How to Aid N.Z. Industry?

Hawke's Bay Herald-Tribune, Volume 81, Issue 57, 30 November 1937, Page 9

How to Aid N.Z. Industry?

r Our Qwn Correspondent.)

/ MR NASH'S PROBLEM British Manufacturers Have a Point of View SUBSIDY AS WAY OUT

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WELLINGTON, Last Night. The Government is still vexed by the question of local industry and overseas trade. Mr Nash is continuing to ney jtiat-e with London coneerning trade relationsMps, but up to the present he has ma"de no advance whatever. . Ifc will surprise some to learn that he has been planning a line of action wMch. involves the sanction of London. That can only mean that the Goveru- """ ment contemplated a course whie'n would be in'.con&ict with the tenns of the Ottawa agreement. And all the'earlier indications were that the Government would take a line whieh did not bring it into collision with the Ottawa pact. It was obvious why. the Government would choose sueh a course if possible. To negotiate a new settlement with Britain might take months, it's %terms might not prove adequate to meet the ca«e, and its political consoquences might be undesirable. ,Such were the circumstances surrounding the 5 per cent. increase on the tariff proteetion which some manufacturers were asking. It was forecast that the Government w>ould turn its back on rationing of exchange becau.ee of the complexities this course would create and wpuld instead seek a quota on the imports of certain Empire and fbreign goods. But, the dread word "quota" Mai overtones sueh as the Government does not care to hear. Eixing quotas is & game which can be played on both sides of the world, was th/eatened to b® played on the other side of the world aot so long ago. An Orthodox Method. Sq to-day belief is gaining grouno that Mr Nash is now considering a syatem of subsidies for distressed industries. That suggestion has the advautage -of neatly fitting the known facrs of the present situation. In the . iirst place, it is in tune with the confesseh beliefs of Mr Nash, w^ho declared in . oue of his speeches during his BritisJi visit, that he is a free-trader at hear«. It is the orthodox economic method of dealing with industrial relief . It avoids application of the tariff, which axr Nash dislikes because he dislikes the method of any tariff .and because1 it .untidily confuses industrial proteetion with the production of revenue. It also ^ cleara Tjp\\the - otherwise mysterious fact that the Minister of 'Finance is negotiating with London at all. Most of all, subsidies have the advantage that they do not make any xecognisable additidn to the cost of llving, about which the Government fesls the. most lively concern. And finaliy, the subsidy method appeais to Mr. Nash's mixture of idealism and orderliness by enabling him to feel that he b. xescuing New Zealand industry f rom the slough of despond, but that he is doing it in a manner which will enable him to know exactly what it is going to cost. Accordingly it is being statcd that certain of the more distressed industries may be given monetaxy aid in return for an undertaking that they will maintain their prices within caxtain limits.

There are, of course, many preced* •nts for such a eourse. There have been the much-diseu6?ed wheat industry, the Onekaka iron works, the progressively decreasing subsidy to the superphisphate manufacturers, the case of flax and of • woolpacks. The principle Of subsidies may be said to be nothing now in New Zealand economy, though rata up to now in tho field of secondary industry. And the adoption of , such a course would at once involve consultation with London, for the effect of the Ottawa agreement was to put the British manufacturer on .the basis of a aomestic competitor in the Dominion, and the effect of a policy of subsidies, once it is translated into action, will put imports at a disadvantage. That means the Minister of Finance would have to approach the British Government and endeavour, by" his representations, to convince them that such a eourse was for the good of all, New Zealand for obvions reasons, Britain because tho avoidance of any upset of the New Zealand market would in the long tuji make for stability in British trade. But at all events the representations ara being made, and they go on being made without any appreciable change in the position up to date. Opposition From Britain. Meantime the opposition aevelofjs. On November 5 the British National llnion of Manufacturers made xepreSentations to the Board of Trade ton.cerning the negotiations between the New Zealand Government and Britala which "would adversely affect the export of goods to the Dominion." The National TJnion of Manufacturers also drew the attentioh of the British Government to the fact .that "there is manufacturers with the one-sided t nawidespread dissatisf action among ture of the Ottawa agreements as they stand, at present," and declared that any movement in the directipn of oitering aiiy of these agreements so as "to increase still further the handicap (of Britain) must ajd to the anxiety which alr.eady prevails." As these things happen Mr Nash'S bulk pnrchase plan is quietly interred. There will be no easy way to ,an agreement by means of this spectacular offer of a full market to Britain which, Ic.various reasons, the Bntish ■ Govem- . ment has not chosen to aceept. Meantime the industrial position in this country continues to cause concern. But the maiufacturers at preseut are not noisily complainingj they feol that they have won a victory and that they have «ucceeded in turning r-ht Government from indifference into a frame of mind in which there will be active support for New Zealand seconitoiry industry. Mr Nash's attitude h •xactly contrary to the standpokit '

from whicji he first approaehed the subject. Tfien he declared that he was tied by his predecessota,. to-day he savh that it is possible for the Government to aet but that Britain nrust be consurr,ed and New Zealand must not ' ' get offside. " Lately there has been a growing feeling that the Government was inclined to move. but it would not admit the ne'cessity o.f aeting until the Budget debate was a tbing of the past. So m the past few weeks there has been a series of meetings between manufacturers' representatives and members of the Government, Customs ofiicers and representatives of the Bureau of Industry. In the course of these meetings the situation has been fully explore-j, ample doeumentation has been pre» pared on it and Ministers have worked out the available courses of action. There is a feeling that some individua) industries may obtain relief earlier than others, as an interim measure, and tha-t there will be a statement on tliis point next week. But the general -plan still awajts the conclusion of the conyersations with London.