RISING COSTS IN INDUSTRY

Press, Volume LXXIV, Issue 22516, 26 September 1938, Page 16

RISING COSTS IN INDUSTRY

Plea fqr "Cautious Prudence" COMPETITION IN BRITISH MARKET New Zealand's high export income and satisfactory internal trade had gone to the heads of the people and the Dominion was now . leading the world in taxation, said Mr Arnaud McKellar, chairman of the New Zealand Farmers' Co-operative Association of Canterbury, Ltd., at the annual meeting of shareholders on Saturday. "We are aspiring tovshow the world a new way of life and of political economy," Mr McKellar said. "Maybe we are still so young as to regard an idea as true because it is new, but that is all the more reason why those who guide and direct the trade and commerce of our land should always act with cautious prudence in the interests of our Dominion, its business, and all its people." The question of costs was causing a certain strain and tension in the community these days, Mr McKellar said, as the prices charged by one were the costs of another, and there was only one source from which costs could come, and that was out of production. "In our personal experience several large properties have recently had to go out of production because there was no reasonable possibility of the returns for wool and produce being sufficient to cover the rising expenses. This production is therefore lost to the Dominion meantime. "An interesting problem is presented to-day by the attempts at expensive development of certain industries now being made; under which a number of Peters are called upon to reimburse the- losses of- an uneconomic Paul - ,' while rising costs and taxes are making the position of established industries more precarious, when they might live and prosper under moderate and reasonable costs. "Meantime, however, we have an export income a head of our populatio.. which is the envy of every other country in the world. We have primary industries which have expanded since the war more- greatly than those of any other country. We have ]ust now very satisfactory internal trade which is employing our people and employing the services of orgamsa- ■ tions like this association, the activi- " ties of their staffs, and. the capital of • their shareholders. It is true that this ■ has gone to our heads a little, and as » a result we are leading the world in '< the taxation of our people and our ; industries." f . • Social Security Tax *• "It is appropriate that in considering ' our future. I should mention the new !• social security tax, which will fall ; heavily on the earnings of companies . like this after April next. Upon last " year's earnings, this would have cost us nearly £3OOO, or a sum equal to a 2J per cent, dividend on our ordinary share capital. This is a very heavy tax, especially when added to all our other growing taxes and rates: and it is calculated to discourage all those officers of our company who take a » pride in its stability and progress, who b think, and plan, and work more than 1 40 hours each week to achieve some- • thing worthy of their efforts: and who " will feel a sense of frustration as they J see more than half the fruits of their labours appropriated by the- Stat*.- ■-< J "We believe in a good standard of ' life in New Zealand. Over many years i we have increasingly built up a generous system of social assistance to the { sick and aged, and those who have » fallen by the way; as well as to the 3 rising generation, which is creditable - to our. Dominion; but generosity is 3 not the only virtue in life, for somer - times generosity defeats itself through 1 lack of prudence and wisdom. The f French have a proverb that 'the wise 1 are occupied in correcting the mis- • takes of the good.' ."We have only one market, the Bri- : tish market, for the bulk of what we \ have to sell. Most costs in that mart ket ay lower than costs in New Zea- , land, even after allowing the 20 per \ cent, difference in the relative values r of the two units of currency. The [ British market is sought by an increas- ■ ihg number of nations which have goods to sell—goods which compete 1 with the exports New Zealand has to - sell; and most of these competing ' nations are content with much lower ' wages, lower standards of living, and ' consequently lower costs than we ln- ' sist upon hero. Synthetic Products '. "Then synthetic products such as margarine and staple fibre are always waiting round the corner to enter markets we wish to hold, and to dull the prices we receive. I think I am right in saying that never before ftae there been such rapid growth in any synthetic product as there has been during .the last seven years in the production of artificial wool from wood pulp. "In 1931 the world's total production of this staple fibre was 9.000.0001b. It grew to 140,000.0001b in 1935. 299,000.000 lb in 1936, and 600,000,0001b in 1937. The price at which the fibre is selling in Great Britain is lOd ,per lb in any count up to 64 cut into any length of staple, and, of course, it is 'clean scoured.' ■-/.'-..;.'" I

"Happily, this fibjre has many deficiencies \in comparison with natural wool. In fact, I think that the world is only just beginning to realise what a wonderful and •valuable fibre is sheep's wool,- and, we are doing the right thing .in advertising its good qualities in conjunction with other wool-growing countries, through the International Wool Publicity, and Research Secretariat. Therefore, the price of progress and prosperity in New Zealand must be eternal vigilance in these and other matters that affect our trade."