FLAX INDUSTRY.

Taranaki Central Press, Volume IV, Issue 412, 20 April 1937, Page 2

FLAX INDUSTRY.

REORGANISATION PLAN DISLIKED. Cost To Taxpayers. Trepidation over the provisional plan for the- reorganisation of the flax industry as recently announced by the Minister of Industries and Commerce if. felt, by the Associated Chambers of Commerce. It has issued thei following statement on the scheme: “The main provisions of the plan •ire for Government guaranteed prices; the licensing of mills.; a Government advisory service for millers; Sta'te-conLrollied marketing, overseas and internally; Government expenditure on publicity and investigational work; Governm nt restriction of imports of raw or manufactured material; establishment of a Government mill for experimental and commercial purposes; an industrial committee to regulate and control the industry. “This plan is very drastic, and we regard it with considerable trepidation. The flax industry in New Zealand has been on the decline for a considerable number of years. It is this fact which has prompted the Bureau of Industry to suggest the present comprehensive plan of Government action and control* as an alternative to allowing the industry to run its natural course to decadence. The industry is decadent because those engaged in it have found it to be uneconomic, through the competition of o'th'r products. Sisal and manila have displaced it on the open market. Labour costs have played a very important part in this; Mexico, Tanganyika and Java, from v-hence come the chi f supplies of sisal, are cheap-labour countries. This factor is one to be considered more than ever to-day, with increased labour costs which must be taken into account by industry in \ew Zealand. Therefore, would application to the New Zealand flax industry of the plan proposed by the Bureau of Industry he a proppingup of an uneconomic industry? Price Prospects.

“The answer to this question depends very largely, on the price the Government would guarantee for the flax We understand that the price proposed is £26 per ton. This If more than :the average price in New Zealand currency (£25/12/6) realised Per ton of high fair New Zealand hemp during 1937, and the price has fallen as low' -as £lO in 1932 in the New Zealand currency of that year. In view of the heavy competition from cheap-labour countries, a guaranteed price based on preisentday market values, together with substantial capital and annual expenditure on the TStew Zealand flax industry by the Government, would appear to be a highly speculative proceeding. “We are aware that it is proposed to apply the benefits of scientific research to :the production of flax, but it should not be forgotten that New Zealand will gain by such application no clear advantage over its competitors. Another important; point is that New Zealand has negligible standing are-as of suitable green flax for milling. Consequently, the flax v'ould have to be grown, and that takes seven years. Any market prospects which may ba evident at present might well change very considerably in that period. Taxpayers Involved. “Apart from technical considerations, however, we are chiefly concerned from the standpoint of. the public interest with the manner in which the taxpaying- community of New Zealand will be involved if the plan proposed by the Bureau of Industry i s carried into effect. The plan proposes that the Government undertake a capital expenditure, as initial outlay, of approximately £71,000 on land, a Government mill, housing, etc. It is certain that the commercial mill, <as proposed, would not be a commercial proposition, and that it would sustain an appreciable annual loss. “‘This 'expenditure, however, is 9nly initial outlay. The plan also proposes that approximately £22.000 annually be spent by the Government, with considerable additional costs in a. few years’ time. In effcict, this means that the taxpayers would be providing a total of at the very least £225.000 over «a period of seven years to finance the plan, and also a staff of State officials, probably highly paid, and growing in numbers as i the plan was elaborated. This is too extravagant a commitment in which , to involve th?i taxpayers, but appar- j pntly the bureau is intent on all or nothing. “No estimate Whatever has been given of iany compensating savings in costs that are likely to be effected m the industry under the plan. Any figures as to savings that would be ‘effected in Unemployment Fund dis-

bursements through the employment created in the State-controlled flax industry are no argument in times of prosperity, when there, are avenues of employment in trades and industries. Men losing employment in the decadent flax industry would find ample employment in the farming industry, which is suffering to-day from an acute labour shortage. As it is, if losses are sustained in (he proposed State enterprise in flax, as seems likely, the labour coste will still be a charge on the taxpayers. ‘‘This association is strongly of opinion that it would be the height of unwisdom for the Government to enter into a speculative undertaking by becoming involved in an industry which has had a notoriously chequered history, and in -which large sums of money have been lost already. The Government would be better advised to concentrate on establishing conditions for private business which would enable it to absorb the greatest possible amount of labour in profitable enterprise.”