The present Government was completely responsible for all scandal in the Nelson Cotton Mill affair, said the Hon. A. H. Nordmeyer last Thursday. He was addressing the V.U.W. Labour Club. The mill, he said, played an important part in the attempt to correct the very dangerous imbalance in the country's economy. Therefore the National Government has been acting against the best interests of New Zealand as a whole, to appease its friends.

When Labour came into power in 1957 there was a severe balance of payments crisis. It was urgent to cut down the drain on overseas funds. Import controls helped, but only as a temporary solution. Some imports could not be cut out. However, if raw materials for industry could be imported in their rawest form and goods exported in their most processed, then a great amount of money could be saved. This is the principle of Manufacture in Depth. If raw cotton could be processed in New Zealand instead of having to import finished cloth, with this one mill we should have saved £695,000 in foreign exchange per year.

Equally important, the population increase is such that 20,000 extra jobs will have to be found every year.

In answer to some of the National Government's allegations about the project, Mr Nordmeyer said that the company, Smith and Nephew, proposed to produce 20 per cent of New Zealand's needs for cotton goods. This is far from being a monopoly. The share of the market that was guaranteed to them they in fact possessed already.

It was important to remember that Nelson as a site was chosen by the firm, not by Government.

The Company felt, contrary to National allegations, that the Department of Industries and Commerce was over-zealous in its desire to protect the New Zealand public's interests.

Before the change of government, company representatives had seen Mr Holyoake and discussed the Mill. Mr Holyoake said that no details were discussed. The Chairman of the company said that the talks were "fairly full." And in 1961 Mr Marshall declared that the agreement was binding and the National Government had no intention in abrogating it.

Vested Interests

The main opposition to the Cotton Mill came from the local manufacturers, importers and distributors of cotton goods. Nordmeyer pointed out that the middle-men derive a greater income from these goods than do the manufacturers. They exerted great pressure (£1,500 worth) on the Government and it succumbed.

On February 14, 1962 the Cotton Mill agreement was abandoned. Enthusiasm to invest in this country has waned, because of this.

The Prime Minister stated recently that government had not terminated the agreement unilaterally, both parties being anxious to do so. He said that he would seek permission to publish the company's letter showing this. That letter had been in the Government's hands, claimed Nordmeyer, since September last.

In fact the company did Not offer to terminate the agreement, but only admitted, in this letter, that it could be terminated if the government were determinedly hostile to It.

Contrary to the Prime Minister's statement the Director of the company concerned states it was Cabinet that proposed abrogation of the agreement.

Was the agreement legally binding? It must have been, because otherwise there would be no need to pay compensation.

There is some confusion about how much we will have to pay for the privilege of not having a cotton mill. Mr McAlpine suggested £1 million, Mr Holyoake £¼ million, Mr Marshall, who, as Minister of Industries and Commerce, should know, said £½ million.

Mr Nordmeyer concluded that it was evident that all scandal in the cotton affair was due to the actions of the National Party Cabinet.

R. J. B.