WELLINGTON NEWS

Hokitika Guardian, 11 April 1928, Page 4

WELLINGTON NEWS

THE CONDITIONS OF PROSPERITY

(Special to “ Guardian WELLINGTON, April 7. In Unlloti 11 No. 39 prepared by the Department of Economics of Canterbury College the conditions of Economics are analysed. It is pointed out that 11 10 population of the Dominion amounted to ] ,450,00(1 and the last coirs us indicated that 45 per cent of these are bread-winners and do per cent dependents. The total value of goods produced in New Zealand in the year 1925-26, excluding distribution and other services is estimated at UIHi,IKK). 1)00. The pastoral and dairying groups alone account for about do per cent of the total production, and :)■! per cent of the exports, and these are the basic industries. In classifying the production two markets may be distinguished—the home market, where the demand is limited to the demand if our own small population, and the export market, where demand though varying with price, is for all practical purposes unlimited. A large proportion of local productive industry is devoted to goods which from their nature can be neither exported or imported, and which must necessarily be produced near the market. In the tame class might be placed all those occupations employing about half the working population, classed as not directly productive, which provide distributive, professional and administrative service. These are the sheltered industries. There is a third group of industries producing for the local market, protected to some extent both by

transport costs anil the tariff but subject to overseas competition in the shape of imported goods. An analysis made previously showed that roughly 15 per cent of our total production came from the unsheltered group of industries, If? per cent from the sheltered industries, and the remaining 8 per cent from the partly sheltered group. Analysing this data the Bulletin says: “The significance of this grouping lies in the dependence ol inlustries on their market conditions, and m the importance of market changes to the industries concerned. During the war period of rising prices Hill to 1920—the effects of general intlation overseas were passed on to New Zealand through increasing prices for both exports and imports. The first effects of these rising prices were felt in the unsheltered industries, hut they were passed on after some lag ol time and in greater or lesser degree, to the sheltered industries and so to the community in general in the Dominion. Since 1920 world prices have fallen heavily. Again the effect has been felt first in the unsheltered industries and the tendency is for these effects to be passed on, again after some lag in time, to the sheltered industries.” To some extent they have been passed on and some internal prices have fallen. Others, however, remain high, and dillicutlies stand in the way ol their reduction. During the period of rising prices the country as a whole, and'the export industries in particular, were very prosperous. New standards of values were adopted and wore embodied in capital outlay, in contracts, agreements and custom. Since then world prices have fallen, and tlie unsheltered industries have suffered the fun impact of the fall. Hut many industries selling in the sheltered local market, and not directly subject to changes in world prices, have been able to avoid file lull clients ol falling world prices. Since internal prices must he paid by the primary producers, as part ol their costs ol production, and since they must accept the lower world prices ruling in their export markets, the margin between costs and prices in our basic industries lias been narrowed, and the industries have been on the average of good and had years depressed since 1920. It is held that the key to improvement lies in increased production all round at lower prices. I’mler economic pressure it is being achieved in the unsheltered term industries, where research, better farm management, herd-testing, top-dress-ing, labour-saving machinery, etc. are reducing costs and expanding output. Hut there is less evidence of progress in the sheltered industries, where economic pressure is less direct, and where the burden of restrictive refulation is greater, and high sheltered prices make expansion difficult, both for sheltered and unsheltered industries.