The Waikato Times THURSDAY, JULY 29, 1937. THE FISCAL POLICY.

Waikato Times, Volume 121, Issue 20258, 29 July 1937, Page 8

The Waikato Times THURSDAY, JULY 29, 1937. THE FISCAL POLICY.

" Manufacturers are said to be alarmed at the prospect of a tremendous drop in factory production, and that, of course, would mean more unemployment. There is said to have been a sudden cessation in the demand for the output of certain factories. Doubtless the Government will have the necessary inquiries made, and there will be certain indicators that should be of value. The sales tax is now regarded as one that is fairly reliable, and it has frequently been quoted by the authorities to show that domestio trading has been exceptionally active. The amount collected in this way last May, the latest detailed figures available, constituted a record for any single month since the tax was introduced. The Abstract of Statistics, commenting on the figures, said that the trend was indicative of a higher volume of sales of commodities, and that includes local manufactures, but excludes foodstuffs. Then only a few weeks ago the Minister of Industries and Commerce made a statement, based on figures supplied by the Government Statistician, in which he reviewed the trend of prices. Mr Sullivan claimed that the manufacturer “must benefit from the increased turnover due to greatly heightened prosperity, and this is evidenced by the fact that the mills and factories are working to full capacity. Spending power, savings and business activity generally are reaching high le _ v*els.”

That statement was made in May, and was based on official figures. In July the manufacturers state that they are alarmed at the prospect of a serious slump. What has happened to change the position so radically in such a short time? A statement issued recently by ap organisation formed to promote immigration said that many industries were in need of skilled labour. Is that still the case? The matter is of importance, and those who make the statement that local industries face, or soon will face, a crisis should produce the evidence. The public will certainly want to know why, if mills were working to full capacity in May, some of them have suddenly been dismayed by a complete lack of orders. It is admitted that these factories have been working at top speed for the past 12 months but, in a few weeks, are said to have come to this unwelcome pass, with no assurance of further business.

Perhaps the explanation may be found in the accompanying statement that the trouble is due to heavy importations. Imports have increased of late years, but not to such an extent as exports, and the aggregate in 193 G-37 was below the level touched in predepression years. To state that imports during May increased by £1,250,000 is of little value. Exports during that time advanced by £850,000, and for the first six months of the year the increase in exports was fully £2,000,000 above that of imports. There is a very marked difference between the statements of the Ministers, when at home or abroad, and the manufacturers, and it will be difficult to reconcile them. The policy of the Government is to make trade agreements with other countries and that cannot be done if the local market is to bo further restricted by tariff barriers. Mr Nash, when speaking in Parliament last session, explained that the first step was an agreement with Great Britain. “ When that has been achieved wo shall be prepared to consider agreements with other countries.” It may be that this campaign to secure further protection for manufacturers is designed to prevent that development,* but meantime it is the duty of either side to explain which of the two versions of the industrial position is in accordance with the facts.