REASONED OPINIONS EMERGING FROM CHAOS OF CONTROVERSY: THE DISADVANTAGES OUTLINED

Bay of Plenty Beacon, Volume 13, Issue 1, 29 September 1948, Page 5

REASONED OPINIONS EMERGING FROM CHAOS OF CONTROVERSY: THE DISADVANTAGES OUTLINED

Effects Of Exchange Reduction

•' , \ Now that there has been time to consider all possible implications of the recent adjustment of the exchange rate, the first confusion the sudden announcement created has died -down, and some reasoned expressions of opinion are emerging from the chaos of claims, counter-claims, moans, and howls of delight with which Mr Nash’s bombshell was greet- • ed.

'The article which follows is contributed. It is not put forward as an expression of editorial opinion. It does probably express the considered opinion of a section of our readers. We would be pleased to hear from the others, because our aim always is to present balanced comment on any public question. > There are features relative to the alteration of the exhange rate that concern all. Possibly, there are advantages that will , 'benefit certain sections, but it is 'certain there will be more far--.reaching disadvantages to be borne by other sections; and it must be realised that it is unfortunately the latter which re- ' present the very basis of our ‘ because they include the primary producers and the secondary industries who have an export market for their prq- . ducts. , r Such important sections of the .community cannot be effected by .adversities without its quickly being reflected throughout the whole .community. Surely, if the, country depends on the income of these pro- .. ducers. as the very basis of our finan--cial structure, no one will continue to prosper unless they are kept in . a sound position ' , : \ ; Primary Produce

The income from wool sales will ' be 20 per cent lower and in the case . of receipts from dairy produce and meat, the recent increases agreed to by the British Government, have been nullified. It is that primary -producers have substantial sums . held in their Pool Accounts. There is no doubt these accounts were ' brought into being for the sole purpose of maintaining a standard of indome within the Dominion to off- : set any fall in overseas prices. This was to ensure security for the future—not only to the primary .producers but alsp to bear our internal cost structure which includes maintaining wages levels of all sections of the commnnity. There are other exports also, which, while not dealing in sums approaching those of the wool, meat and dairy produce exporters,- are -nevertheless due for consideration. .An illustration of this dan be seen in the case of an Auckland firm manufacturing crockery for export -to Australia. By the exchange adjustment this Arm finds its trade cancelled and many of its workers are throWh out of employment. Of even more -importance than this is the export -of our surplus of §oft woods which must be exported or rot, and by way

of exchange, was the means of our getting necessary hardwoods from Australia. , Other Exports The value of exports of frozen fish approximates £200,000 per annum and this trade .with a 25 per cent loading of its prices does not expect to be able to compete with other countries. Tomato growers, also, will be hit through the export trade in tomato products being placed in a disadvantageous position. Exporters who will suffer most are those whq are exporting products for which there is no assured market except at highly competitive prices. They can sell only for as long as they can sell at competitive prices. Now they will need to increase prices by 25 per cent to obtain the same return as they did before the reduction in the exchange rate. Other commodies which may be affected are rabbit skins, opossum skins, grass and clover seed, cardboard and wallboard and pinus timber. —*33^?# In the “Southern Cross’ 5 last month it was announced that Fiji might turn to Australia for essentials. “Most imports from New Zealand, including tinned meats, jams, fresh vegetables, fruit • and other food items will now, whenever possible, be obtained from Australia.” Trade with Fiji, of course, is not considerable, but other countries will also be affected, and it is in any case a serious matter to lose any market. Gold Mining

Gold mining is an industry which is in a particularly bad position. Formerly, gold was sold at £lO 10s per ounce, New Zealand currency, the fixed price in England being £8 8s sterling. Gold* must now be sold to the Reserve Bank, and unless the Reserve Bank buys gold at above world prices, the price will drop to £8 8s an ounce. The Government abolished the Export duty of 12/6 an ounce on gold through the Budget, but the alteration in the exchange rate took away £2 2s.

The Government has remoyed the exchange and must accept the responsibility for all the implications and should have had the foresight to minimise the repercussions. This is some- ■ thing it has not done. In other words, it will not be the removal of the exchange rate that will cause hardship in the future, but the failure of the Government to prepare for the effects of its action. -