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9. With the change of Government and the subsequent appointment of the Import Advisory Committee, a serious attempt has been made to relax the controls as far as possible consistent with the estimates of available overseas funds. But an endeavour is also being made to make the licensing system an effective instrument for actually limiting the issue of licences to the funds expected to be available. One of the problems faced by the Government was that of changing the previous practice of issuing licences •considerably beyond currently anticipated income in the hope that export receipts would •continue to rise. Only the extraordinary increases in receipts from the export of wool •during the last season avoided a breakdown in the licensing system. An attempt is now being made, in spite of considerable difficulty, to restrict licences in total to a figure within the anticipated income. This matter is referred to in more detail in paragraphs :25-27 below. C. IMPORT ADVISORY COMMITTEE 10. In view of the urgent need to reform the import licensing system, the Government •decided that it was imperative to give effect to its declared " Board of Trade " policy •even before appropriate legislation could be submitted to Parliament. Accordingly, on 17th May, 1950, the Government appointed on a full-time basis an Import Advisory Committee to advise the Government on all policy matters relating to the administration -of import licensing. The Committee is virtually an independent authority of four members under the Chairmanship of a former Supreme Court Judge. Of the other members, one was formerly managing director of a very large retail organization; one was the Permanent Head of the Department of Industries and Commerce ; and one was the secretary of the New Zealand Manufacturers' Federation. The Government has referred many problems to the Committee and has been acting upon its recommendations. The •Committee is the forerunner of the proposed Board of Trade. D. COMPLAINTS AGAINST THE SYSTEM 11. Evidence was received by the Committee of a large number of complaints •concerning the licensing system. The most fundamental of the complaints was one against the system itself. It was said that it was not sufficiently flexible and should be replaced by financial control exercised by the banks. (This point is dealt with in some detail in paragraph 12.) Substantial modifications of the system were also suggested—• ■e.g., the extensive grouping of items or the use of open licences. However, any such broad modification would leave to importers the selection of the classes of goods on which -our overseas funds should be spent without any real check as to selective essentiality •or any consideration of availability from local manufacture or other local supply. A position could rapidly develop under which essential supplies were short while available •overseas funds had been exhausted on the purchase of goods of lesser value to the national economy. 12. The suggestions made to the Committee by some national trade associations that import control should be replaced by financial control exercised by the trading banks in effect meant changing from commodity control to purely exchange control. The proposals varied in detail, but in essence they implied that control would be transferred from the Government to the trading banks, acting in co-operation with the Reserve Bank. Exchange would be allocated to various commodities or groups of •commodities in line with imports for, say, this year or last year, and responsibility would be on the trading banks to keep allocations of overseas remittances to their clients down to a level which might be set by the Reserve Bank. The Committee consulted banking officials, and it appeared doubtful whether the banks would wish to have the responsibility

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