1949—August 113 Ill September 113 110 October 113 118 November 114 120 December 115 122 1950—January 116 124 February 116 125

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The following tabulation shows that, although there has been a large increase in the export price index, this has been paralleled by a rise in the import price index, viz. :

Table 2—New Zealand Price Indices

The importance of our import and export figures to our economy can be appreciated when the figures per head for New Zealand are compared with some other commonwealth countries :

Table 3—Trade per Head, 1948

It is fortunate, therefore, that as the price of imported goods has risen, so too has the price for our exports. Any marked fall in export prices would, indeed, present difficult problems. 2. GENERAL The Department during the year has extended such assistance as has been within its power to the manufacturing and commercial community. We have been in close touch with the representative associations and gratefully acknowledge the fullest co-operation and friendliness. Government Departments, too, have been most helpful, particularly in regard to technical and scientific subjects. The Department's overseas representatives and Trade Commissioners have again given valuable service. Their range of activity is extremely wide, including the development of our export trade, locating sources of commodities in short supply, assistance and advice to visiting New Zealand businessmen, and acting on behalf of Government Departments in many varied matters. During the year delegations of officials visited New Zealand from Australia and the United Kingdom for discussions on trade and economic subjects of mutual interest. The resulting exchange of information and views was invaluable, and it is to be hoped that these will be followed by further similar discussions. Constant attention has been given to the possibility of removal of wartime restrictions and the return of trade to normal channels. The only items remaining under factory control at the beginning of the year were tinplate, Manila fibre, galvanized iron, black steel sheet, and galvanized and wrought iron tubing. During the year the stage was reached where it was no longer necessary to retain these controls, and under the Supply Regulations Amendment Act, 1949, the Factory Emergency Regulations were revoked as from the 31st December, 1949. On the 31st December, 1949, the authority under which the Shipping Controller was appointed, the Shipping Supply Emergency Regulations 1942, was revoked and the control previously placed on vessels on the New Zealand registry no longer exists.

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(Base —Exports : First quarter, 1949 = 100 ; imports : 1948 = 100) Year. Exports. Imports. 1939 50 44 1947 96 96 1948 106 1 100

(£stg.) Country. Exports. ! Imports. Total. New Zealand 69-4 61-7 r~ 131-1 Canada 59-2 55-9 1151 Australia 42-1 38-7 80-8 United Kingdom 31-6 41-6 73-2 Source.—Report of Commonwealth Economic Committee.

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3. STAFF AND ORGANIZATION The staff of the Department was further consolidated during the year into five main divisions of Administration, Commodity, Overseas Trade, Research and Investigation, and Standards and Technical, and following the lifting of controls and the reduction in Government purchasing, the numerical strength of the staff was also further reduced. The Standards * Institute, which previously operated as a semi-independent unit, was incorporated in the Standards and Technical Division and thus brought into closer relationship with the Department. District offices are maintained at Auckland, Christchurch, and Dunedin, and overseas representatives at London, Washington, New York, Montreal, Sydney, Melbourne, Bombay, and Tokyo. Departmental officers stationed at Washington were reduced from four to two during the year and an additional officer sent to London increasing the number there to three. The following table shows the staff and their location at 31st March, 1950, compared with 1949.

Table 4—Location of Staff

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— Overseas. Head Office. Auckland.. Christchurch. Dunedin. Total, 31st March, 1950. Total, 31st March, 1949. ""Department of Industries 19t 186 10 7 4 226 | 247 and Commerce 19 15 221 240 Price control 130 57 * Includes Standards and Rationing previously shown separately. t Excludes local appointees.

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PART lI—INDUSTRY 1. EXPANSION Appendices A, B, and C to this report summarize certain of the principal statistical data relating to factories.* It will be observed from Appendix A that the steady increase in the number of factories since 1933-34 was arrested in 1940-41 because of the war. Despite labour shortages and building restrictions factory expansion increased its momentum from 1944-45 onwards, no doubt stimulated by the deferment of projects during the war years. With the upsurge of employment from the depression years, the numbers of workers employed show a marked increase from 1933-34 to 1937-38, a relative flattening off during 1938-39 to 1943-44, and a marked rise a,gain from 1944-45 to 1947-48. The volume of production indices (Appendix B) show a consistently upward trend. The expansion between 1938-39 and 1947-48, whilst high, was, however, not exceptional compared with some other countries, as is shown by the following tabulation: —

Table 5—Indices of Employees in Manufacturing

The percentages of the total working population employed in factories in 1935-36 (the first year for which these figures are available), 1937-38, and 1947-48 were :

Table 6—Factory Workers as Percentage of Working Population

By way of comparing the increase in volume of factory production in recent years, taking 1938-39 = 100 as the base year, the volume of factory production index figure increased to 151 in 1947-48 and farm production to 113. The growing importance of factory production in our economy can readily be seen from these figures.

* The statistical information in this review has mainly been taken from the " Statistical Report on the Factory Production of New Zealand " compiled by the Census and Statistics Department. This report does not cover all registered factories —for instance, in 1947-48 registered factories numbered 19,102, employing 162,802 persons, whilst factories covered by the report totalled 7,966 and employed 140,267 persons—but is the only complete statistical survey of factories available and, furthermore, as it has been compiled on a uniform basis over the period under review is satisfactory for comparative purposes.

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Year. Australia.* Canada.* U.S.A.* New Zealand. 1938 104 97 85 100 (1938-39) 1948 160 179 147 136 (1947-48) * United Nations " Bulletin of Statistics."

Year. Factories Covered by the Statistical Report on FactoryProduction. Registered Factories. Per Cent. Per Cent. 1935-36 12-9 15-3 1937-38 14-9 18-0 1947-48 19-8 23-0

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2. NATURE OF EXPANSION The recent expansion has taken place over a wide field of production, but with a vast increase in purchasing-power and the consequent enhanced demand for goocts including those of a less essential type, there has been an undoubted tendency to expand at a greater rate in this field. This tendency has been accentuated by the shortage of supplies during the war years and the need to allocate a greater proportion of our scarce overseas funds for the more essential type goods. Because of the broad industrial groups given in the factory production statistics, it is difficult to single out many clear-cut examples of the tendency. The following may, however, be of interest: —

Table 7—Numbers Employed in Selected Industries

Though the foregoing are small industries, the rate of expansion contrasts strongly with that in many older established industries. One example would be the manufacture of common bricks which in 1937—38 and 1938—39 totalled 26,268,000 and 29,057,000 respectively as compared with 25,117,755 in 1947-48. (A contrast would be in wineproduction where, according to the returns received by the Department of Agriculture, the gallonage of wine manufactured in 1937-38 was 167,500 gallons and in 1948-49, 675,000 gallons.) Another instance is the woollen-milling industry where employment and volume of production has been :

Table 8—Woollen-mill Industry

3. LABOUR At the 31st March, 1950, notified vacancies for factory labour totalled 11,665, the total of all vacancies being 22,299. This illustrates the unsatisfied demand for labour which has been a factor making for gradually rising wage-rates and unit costs of production. These factors have undoubtedly been part of the spiral of inflation. Although New Zealand currency is now at parity with sterling, wage-rates are higher than in the United Kingdom, a fact which places some New Zealand industries in a difficult position, particularly as the rate of production is often largely set by the machine, irrespective of the skill or energy of the worker.

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Industry. 1937-38. 1946-47. Winemaking Jewellery and watchmaking Electroplating Small machines and appliances, sports equipment, &c. Chemicals, patent medicines, &c. 70 256 164 157 615 181 640 402 782 1,363

Year. Employees. Index of Volume of Production. Male. Female. Total. 1937-38 1947-48 1,100 1,571 1,648 1,099 2,748 2,670 100 129

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In the following tabulation it will be observed that the percentage of female workers to all workers in factories in New Zealand is slightly lower than in Australia and much below that in the United Kingdom :

Table 9—Female Workers as Percentage of Factory Workers

From the tables given in the Appendices it will be seen that the volume of production index has increased at a greater rate than the numbers of workers employed, so that productivity per head has increased. This is a simple statement which conceals many factors. As stated in Appendix D, the volume of production index in itself suffers from certain limitations and, further, regard must be paid to the considerable increase in the use of machinery. 4. PLANT, MATERIALS, ETC. The number of machines employed in factories increased from 30,992 in 1938-39 to 73,397 in 1947-48, and horse-power employed rose from 848,000 in 1938-39 to 1,320,000 in 1947-48. In the same period the value of the investment in plant, machinery, and tools increased from £49,296,000 to £90,220,000. No doubt the marked increase in the use of machinery has been stimulated by the shortage and cost of labour. With the shortage of labour many factories have surplus machine capacity, and, in some instances production on a full-capacity basis would exceed market requirements. The total value of fixed and floating assets employed in factories rose from £102,470,000 in 1937-38 to £186,659,000 and £222,871,000 in 1946-47 and 1947-48, The high cost of plant and materials in the last few years has undoubtedly thrown a strain on many concerns which had arranged their permanent finance pre-war. This applies to extensions and to replacements to existing plant where depreciation funds set aside on the basis of pre-war costs are to-day quite inadequate. Nevertheless ways and means have been found, and it is a fair assumption to say that the condition of plant and equipment in industry to-day is, in general, good. Industry, in fact, has substantially completed its post-war refurbishing, and a heavy drain on our overseas funds for this purpose should not recur unless exceptional circumstances arise. Naturally, during the war years, production was hampered by the shortage of raw materials, but the position in general has improved considerably since the war, although a few raw materials are still in short supply. The value of materials, stocks in process, fuel, and supplies in 1937-38 was £15,214,000 and rose to £38,086,000 and £52,895,000 in 1946-47 and 1947-48 —a most marked increase despite the falling value of money over the period. These figures do tend to confirm the general view that the raw material and stock position has improved tremendously since the war and that, in general, essential industry is well supplied with raw materials. 5. MOTIVE POWER The difficulties encountered with the supply of coal and electric power in recent years have inevitably been upsetting to industry. The coal-supply position has improved considerably but restrictions are still being imposed on the use of electricity. Every effort is, however, being made by the Government to meet the position by erecting new power-stations.

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Year. New Zealand. Australia.* United | Kingdom.* 1939 1943 1948 Per Cent. 25-0 31-5 24-3 Per Cent. 27-5 30-5 25-4 Per Cent. 33-9 43-3 33-4 * Annual report, Commonwealth of Australia Tariff Board, 1948.

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6. BUILDING A number of applications for industrial and commercial building permits were deferred during the year because of the strain which would otherwise be imposed on our national resources. The importance of devoting available building material and labour to the most deserving national purposes, particularly housing, is fully recognized, but it would seem that serious consideration will have to be given to a greater allocation for construction of factories, storage, and office space. Despite the increased commercial activities, the continued growth of our population and the encroachment on storage space for factory purposes in recent years, there has been no substantial addition to storage or office space. The cramping effect of lack of storage facilities on our already strained transport system is well known and it is obvious -that in the interests of national efficiency, the need is one that should be met as soon as possible. Many factory buildings to-day are most unsuitable for their present purposes and require replacement, renovation, or extension. The high costs of building are undoubtedly one factor preventing an improvement, but it would seem that in the interests of efficiency and the comfort and health of the workers, a greater allocation of our building resources for this purpose should be made. To alleviate the position, every effort is made to arrange for the allocation of surplus Government space for industrial and commercial use. 1. DECENTRALIZATION OF INDUSTRY AND DEVELOPMENT OF INDUSTRIAL AREAS The labour situation still appears to be acute in the main centres but is easier in a number of the smaller towns. Manufacturers continue to set up branch factories wherever labour can be found and this Department has supported many applications for permits to build premises in such areas. With a view to assisting in the relocation of industry and to provide necessary services and employment near to home, certain localities are being developed by the •Crown for industrial use. The principal areas are at Taita, Naenae, and Seaview in Lower Hutt, at Tamaki, near Auckland, at Prosser's Block, near Porirua, and a block of 13 wartime stores in Hutt Park Road. The intention is that sites in the Taita, Naenae, Seaview, and Porirua areas should be allotted to selected suitable industries on renewable lease under the Land Act, 1948. It is understood that the holders of such leases may have the option of acquiring the freehold. Development work at Taita industrial area will be completed shortly, and the preparation of subdivisional survey plans and valuations will be undertaken to enable annual rentals to be fixed. Interest in this area has been only moderately keen due, no doubt, to the difficulty of obtaining a building permit for any but essential enterprises and the acute shortage of labour in Hutt Valley. Sites applied for exceed slightly the acreage of the Taita industrial block and it will be necessary to make a selection between the applicants. A further 14 acres approximately remain to be allocated as soon as possible. At Naenae progress has been held up pending completion of discussions between the Lower Hutt City Council and the Ministry of Works concerning the proposed roading -and subdivisional plans and the provision and maintenance of certain plantation reserves. The portion of the area which will be unaffected by the eventual decision on these points has been recommended to the Lands Settlement Board for allocation, and the Lands Department is now negotiating with the allottees as to rentals and conditions of lease. These sites are intended for the accommodation of local-service trades and although the total area available for allocation has not yet been finally determined it will, including :roads, amount to 26 acres.

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The area of Crown land at Seaview Road consists of approximately 80 acres of land reclaimed from tlie harbour and, in this case, it is intended to subdivide and allocate it to industrial use, but detailed proposals have not yet been completed in respect of this locality so that it may be some months before it is possible to proceed to allocation. The Tamaki area comprises a block of wartime stores which are being allocated to industrial use when no longer required for Government purposes. To date five stores aggregating a floor area of 175,000 square feet have been leased for a maximum term of ten years for the manufacture of corrugated board, motor bodies, cardboard boxes, joinery, and toys. Further space will be advertised and tenants will be shortly selected having regard to the importance of the proposed manufacturing. A further block of thirteen stores in Hutt Park Road, Lower Hutt, is gradually being released for industrial use, and five of these aggregating over 100,000 square feet of floor space have already been allocated on leases up to ten years for the following : a steel fabricating and galvanizing factory, two production machine shops, and a general chemical factory. There is keen demand for this space. Development of large blocks of land for housing at Porirua and Titahi Bay is still progressing, and provision is being made for the establishment of light industry by the setting aside of an area of approximately 50 acres on what is known as Prosser's Block near Porirua Township. At present plans are not sufficiently far advanced to enable sites to be allocated on a permanent basis, but preliminary consideration has been given to the temporary establishment of certain industries which will be immediately concerned with the development of the nearby housing block. Additional Crown lands which it has been decided to allocate to industry are blocks of acres at Penrose and 10 acres at Palmerston North. The provision of employment for the rapidly increasing Maori population in certain areas is engaging the attention of appropriate Departments, and, to the extent that the scope of this Department's activities enables it to do so, sympathetic treatment and assistance would be given to any authorized scheme. 8. TRANSPORT The high level of economic activity has imposed a strain on existing shipping and rail facilities, inevitably causing inconvenience to industry and trade. Delayed deliveries of raw materials to the factory and finished goods to the markets have tended to hold up production and create temporary local shortages in certain consumer goods. Further, the costs of transport are becoming each year an increasingly important item_ and particularly with goods bulky in proportion to their value, transport is an increasingly important consideration in respect of location of industrial units. This factor undoubtedly tends to accentuate other difficulties—particularly labour shortages—through the desire to establish factories in close relation to the larger markets of the North Island. 9. IMPORT LICENSING The Department has continued to play its part in import licensing by making recommendations to the Customs Department on applications for licences to import plant and raw materials for industry, and consumer goods of types produced in New Zealand. The Department's knowledge of local industry is a factor of very real value if a balanced relationship between production and importation is to be maintained. To the extent that such a state of balance can be preserved, unnecessary diminution of overseas funds is avoided, and the local manufacturer is assured of continuity of demand for his products, at least to the extent that he can reasonably meet normal market requirements. In the case of a proposed new industry, such factors as availability of

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building materials, power, and labour call for consideration : with limited overseas funds, too, there is justification for asking whether the cost of plant may, or may not. bear scrutiny when related to the estimated added value of the end-product. The conservation of overseas funds, particularly on " hard " currency markets, has required continued thought. Every possible effort is made to locate plant or supplies in " soft " currency areas, and to direct demand accordingly wherever price and quality are comparable. One important decision in import licensing during the year was the issue of licences on the Commonwealth sterling area instead of on particular countries within the group as previously. In relation to import licensing, it is interesting to note that the index of all goods available for use in New Zealand (base 1939) was :

Table 10—Goods Availabe for Consumption

The proportions of locally-produced and imported goods entering into consumption were :

Table 11—Goods for Consumption

Whilst importations were higher per head in 1948 than pre-war it must be borne in mind that there was a considerable accumulated demand resulting from the high purchasing-power and the relatively low level of imports during the war years. For the year 1938, the percentage of manufacturers' materials and equipment imported to total imports was 37*74 per cent. The figure for the year 1947 (the latest figure available) was 51-68 per cent. The much higher proportionate figure for 1947 probably indicates the restocking and re-equipment of industry which was then under way. 10. BUREAU OF INDUSTRY (a) General Review Over the past year, the Bureau has continued to carry out its functions in respect of those industries which operate under the provisions of the Industrial Efficiency Act, 1936. The Bureau has also continued to survey the position of all industries coming under the provisions of the Act, and the past year has seen the delicensing of two industries which had operated under the Act for some years —the footwear manufacturing industry and the industry for the manufacture of petrol-pumps. Close collaboration with the Rehabilitation Department in cases affecting the rehabilitation of ex-servicemen has been maintained.

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(Base, 1939=100) Year. Total. | Per Head. 1938 102 103 1939 100 100 1947 108 98 1948 125 111

Year. Locally Produced. Imported. . Per Cent. Per Cent. 1938-39 59 41 1939-40 64 36 1946-47 65 35 1947-48 59 41

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(b) Personnel of Bureau The personnel of the Bureau has remained unchanged during the year. (c) Licensing of Industries No new industries were brought within the provisions of the Industrial EfficiencyAct during the year, the number now subject to that Act being 25. (d) Retail Sale of Motor-spirits Applications to the Bureau totalled 1,016 (of which 820 were granted and 196declined) a great increase over the previous year's figure of 589. To a large extent, the increase is accounted for by the entry of the British Petroleum Co. of New Zealand, Ltd.,. into the industry and, to a lesser extent, by the change of policy in regard to the installation of pumps at repair garages. (e) Pharmacy There has been considerable activity during the past year in the establishment of" pharmacies in new and growing areas, an additional 23 licences being granted. In considering applications both for new licences and transfers of existing licences, the claims of chemist servicemen to assistance in rehabilitating themselves have in all cases been sympathetically considered. (/) Appeals Against Decisions of the Bureau The Act provided procedure whereby any applicant or other person materially affected by a decision of the Bureau may take the decision before the Appeal Authority appointed under the Act. During the year 43 appeals were heard under this procedure, 25 being successful and 18 disallowed. 11. GENERAL Although the actual effect has been clouded by the impact of war and inflation,, it is undoubted that a number of industries have been established behind the protection provided intentionally or otherwise by import licensing. Many of these firms might not survive if protected solely by the present tariff (which has not been revised for many years) particularly since the New Zealand pound is now at parity with sterling. It is. to be realized, however, that comparison with overseas products is often difficult because of variations in the type or quality of a commodity and, moreover, an industry which to-day could not face unrestricted overseas competition may well do so in a few years. Currency adjustments (such, for instance, as the recent bringing of New Zealand currency to parity with sterling) may entirely alter conditions overnight. Whilst this. appreciation of our currency has tended to act as an influence against rising costs, it has substantially impaired the ability of many firms to produce quality goods at the price at which these could be imported. It has also reacted unfavourably on several export lines—e.g., timber, crockery. With the lack of fully effective competition, some manufacturers are not paying sufficient attention to the price or quality of their output. It has, in fact, been necessary to take the issue up with certain firms, pointing out that protection under import licensing necessarily carries with it a responsibility to the consumer. It would unquestionably be wise for those firms to consolidate their position now and prepare themselves more effectively to meet overseas competition when it is possible to removeimport licensing.

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A most necessary prerequisite to the removal of import control would, however, be a careful examination of the possible consequences to industry and what tariff adjustments might be necessary to protect adequately the worth-while units and prevent any too violent a disruption in the present pattern of our economic life. Much heart-searching will be required if we have to decide as to whether or not units, whose protection on the grounds of saving in expenditure of overseas funds is justified, merit protection on different grounds. As proved by so many firms, New Zealand industry can produce a quality article at a competitive price, and there is still a large field for economic development of manufacturing industry. For instance, there is prospect of worth-while expansion in the direction of processing our own primary products and the utilization of indigenous raw materials—e.g., wool, clay, timber. As the population of the country increases, manufacturing industry must become a progressively important avenue of employment, unless there occurs a considerable change in the pattern and type of our primary production. It is important to realize that our gradually increasing population is constantly enlarging the local market and offering opportunities for industries which could not previously have been established on an economic basis. New Zealand is undoubtedly experiencing inflation, and with the high competition for our already fully employed productive resources, industry unquestionably is not in the best position to show what it can do. Lack of labour to keep expensive capital equipment fully employed and high rates of taxation militate against low costs of production. With the inherent enterprise and intelligence of our people, provided the economy of the country is in a sound condition, there is every reason to expect that we can be as successful in the field of manufacturing industry as we have with primary production. The important thing is the need to realize, however, that this cannot be achieved overnight, and that the aim should be the building of a sound industrial basis for the future with appropriate selection of new industrial development. It has been suggested that as our productive resources are now so fully employed, the time has come when some reassessment of policy should be made. With labour, hydro-electricity, building resources, &c., in such scarce supply, it might well be thought in the national interest to adopt a stricter test of desirability on new projects. It is indeed questionable whether industrial expansion should proceed at its present pace and so add to the existing unsatisfied demand for labour and other scarce factors of production. Every new enterprise must inevitably compete in the market for labour and to the extent that it is successful, must draw from established industry. In fact it has been suggested that a review of manufacturing industry should be carried out with the intention of determining, as far as possible, those industries which are worth while and those whose continuance is not in the best interests of the nation. Any such review is fraught with great difficulties of choice especially in the face of established interests both of capital and labour. Some notes on selected industries are contained in Appendix E.

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PART III —OVERSEAS TRADE 1. DEVELOPMENTS IN WORLD TRADE (1) Balance op Payments Difficulties The shortage of dollars and other currencies now regarded as " hard " has been the dominant international trade problem during the past year. New Zealand is affected equally with other sterling-area countries, and has devoted considerable effort towards reducing drawings from and increasing contributions to the sterling area gold and dollar reserves. It was found, during the first half of 1949, that in spite of the close attention that had been paid by the sterling area as a whole to the conservation of reserves, the drain was continuing. The Commonwealth Finance Ministers met in London in July, 1949, to discuss this question, and agreement was reached on steps to reduce the future rate of dollar expenditure. In September, 1949, Britain, the United States, and Canada conferred in Washington on further measures towards reduction of the dollar gap, and general agreement was reached on broad action to be taken to promote exports to the dollar area, to provide for United States capital investment in the sterling area, and to extend the field in which Marshall Aid dollars could be used. On 18th September, 1949, Britain devalued sterling by about one-third in the face of increasing difficulties in making sales to the dollar area. A distinct improvement in the sterling area's reserves has since become apparent, but, even with Economic Co-operation Administration (ECA) assistance and increased hard-currency earnings following devaluation, this improvement would not have been possible without continued stringent controls over hard-currencies expenditure. The sterling area's reserves are still much below a level which would justify the removal of controls over imports from hard-currency countries. Marshall Aid will end in 1952, and before that time the sterling area must reach a position in which it can balance its payments without external assistance. (2) Liberalization of World Trade (a) General Agreement on 'Tariffs and Trade (GATT) Though balance of payments problems in post-war years have compelled many countries to adopt trade controls and to resort to bilateral trade-balancing agreements, there have been persistent efforts, particularly through United Nations agencies, to maintain multilateralism as an ultimate goal. Although the proposed International Trade Organization has not yet come into force, the General Agreement on Tariffs and Trade, to which New Zealand is a contracting party, is being provisionally applied. At the meeting of contracting parties held in Annecy in France from April to August, 1949, negotiations were completed for tariff concessions between the twenty-three original contracting parties and a further ten countries. At this meeting New Zealand made further agreements with participating countries for tariff concessions, but these have not yet come into effect. Various matters arising out of the practical application of the rules of the General Agreement on Tariffs and Trade were discussed at the Annecy session, including internal and external measures adopted to protect industry in various countries, and the justification for such measures. A further meeting of contracting parties, at which New Zealand was represented, commenced at Geneva on 23rd February, 1950. Similar discussions on trade matters were held at this session. A round of tariff negotiations is to be held again in September, 1950, at Torquay in England, and invitations to attend are being extended by the contracting parties to countries not yet parties to the Agreement. The question of the continuation of the present tariff concessions, which would otherwise expire in January, 1951, will be considered at the Torquay session.

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(b) Organization for European Economic Co-operation (OEEC) In a different sphere, under the auspices of the Organization for European Economic Co-operation, participating countries in OEEC have agreed to work towards the elimination of restrictions on intra-European trade and payments, and significant steps in removing quantitative import restrictions have already been made. The United Kingdom and some other European countries have extended their trade liberalization measures to New Zealand and the rest of the outer sterling area, but most OEEC countries have so far not extended their liberalization measures to members of the Commonwealth sterling area other than the United Kingdom and colonies. The effects of these moves on New Zealand's export trade are not yet clear. The most important aspect will be the ability of New Zealand to continue selling, on the United Kingdom market, those goods which are not covered by bulk-purchase contracts. To the extent that the United Kingdom may have accorded preference in its importlicensing procedure to New Zealand goods in the past, some advantage may be lost. For those New Zealand products which are already competitive on the United Kingdom market with the goods of other countries, no adverse effects should be felt. The disadvantage with respect to New Zealand's exports to those countries that have not included the outer sterling area in their liberalization measures may be more serious. If free importation from other OEEC countries is allowed, while specific import licences must be obtained for similar goods from New Zealand, a procedural advantage is conferred on OEEC countries competing with New Zealand. It is possible that some OEEC countries in programming their import needs, or in deciding on individual applications for import licences, may regard the freely importable commodities as sufficient to meet their total requirements, and for that reason may neglect to make provision for similar commodities from New Zealand and other outer sterling-area countries. In the longer term it may be expected that the liberalization measures, by assisting the economic recovery of OEEC countries, will contribute to the expansion of demand in those countries for goods which New Zealand can market competitively. 2. EE VIEW OF NEW ZEALAND'S EXTERNAL TRADE (1) General As befits a debtor country, New Zealand's visible external trade is normally characterized by an excess of exports over imports. With the exception of the years 1943 and 1944 when lend-lease imports introduced abnormalities in the pattern of trade, such an excess has occurred in each year since 1927.

Table 12—Visible Balance of Trade

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(£N.Z. thousands) Year. Exports. Imports. Excess of Exports. 1936 1937 1938 1939 1946 1947 1948 1949* 56,752 66,713 58,376 58,049 101,307 129,406 147,823 92,761 44,259 56,160 55,422 49,387 71,634 128,725 128,201 53,077 12,493 10,553 2,945 8,662 29,673 681 19,622 39,684 * First six months.

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Values of exports and imports rose sharply from 1945 onwards. There was a surplus of exports over imports in 1946, but a near-balance in 1947 when the value of imports increased by almost 80 per cent., compared with a corresponding increase in the value of exports of 28 per cent. In 1948 import licences were not issued on the same scale as for 1947. No fundamental changes took place in import-licensing policy over this period, but because of the greater need to conserve overseas funds and to confine imports from hard-currency countries to essential classes of goods, it was necessary to exercise a stricter control over imports in 1948. These factors, allied with the revaluation of New Zealand's currency to parity with sterling in August, 1948, caused a decline both in the value and volume of imports from the 1947 level. The value of exports in 1948, however, continued to increase, resulting in a favourable balance of merchandise trade of £19,622,000 in that year.

Table 13—Indices of Value and Volume of External Trade

While there have been remarkable increases in the value of external trade, account must be taken of price movements in any assessment of change. The value index of imports rose from 100 in the base period 1936-38 to 248 in 1947, while the volume index of imports over these years rose from 100 to 115, reflecting an increase in the average price of imports of 116 per cent. A further slight increase (to 117 per cent.) in the average price or imports occurred in 1948, the value index falling to 247 and the volume index to 114. Between 1936-38 and 1948, the index value of exports increased from 100 to 244, and index volume from 100 to 123, representing an increase in the average price of exports of 98 per cent. The broad conclusion to be drawn is that the average level of import prices rose almost 10 per cent, above the level of export prices between the base years 1936-38 and 1948. (2) New Zealand's Import Trade

Table 14—Direction of Import Trade: Values

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(Base, 1936-38 = 100) Year. Exports. Imports. Value. Volume. Volume per Head. Value. Volume. 1 Volume per Head. 1939 1946 1947 1948 96 167 214 244 98 112 119 123 96 101 105 106 95 ! 138 248 247 94 75 115 114 92 68 102 99

(£N.Z. thousands) Year. United Kingdom. Europe. U.S.A. Canada, j Australia. Far Bast. Other. Total. 1938 1939 1946 1947 1948 26,533 23,134 34,195 55,039 67,089 2,040 1,716 1,304 6,760 5,843 6,856 5,613 11,793 23,329 13,822 4,855 4,377 4,656 11,609 6,898 7,159 6,419 10,420 14,942 14,194 3,765 4,508 3,742 7,424 8,461 4,214 3,620 5,254 9,622 11,894 55,422 49,387 71,364 128,725 128,201

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Table 15—Direction of Import Trade: Percentages

To the traditional reasons that have made the United Kingdom New Zealand's main source for imported goods, must be added the favoured position she has enjoyed under New Zealand's import-licensing policy and the increasing substitution of United Kingdom goods for those of hard-currency origin. These resulted in the United Kingdom obtaining in 1948 an increased share of the New Zealand import trade both absolutely and relatively. That New Zealand has given practical demonstration of the sterling area's endeavours to curtail dollar expenditure is evidenced by the drop both in values and percentages of her imports from the United States and Canada in 1948 compared with 1947 and previous years. The rapid return of Europe as a supplier of New Zealand's imports in 1947 was ■assisted by the more liberal import policy adopted in that year, allied to the post-war economic recovery of European countries. The main items imported from Australia are wheat, machinery, iron and steel, textiles and yarns, hardwoods, sugar, dried fruits, egg-pulp, wines and spirits, and a range of other manufactured goods. The value of imports from Australia in 1948 was almost double the value in 1938. This increase came about largely through higher prices of foodstuffs and raw materials. The quantity of wheat imported from Australia over these years was doubled, whereas the cost increased five-fold. The value of imports of manufactured goods from Australia also increased substantially, the value of 1948 purchases being about 85 per cent, above the 1938 figure. Increases were recorded in such items as electrical, agricultural, and metal-working machinery, artificers tools, manufactured metals, woollen piece-goods, and printed books. A number of Australian industries, particularly in metal-working and engineering, are now able to compete effectively on the New Zealand market with former suppliers such as the United Kingdom, Germany, Sweden, and the United States. Australia's ability to compete has been hampered in recent years by coal and iron supply difficulties. There is reason to believe, however, that, as these difficulties are overcome, the volume of New Zealand's imports from Australia will increase beyond the present level. Between 1938-39 and 1948 the value of New Zealand's import trade with the Far East was more than doubled. The individual countries contributing to this increase were India, Pakistan, Ceylon, and Malaya. Before the war the Duch East Indies (now Indonesia) was the major participant in this trade, supplying over half of New Zealand's imported motor-spirit. The recovery of Indonesia's export trade has been long delayed by internal dissension, but she is potentially a valuable source of dollar-saving goods, and imports from that source will probably increase when normal trading is resumed. (3) New Zealand's Export Trade The value of exports in 1948 was £147,823,000, compared with £58,376,000 in 1938. In a period of changing price-levels, the currency value of a country's trade does not give a correct indication of changes in the volume of trade. The index numbers in Table 13 show, however, that the volume of goods shipped from New Zealand has increased progressively in recent years.

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Year. United Kingdom. Europe. U.S.A. Canada. Australia. Far Bast. Other. Total. 1938 47-9 4-3 12-4 8-8 12-9 6-8 6-9 100 1939 46-8 3-5 11-4 8-9 13-0 9-1 7-3 100 1946 47-7 1-8 16-5 6-5 14-5 5-2 7-8 100 1947 42-8 5-3 18-1 90 11-6 5-8 7-4 100 1948 52-3 4-6 10-8 5-4 11-1 6-6 9-2 100

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Comparative figures showing exports of main products during the three years ended June, 1939, 1948, and 1949, are given hereunder :

Table 16—Principal Exports

There were increases in the total quantities of all the main dairy products exported in the twelve months ended June, 1949, as compared with corresponding 1947-48 figures. Percentage increases were 0-1 per cent, for cheese, 16 per cent, for butter, and 42 per cent, for processed milk-products. There was a relatively small increase in the total quantity of meats exported, reductions in exports of beef and pork being more than offset by increased tonnages of mutton, lamb, and veal. A slight increase also took place over this period in the quantity of canned meat exported. The 1948-49 figure was more than double that for 1938-39. The volume of wool exports in 1948-49 showed an appreciable increase over the high level reached in 1947-48. The effects of high wool-prices are indicated by the fact that whereas the quantity of wool exported in the year ended June, 1949, was 43 per cent, above the corresponding figure for 1938-39, the 1948-49 value figure was 266 per cent, above the 1938-39 value.

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(Value : £N.Z. thousands) Quantity. "Value. Item. Unit of Quantity. 1939. 1948. 1949. 1 1939. 1948. 1949. 'Dairy products— (000) (000) (000) Butter Cwt. 2,462 2,541 2,949 15,813 31,492 35,122 Cheese ,, 1,605 1,665 1,667 5,727 12,254 11,277 Milk, dried ?? 150 292 410 237 1,314 1,787 Milk, condensed, &c. 99 52 161 235 99 594 877 Meats —- Frozen — Beef 99 1,032 1,260 1,100 1,837 4,005 3,198 Lamb 9 1 2,592 3,714 3,981 8,768 19,195 18,746 Mutton ? ? 1,029 1,427 1,429 1,813 3,859 3,801 Pork ? ? 514 217 193 1,686 1,248 1.086 Veal 140 157 163 265 521 395 Other 99 186 392 385 407 1,838 1,479 Canned 99 61 123 125 274 953 946 Meat extract ? ? ' 0-6 7 10 4 230 265 Sausage-casings 9? 39 50 48 673 2,116 1,972 Hides and skins — Sheep-skins without wool No. 14,018 15,396 14,045 1,045 5,011 3,675 Sheep-skins with wool ? ? 2,010 1,175 794 386 734 399 Cattle-hides 99 541 482 444 475 2,098 1,737 Calf-skins 99 1,083 848 819 239 1,195 828 Rabbit-skins 99 11,497 15,441 10,788 244 977 659 Other 9 9 11 188 152 Wool lb. 305,401 422,540 437,419 12,896 42,849 47,248 Agricultural products— Apples, fresh Cwt. 450 319 212 653 780 431 Peas Cental 162 560 457 144 1,195 968 Seeds, grass and clover Cwt. 46 158 168 241 1,360 1,681 Miscellaneous products— Tallow and other animal fats .. 99 586 584 548 476 3,115 2,869 Fish 99 45 60 69 164 437 480 Timber, sawn S./ft. 12,933 12,957 fcO 00 <1 E\3 155 286 625 Gold Oz. 171 90 45 1,506 941 402 Kauri-gum Cwt. 283 103 134 112 98 118 Other New Zealand produce 977 3,618 4,066 Totals, year ended 30th June 57,384 145,043 147,882

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The increased volume of wool exported in post-war years was caused largely by sales of stock wool accumulated during the war, and held by United Kingdom - Dominions Wool Disposal, Ltd. Quantities of stock wools sold at auction in the years ended June, 1948 and 1949, were 87,286 bales and 161,611 bales representing 9-4 per cent, and 15*7 per cent, respectively of the total quantity of wool offered at auction in New Zealand during those seasons. Hides and skins exports of all kinds were lower both in total value and volume in 1948-49 than in 1947-48, the main reason being increased purchases by local tanners. Increases are recorded in the 1948-49 values of exports of sawn timber, fish, and •of grass and clover seeds, and decreases in the values of exports of fresh apples, peas, •and tallow.

(b) Direction of Exports Table 17—Direction of Export Trade: Percentages

Table 18—Direction of Export Trade: Values

United Kingdom.—The United Kingdom is traditionally New Zealand's major export market. There has been, however, a decline in the proportion of exports to the United Kingdom in post-war years. During the years 1930-39, the United Kingdom purchased an average of 83 per cent, of New Zealand's total exports. The comparative figure for the years 1946-48 is 73 per cent. This decline has come about in spite of New Zealand's commitments of meat and dairy products under long-term contracts with the United Kingdom. New Zealand is committed up till 1955 to sell to the United Kingdom all its exportable surplus of meat, and nearly all its surpluses of butter and cheese. In addition there are contracts covering the major portion of buttermilk powder, skim-milk powder, and casein exported from New Zealand. A contract with the United Kingdom Government for the purchase of all tallow exported from New Zealand has also been negotiated each year since 1942. The value of goods exported to the United Kingdom under bulkpurchase agreements in the calendar year 1948 accounted for 52 per cent, of the value of New Zealand's total exports in that year. There are some disadvantages associated with bulk-purchase contracts. Export prices are held within relatively narrow limits in boom periods when import prices may be rising more steeply. There may also be some danger in dependence upon the ability

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Year. United Kingdom. Europe*. U.S.A. Canada. Australia. East Asia.f Other. 1 J Total. 1938 84 4-7 2-5 1-9 3-8 1-4 1-7 100 1939 81 6-1 4-9 1-7 3-9 1-3 1-3 100 1946 70 7-6 9-6 2-8 3-6 4-4 2-0 100 1947 76 8-2 6-3 2-4 3-2 0-9 3-0 100 1948 73 13-7 4-9 2-0 2-7 0-9 3-0 100 * Includes Russia. f Includes Burma, Ceylon, China, Hong Kong, India, Indonesia. Japan, Malaya, Pakistan, and Philippines.

(£N.Z. thousands) Year. United Kingdom. Europe.* U.S.A. Canada. 1 Australia. East Asia.f Other. Total. 1938 1939 1946 1947 1948 48,898 46,689 70,923 98,660 107,965 2,743 3,521 7,733 10,674 20,259 1,422 2,847 9,716 8,174 7,273 1,127 964 2,803 3,060 2,991 2,189 2,256 3,627 4,096 3,956 822 775 4,435 1,198 1,295 1,175 997 2,070 3,544 4,045 58,376 58,049 101,307 129,406 147,882 * Includes Russia. t Includes Burma, Ceylon, China, Hong Kong, India, Indonesia, Japan, Malaya, Pakistan and Philippines.

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of one market to maintain an effective demand for the products covered by the contracts. The bulk-purchasing system could tend to obscure changes in the pattern of world supply and demand and might confer only a temporary security, which could be lost when the contracts terminate. This could apply particularly with regard to butter, for which substitute products exist, if the United Kingdom demand were not strong enough to absorb a sufficient quantity from New Zealand at prices offering adequate returns. The promotion of expanded sales in other areas would spread the market risk. On the other hand, the products covered by New Zealand's bulk-purchasing contracts, are of a kind most subject to overseas price changes, and the contracts, in conjunction with the primary industries Stabilization Accounts, by providing a cushion against overseas price-fluctuations, both inflationary and deflationary, ensure the stability of the earnings of those producers on whose industry the economy of New Zealand so largely depends, and enable them to plan increased production in relative security for the period of the contracts. While it has been argued that New Zealand should seek greater diversity of markets, it must be remembered that the United Kingdom has always been the most important market for New Zealand goods, and the contracts do not involve any unnatural change in the direction of export trade. To endeavour to sell the goods in other markets purely because such markets offer greater returns for the time being, without any guarantee of long-term stability, might endanger the market in the United Kingdom. Quite apart from these considerations, New Zealand, by participating in these contracts, has assured the United Kingdom of supplies of essential foodstuffs over a critical period. Investigations indicate that some of the products covered by the bulk-purchase contracts could, in the absence of contractual obligations, be sold in the dollar and other hard-currency areas. While New Zealand's earnings of hard currencies could no doubt be increased in this way, the United Kingdom would probably have to make up at least part of its consequent deficiency by additional imports from hard-currency areas. Europe.—The proportion of exports to Continental countries increased from 4-7 per cent, of the value of total exports in 1938 to 13-7 per cent, in 1948. The value of exports to France, Germany and the Netherlands in particular has risen substantially. The principal exports to European countries in the twelve months ending June, 1949, were wool, hides and skins, butter and cheese, dried and condensed milk, sausage-casings,, grass and clover seeds, and apples. The substantial increase in the value of New Zealand's exports to European countries is probably attributable to a large extent to the need of most European countries to seek their import requirements in soft-currency markets. The concentration of demand for sterling area raw materials has been an important reason for the sustained high prices of some New Zealand products, particularly wool. A further factor has been the existence of cross-rate operations in some of New Zealand's export products. While most of New Zealand's exports to Europe have been for processing or consumption in the country of destination, there has been evidence that a certain proportion of wool, hides and skins, and other goods from New Zealand has been re-exported in unprocessed form directly to the United States. This trade .has proved profitable to intermediaries engaged in black-market exchange operations, and has been responsible for a loss of potential dollar earnings to the sterling area. Efforts have been made to prevent the indirect trade by a system of certification of exports to certain European countries, in cases where it appeared possible that the goods might be transhipped to the dollar area. Latest reports indicate that the indirect trade in New Zealand wool which in 1948-49 was substantial is now of negligible proportions. Itappears probable, however, that despite efforts to prevent cross-rate trading, these operations are still being carried on in some New Zealand products. United States of America and Canada. —From 1946 onwards the value of New Zealand's exports to the United States and Canada has not increased proportionately to the growth in the value of total export trade. In the case of the United States, the value of exports decreased progressively in 1947 and 1948, and the 1948 value level of

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exports to Canada was only slightly above the 1946 level. The decline in exports to these countries can be attributed in the first place to the abnormal pressure of demand for New Zealand's export products from those countries experiencing a shortage of dollar funds. Competition by soft-currency buyers has tended to force the price of some New Zealand products beyond the interest of Canadian and American buyers. A second factor is the committal to the United Kingdom of the bulk of the exportable surpluses of some commodities which might otherwise be saleable in the dollar area. The proportion of the value of exports to the United States and Canada during the war and early post-war years was, however, abnormally high, and although there has been a decline since 1946 the 1948 proportions were still higher than those in 1938. A good deal of attention has been given during the past year to possibilities of increasing exports to dollar countries. These in the past have been confined almost entirely to products of primary industries, and it seems clear that any substantial increases in future export trade with these countries must depend mainly upon exports of primary products. The principal possibilities of effecting increases in New Zealand's dollar export earnings appear to be in one or more of the following : —? (a) By diverting supplies of meat from the United Kingdom. This could be done only by variation of the bulk-purchase contract with the United Kingdom Government. (b) By diverting to dollar markets the maximum quantity they can absorb of such commodities as dairy products, tallow, apples and pears, the overseas sales of which are controlled by quasi-Government producer organizations. Consideration is, however, already given to the need for dollar earnings when sales of these commodities are being arranged and the scope for further expansion is probably small. It would in any case be at the expense of the United Kingdom or other traditional markets, or, in the case of apples and pears, possibly of the local market. (c) By arbitrary control over the direction of exports of commodities which can at present be sold freely to any destination, such as wool, hides, and skins.. It is doubtful whether this form of control would be justified in present circumstances. (d) By general promotional action to encourage increased production and exportof those New Zealand goods which are already being marketed, or could be marketed, in the dollar area. It is in this field that particular attention has been paid by the Department during the past twelve months. There is no doubt that New Zealand's ability to compete in dollar markets has been considerably improved since devaluation, and that better possibilities now exist for exports to these countries, particularly of local raw materials and manufactures based on their use. The export of goods of this nature to the United States and Canada is being encouraged wherever possible. New Zealand Trade Commissioners in North America have carried out a good deal of research and trade-promotion work, and have undertaken a number of market surveys for products available for export from New Zealand. If supply difficulties can be overcome, it is almost certain that New Zealand's earnings from exports of such goods as woollen manufactures could be increased substantially. (e) By incentive schemes to exporters of products which have not hitherto been marketed on any scale in dollar countries, but which could be sold advantageously in that area. One such scheme, which has been adopted in certain other countries, permits exporters to retain a fixed percentage of the net. dollar proceeds from their exports, and to dispose of them freely on further sales promotion, travelling, publicity, &c., or on the purchase of dollar goods of their own choice.

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Australia. —During the four calendar years ended 1948, there was a progressive decline in the proportion of' New Zealand's exports to Australia, and the proportion of exports to that destination in 1948 (2-7 per cent.) was lower than in any previous year. The main items entering into New Zealand's export trade with Australia are wool, gold, sawn timber, fish, grass and clover seeds, hides and skins, and some manufactured goods. The decline in the volume of exports has been mainly in wool, gold, and hides and skins. Exports of timber, grass and clover seeds, fish, and manufactured goods have expanded considerably between 1938 and 1948. When present plans for the expansion 'of New Zealand's timber and pulp industries come into full operation the value of New Zealand's exports to Australia may be expected to increase substantially. Australia's rising population, and the industrial advances she is making, will undoubtedly bring about changes in the nature of her import requirements, and increased opportunities should occur for the export of a number of other New Zealand manufactures, such as dairying machinery, cardboard, and chinaware, which are already being sold competitively in that market. Increasing quantities of processed foodstuffs have also been sold in Australia in recent years, and the export of such items as lactose, canned fish, fish-liver oil, canned peas, rennet, and casein should continue to expand. New Zealand's competitive advantage in the Australian market was affected by the exchange appreciation in August, 1948, and its ability to compete in Australia in some lines is still handicapped by this factor. This may be offset to some extent, however, by the general disinflationary effect of New Zealand's return to parity with sterling. The Far East. —The proportion of the value of New Zealand exports to Far Eastern countries (India, Pakistan, Ceylon, China, Hong Kong, Burma, Malaya, Indonesia, Philippines, and Japan) declined from 1-4 per cent, of the value of total exports in 1938 to 0-9 per cent, in 1948. This decline has been caused in part by the unstable political and economic conditions that have characterized the post-war years in most Eastern countries. High levels of exports during the war are explained by supplies to the Eastern Group Supply Council and later to UNRRA. Available statistics do not point to any significant changes in the classes of goods entering into New Zealand's current trade with Eastern countries, as compared with pre-war years. Wool and milk-products are still New Zealand's major exports to those destinations. Japan was the main Far Eastern purchaser of New Zealand products before the war. The early post-war years found the Japanese destitute of the means to enter into external trade except under barter conditions. In 1948 a trade arrangement was concluded between the sterling area (including New Zealand) and the Supreme Commander for the Allied Powers in Japan, providing for the conduct of trade on a sterling basis. This arrangement was designed to maximize trade between the sterling area and Japan on a balanced level, consistent with the general trade policies of the individual participants. During 1949 New Zealand exported wool, hides, skins and token quantities of dairy products to Japan, and imported mainly textiles and furniture-timber. The value of exports to Japan in 1949 is estimated at approximately £500,000, compared with £391,000 in 1939. In general, New Zealand's exports to Eastern countries have not expanded in the same way as those of Australia and some other countries, although the Far East may be regarded as a natural market for a number of New Zealand products. Factors limiting the scope for the development of New Zealand's export trade with the East includes — (a) The bulk-purchase contracts with the United Kingdom. It should be noted, however, that small quantities of dairy products and meat are regularly exported from New Zealand (either directly or under allocation by the British Ministry of Food) to those Eastern countries to which these products were exported before the war.

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(b) The fact that some of New Zealand's major export products such as butter and meat are of a luxury nature in relation to the standard of living of Eastern peoples, many of whom in any case are not accustomed to European types of foodstuffs. (c) Shipping difficulties. At present, sailings from New Zealand to most Eastern ports are infrequent, and New Zealand goods have often to be transhipped in Australia. Other countries nearer to the Eastern area, notably Australia, have a competitive advantage in the shorter distance involved in shipping to Eastern ports. (d) General lack of knowledge on the part of New Zealand exporters as to methods of conducting trade with Eastern countries and uncertainty as to the commercial risks involved. It appears possible that worth while results would follow the establishment of a more complete commercial liaison between New Zealand and countries of South-east Asia. At present, New Zealand has no Government trade representation between Bombay, Tokyo, and Sydney. 3. OVERSEAS TRADE REPRESENTATION New Zealand has overseas trade representatives in the following localities : London .. ... The United Kingdom Representative, New Zealand Department of Industries and Commerce (Mr. J. B. Prendergast). Washington, D.C. . . New Zealand Trade Commissioner (Mr. R. W. Marshall). New York .. .. New Zealand Trade Commissioner (Mr. D. W. Woodward). Montreal .. .. New Zealand Trade Commissioner (Mr. J. A. Malcolm). Sydney . . .. New Zealand Senior Trade Commissioner (Mr. W. Taylor). Melbourne .. .. New Zealand Trade Commissioner (Mr. B. R. Rae). Bombay .. .. New Zealand Trade Commissioner (Mr. R. J. Inglis). Tokyo .. .. New Zealand Trade Representative (Mr. R. L. G. Challis). The functions of these officers in promoting and assisting the conduct of New Zealand's overseas trade are becoming increasingly important and valuable with the return of buyers' markets for many of New Zealand's export products. Apart from direct trade promotion, New Zealand's overseas trade representatives are required to assist New Zealand exporters in a wide variety of ways, and to provide regular reports on economic and market conditions in their territories.

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PART IV—OTHER DEPARTMENTAL ACTIVITIES 1. ACCOUNTS Whilst the Department continues to be associated with a few minor matters relating to the finalization of Ministry of Supply activities, the accounting work of the Department is now more or less confined to the normal activities of a non-trading Department —namely, salaries, office expenses, and the like. Special features of which mention might be made, however, were : —• (1) United Nations International Children's Emergency Fund. —Total moneys available for this Fund, including a Government contribution of £350,000 and public subscriptions of £391,553, were £786,385, and expenditure from the Fund, which is administered by this Department, up to 31st March, 1950, totalled £692,655, on the following items — Canned cheese and macaroni cheese .. .. .. 103,853 Milk powders, evaporated milk, and malted milk .. 73,627 Canned meats .. .. .. - • - - 60,683 Laundry soap .. .. .. .. -• 149,805 Fish-liver oil and fish-liver-oil capsules .. .. .. 186,538 Scoured wool .. .. .. • • • • 32,531 Cocoa .. .. .. . • • •' • • 9,489 Freight and other charges .. .. .. .. 76,129 The balance available for further disbursements is £93,720. (2) Charter of Vessels. —Expenditure under this heading and which is charged to vote, " Stabilization," was £215,868. (3) Wheat and Flour Subsidy was £2,718,000, and flour-bag subsidy £45,287 ; also charged to vote " Stabilization." (4) Payments Made Relating to Finalization of Ministry of Supply Activities were — £ (a) Food purchases .. .. .. .. .. 98,032 (b) Receipts from sale of goods purchased by Ministry of Supply .. .. .. .. .. 68,480 (c) Receipts from sale of surplus assets — £ Ministry of Supply .. ... 49,423 Munitions Controller .. .. ..163,746 213,169 2. MOTION-PICTURE INDUSTRY The hearings of the Parliamentary Committee of Inquiry into this industry extended over a period from the 18th May, 1948, to the 10th June, 1949. At the initial meeting of the Committee, it was agreed that evidence should be taken to enable the Committee to form opinions on several specific matters of reference, the principal of which was " whether the existing monopoly conditions in the exhibition of films in New Zealand are compatible with the public interest and whether any legislative or other action should be taken to overcome, limit, regulate, or supervise these monopoly conditions." On this particular question, the Committee was strongly of the opinion that, as a matter of principle, the control of the motion-picture industry in New Zealand, whether on the distribution or on the exhibition side, must not be allowed to develop into a monopoly. The Committee also considered that the tendency towards further monopolistic control should be arrested, and that in so far as the exhibition side of the industry in first- and second-release situations was under the control of two theatre chains, those chains should

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not be allowed to grow bigger and their enlargement should be regarded as the exception rather than the rule. The Cinematograph Films (Issue of Exhibitors' Licences) Regulations 1937, Amendment No. 2 (Serial number 1949/140), dated the 7th September, 1949, were promulgated to conform with this recommendation. The Committee made other recommendations which are receiving the consideration of the Government. The various interests in the film industry were given full opportunity of presenting evidence at the inquiry, which in substantial form testified to the efficiency of the industry as a whole, notwithstanding difficulties of obtaining building supplies for renovating old theatres and the impossibility in the meantime of erection of new theatres. Several investigations were made by the Department during the year under the Cinematograph Films (Issue of Exhibitors' Licences) Regulations 1937, particularly in respect of locations adjacent to centres where films were already being screened. The effect of 16 mm. films on the industry is clearly demonstrated where small public halls and indifferent facilities may quite readily be used for showing this type of film. It is sometimes a matter of extreme difficulty to determine the extent to which existing exhibitors may suffer by the granting of new licences. The draw off from one exhibitor's screenings to those of a neighbouring exhibitor may be relatively small but, in direct effect, may represent the difference between profit and loss at the location suffering reduced attendances. For this reason, every care must be taken that all parties, exhibitors, prospective exhibitors, and the public are fairly treated in the allocation of licences. The annual election of two members to represent the independent exhibitors on the Film Industry Board was conducted during the year and resulted in the two sitting members being returned. By vote, the usual period of office was extended from one to three years for the successful candidates. 3. GAS-MANUFACTURING INDUSTRY The Board of Trade (Gas) Regulations 1924 are administered by the Department with the technical assistance of the Director and staff of the Dominion Laboratory. Regular tests for calorific value, pressure, and purity are made of the gas-supply of twenty-two gasworks by gas examiners who are qualified scientists. All gas-meters are tested and stamped by Inspectors before installation at consumers' premises. The Chief Gas Examiner reports that there has been, in general, a steady improvement in gas quality since the end of the war, several works having completed extensive new installations. The following table shows gas consumption in New Zealand for the past two decades :

Table 19—Gas Consumption

4. EXHIBITIONS AND INDUSTRIAL FAIRS Throughout the year the Department continued to combine with other Departments in the provision of Government exhibits at fairs and exhibitions. A Government court, the general theme of which was an interpretation of governmental social service with particular reference to the direct contribution made to industry —both primary and

25

(Millions cubic feet) Year. Consumption. Year. Consumption. 1930 3,528 1946 4,239 1935 3,263 1947 4,366 1940 3,885 1948 4,458 1945 .. 4,195 1949 4,378

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manufacturing—particularly by the Department of Scientific and Industrial Research and the Agriculture Department, was displayed at three centres : at the New Zealand Industries Fair held in Christchurch from sth August to 20th August; at the New Zealand Industries Fair held in Hamilton from 18th October to 24th October ; and at the Industrial Trade Section of the 1950 Empire Games Carnival held in Auckland from 25th January to 3rd February. As indicated, the same court was displayed at each centre with only minor alterations dictated by considerations of space. Arrangements were also made to send a small exhibit, comprising mainly pictorial views, to a Foreign Trade and Industries Exhibition to be held at Kobe, Japan, in March, 1950. Projects for the ensuing year include participation in the Christchurch Industries Fair to be held during August, 1950, the Wellington Manufacturers' Jubilee Industries Fair to be held in October, 1950, and in the " Pageant of Progress " procession which will be a feature of the Canterbury centennial celebrations in December, 1950. 5. LIBRARY AND 'INFORMATION SERVICES The Technical Library has continued to be used by manufacturers to a considerable extent. The " Industrial Bulletin," prepared in conjunction with the Department of Scientific and Industrial Research and other Departments, has a circulation of sixteen hundred copies, and a questionnaire sent to all recipients proves that it is of great value to industry. The " Manufacturers' Directory "is nearing completion and will be issued before the end of 1950.

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PART V- ORGANIZATIONS ASSOCIATED WITH THE DEPARTMENT 1. PRICE CONTROL DIVISION The following report covers the operation of price control during the past year : (a) General During the year, some further improvement occurred in the supply of many lines of both imported and locally manufactured goods, but effective demand stimulated by a general increase in wage-rates continued at a high level, and the problem of shortages remained troublesome. It would appear that a continuance of strict price control over a wide but diminishing field will be necessary so long as effective demand continues to exceed the quantities of goods available through local production and importations, with resultant continuing strong upward pressure on prices. However, the possibility of releasing goods from price control as the supply position improves to the point where competition provides adequate protection to the consumer is being constantly explored, and during the year it was found possible to de-control a number of goods and services. With continued progress in the introduction of simplified pricing procedures, this has enabled a substantial reduction in staff to be effected. Import prices, following a temporary check towards the end of 1948, generally resumed a steady upward trend which continued throughout 1949. The devaluation of sterling (and with it of New Zealand currency) in September, 1949, accelerated the upward price movement of goods originating in the dollar area and in some other countries. (b) De-control Although a number of commodities and services was released from price control up to the end of November, the change of Government resulted in the adoption of a definite policy of progressive de-control aiming at the restoration of free competitive trading conditions as soon as practicable. The progress of de-control was accordingly accelerated, and three notices, one of which covered an extensive range of goods and services, were subsequently issued. With the position under constant review, it may be anticipated that substantial progress in this direction will be made over the next year, although the speed with which de-control can be effected will be conditioned by the availability of supplies and the effectiveness of competition in preventing undue price increases. Among the more important items de-controlled during the past year were : localauthority charges except those relating to gas, electricity, or milk ; chocolates and confectionery ; fish ; ice ; jewellery and silver-plated ware of various kinds ; radioreceiving sets ; gramophones and records ; brushware ; haberdashery ; furs ; cosmetics ; various industrial goods including abrasives, industrial processing machinery, hoists, and valves ; some stationery items ; professional fees ; and commercial printing and newspaper advertising charges. (c) Development op Pricing Procedures During the year the " automatic " percentage mark-up procedure, which had already proved its value and efficiency in a number of important distributive fields, was further extended under various Price Orders to cover the sale of drugs, electrical goods, sports goods, floor coverings, office equipment, toys, stationery, musical instruments, and numerous other classes of goods. In addition, the earlier scheme covering the retail distribution of apparel and softgoods was reviewed and incorporated in a Price Order.

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Under the " automatic " schemes, distributors are able to apply the appropriate scheduled percentage mark-up to the invoice cost of the goods without reference to the Tribunal or Division. This system provides a considerable saving in time and work to both traders and the Division compared with the individual authorization methods, where at each stage of distribution traders had to secure approval of selling-prices for •each line before they were permitted to sell. In May, 1949, the Price Tribunal introduced by Price Order a new method for controlling tariffs chargeable by licensed hotels. This involved the grading of hotels and the fixing of basic charges (with allowances for extra services) on the basis of the grade. (d) Repricing Following the Standard Wage Pronouncement As a result of the Standard Wage Pronouncement made by the Arbitration Court on 12th April, 1949, with consequent wage-cost increases throughout industry and trade, widespread price adjustments had to be taken. Immediate action was taken to assess the effects of the wage increases on various industries and trades. Following the publication of a policy statement by the Price Tribunal, relief was granted immediately without awaiting application in the case of industries which would have suffered hardship in the event of delay. Other industries and trades were dealt with in order of priority following the submission of applications supported by adequate cost data. (e) Public Hearing and Price Orders Some of the more important public hearings held during the year related to bread, licensed hotel tariffs, sports goods, and electricity charges made by the Hutt Valley Electric-power Board. During the year 243 Price Orders were issued by the Tribunal bringing the total number issued to 1,133. (/) Enforcement Some 500 prosecutions affecting 371 traders were instituted during the year. Many of these cases involved more than one charge, and the total number of convictions entered was 855, the fines imposed totalling £2,401 ss. From early 1940 to 31st March, 1950, a total of 3,661 convictions have been recorded for breaches of price-control measures, and amounts totalling £16,377 ss. have been imposed by way of fines. 2. RATIONING CONTROLLER Butter and Cream (a) Butter Butter rationing was continued throughout the year. The local ration for private domestic consumption was increased from 6 oz. to 8 oz. per week on the 24th October, 1949, at which time also the period for which coupons were valid was extended from four to eight weeks. This concession, together with the increase in the basic ration, was greatly welcomed by the public. With the increase in the butter ration to 8 oz. per week, complaints that the ration was insufficient and requests for additional supplies practically ceased to be received. (b) Cream On 19th December, 1949, cream rationing was suspended for one month to enable the public to enjoy cream over the Christmas period. It was subsequently extended for a further month, and finally abandoned on 13th February, 1950.

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(c) General The staff of the Department wholly employed on rationing work has been reduced "to three officers and, as has been the case since the introduction of butter rationing, most of the work continues to be undertaken through the P.ost Office under the direction ■of the Rationing Controller. 3. WHEAT, FLOUR, AND BREAD INDUSTRIES REPORT OF GENERAL MANAGER, WHEAT COMMITTEE, FOR YEAR ENDED 31st JANUARY, 1950 General Review World supplies of wheat continued to improve during the year under review, and this brought about some relaxation in the controls that had been adopted by various countries in the latter years of the war and afterwards when wheat and other cereals were in short supply. With the improved conditions, cereals including wheat were, as from 18th April, 1949, removed from the list of items subject to allocation by the International Emergency Food Council, Washington, which for a number of years previously had rigorously allocated supplies amongst the various importing countries. In New Zealand the first relaxation came on Ist March, 1949, when the extraction rate of flour was reduced from 80 per cent, to 78 per cent, in keeping with the better supply conditions then prevailing. The improvement in supplies also enabled adequate quantities of wheat to be made available for the full requirements of the poultry industry. On 31st December, 1949, the revocation of the Wheat and Flour Emergency Regulations 1939 became effective. While wheat was easier, no noticeable improvement in supplies of bran and pollard took place. Bran and pollard are by-products resulting from the manufacture of flour, and the supply of these offals is dependent upon the quantity of flour produced in New Zealand for its own requirements, this varying only slightly from year to year. Furthermore, no bran or pollard could be obtained from overseas. In these circumstances, and in order to enable the poultry industry to receive the maximum benefit from the limited supplies of bran and pollard that are available, it was decided at the request of the New Zealand Poultry Board, following the revocation of the Emergency Regulations, to continue to divert these offals to the manufacture of poultry mash. This matter was further considered by the annual conference of the poultry industry in March, 1950, as the result of which the industry expressed itself as being in favour of this practice being continued, and bran and pollard supplies are being dealt with accordingly. During the year ended 31st January, 1950, importations of Australian wheat, although heavy (5,796,062 bushels) were smaller than in the previous year (6,636,973 bushels). The quantity harvested in New Zealand in 1949 was, however, 5,958,026 bushels from 146,707 acres as compared with 4,539,017 bushels from 123,751 acres in 1948. The average yield per acre for the 1949 harvest was 40*61 bushels which was a record for New Zealand. Taking the above into account, the actual physical supply of wheat to meet New Zealand needs and to provide a more adequate carry-over increased from 11,175,980 bushels in 1948-49 to 11,754,088 bushels in 1949-50. During the year Australia delivered the balance of 2,851,640 bushels at 6s. 9d. (Australian) per bushel, f.0.b., sacks extra, to complete the 18,000,000 bushels arranged under contract between the Australian and New Zealand Governments and extending over the Australian crop-years 1945-46 to 1949-50. Owing to New Zealand having drawn upon this contract more heavily than expected when the contract was first entered into, it was completed earlier than anticipated. Upon the fulfilment of this the Wheat Committee entered into a further contract with the Australian Wheat Board, for 2,500,000 bushels at 15s. (Australian) per bushel, f.0.b., sacks extra. As a

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result of the General Manager's discussions with the Australian Wheat Board in Melbourne, the Board agreed to exempt this 2,500,000 bushels from New Zealand's commitments under the International Wheat Agreement, thus leaving the full quantity of 4,500,000 bushels still available under this Agreement. This enabled supplies to be kept moving from Australia, until deliveries could be made against New Zealand's guaranteed quantity under the International Wheat Agreement, which came into effect as from Ist August, 1949. Besides delivering the balance of the 18,000,000 bushel contract, and the 2,500,000 bushels under the new contract, Australia also delivered 444,422 bushels against our guaranteed quantity of 4,592,964 bushels under the International Wheat Agreement. The price for Australian wheat supplied under the International Wheat Agreement was 16s. Id. (Australian) per bushel, f.0.b., sacks extra. Both New Zealand flour-milling and bread-baking industries successfully met alldemands for flour and bread supplies. In a few instances, however, due to coastal shipping and other delays, shipments of flour from South Island ports to Wellington fell behind schedule causing a difficult supply position to arise at times at this point, but on no occasion did the supply fail and the position was quickly relieved in each instance. Trading Results The following summarizes the trading results of the Wheat Committee for the year ended 31st January, 1950, in comparison with the results for the previous year. Turnover by weight was as under

Table 20 —Volume of Turnover

* This does not include New Zealand wheat which goes into consumption on farms where it is produced or which is sold to neighbours as provided for in the regulations. Certified seed wheat is also excluded. During the year ended 31st January, 1950, the Committee handled 4,733,701 bushels only of New Zealand wheat, whereas the total production was 5,958,026 bushels. Of the 5,796,062 bushels of wheat imported from Australia last year, 4,052,664 bushels went to the North Island and 1,743,398 bushels to the South Island. The New Zealand flour-mills received 4,003,621 bushels, the balance of importations (1,792,441 bushels) being distributed to the poultry industry. An increasing proportion of importations took the form of shipments in bulk, no less than 1,876,137 bushels, representing 32-37 per cent, of total importations, coming forward in this way. Australian exports from New South Wales and Victoria are practically all bulk and we. have to go to South Australia for bagged wheat. Up to the present it has been possible to handle shipments of bulk wheat at Auckland only, where discharge is by grab operated from wharf cranes. A proper bulk-handling plant at this port would expedite discharge of vessels. The present system in make-shift only. With the above development it has been necessary to arrange for an increasing proportion of feed wheat to be bagged from bulk shipments as they arrive at Auckland. Some merchants, however, are now making arrangements to handle a proportion of their requirements in bulk.

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Item. 1949. 1950. Increase or Decrease. Bushels. Bushels. Bushels. Wheat* 10,120,230 10,529,763 +409,533 Tons. Tons. Tons. Flour 160,579 164,543 + 3,964 Wheatmeal 8,489 8,565 + 76 Bran 19,579 20,080 + 483 Pollard 21,518 23,545 + 2,027 Australian flour sold for mixing in at mills 3,255 - 3,255 Australian wheatmeal 144 — 144

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The average cost of Australian wheat purchases during the year was Bs. 10-7 d. (N.Z.) per bushel, sacks extra, Australian ports. Of the 4,733,701 bushels of New-Zealand-grown wheat distributed by the Wheat Committee, 3,841,592 bushels went to the flour-mills, 848,405 bushels to the poultry industry, and 43,704 bushels for seed. This does not represent all the seed used because certified seed does not pass through the hands of the Wheat Committee. The trade in flour and wheatmeal represented 121*818 per cent, of the basic allocation made to mills in 1936. For the year ended 31st January, 1949, 118-97 per cent, of allocation was sold. In the past year biscuit-manufacturers absorbed 10,287 tons of flour which was the largest quantity taken in any one year since the time when manufacturers were fulfilling substantial war contracts for biscuits. The figures giving the quantity of flour bought by biscuit-manufacturers during the past four years, show that the industry is catering for an expanding post-war market. Table 21—Flour Purchases by Biscuit-manufacturers Year. Tons. 1947 .. .. .. .. 8,999 1948 .. .. .. .. 8,678 1949 .. .. .. .. 9,475 1950 .. .. .. .. 10,287

Table 22—Cash Turnover of Wheat Committee

The wheat figures are based upon landed costs of Australian wheat and the growers' price of New Zealand wheat, while the flour figures are based upon the price paid to millers for flour. The increase in cash turnover is mainly accounted for by the increased quantities of wheat, flour, bran, and pollard handled and the increased price of both New Zealand and Australian wheat purchases. Administration Costs The over-all administration costs of the Wheat Committee totalled £50,622, or 0-593 per cent, of turnover, and were apportioned as under : (a) Wheat administration costs, covering the purchase, sale and distribution, invoicing, collection of proceeds, &c., of all New Zealand and imported wheat £12,571 or 0*227 per cent, of wheat turnover. (b) Flour administration costs covering all the charges arising from collecting orders, ordering out from the mills, invoicing, collecting accounts, paying proceeds to mills, acceptance on our part of the del credere risk, and including a commission of 2-05 per cent, paid to merchant-agents handling flour in localities where no Wheat Committee branch offices are established, £38,051 or 1-27 per cent, of the flour turnover. The flour administration costs are more than covered by the commission of 1-25 per cent, plus 4d. per ton of flour paid by millers to the Wheat Committee. There were no bad debts during the year, which is an excellent result having regard to the size of the turnover.

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Item. 1949. 1950. Increase or Decrease. Wheat Flour .. £ 4,070,187 2,880,360 £ 5,538,005 2,995,830 £ + 1,467,818 + 115,470 6,950,547 8,533,835 + 1,583,288

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International Wheat Agreement The Department of Industries and Commerce is responsible for the work arising out of New Zealand's participation in the International Wheat Agreement. The operative provisions of this Agreement came into force on Ist August, 1949, and remain in effect for four years from that date. The International Wheat Council, which administers the Agreement, has established its permanent seat in London. Communications between the Council and the New Zealand Government are channelled through the United Kingdom representative of the Department of Industries and Commerce, who also represents New Zealand on the Council when it is in session. New Zealand's guaranteed quantity under the Agreement is 125,000 metric tons or 4,592,964 bushels per year. Under this arrangement New Zealand is assured of a supply of wheat from overseas within the range of prices fixed by the Agreement. The fact that New Zealand is a party to the Agreement in no way lessens the obligation of the Wheat Committee under the Board of Trade (Wheat and Flour) Regulations 1944 to purchase all f.a.q. wheat offered by New Zealand growers. A decided increase in production of wheat in New Zealand is highly desirable, and it is confidently expected that all the wheat that can be grown here over the period of the Agreement will be readily marketed. New Zealand Crop The 1948-49 crop yielded 5,958,026 bushels from 146,707 acres, resulting in a record average yield of 40-61 bushels per acre. By comparison the crop yielded 4,539,017 bushels from 123,751 acres, an average of 36-68 bushels per acre. Growers were paid Bs. 6d. per bushel f.o.b. nearest port, March Tuscan basis, for the 1948-49 crop, against the Bs. per bushel paid in the previous year. For the 1949-50 crop the price was fixed at Bs. 9d. per bushel f.0.b., and recently the Government announced that for the succeeding crop (1950-51) growers will receive 9s. 9d. per bushel f.o.r. March Tuscan basis. The change from the f.o.b. to f.o.r. basis has been well received by growers, because the millers' price being maintained on the f.o.b. basis means that the anticipated discrimination by millers against wheat with long railages will not eventuate. Subsidies Paid to Stabilize Prices Subsidy payments through the Wheat Committee, on wheat and flour amounted to> £2,346,557 for the year ended 31st January, 1950, by comparison with the £1,488,951 paid out in the previous year. Subsidy payments on small calico flour-bags which were additional to the above, amounted to £46,880 in the past year, as compared with £83,058 in the previous year. Wheatgrowers' Compensation Scheme Compensation payments made to 59 growers whose crops were damaged by flood,, frost, or hail, totalled £7,946 Bs. 4d. as under :

Table 23—Compensation Payments for Damaged Wheat

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Damage From Claims Paid. Acres. Compensation Paid. Payment per Acre. Flood Frost Hail .. 5 53 1 102J 964| 25 £ s. d. 604 10 1 7,225 10 4 116 7 11 s. d. 5 IS 0 7 9 10 . 4 13 1 59 1,092 7,946 8 4 7 5 7

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For the seven years that the scheme had been in existence to the 31st January, 1950, 284 claims involving acres and £32,039 4s. 7d. had been settled, representing an average payment of £4 Bs. Id. per acre. At 31st January, 1950, the amount in the trust fund was £44,857 10s. sd. of which £44,000 was invested in New Zealand Government stock bearing interest at 2£ per cent. and. 3 per cent. Compensation payments in respect of 1949-50 crops damaged by flood, frost, or hail are not included in the above, but more than 200 claims were received, involving over 5,000 acres, and payments by way of compensation are expected to amount to about £20,000. Most of the claims result from extensive frost damage sustained by crops in North Canterbury. Hilgendorf Wheat This new variety has been very favourably reported upon by the Wheat Research Institute as a wheat which gives a flour of improved baking quality. The wheat has not been sufficiently tested, however, to enable a comparison to be made with Cross 7 as regards performances under varying growing conditions. In order to test this, by encouraging farmers to try out Hilgendorf, a premium of Is. per bushel was paid to growers on Hilgendorf harvested in 1950, and the same premium will again be paid in 1951. One-half of the premium is being met by flour-millers and the balance from Government subsidy. Shipping Freights As from 23rd June, 1949, substantial increases took place in both trans-Tasman and New Zealand coastal shipping freights. The increase amounted to 20s. per ton in the trans-Tasman rate, 10s. per ton on shipments from South Island ports to Auckland, and ss. per ton on other New Zealand coastal shipments. These increases affected wheat shipped to New Zealand from Australia and flour, bran, and pollard shipped from the South to the North Island. Supply op Special Pollard for Rabbit Boards The Wheat Committee arranged for certain flour-mills to manufacture a special pollard for use in preparation of a poison bait in rabbit-destruction work, and the Wheat Research Institute assisted with its technical advice. This necessitated the production of a pollard having binding properties to enable it to withstand disintegration when exposed to weather in the open. For technical reasons only a small quantity of. this special pollard can be made at any one mill, and certain milling adjustments had to be made at the flour-mills concerned to bring about the desired results. In the first place one . North Island and one South Island mill commenced production, but later two further mills in the South Island agreed to make this special pollard. At the present time these flour-mills produce altogether 10 tons weekly, but as. the demands of the Rabbit Boards grow, more mills may have to assist. Corn-sacks Pool At the request of the Department of Agriculture, the Wheat Committee administered the 1947-48 corn-sacks pool with which the 1948-49 corn-sacks pool was later incorporated, this work' being carried out by the Committee without charge. The object of the pool was to stabilize the charge out price for new 46 in. X 23 in. corn-sacks at 365. per dozen and for new 48 in X 26| in. corn-sacks at 41s. per dozen, both prices ex wharf Auckland, Wellington, Lyttelton or Dunedin. Merchants were allowed a profit margin of £1 10s. per bale of 250 sacks above the pool prices ex wharf. Indentors were required to pay into the pool any surplus above the actual landed costs arising from the sale of sacks at pool prices. On the other hand, where indentors suffered a monetary

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loss through this cause, reimbursement was made from the pool for such losses. The landed value of corn-sacks placed through the pool amounted to £632,917 for 1947-48 and £441,198 for 1948-49. Flour Quality For the most part the flour produced was of a high standard of quality, and a relatively small number of complaints were received during the year. On 6th December, 1949, a meeting was held at which representatives of the New Zealand Four-millers' Society (Inc.), New Zealand Federation of Bakers and Pastrycooks (Inc.), Wheat Research Institute, and Wheat Committee attended, and this meeting was worth-while as it enabled a full discussion to take place between the millers and the principal users of flour, the bakers, along with the other organizations most interested in questions affecting the quality of flour. Both millers and bakers are anxious to see the production of wheat in New Zealand increased, as a means of improving the quality of flour. As from Ist March, 1949, the extraction rate of flour was reduced from 80 per cent, to 78 per cent. The 80-per-cent. rate had ruled since May, 1946. Flour Consumption On the basis of population at 31st December, 1949 (1,902,000) and sales of flour and wheatmeal for the twelve months ending 31st January, 1950 (173,108 tons), the consumption of flour and wheatmeal for the twelve months was 182-03 lb. per head of population. Bakers' Flour-Prices During the year two reductions in the flour-prices charged to bakers came about as the result of decisions on the part of the Price Tribunal to compensate bakers for increased costs. The first amounted to 14s. 3d. per ton effective in the case of all bakers from Ist June, 1949, and the second, on 21st November, 1949, amounted to lis. 6d. per ton in the scheduled areas (where the price of bread is s£d. cash over the counter) and 18s. per ton in the non-scheduled areas (where the price is more than s|d.) The prices to bakers then became : In scheduled areas : £ll 6s. per ton less 1|- per cent., sacks extra, delivered. In non-scheduled areas : £l2 7s. 6d. per ton less 1| per cent., sacks extra, c.i.f. or rail paid. Bread-baking Industry On 31st January, 1950, 504 bread-baking units were operating compared with 526 at 31st January, 1949. New units were established at Taihape and at Hinds, and 3 were reopened, at Otahuhu, Waitoa, and Oamaru. Bread-baking thus ceased at 27 units, accounted for as under : 9 are still in the bakery business, manufacturing pastrycook goods. 1 purchaser of a " mixed " business decided to bake " smalls " only. 4 storekeepers gave up bread-manufacture. 5 bread-bakers retired for reasons of old age and ill health. 2 were involved in difficulty with landlords. 1 became financially involved. 1 unit closed on account of a widow's inability to obtain competent bakehouse assistance. 1 baker closed down under circumstances undisclosed. 3 sold out to existing units.

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The 504 remaining units are distributed as follows : Operating as at 31st January, 31st January, 1950. 1949. Northland .. .. .. .. .. 35 35 Auckland Metropolitan Area .. .. .. 48 49 Waikato, South Auckland, Bay of Plenty .. .. 95 96 Grisborne and East Coast Bays .. .. 11 11 Northern and Central Hawke's Bay .. 19 21 Taranaki-Wanganui - Main Trunk Townships .. 54 56 Manawatu, Southern Hawke's Bay, Wairarapa .. 44 45 Wellington - Hutt Valley .. .. .. 29 29 Marlborough .. .. .. .. 11 11 Nelson.. .. .. .. .. 14 14 West Coast .. .. .. .. .. 20 23 Canterbury .. .. .. .. .. 64 66 Otago .. .. .. .. .. .. 36 43 Southland .. .. .. .. .. 24 27 504 526 Thirteen of the closed units (for bread-baking) formerly operated on the West Coast (South Island) and in Otago and Southland. On the basis of population at 31st December, 1949 (1,902,000), the proportion of bread-bakers is one for 3,774 persons. The majority of the 504 units (operating at 31st January, 1950) undertake the manufacture of pastrycook goods as well as bread. In addition there are 210 units using 10/160's or more of flour per month engaged in making pastrycook goods only, and a large number of smaller pastrycook establishments (the " home cake kitchens ") use lesser quantities. During the twelve months under review 111,012 tons of flour were delivered to breadbakers and bread-pastrycooks—i.e., excluding bakeries undertaking solely the manufacture of pastrycook lines, as compared with 110,533 tons for the year ended 31st January, 1949, an increase of 479 tons. Allowing for an estimated proportion of flour used by bread-bakers in the manufacture of " smalls," 105,500 tons of flour were used for bread-baking. Using again the population figure (1,902,000), the consumption per head is 2-86 lb. bread per week. The relative figure per person for Australia (as calculated by the Commonwealth Statistician at 30th June, 1947) was 2*72 lb. of bread per person each week. 4. TOBACCO BOARD The following is a report received from the Tobacco Board covering the period under review:— (a) Growth of Industry This is the Board's thirteenth year of administration, and the statistical records kept over the years show that crop production has risen from 1,197,161 lb. in 1935-36 to 5,000,470 lb. in 1948-49. This represents an increase of approximately 318 per cent. The harvest for 1949 exceeded that of the previous year by approximately 4-8 per cent. The increased production of tobacco is in accordance with the objective of the Board to encourage and develop the tobacco-growing industry as far as possible. Continued expansion is, however, contingent upon the supply of labour which, in turn, is

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associated with the question of housing accommodation for workers engaged in the industry. The increasing utilization of farm machinery such as light tractors is materially assisting growers to overcome the problem of shortage of labour. (b) Season 1948-49 The past season was not the most favourable for the growth of the tobacco crop. Rainfall for the spring months was below the average, and although this enabled the preparation of the land to be carried out early it resulted in the soil being rather dry at planting-time, with little or no reserve of moisture to carry the crop through the growingseason. A showery November made for good planting conditions, but this was followed by a dry spell, the month of December being the driest for many years. Summer rainfall was fair, but, considering the dry condition of the land, was insufficient. This was confirmed by the excellent growth of the irrigated crops in the district. Temperatures during the season were not extreme, but some cool nights were recorded. A severe hailstorm on the 26th January struck the Riwaka Valley and the area adjacent to the foothills, causing some crops to be completely ruined and others damaged to a greater or lesser degree. Frosts late in March caused some loss of leaf in the district. There was more wind than usual, particularly in the early summer. The crop promised to be an unusually heavy one, but the hailstorm in January and the frosts in March caused a considerable loss in weight of leaf. The quality of the leaf this season was variable. The dry, early summer weather tended to bring the crop to maturity, and much of the leaf harvested at this stage, although bright, was small. Subsequent rains caused the tobacco to make fresh growth and to green up again, with accompanying difficulties in harvesting and curing. In addition there was a considerable amount of hail-damaged leaf. Taking all these factors into account, the leaf offered during the past season was probably the most varied for several seasons. (c) Prices of Leaf The basic average prices for the 1949 harvest were 2s. per pound for flue-cured, and 2s. 2£d. per pound for air-dried leaf. These prices were given effect to by the issue of Price Order No. 996 (Rawleaf Tobacco) by the Price Tribunal and were the same as those which operated during the preceding year. The minimum price below which leaf cannot be sold as fixed by the Board of Trade (Raw Tobacco Price) Regulations remains unaltered at Is. 2d. per pound. (d) Minimum Percentage of Domestic Leaf For the twelve months ended 31st July, 1949, manufacturers voluntarily offered to use a minimum of 32-| per cent, of domestic leaf over all their manufacture, this being an increase of 2| per cent, over the figure for the corresponding period of the previous year. The figure remains at 32J per cent, for the year ending 31st July, 1950. (e) Tobacco Research The amount contributed by the Board towards the cost of maintaining the Tobacco Research Station for the year ended 31st July, 1949, was £1,923 lis. 6d. This brings the total contributions of the Board to that date to £10,977. (/) Crop Insurance The 1948-49 crop suffered considerable damage from hail in January, 1949, and later on in March of that year from recurring frosts. The claims submitted for compensation were : hail damage, 415,381 lb. ; frost damage, 201,486 lb. The recuperating qualities of the tobacco-plant were again demonstrated, and in some instances growers who had submitted claims for hail damage actually achieved their contract quantity and were therefore not eligible for compensation.

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As regards the current season (1949-50) late frosts have, recently occurred, and very considerable damage has been reported. A survey of the damage is now being made, but the full extent of the losses incurred will not be known for some time. The amount of compensation paid to growers for the 1948-49 season was much higher than on any previous occasion. Particulars of claims submitted by growers and payments made over the past five seasons are as follows :

Table 24—Compensation for Damaged Tobacco

Rates of compensation were increased for the 1948—4:9 season and subsequent seasons. . „ To assist in placing the crop insurance fund on a sound basis the Board with the concurrence of the New Zealand Tobacco-growers' Federation decided that the levy on sales of leaf should be increased from to per pound for the seasons 1949—50, J950-51 and 1951-52, and that the additional £d. per pound should be set aside for the insurance fund. (g) Flood Protection As mentioned in the previous year's report, the question of protecting tobacco lands threatened by flooding of the Motueka River has received the serious consideration of the Board working in collaboration with the Soil Conservation and Rivers Control Council, the Treasury, and other interested organizations. The proposals were accepted by the ■Government, and work on the scheme has now bfen commenced. The estimated cost of the scheme is £lOO,OOO, of which amount the Board will pay •as its portion the sum of £20,000 together with interest thereon, the payments being spread over twenty-five years. The Tobacco-growing Industry Regulations 1945, Amendment No. 3, gazetted in March, 1949, give the Board the necessary authority to make contributions towards the ■cost of flood-protection or other works intended to benefit land situated in tobaccogrowing districts. The scheme of flood-protection is regarded as of both national and local importance, and it is pleasing to report that the Board's efforts in recent years in connection with this matter have proved successful. (h) Members or the Tobacco Board The Tobacco Board members at the 31st March, 1950 were : Chairman and Government Representative : Mr. L. J. Schmitt. Representatives of Manufacturers : Messrs. F. A. L. Hunt, T. P. Husheer, J. G. Lisman, and T. F. Yarley. Representatives of Growers : Messrs. F. A. Hamilton, K. J. Newman, R. W. S. Stevens, and M. H. Thorn. Mr. B. J. Fawcett, Director-General of Agriculture represents that Department in an advisory capacity at meetings of the Board. Secretary : Mr. H. L. Wise. Assistant Secretary : Mr. W. A. Clarke.

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Harvest Year. Claims Lodged. Allowed. Poundage Compensated. Amount Paid. Frost. Hail. Flood. £ s. d. lb. lb. lb. 1945 53 41 62,178 1,251 6 5 18,194 11,153 32,831 1946 19 14 16,249 340 2 7 15,943 300 1947 1 1 300 5 0 0 300 2^000 1948 33 29 50,494 1,098 6 4 48,494 1949 149 106 410,624 12,788 5 7 108,879 301,745

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(i) Tobacco-growing Statistics A comparison between the year under review and the proceeding years is tabled below:—

Table 25—Tobacco-leaf Production

N.B.—The above production figures represent the weight of leaf purchased from growers before redrying. Flue-cured leaf accounted for 96-5 per cent, and air-driecl leaf for 3*5 per cent, of the 1948-49 crop.

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Season. Growers. Contract Acreage. Amended Contract Acreage.* Production. lb. 1935-36 499 1,969 t 1,197,161 1936-37 508 2,770 t 1,609,493 1937-38 442 2,563 t 2,067,827 1938-39 342 2,225 t 1,423,610 1939-40 339 2,570 t 2,217,040 1940-41 381 2,963 t 3,143,355 1941-42 381 3,063 2,875 2,721,539 1942-43 360 2,960 2,907 3,185,183 1943-44 414 3,106 3,066 3,083,094 1944-45 487 3,383 3,303 3,286,067 1945-46 553 3,577 3,405 4,080,135 1946-47 628 3,934 3,805 4,706,723 1947-48 661 4,361 4,322 4,770,827 1948-49 619 4,406 4,393 5,000,470 * Amended after planting operations completed. f Not available.

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APPENDICES

APPENDIX A

DETAILS OF FACTORIES COVERED BY STATISTICAL SURVEYS

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Year. Number of Establishments. Workers. Percentage of Female Workers. Percentage of Total Working Population. Number of Machines. Horsepower. Males. Females. Total. 1927-28 5,156 62,913 15,707 78,620 20-0 * 15,322 (000) 417 1928-29 5,126 64,161 16,457 80,618 20-4 * 16,493 464 1929-30 5,168 65,554 17,307 82,861 20-9 * 17,700 588 1930-31 5,194 61,094 16,820 77,914 21-6 * 18,638 524 1931-32 4,969 52,922 15,775 68,697 23-0 * 18,843 534 1932-33 4,993 52,454 16,467 68,921 23-9 * 19,458 642 1933-34 5,028 55,299 17,352 72,651 23-9 * 20,277 646 1934-35 5,270 59,874 19,484 79,358 24-6 * 21,837 721 1935-36 5,536" 65,197 21,391 86,588 24-7 12-9 23,468 733 1936-37 5,728 72,001 24,400 96,401 25-3 14-2 25,625 745 1937-38 5,924 76,151 26,193 102,344 25-6 14-9 28,074 833 1938-39 6,146 76,868 25,667 102,535 25-0 14-6 30,992 848 1939-40 6,342 80,167 28,555 108,722 26-3 16-1 34,358 903 1940-41 6,395 81,706 32,293 113,999 28-3 18-3 37,938 914 1941-42 6,367 82,042 35,172 117,214 30-0 18-9 40,949 969 1942-43 6,127 78,529 36,061 114,590 31-5 18-1 44,567 1,015 1943-44 6,202 81,693 36,171 117,864 30-7 18-0 48,058 1,059 1944-45 6,485 85,861 36,553 122,414 29-9 18-0 53,141 1,091 1945-46 6,991 92,701 35,507 128,208 27-7 18-7 58,510 1,167 1946-47 7,642 100,915 33,520 134,435 24-9 19-3 65,523 1,215 1947-48 7,966 106,206 34,061 140,267 24-3 19-8 73,397 1,320 * Not available.

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APPENDIX B

FACTORY STATISTICS

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Year. Volume of Production: Index Figures. Value of Production. Added Value. £(000) £(000) 1927-28 * 85,060 30,502 1928-29 71 90,478 31,342 1929-30 .. 74 90,758 32,274 1930-31 .. 69 77,745 29,287 1931-32t .. 60 66,589 24,116 1932-33 63 66,109 23,383 1933-34 65 71,771 24,703 1934-35 74 79,324 27,047 1935-36 81 90,015 29,842 1936-37 92 105,942 35,004 . 1937-38 97 113,692 38,320 1938-39 100 114,447 38,813 1939^0 110 129,062 43,818 1940-41 114 147,154 48,606 1941-42 116 155,566 53,305 1942-43 120 165,936 58,488 1943-44 125 175,687 62,803 1944-45 129 189,801 67,106 1945-46 131 195,259 71,750 1946-47 .. 140 216,606 79,572 1947-48 151 272,155 90,382 * Not available. t Commencing with the year 1931-32, the inclusion of statistics of electric tramways was discontinued. Previous years adjusted accordingly.

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APPENDIX C

FACTORIES, CAPITAL INVESTED AND ASSETS £(000)

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Year. • Fixed Assets. 1 ■ Floating Assets. Totals. Land and Buildings. Plant, Machinery, and Tools. Materials, Stocks in Process, Fuel, and Supplies. Cash, Bills, and Accounts Receivable, Accounts Prepaid, &c. 1927-28 22/537 37,100 10,779 6,566 76,982 1928-29 23,371 38,829 10,898 9,437 82,535 1929-30 24,688 41,660 11,432 9,343 87,133 1930-31 23,564 43,254 10,808 9,298 86,924 1931-32* 22,989 42,918 9,505 8,689 84,101 1932-33 22,910 42,946 9,387 8,690 83,933 1933-34 22,159 42,231 9,825 ! 10,887 85,103 1934^35 23,160 44,109 10,774 11,314 89,356 1935-36 23,986 43,453 11,697 1 12,924 92,059 1936-37 24,445 45,152 13,122 13,685 96,404 1937-38 25,574 47,165 15,214 14,517 102,470 1938-39 27,202 49,296 15,221 15,180 106,898 1939-40 28,544 52,029 17,616 17,195 115,384 1940-41 29,230 54,525 22,361 18,014 124,130 1941-42 30,199 56,929 24,599 20,720 132,447 1942-43 30,893 57,361 26,041 24,152 138,447 1943-44 31,733 59,007 29,543 27,952 148,236 ' 1944-45 33,933 63,059 30,806 29,462 157,259 1945-46 35,921 67,969 32,557 31,587 168,035 1946-47 38,061 75,459 38,086 35,053 186,659 1947-48 42,593 90,220 52,895 37,163 222,871 • * Commencing with the year 1931-32, the inclusion of statistics of electric tramways was discontinued. Previous years adjusted accordingly.

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APPENDIX D NOTE ON VOLUME OF PRODUCTION INDEX Figures for " added value " and " value of production " are given in the " Statistical Report on the Factory Production of New Zealand," but do not, in themselves, give a reliable guide to physical production. This is, of course, due to the changing price-level and the impracticability of making any accurate adjustment on this account. The most satisfactory indication of physical production is the volume of production index. This index is a composite figure and itself is subject to certain limitations. For instance — (a) The difficulty of computing the volume of production in certain industries. (b) The changing character of many goods from year to year. (c) Liability to change in the actual work done on particular goods—smaller or greater use may be made of partially processed materials. Notwithstanding these limitations, it is considered to be a reasonably satisfactory index for the purpose. APPENDIX E NOTES ON SELECTED INDUSTRIES Paper Bag and Boxmaking In recent times paper and cardboard have displaced a number of other materials for packaging, examples being cardboard for tinplate in the tobacco trade, paper for jute sacks in the cement trade, and cardboard for wooden boxes for packaging butter. This trend is extending, and it would appear that our requirements of paper packaging materials will increase progressively. The fertilizer industry is experimenting with the use of paper bags, and there are also prospects of dried milk being packed in moistureproof mutiwall paper bags. The multiwall paper bags are at present made in New Zealand from imported kraft paper but plans have been laid for the local manufacture of the necessary sack kraft. It is hoped that after 1952 imports will be reduced to a minimum. Although wrapping-paper was imported during the year prospects are now that the domestic production can take care of this field in the future. Bags and containers of transparent and moisture-proof materials are being produced in large quantities in line with overseas packaging trends. A fillip to the demand for this type of package will be seen with the expansion of " self service " grocery stores. SOFTBOARD AND IIARDBOARD The production of hardboard is increasing steadily and has reached a rate approaching parity with softboard output. It is anticipated that for 1950 an output of 50,000,001) square feet for each type will be achieved, and although the local market has experienced some shortages, this figure might be beyond the immediate needs of New Zealand. "While it is still necessary to import from Australia limited quantities of tempered weatherboard and board of in. and \ in. thickness, not produced locally, the New Zealand factory has commenced installing equipment to produce tempered board in | in. thickness. Fibrous Plaster While there has been a great improvement in the supply position of plaster-of-paris, local supplies being supplemented by imports, the main difficulty in the production of fibrous plaster still lies in the shortage of skilled casters.

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Cardboard Lined Plaster-board As local production of this material was not sufficient to meet the demand, licences were granted for the importation of approximately 3,500,000 square feet of board, but additional equipment calculated to double the present output of the Auckland factory is anticipated to be in operation by June of this year. Asbestos-cement Sheeting While supplies of raw asbestos fibre have improved as compared with last year, production of asbestos-cement sheeting still falls short of demand by about 2,500,(XX) square yards. Provision has been made for importation of both flat and corrugated sheeting, but owing to the limited availability of this material from sterling sources, it is not expected that the shortage will have been completely eliminated. Chemicals During the past year there has been a continued improvement in the supply and delivery of chemicals from soft-currency sources. This has been particularly so in the case of supplies from the United Kingdom whence a number of essential raw materials, previously obtainable only from hard-currency areas, have become available. Not only has the United Kingdom met our full requirements in the alkalis, but deliveries in dyes, pigments, oxides, and resins have returned to nearly normal quantities. With this very great improvement in the range of materials available from the soft-currency area, the necessity for recourse to hard-currency sources has been confined to a few specific items, such as natural rosin and carbon black. Soap and Candle Making With the ready supply of alkalis from the United Kingdom the manufacture of soap has continued at a high level, and output has been sufficient to permit export. Supplies of paraffin wax and stearine were adequate for candle-production, the demand for which rises considerably with lighting restrictions. Local requirements were adequately met and quantities were available for normal export trade. Cosmetic and Toilet Preparations This industry is well established in New Zealand, there being adequate manufacturing capacity to meet the total demand. During the year proposals for the establishment of further units have been considered, but in view of the number and size of the units already engaged in this class of production, inquirers have not been encouraged to proceed with their plans, especially where, as in some cases, the proposed production would be subject to the payment of royalties in dollars. Matches There are now three units engaged in the production of matches, and although the total capacity of these units is sufficient to meet the whole demand, production has fallen short by approximately one-half of the demand. Present provision for importations together with local production is keeping the market well supplied. Plastics During the year the supply from the United Kingdom of moulding-powders, especially the thermoplastic type, has improved greatly, and the necessity for the importation of powders from dollar sources has been reduced considerably.

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The industry has produced a large variety of toys and novelties which has resulted in the reduction of importations in these lines, while production of utility lines, such as builders' hardware, brushware, sanitary ware, and electrical fittings has increased. Paint and Varnish Manufacture Over the past year there has been a general improvement in the paint supply position, not only in the quantity and choice'of brands available to the consumer but also in the range of colours produced by the local industry. Although the local production of white lead has been delayed because of buildings and plant not being ready when expected, construction is now well advanced, and production should be in full swing before the end of 1950. White lead is now more freely available from Australia as well as from the United Kiagdom and is not likely to cause any bottleneck in production. Chemical solvents are important ingredients in synthetic enamels and in lacquers, and formerly most of these came from United States of America. Although petroleumcracking plants were set up in the United Kingdom and during 1949 the manufacture of solvents undertaken on an extended scale, the price was above the American price to such an extent that even a dollar shortage did not always justify purchase from the United Kingdom. When devaluation of the pound took place last September, the situation altered, prices came much nearer into line and in a few cases United Kingdom solvents became competitive. In addition, Australia has been developing the production of some solvents based on cellulose from sugar-cane ; for butyl alcohol and butyl acetate the Australian price is only a little above the American. During the year there has come on the market a new type of paint that is a water extendable plastic substance —it does not contain, and is not mixed with linseed-oil. A number of buildings have been coated with this new type material. Manufactured Tobacco and Cigarettes Although local production of manufactured cigarettes and tobacco showed a slight over-all improvement, the output did not reach the volume anticipated. The manufacturers were still hampered by a shortage of labour, particularly female, and were unable to utilize their full productive capacity. As local production was unable to meet the demand, arrangements were made for the importation of cigarettes from the United Kingdom. Fruit and Vegetable Canning Production of canned fruit for the year ended 31st December, 1949, was_ 2,495 tons, the highest since 1942, canned-vegetable production being 8,870 tons, the highest since 1945. As a result of negotiations, an export programme was agreed to with the United Kingdom for the export of canned vegetables, and under this programme canned peas, tomato puree, tomato products, and spaghetti and cheese were exported during 1949. Linseed-oil The past year was the first year since the war when distribution of linseed-oil was not under the direction of the Factory Controller. At the commencement of the year, as difficulty was experienced in obtaining adequate supplies of linseed-oil from sterling sources, quantities were imported from Canada sufficient to maintain production in the paint-factories. By the end of the first quarter the position had eased considerably and we were able to obtain our import requirements from India. During the year the domestic industry widened its range of varieties until all special grades were being produced.

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Footwear A notable event in the footwear-manufacturing industry during the past year wasthe removal of the industry from the provisions of the Industrial Efficiency Act, 1936. Production during the year has been maintained at a fairly high level and the industry has experienced little difficulty in obtaining supplies of material. With the exception of children's shoes in the infants' sizes, which are not made to any great extent in New Zealand, and in a lesser degree youths' and maids' utility footwear, the industry has been able to meet the demand for all classes of leather footwear, and it is hoped that, with the introduction of new machinery, the local industry will be able to increase the types and variety of footwear available. To meet the deficiency in local production of the types referred to above, arrangements were made with the Customs Department to permit importation, and it is expected that the quantities to be imported, together with local production, will ensure adequate supplies being available. Statistics of production are as follows :

Tanning The tanning industry in New Zealand has been able, in past years, to meet the country's requirements of leather in all but a few qualities, but, unfortunately, production has not been maintained in some types. Consideration must be given to the extent to which importation will be necessary to ensure that adequate supplies are available tomeet the needs of the footwear and other industries. Sundry Leather and Travel Goods (a) Hand-bags. —Ample supplies of hand-bags are available in a wide range of style and design—manufacturers generally have maintained production at a high level and notrouble has been experienced in meeting the demand. There are indications at present that the 1950 demand will be lower that that of 1949. (b) Leather Dress Gloves.—While the manufacturers of dress gloves to some extent are able to use locally-produced leathers, the material required for the best quality continues to be imported. Total production locally was not sufficient to provide sufficient gloves to meet all requirements, so that provision was made for the importation of reasonable quantities to make up the deficiency in local production. (c) Travel Goods, &c. —Production of travel goods and novelty items made from leather continues at a high level and a wide and varied range of articles is available at. reasonable prices. Iron and Steel A rapid improvement in the world steel position took place during the past year,, and apart from a few types such as galvanized sheet, tube, and tinplate which remain difficult, our steel problems have eased. Deliveries of Australian steel did not increase to the extent expected, but the United Kingdom is now able to supply virtually all our requirements, mainly direct from mill sources.

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— Year Ended 31st May, 1948. Year Ended 31st May, 1949. Eight Months to 28th January, 1950. Pairs. Pairs. Pairs. Leather footwear 3,407,615 3,033,417 2,149,880 Slippers 2,153,201 1,933,260 1,310,565

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During the year the Otago Iron Rolling Mills Co., Ltd., transferred operations to "the Government-owned plant and achieved a substantial increase in output. It is intended to institute double shifts as soon as Australia is in a position to supply the necessary increased quantity of billets. Black steel sheet, while not yet freely available from sterling sources, improved sufficiently in supply to enable the control over end-use to be removed, supplementary of enamelling quality sheet being obtained from the United States of America. Supplies of galvanized sheet and galvanized pipe from the United Kingdom and Australia were again limited. Some relief was obtained from North America, but currency problems prevented us from taking full advantage of these sources of supply and end-use •control of both commodities continued to operate. Adequate supplies of fencing-wire and wire-netting have been available but a shortage of nail-wire, due mainly to the shipping hold-up in the United Kingdom, created .a temporary local shortage of nails. Large shipments came to hand early in the New Year, however, and the industry is working extended hours to meet the position. The extended strike on the Australian coalfields last winter affected our supplies of pig iron and foundry coke, but temporary relief was secured from other sources and Australian deliveries resumed in time to prevent any serious dislocation of local industry. Non-ferrous Metals Adequate supplies of non-ferrous metals in all forms except copper and aluminium ingot and wire-drawing quality copper rods, have been freely available from the United Kingdom during the past year. Aluminium ingot and copper rods —the latter for the use of the local wire-drawing industry—have been available from Canada. Australia has been able to meet our requirements of lead and zinc. Ingot tin was freed from international control during the year, and the London Metal Exchange was reopened for dealings in this commodity. Machinery and Machine Tools : General During the past year the supply position from the United Kingdom and from other soft-currency countries improved materially for a number of machinery items. Sterling devaluation assisted in removing the excessive price difference which frequently existed between similar machinery from soft- and hard-currency areas. Diesel engines and small petrol-engines for industrial purposes have shown rapid improvement in range and price from the United Kingdom, and as petrol-engines in particular are used widely in conjunction with locally-manufactured equipment of various types, substantial savings in dollar expenditure have been affected. Certain specialized machinery is still secured from the United States or other hardcurrency countries because of considerations of price, delivery, or availability, including some carton-making machinery, some printing or book-binding machinery, some woodworking machinery, and machine tools for engine reconditioning. Timing-chains and driving-chains used in automotive and agricultural machinery respectively are now more freely available from the United Kingdom. In recent years the bulk of our requirements have been procured from hard-currency sources. It would appear that the greater part of post-war expansion involving the importation of machinery has been completed, and consistent with overseas funds available industry has been enabled to equip itself with modern machinery best suited to its various requirements.

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Agricultural Implements and Dairying Machinery Shortage of steel continued to limit the over-all output of farm implements, and while there has been some improvement in recent months, a backlog of orders still exists.. Another difficulty has been the slow delivery of castings from local foundries due primarily to shortage of labour. The production of low-pressure sprayers has increased rapidly, and their use with newly developed hormone sprays is playing an important role in the improvement of pastures. Some popular types of high-pressure orchard sprayers, previously available only from the United States, are now being manufactured in Australia. A recent development in the application of lime to farm lands calls for the use of bulk lime distributors, and it is of interest to note that locally-manufactured vehicles are meeting this requirement. There has been a notable improvement in both the numbers and types of agricultural wheel and crawler tractors available from the United Kingdom and other softcurrency sources, and the tractor population of New Zealand has reached a new highlevel. This increased mechanization of farms has directed the attention of local manufacturers toward the necessity for production of integral equipment and for alteration in design of specific implements. One factory has produced a number of integral ploughs, and it is understood that other units will undertake similar production during 1951. The activities of firms engaged in reconditioning farm implements are of considerable importance and represent a valuable contribution to the local economy. Earth-moving Equipment The local production of bulldozers, angledozers, and hydraulic loaders continues satisfactorily. Light patrol-type motor road-graders are also produced locally, while medium weight motor road-graders will be in production during 1950. There is an increasing availability of certain types of mobile excavators and allied equipment from soft-currency sources, but the United States remains the only source of supply for some of this equipment, also for the heavier types of industrial crawler tractors. Transport Trailers The desire on the part of industry for modern transport facilities suitable to our highways and complying with Transport Regulations has been reflected in a greater demand for trailer units, especially of the articulated type. Local production during the year met approximately 70 per cent, of requirements, and included farm trailers, flat tops, stock transporters, tankers, and drop-frame low loaders. The increased production capacity is now adequate for full requirements except for a few special types, but output depends on overseas supplies of steel, brake and axle assemblies. Materials Handling Equipment A steady increase is apparent in the use by industry of fork-lift trucks for the bulk handling and stacking of goods and materials. While in past years most of these vehicleswere obtained from North America, models suitable for many purposes are now available from sterling sources. Automotive Parts The recent establishment of a local company representative of several well-known United Kingdom manufacturers will increase materially the productive capacity for pistons, piston-rings, and cylinder liners.

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Domestic Machinery and Equipment The ready, availability from sterling sources of component parts and raw materials required in the manufacture of vacuum cleaners, dish-washing machines, clothes-washing machines, and domestic refrigerators has permitted these industries to become more firmly established. The output of dish-washing machines and vacuum cleaners continues to meet local needs, while an increasing production of washing-machines, including ■some new types, is coming closer to meeting the demand. Lawn-mowers The production of hand roller-type lawn-mowers has progressed considerably during -the past year, and it is not anticipated that any further large-scale importation will be; necessary. The position in regard to locally-produced motor mowers, both electric and petrol engine driven, is favourable also as output meets demand except for large mowers •(with blades exceeding 18 in. in length). Radio Apparatus : Making and Assembly This industry has made good progress towards the readjustment and consolidation necessary for efficient operation under the relatively normal conditions now prevailing. Wholesale stocks have increased and, whilst considerable effort has been made to stimulate sales, there have been no important technical changes in design, and the market for ordinary replacement sets shows a downward tendency which may continue over the next few years. Nevertheless, advancements in the design of portable and car radios and the increasing popularity of radio gramophones has provided added marketing •opportunities. Attention has also been given to the production of mobile radio equipment which is now recognized as necessary for the efficient operation of essential services, including ambulances, patrol-cars, and taxis. An increased outlet for surplus capacity has been found by diversifying production to a marked degree, and the extent of this is shown by the following table :

Fluorescent-lighting components and fixtures, electrical appliances such as jugs, -toasters, kettles, radiators, rangettes, and extruded plastic hose are some of the products now being made on an increasing scale. Electrical Engineering and Allied Production As is to be expected, this important industry continues to expand concurrent with the development of hydro-electric resources. Its growth may be gauged from the following table :

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— 1946-47. 1947-48. £ £ Radio production 874,117 895,481 Other products 335,226 522,568 Repairs 118,334 67,421 1,327,677 1,485,470

— 1946-47. 1947-48. 1948-49. of establishments Total number of persons engaged .. 110 1,707 £ 120 1,865 £ 134 2,040 £ Value of output Added value —i.e., value of output le ss cost of materials 1,904,182 991,576 2,237,110 1,060,233 3,203,260 1,379,198

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These figures relate to a very wide field of industrial activity including the manufacture of transformers, three-phase electric motors, bare and covered copper wires and cables, storage batteries, domestic and industrial heating and cooking appliances, electrical wiring accessories, electric lamps, &c., and the maintenance and repair of all electrical •equipment and installations. Due to financial conditions, considerable efforts have been made by the Department to locate sterling or other soft-currency sources of supply of essential raw materials and equipment for this industry, and excellent progress has been made in this direction. Some of the more important items involved are standard types of single-phase fractional ■electric motors, electric-generating and automatic-control equipment, all of which are now in much better supply from the United Kingdom. Brief reference is made to the following developments in the manufacturing side of this industry : {a) Bare and Insulated Copper Wires and Gables. —Towards the end of last year, important British interests decided to proceed with the establishment of a new factory at Christchurch to draw and insulate copper wires and cables. There are already two units operating, both situated at Auckland, and, with the entry of this further unit, it is probable that a greater portion of our requirements (which have grown steadily to the extent that overseas purchases now total over £1,000,000 annually) will eventually be met from domestic sources. (b) Electric Ranges and Rangettes.—An improvement in availability of raw materials is reflected in the increased output of ranges as revealed in the following table :

Kangette production fell due to labour difficulties and tlie fact that the industry concentrated to some extent on range-production for urgent housing requirements. However, a substantial increase in output of rangettes is forecast during 1950. Sales turnover during 1949 amounted to approximately £700,000. T O Y-MANUFACTUBE The local toy industry showed considerable expansion, and developed to the stage where it could be considered a major industry offering a wide range of metal, plastic, xubber, mechanical, wooden, and soft toys. The factory selling-value of toys placed on the market in 1949 was slightly in excess of £750,000. With the greater mechanization now possible by the improved availability of the right types of raw materials and machinery, the industry has programmed further expansion this year, which will provide an even greater range and variety of articles. Motor-vehicle Tires and Tubes Although licensed under the Industrial Efficiency Act in 1945 the three local motor tire and tube manufacturers were not in regular production until 1949, various factors having contributed to delaying the commencement of production. Our annual requirements have been estimated as approximately 400,000 tires of all types, and the industry plans to meet approximately 90 per cent, of this total leaving the balance, covering odd sizes not included in the local manufacturing range, to be imported.

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—• 1947. 1948. 1949. Ranges Rangettes 18,885 6,886 19,427 7,777 20,987 5,443

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Cement During the year it became quite clear that local production of cement would be insufficient to satisfy the unprecedented current and accumulated demand. Special arrangements were made to meet this situation by importation, and for 1950 it has been decided to import approximately 100,000 tons. The capital for a non-profit-making concern was subscribed by the three local cement-manufacturers and this new company is the sole importer of cement. The imported cement lands at a figure in excess of £lO, and so that the local and imported product could be sold at the same price in the same locality a pool has been established and a surcharge imposed on the local product. The existing manufacturers have plans in advanced stages for the expansion of output and, in addition, a new concern proposes establishing a works near Westport.

Approximate Cost of Paper.—Preparation, not given; printing (1,716 copies), £132.

By Authority: E. E. Owen, Government Printer, Wellington. —1950.

Price Is. 3c?.]

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