NOT CONSULTED

Evening Post, Volume CXXVI, Issue 138, 8 December 1938, Page 20

NOT CONSULTED

THOUGH OFFER MADE

CHAMBERS OF COMMERCE

EMPLOYMENT ISSUE

"It is a matter for regret that the Government, before taking these drastic steps to control imports, did not ask of the commercial community of New Zealand that measure of co-operation and assistance in dealing with the situation which it had the right to expect in the circumstances, and which would have been readily given," says a statement made by the Associated Chambers of Commerce of New Zealand in reference to the import control regulations.

"When rumours first reached us thatj the Government was possibly contem-j plating import control, we offered the \ Minister of Finance the assistance of a special committee of our association. We pointed out that we were at one with the Government in the desire to remove any obstacle that might stand in the way of New Zealand meeting her overseas obligations in full, but we were concerned with the dislocating effect on business in the Dominion of Government control of exchange and imports. We would have been pleased] to confer with the Government on the] matter. "Operation of the system of exchange control required an extremely high degree of State interference with, and control of, all brancnes of economic life. Great uncertainty is introduced into business affairs, and the discouragement of private business en-i terprise through the introduction of arbitrary and unpredictable elements into the economic life of a country is one of the most important indirect effects of exchange control.. CAUSES OF EXPORT DECLINE. "When a country re^prts to exchange control it is because it is in difficulties, financial and/or economic. The need for exchange controls can be most quickly removed if the general economic situation can be restored. There is evidence that the present position has been contributed to on the merchandising side both fey a decline in the volume of exports and a rise in the volume of imports, and it would seem that, in the interests of trade generally, the remedy should be directed at increasing exports rather than limiting imports. . Poor seasons and stock diseases can be traced as a factor contributing to the decline in exports, but apart from causes such as this, and the lower unit prices realised on our main exports, another factor appears to be rising production j costs and a shortage of farm labour (due to public works attracting farm workers) thus bringing some land that was previously producing below the level of profitable iarming. Higher production costs have similarly brought many manufacturing industries into difficulties. S IMPORT RESTRICTIONS. "Obstacles placed in the way of imports are likely to throw out of work a number of employees in import houses, who in many instances would not, through lack of appropriate training, etc., be able to be readily absorbed into the factories which might be expected to benefit from the. restrictions on imports. Thus a serious unemployment situation is likely to be created as a result of efforts to deal with, evil effects from one angle only. The basic causes of these evils are fully understood to lie largely in the New Zealand Government's failure to live within* its income. "The Minister of Finance indicates that the greatest restrictions will be on those imported goods which compete with local manufactures. This raises the point that the restriction of imports is likely to be regarded in Britain as a violation of Article 8 of the Ottawa Agreement. FLIGHT OF CAPITAL. "It is noted that the Minister of say how'long the new [control measures may be expected to in operation. Does the Goviernment mean to make them permanent? It is too late in the day now to say that so far as the flight of capital Hvas concerned, the tendency might have been reversed if conditions in New Zealand had been made more attractive for investors, but it does seem 'to be a fact that internal policy still iieedssto--be steered^iU' the proper direcrtion if we are not to be faced- with a long-term period of exchange control. There are important questions arising in connection with the regulations whiqh we are taking«tip direct with the Minister."