1T.—44.

The Eastern Group Conference was convened at New Delhi, India, in October, 1940, on the invitation of His Excellency the Viceroy of India, with the approval of all Dominion and Colonial authorities concerned. The New Zealand delegation consisted of Major-General Sir Joint Duigan, Chief of General Staff, as Leader, and the following advisors : Mr. F. R. Picot (Internal Marketing Department), Mr. J. R. Middleton (Ministry of Supply), Major H. E. Erridge (Army Ordnance), and Mr. A. B. Taylor (Treasury). The Conference surveyed the resources and capacity of the Empire countries east and south of Suez. These investigations, covering a wide range of subjects, including armaments and munitions, military and engineering stores, and also commodities of major importance such as metals, chemicals, fibres, timber, &c., have been summarized in the form of reports which will provide the basis for further action and implementation by the Eastern Group Supply Council, which all participant countries unanimously agreed to establish on the recommendation of the Conference. During recent months New Zealand has had the advantage of a visit by members of the British Supply Mission to India, and having particular reference to the expansion of the Dominion's munitions programme. A full report was rendered to the Eastern Group Supply Council and to the British Government by members of the Mission, and as a result it may confidently be expected that production of important munitions items will be considerably expanded in the very near future. During the past year the internal supply position has become more difficult in many basic lines, and in certain items it has been necessary to curtail usage for specified purposes. Under the various Supply Regulations notices have from time to time been gazetted limiting the use of cordage, rope, twine and thread ; wrought iron or steel tubes ; screwed steel conduit; copper sheet; and certain types of timber. Under the Building Control Regulations and amendments the erection of new buildings containing upwards of half a ton of reinforcing steel or estimated to cost over £'2,000 is not permitted without the prior consent of the Building Controller. Full use is made of existing local authorities in the granting of permits, but in the case of a dwellinghouse involving the use of galvanized corrugated iron such local authorities may not issue a permit without the prior consent of the Building Controller. The activities of the Supply Controllers have been extremely varied, and individual difficulties met with from time to time have been overcome, as, for instance, in the packing of various commodities for export to the forces or to the British Government. Here the question of containers has been of paramount importance, and it has been found necessary to utilize substitute packings for an increasing number of local consumption goods ; particularly is this so in respect of tinplate, and every endeavour is now being made to pack in cardboard cartons, and in some cases in glass jars. Again, considerable difficulty has been met with in obtaining a sufficiency of timber for cases, and here the activities of the Timber Controller in rationalizing boxmakers and the supply of timber in various centres has assisted in overcoming this shortage. Encouragement has been given by publicity and otherwise to the reusing of the cases where possible. With regard to the production of military clothing and footwear, woollen-mills, clothingfactories, and boot-factories have been working at top pressure to meet the, ever-growing needs of the Forces. Difficulties have been experienced this winter in meeting the full needs of consumers of electricity, particularly in the North Island, owing to the increasing demand on the part of industrial and primary production needs, and, while supplies of coal have been sufficient, the most strenuous endeavours on the part of the Mining Controller have been necessary to maintain supplies for domestic use, for industrial uses, and for subsidiary electric-power plants. The sugar position has been well catered for, notwithstanding certain difficulties in the way of shipping space both from Queensland, which now supplies all our raw sugar, and coastal from Auckland to South Island ports. The rationing of petrol has been continued, but over the holiday period provision was made for coupons to be used over a two-monthly period instead of the usual monthly period. The munitions programme has grown apace, and it is a noteworthy fact that factories are engaged from one end of New Zealand to the other in the making of components or finished articles ranging from buckles to hand-grenades, universal carriers, and now minesweepers. With the coming into operation of the Eastern Group Supply Council, and following upon Mr. Picot's arrival in India, a constant stream of inquiries is received by the Ministry of Supply covering ascertained shortages of one or more countries in the Eastern Group, and in a number of instances New Zealand has been able to make supplies available to meet such deficiencies. Cases in point are greatcoats, pullovers, socks, blankets, telephone insulators, barbed wire (subject, of course, to supplies of barbing wire being made available), and other items. There have, too, been cases where, although New Zealand has been able to offer supplies, those have been more readily met by Eastern Group countries closer to the deficient territory. Again, and conversely, the Council is now operating in such a way as to facilitate the supply of much needed raw materials for munitions production in this country. In North America the strengthening of the supply liaison service and its close co-operation with the British Purchasing Commission and the American authorities handling Lease-Lend, a noticeable improvement is already in evidence that New Zealand will receive raw materials and completed goods, some of which have in the past been almost unobtainable. In so far as reserve stocks are concerned, some progress has been made during the year in increasing the range of commodities covered, such as tanning-materials, further supplies of tinplate, and numerous food items, which will be distributed as widely as possible.

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