Local as against overseas production [unclear: es] not necessarily help the country or [unclear: e] workers. New Zealand has a small in[unclear: mal] market -a small diverse market., [unclear: ctories] manufacturing for local consump[unclear: on] can often make only short runs because [unclear: this]. Short runs means inefficient and ex[unclear: nsive] production, hence local products [unclear: ay] be twice as expensive as the same stuff [unclear: om] overseas. So we tax imports to [unclear: protect] local production. This means that the [unclear: orker] now has less buying power. He [unclear: de-ands] a wage increase. We give it to him. [unclear: it] this has inflated the cost of our exports [unclear: hich] are no longer competitive. Thus [unclear: lo-l] production may compound our [unclear: problems].

Peter states "Muldoon is still encouraging [unclear: r] manufacturers to operate by assembling [unclear: ported] components." In fact as a general [unclear: e] New Zealand manufacturers may only [unclear: e] imported components if (i) the product [unclear: for] export and (ii) the component is either [unclear: t] locally produced or the local product is [unclear: inferior] quality. This should be an in[unclear: ntive] for local manufacturers' to improve [unclear: ality] and protect our export earnings. No [unclear: erseas] buyer wants an inferior product [unclear: ide] with unreliable components.

Peter fastens onto our ironsands exports, [unclear: sumably] as an example of overseas [unclear: exptation]. In fact we don't have the finance [unclear: develop] them ourselves; unless Peter is [unclear: vocating] education or welfare cuts. Fo[unclear: gn] investment is a bogey. So what does [unclear: suggest?]

Furthermore even if we had finance to develop our own iron and steel it is cheaper to buy it from Japan. I don't know if Peter is exercising a fond nostalgia for the Chinese "backyard furnaces" of the late 50s, but I will remind him that these were little more than an unsuccessful and expensive experiment: witness China now looking for overseas finance to develop their iron and steel industry on an economic scale.

As for the "huge amounts" spent on oil exploration, this was overseas finance and New Zealand stood only to gain from its success. To those who imagine that overseas investment is a bogey, the facts remain: that foreign investment provides us with momey we don't have, technology, we don't have, to develop industries we don't have, providing jobs and export earnings we don't have.

But let us be pessimistic for a moment. Let's say that foreign investors are not business men out to make a deal that can benefit both of us, but rather evil tyrants bent on controlling our resources and exploiting our workers. So what do we do? The answer is apparent to anyone. We make a deal whereby they spend their money to make factories etc to process our resources and then we progressively nationalise.

The Wool Industry

Enough of Peter's article and onto my present humbug — the New Zealand Wool Industry. For many years I, like many others, was appalled by the fact that New Zealand exports raw wool overseas, mainly to Britain. That is, until a few years working for a large textile importing company put me in touch with the facts.

New Zealand wool exported to Britain can be made up into high quality cloth and garments, re-exported to New Zealand and still sell for two-thirds the price of locally produced goods of vastly inferior quality. That is without present import controls. In spite of greater labour costs, extra handling and freight charges. This is because the British (and Italian) manufacturers have both the technology and experience to produce high quality woollens and large markets.

This means that they can do large runs: in other words their industries are efficient.

The situation in New Zealand is this. We have a few small factories producing woollen garments: mainly knitteds, and very little cloth. These are of poor quality because our technology is not the best and we don't have the-money to spend to improve it. No overseas buyers are interested in low quality goods so these factories unload their junk on the New Zealand market. But we pay through the nose for this junk because New Zealand is a small, diverse, market, so the factories can do only short runs of each line. This means inefficient and expensive industry.

However the government, in its protectionist wisdom has decided that these producers of garbage should be encouraged and so heavy import restrictions and taxes have been slapped on imports of overseas woollen goods made usually with our wool. This means that the New Zealand consumer is stuck with the junk — the knitteds anyway, at inflated prices.

As for cloth, New Zealand can't yet produce decent woollen cloth so we have no choice but to import it from Britain, Italy and France. Because of the import restrictions and taxes, the landed cost of this cloth is very high, the quantity small. It's the sort of stuff that Merv Wellington might have a suit made of. Or King Solomon's favourite concubine might have a dress out of it. But you and I won't be wearing it.

The Advantages of Wool

Everyone knows the advantages of wearing woollen clothing. Its a naturally produced and infinitely renewable resource. It's fibres ace tough, springy, and resilient. It can be very soft and fine, or hard and course, depending on what sheep it came off. Its comfortable to wear — it breathes It's warm in winter, cool in summer. It retains 50% of it's warmth when wet. It is very suitable for safe, non-asbestos flame resistant cloth — hence its use in racing suits. But we can't get it.

Textile importers in their desire to keep us covered are forced to import polyesters and other synthetics like acrylics and viscose. These are produced entirely from oil. Over seas oil Manufactured overseas by Japan, Malaysia, Singapore, China and Korea. It doesn't breathe. It has a slightly shiny surface. It's not as resilient as wool and tends to pill and bag. But it is cheap enough for us to import and make up into our everyday garments.

Clearly, the situation is absurd! In our desire to promote self-sufficiency at all costs we encourage an inefficient industry to remain so. We add to the demand for oil and thus increase our dependence on a finite resource. We penalize the New Zealand consumers. We help to reduce the world demand for wool by our attitude to it, and thus diminish our own wool export earnings. The solution seems to me, to be quite simple.

This should keep consumers happy, they will be able to buy good woollen products at a fair price. It will keep the farmers happy because New Zealanders will buy more wool overall — even though it is made up for us. Our dependence will shift from finite overseas resources to infinite local resources. New Zealand industry will survive in a field more appropriate to its expertise. No more blind subsidisation of industry!

John Penney.