LOW PRODUCTION COSTS

Hokitika Guardian, 11 September 1930, Page 7

LOW PRODUCTION COSTS

; DOMINION NECESSITY. ; GETTING BACK TO PRE-WAR basis/ \ A whmd-the-tahlk conference of reY : prfesentatiyea of labour, farmin' i inercial,: imliistrial, financial and ecoriomic;‘interests, in an effort to bring greater stability to New Zealand, was urged by Mr Norton Francis in his ■ presidential address at the annual meeting 'of k the Canterbury Chamber of Commerce on Monday evening. : -Mr Francis contended that, with the present tendency for lower land values and cheaper pricesi for imported goods primary production could be successfully carried on and increased in com- ; petition with rival countries, only provided ; that Government and local body expenditure were,kept within limits country could afford, and provided that the present fates of money wages were reduced without any reduction in the actual purchasing power oftlie married worker’s pay. . "It was submitted that a continuation ■'of’i existing conditions, with present- ■ day values for New' Zealand’s exports, #ould soon result in decreased production; and greatly increased unemployment _and loss of capital. - “la there any subject of more importance to-day to the fanning or any other section of the community in this country, where practically all, are dependent oiythespccess of : .the farmer’s laboufsj than the. necessity of finding a : means•' ,-of lo^lering.■ the !< present coats of produietionfon which oiir very existence . .appeal's to depend ?” asked ,>fr Francis. . “If , such is admitted, Iwhat Jbetter ,'wprk - could he ■ undertaken by/this Chamber than an effort to country., >nter e s ts , in this / province and tUrdhgtp’ other 1 ■ t^amhers^n^very; .partly#Zea- ? ; . c?ent; :: pre§sure ; ;, pn ■, the . • ■Parliament , to, jift^eeJisatipn?.^':' of ; locaibody ; expenditure Ipd a geineraflowering of the costs of lining, ~f ■' ;

‘ OF LABOUR. , ; (■“ln continued the. speakfr “thp|ipcome of this country has ecu from the land and* into farming, and Whilst wo‘may hope eventually to. expert our -, produce as far‘as possible in the shapes of - manufactured { products,; ift, must/ .fM many depend on tlie. prohefeds‘.from the sale- to other countries .‘jOf wool, meat, and dairy produce, to meet the cost of interest oh our oversea loans and necessary imports The' more we can. supply our Dominion ; j|equirements of manufactured gooih iiom local industries atreaecmabletpriees, ■ the better for all sections yMojafc% community; because the more labour we, can profitably and

permanently absorb in our primary and secondary industries the more prosperous every section of the community becomes, on account of the increased local consumption of our farm and manufactured products.” The successful continuation of this procedure, however, was possible only provided that the man on the land were able to produce at a remunerative price those commodities which we ; must export in sufficient quantities to meet our oversea commitments. His land must not he purchased or leased at a higher price.'than was warranted by its productivity; his Government and local body taxes must must not be on a higher scale than could reasonably be paid, and his employment of labour and the various goods required for progressive production must not cost more than the gross profits from his sales warranted. REDUCING LABOUR COSTS. In the past costs had mainly depended upon marketing oganisation, methods of distribution, efficient or extravagant management, rates of interest : ahd the basis of wages. Improved’business methods were general, but there were still uneconomical methods employed by many farmers and traders. Probably our present multitude of small scattered, independent units of industry should combine in some way /to enable the consumers to buy at lowest possible prices. Fierce Competition both here and overseas was, however. Tapidlv eliminating any conditions that did not lead to successful marketing, and producing economical methods of distribution and efficient management, so there was little further improvement to be looked for there. There had however, been little real effort to find a means by the Arbitration ' Court to meet the, until recently, continuous increased cost of living since the war. “All Will admit that prices for our exports mu. t be finally regulated by the world’s supply and demand, and that, with increased competition, we must at least maintain nad, if possible, improve the quality and quantity of bar products, at the same time producing them at a'cost which will return a profit despite the competition of the markets of the y world,” said Mr Francis.' ‘lit would appear, therefore, that ftWtime has now come to find a mean* of reducing production costs. How eft»* this he achieved without reducing the standard of living in this country or which most of us are proud and many other countries envious ?”

PUBLIC EXPENDITURE. The cost of land was falling in sympathy with reduced prices for produce, continued the president. Mortgage interest was too high, but there seemed little possibility of reduction whilst the Government and local bodies continued to be heavy borrowers of investment moneys, and the public overlooked the advantage of thrift. With falling prices, the cost of interest on and repayment of existing debts abroad necessitated .an increased export of produce, This made it doubly necessary to avoid any fresh loan which might .be dispensed with.

We were far too apt to forget that a country which contained one and a half million of people could not afford (prosperous as they had been) public services equal to those countries of similar area with a population more than twenty times as dense. It appeared, therefore, to be urgently necessary to make the members of the Government and numerous local bodies (far too. many for economical and efficient management) understand that, instead of an increase, there must be a heavy curtailment in expenditure of public moneys. The Prime Minister liad already stated the necessity for this, and all should not only support his efforts, but insist on real economy. It was stated that the Civil Service could not be reduced without causing much additional unemployment, hut why should the State permanently retain any unnecessary labour more than the factroy? Unless production costs, including general taxation, could be reduced, it was certain that there would be little increase in private enterprise. Some inducement to start new industries, in town and country would'soon absorb all the surplus civil servants and all the willing workers now unfortunatey suffering from unemployment.

LOWERING “MONEY” WAGES. The use of more machinery and the aid of science were cheanening many production methods on the farm, as in the factorv, but the wages hill payable from the production of raw material to the finished article \vo« the main reason why costs were still so high in New Zealand industry, continued Mr Francis. A reduction of monev wages in the same ratio as the fall in the cost of living was no. reduction in real wages, or their purchasing power. It was submitted that the present system of assessing New Zealand wages on the cost of living figures was one of the reasons for the pound sterling here to-day being able to purchase less than two-thirds of the goods obtainable in 1914, and that once commodities and other requirements were procurable at near pre-war prices money wages could go hack to near pre-war rates without any undue hardship, even to the married man. A reasonable reduction of monev wa!ges with less Government expenditure would rapidly bring about a sufficient reduction in production costs to enable a smaller wage to have an equal and possibly higher purchasing power , than was possible to-day. This would involve a deflation period, and one great difficulty would he to provide for. the children of the married men duripg the transition.

CHILD ENDOWMENT SCHEME. After a perusal of the proposals made in 1925 by Mr A. D. Piddington, K.C., for an Australian family basic income one could see a means was possible to overcome the temporary difficulty of smaller pay envelopes, until there was an equivalent increased purchasing power. Under his scheme, or some other more equitable for New Zealand conditions, it was considered that the married worker would suffer

little, if any, hardship during the period. Once sufficiently low costs for commodities and labour and less taxation were in force to enable our exports to meet world competition, our primary and secondary industries would rapidly increase their production. More labour would be wanted as confidence if our progress was restored, and any necessary reductions of the staff employed by Government Departments and local bodies, with the present unemployed, would he quickly absorbed. With the present position in Australia as a warning, this country must very soon start to set its house in order. Should not some real effort be made by the Government, the employers and the workers to bring about a reduction in production costs before irrecoverable harm, had been caused? Tf a round-the-table conference, representing the labour, farming, commercial, industrial, financial and economic. interests could be held, at which the present economic position could be freely discussed in an unbiased manner, the speaker bad little doubt about a sueessful interest, because all had a common interest, the prosperity of the Dominion. Some employers might think a reduction in wages must eventuate shortly through necessity, but surely that' would be achieved only after much labour unrest, with its serious losses to employers lind workers, from which this country had fortunately been very free for many years.