TRADE CONTROL

Wairarapa Times-Age, 9 February 1939, Page 8

TRADE CONTROL

FURTHER STATEMENT BY IMPORTERS POLICY OF THE GOVERNMENT ATTACKED. OBJECTIONS TO "EXTREME INTERFERENCE.” (By Telegraph-Press Association.) (Special to the “Times-Age.”) WELLINGTON. This Day. The following further statement on the Import Control Regulations, 1938. has been issued by the importers’ National Committee:— On behalf of the national conference of importers which appointed us, we have given a reasoned reply to the speech of (he Minister of Customs and Finance (the Hon W. Nash) in which he presented the case for the Government on the Import Control Regulations. Our next duty is to explain to the consuming public the objections of the conference to the import selection scheme, and the reasons for those objections. These are as under: —

(1) The New Zealand Government is the only Government in the British Empire to banish freedom of exchange. That, in itself, is deplorable, and is publicly branded as such by responsible British opinion outside New Zealand.

(2) The extreme steps taken by the Government were more than were necessary to ensure the conservation of sufficient funds in London to meet national debt, commitments. Importers fully appreciate the fact that, in order for the country to be able to provide sufficient funds in London to service the national debt, imports will have to be less, but there is a vast difference between (a) importers being left free, as individuals or individual concerns, to make the best they can of fewer funds for imports, and (b) Government stepping into the field and saying, by arbitrary decree, how the New Zealand market is to be served by importations, and to what extent, and from what countries, and by what firms. “NO CHANCE WHATEVER.” In past periods of national financial stress, when importers, left free to exercise their skill, resource, and knowledge of the market, nevertheless failed to survive—finished, perhaps, in’ the Bankruptcy Court —they did not blame the Government of the day, or seek compensation from the State. Under those conditions, they had a fighting Chance; but today, under the present control scheme, there is no chance whatever for an importer who is told by the Government that he must go out of business because the State says so. If flip Government assumes the function of cutting the I ground from under the feet of indii vidual importing concerns, then it must shoulder the responsibilities that Igo hand in hand with the exercise of ! such extreme powers of interference. Heribe importers, complain not against the necessity for reduced imports, but against the unnecessary lengths to which the Government has freely chosen to go in the absolute control of the import machinery of the country—setting itself up as judge and jury, and condemning out of hand importing concerns whose only crime has been to serve the 'needs of the public.

(3) Sudden and extensive unemployment, for both importers and their employees, will result from the operation of the import selection scheme. The complacent • contention by the Government that employees in importing concerns who lose their livelihood will find re-employment in secondary industries, cannot be proved to any satisfactory degree; one cannot move people around a. Socialistic chessboard like pawns, to conform with a Socialistic theory; these people have been trained to earn their living in certain ways. Some will find a livelihood in secondary industry, many will not be able to do so. What is the Government going to do about these latter?

ONE SECTION PENALISED.

(4) It is wrong and unjust for one section of the community to be penalised for what should be the concern of all. Since the country, in the financial difficult 7 that has arisen..must bring in fewer imports, then (if regulation by Government is to be conceded) why does not the Government state by what percentage imports must be reduced, and let that percentage reduction apply to all importers,. irrespective of the classes of goods imported? This would have obviated all the complicated selective policy of the Government —a policy which is discriminatory in its effect as between importer and importer —and would have reduced the matter to a simple solution. It would also have made unnecessary the complete disruption of business, and the serious loss of time and money involved in administering the regulations on the one hand and conforming to them on the other. The heavy cost that will fall on the taxpayers because of the tremendous administrative task that has been thrown on the Customs Department is as nothing compared with the expense that has devolved on the thousands. of importing firms in the country, which expense must inevitably be passed on to the public, wherever possible, in higher prices for goods and services. (5) The import selection policy is a temporary expedient which will serve to smother up the effects of the unsound financisi policy the Government has been pursuing, but this will be only for a time. Although the country has now run through nearly all its money, the Government declines to adjust its policy accordingly, by reducing public and private extravagance; on the contrary, the Minister of Finance states that the Government intends to maintain “the standard of living”—which could be better described as an attempt to maintain an artificially high standard of costs which is eating into the real standard of living. The high cost policy cannot be maintained, as is shown by the state of financial stress in which the country found itself in December. Thus the import selection scheme leaves the Government free to pursue its unsound policy without fear of consequences —that is, immediate consequences, since the grave danger is that the Government, in face of the rising tide of costs, will resort to still further inflation.

Also, it is this accelerated inflationary development which will defeat the aim of the Government in endeavouring to increase secondary production to the extent of balancing the reduction in imports. MAINTAINING A SURPLUS. (6) One of the objects of the Government scheme is to ensure that there is a surplus of exports over imports sufficient to provide all the funds that are needed in London for debt purposes. But restriction of imports can produce an export surplus only if exports themselves are maintained. How does the Government plan to maintain exports? The Minister of Finance voiced the broad generality that “primary and secondary production must be extended as far as is humanly practicable,” but he said no word as to how primary production — which alone will build up our London funds—is to be even maintained, leave alone extended. The fact is that high costs have already retarded, and in some directions reduced, primary production; butter and cheese production is down, and the volume of other production is failing to maintain its customary expansion. The import selection scheme will further increase farming costs, and further restrict primary production, resulting in still fewer funds available overseas for importation purposes. A further decline in the export of primary products will lead to a smaller national income, and reduced purchasing power, which will re-act to the further detriment not only of the importers but also of those secondary industries which the import selection scheme is designed to benefit. VZe repeat that restriction of imports will not in itself ensure an excess of exports, and that the proper sphere of activity for the Government is in removing every obstacle —chiefly of its own creation —that stands in the way of increased primary production. AN EXPECTED TIME-LAG. (7) The scheme of import selection to protect local industries, which the Government has grafted, as a hurried afterthought, on to the control of exchange for* national debt service purposes, is illlconceived, unscientific, and uneconomic. It is the result of no proper' survey and plan as to the capacity or incapacity of New Zealand industry to fill the gap left by Government bans and restrictions on imported lines. There are established factories in New Zealand which have already proved incapable of meeting the demand which, by the compulsion of Government methods, has turned in their direction. In the time-lag that will operate until secondary industry is able to step into the breach, the public may expect to go short. Since conditions will not enable secondary industry to replace all lines that are being barred importation or restricted, then the public will have a restricted range from which to choose. MOVEMENT OF CAPITAL. (8) It remains to be seen how much overseas capital is likely to be attracted to New Zealand for secondary industries in view of (1) the restricted market, (2) the crushing rates of taxation that exist, (3) the fact that a great amount of .capital left New Zealand because reasonable returns were not allowed it, (4) the high cost of labour, (5) the lack of sufficient trained labour, and (6) the bureaucratic control of commerce and industry that is being increasingly applied by the Government as a matter of policy. The business of importers is now being run by Government and Government officials. Manufacturers will in due course find themselves in the same boat.

(9) The cost of living, spread over innumerable items, is going to rise. Even if new secondary industries were to spring up in New Zealand and were to produce to capacity the whole year round, they could never hope to reproduce for either price or quality, many lines now imported. Lines beyond number which are now imported are made possible in New Zealand, either as to price or quality, or both, only because of mass production, which in turn is made possible only by the fact that great numbers of people, in many lands, are being catered for. The percentage which the New Zealand market represents of total output in such cases is exceedingly small. As far as New Zealand secondary indus-

try is concerned, the country’s restricted population—of a mere million and a half peole—has always been the chief barrier to large-scale production at competitive prices. It will remain so, no matter to what extent protection is given to secondary industries. The result is that the public of New Zealand will pay more dearly. INFORMATION SOUGHT. (10) No information has been given as to the extent —if any—by which the Government intends to reduce its own excessive importations, which have played a leading part in the decline of London funds. (11) If the Government intends to maintain not only expenditure on its own excessive importations for unproductive public works and other purposes, but also internal expenditure on State services, then the public may expect the imposition of further taxes to make up for the loss of revenue from Customs, income tax and other sources which will be adversely affected by the import selection scheme. (12) The regulations are a breach of the^spirit—if not of the letter —of the Ottawa Agreement, and of trade agreements not only with the United Kingdom but also with Australia, Canada. Germany, Belgium, Sweden and other countries. We are fearful of reprisals on the part of those countries that are being adversely affected by the operation of these arbitrary regulations. It would be calamitous to New Zealand to have her export markets —which are the Dominion’s lifeblood—restricted by the affected countries as a retaliatory measure. The acceptance of the maximum amount of our primary produce into the United Kingdom in particular is of prime necessity to New Zealand, besides which the Government has affirmed that its spendingschemes (such as social security) are based on a constantly expanding national production. The points given above explain to the consuming public the reasons why the Import Control Regulations, 1938, were considered by the recent national conference of importers to be impracticable, unnecessary and unjust. f ■ ■

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