COST OF LIVING

Evening Post, Volume CXV, Issue 39, 16 February 1933, Page 10

COST OF LIVING

(To the. Editor.) Sir,—The Horn R.; Masters recently quoted figures to show" how the Australian cost of living has fallen srnce-7-and largely because of—the Australian policy of high tariffs .and high exchange. Mr. Coates also has indicated his belief that the raising of exchange should result in a fall in New Zealand retail prices, at any rate of goods manufactured' irt New Zealand. .'; :.■".■- . '";. What happened in Australia was that, when tariffs arid exchanges were raised so drastically in 1929,; Australian;,manufacturers realised that it was .their opportunity to install the latest machinery, increase production, and so'reduce the costs of production per unit of output. Instead of having to share the iharket, as formerly, with .competing imports, the Australian manufacturers then found that their market was practically doubled by the virtual exclusion of competing imports, and with double the market they could double their output, absorb additional labour, and reduce their costs and prices. Mr. Coates is credited with the belief that a similar result; will follow in New Zealand; and no doubt it will be, provided only, however j that. New Zealand manufacturers are' assured of some permanence in the existing levels of tariff and exchange. Another important'fact is that, provided such assurance is vouchsafed, there will undoubtedly be many overseas firms which have hitherto exported their manufactured goods to New Zealand, but which will now find the barrier of tariffs and exchange too high, and which will therefore find that it pays them now to establish factories here in New Zealand. This happened in scores of cases in Australia, and cabled reports indicate that it is happening- now on a large scale in England, also as a result of England's adoption of Protection by means of tariff plus high exchange. , ■ ■ It is sometimes said that New Zealand's position is different from that of Australia because our manufacturing industries are not so advanced as theirs in development. On the basis of relative populations, however, there. is not much in -this. The Year Book (page 435) states that there are over 104,000 workers employed in registered factories in New Zealand, while the Commonwealth Year Book gives the number in Australian factories

as 419,000. The figures may not be taken on exactly the same basis, but they are accurate enough for a rough comparison. Australia has four and one-third times the population of New Zealand; and apparently she has about the same ratio of workers employed in factory industries. Another frequent suggestion is that New Zealand's population of 1,500,000 is: too small to afford a sufficient' market for industries manufacturing on an efficient and economic basis. But those who really understand manufacturing declare that there is no truth in this. If New Zealand manufacturers are assured of a market of ; 1,500,000, they can afford to install the latest plant, manufacture on the most economic basis,' and reduce prices accordingly. The trouble hitherto is that they have never had a market of one and a half million: they have had to share that market with competing imports, and their own output has thus been restricted to perhaps a half or a; third of our population. But, although they could manufacture on au economic basis (and lowest : costs) for 1,500,000, it has not been possible to, do that for, say, a mere 500,000—the proportion of the market that they have hitherto had. The virtual exclusion of competing imports—in lines that can be equally well manufactured in New Zealand—will therefore, for the first time, give our own manufacturers a real opportunity to increase their output to meet the market of our whole population, absorb more .labour, modernise plant and machinery, and so reduce' costs of. production arid decrease the price of New Zealand goods to the public.—We- are, etc., SOME N_Z.' MANUFACTURERS.