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War Economy

Economic Planning—Organisation for National Development

Economic Planning—Organisation for National Development

Out of the desire for some co-ordinated plan for the transition from war to peace had come New Zealand's first attempt to establish a central planning organisation. The Organisation for National Development (OND) was set up early in 1944, as a branch of the Prime Minister's Department.

Mr Sullivan,2 in announcing the Government's decision, outlined its intended functions thus: ‘… not only to study and plan for long range development of the Dominion, but also to make special preparations for practical measures to meet the period of transition which will occur on the cessation of hostilities. Not only will provision be made to assist in the rapid rehabilitation of members of the armed forces, but also for the safeguarding of the livelihood of a probably greater army of civilians whose energies have been

2 Hon. D. G. Sullivan, acting Prime Minister. The statement is quoted by Samuel Leathem in ‘Industry and Industrial Policy’ (article in New Zealand, edited by Horace Belshaw).

page 528 diverted to war purposes. The first task must obviously be the restoration of industry to a peacetime basis at a time when there will be a shortage of raw materials and a huge demand for goods.’

A brief outline of the structure of the organisation was contained in the 1944 report of the Rehabilitation Board:1

‘All the major departments of State are in one way or another involved in the organisation, which, for obvious reasons, is directly responsible to the Prime Minister. Associated with the Prime Minister in the policy direction of the organisation is a Cabinet Sub-Committee of Ministers most directly concerned—namely, the Ministers of Finance, Industries and Commerce, Works, Agriculture, and Rehabilitation. The Executive Committee of O.N.D., comprising the Permanent Heads concerned, including the Director of Rehabilitation, and working in close cooperation with a Chief Executive Officer, Mr J. S. Hunter, until recently Director of National Service, is responsible to the Cabinet Sub-Committee for organising and coordinating the activities of several (so far nine) major Research and Planning Committees, which are in turn comprised of the various State and non-State organisations affected. The Secretariat to the Executive Committee is located in the Prime Minister's Department. Each of the main Research and Planning Committees will, as necessary, create specialist sub-committees to deal with particular assignments allotted to them.’

Rehabilitation, and the need for full employment to provide a climate in which jobs would be available for demobilised servicemen, ranked high in government and official thinking at this time. Planning for full employment was therefore an important function of the Organisation for National Development. In fact, the 1945 report of the National Service Department went further. In discussing national and international plans for full employment it said:2

‘In New Zealand the establishment of the Organisation for National Development early in 1944 set in motion machinery to plan and coordinate the economic transition to peacetime conditions and the subsequent development of industrial activity. Full employment is thus the main reason for the Organisation's existence.

‘The National Service Department works in close association with the Organisation for National Development in all matters concerning personnel in industry, and, by arrangement, the

1 Parliamentary Paper H–18, p. 26.

2 Parliamentary Paper H–11A, p. 16.

page 529 Department, in cooperation with the Rehabilitation Department and the Organisation for National Development, will be responsible for the initiation and execution of all personnel research assignments. Already a number of these are in hand.’

The 1945 report of the Industries and Commerce Department1 dealt with the full employment objective in relation to industrial development:

‘In working towards this objective through the expansion and further development of manufacturing industry, the Department enjoys, in addition to its close association with manufacturing enterprises during the past twenty-five years, the experience of, and consultation with, representatives of private enterprise and workers on the Industrial Development Committee of the Organisation for National Development…. Whilst the Industrial Development Committee is concerned with general policy, the Department, as the administrative body, is dealing with the practical issues, such as assisting in the provision of plant and raw materials to expand and develop secondary industry and…. investigations in relation to projected major expansions and new developments. The Committee has behind it the Organisation for National Development, with a staff of economic specialists, and with it is employed the departmental machinery of Industries and Commerce to devise and implement the plans best suited to the Dominion's economy.’

A comment in the 1945 report of the Rehabilitation Board2 also stressed the full employment interests of OND, as well as giving an indication of the extensive network of this rapidly growing organisation:

‘The Organisation for National Development has sponsored the formation of some twenty-five autonomous bodies, known as Regional Planning Councils, whose functions are to examine and advise upon both long-term and immediate projects for the development of their regions and the promotion of full employment therein.’3

The rehabilitation interests of OND were outlined in the same report:4

‘The Personnel Committee of the Organisation for National Development sits under the chairmanship of the Hon. the Minister for Rehabilitation, and its function is to concentrate on

1 Parliamentary Paper H–44, p. 8.

2 Parliamentary Paper H–18, p. 13.

3 Regional and town planning activities of OND are discussed more fully in the Report of the Local Government Committee, 1945, Parliamentary Paper I–15, p. 145.

4 p. 14.

page 530 working out detailed plans for demobilisation of the Armed Forces, rehabilitation of servicemen and civilian workers, and their re-employment in peacetime work.’

Another reference gives an example of the research activities of the organisation and their relationship to the planning function:1

‘The National Service Department, Rehabilitation Department, and Organisation for National Development are at present collaborating in the conduct of a comprehensive survey of industry in New Zealand with particular reference to post-war plans and employment possibilities, whilst the Rehabilitation Department, in cooperation with the Service Arms, is conducting a census of serving personnel with the object of discovering the post-war intentions and ambitions of the men and women yet to be demobilized. It is hoped that the summarised results of these surveys will provide basic data upon which the Committee will be able to progress to the preparation of a comprehensive manpower budget coordinated with the planning data assembled by other Research and Planning Committees of the Organisation for National Development.’

After these high-sounding references, none of the Departments mentioned OND at all in its 1946 report. By the end of 1945 the organisation had been disbanded.

Comprehensive planning, involving manpower budgets and the like, was quietly dropped. Other work, if it was continued, passed to existing Departments; in particular, the Ministry of Works took over the long-term planning for building and construction needs, the Rehabilitation Council and the Rehabilitation Board carried on with rehabilitation policy and its administration and, in April 1946, the National Service Department became the National Employment Service, charged with the responsibility to ‘Generally do all things deemed necessary or expedient for the purpose of promoting and maintaining full employment, whether by facilitating the better location or availability of employment in relation to labour available or otherwise howsoever.’

Lipson and other writers2 have given a number of reasons why OND did not survive, but the seeds of its destruction may well be contained in some of the tendencies which are indicated by the above quotations. For example, the impetuous proliferation of committees and sub-committees,3 a tendency to take an active

1 p. 14.

2 Leslie Lipson, The Politics of Equality, p. 392; J. W. Williams, The New Zealand Economy in War and Reconstruction, p. 62; R. J. Polaschek, Government Administration in New Zealand, p. 48.

3 On the other hand, large numbers of committees had been used in the transition from peace to war.

page 531 interest in the details of administration at too low a level, instead of being concerned with the main lines of economic policy; and failure to distinguish firmly enough between research and advice, for which an organisation like OND is suited, and co-ordination and planning, which for all major issues must remain the function of Cabinet.

In any event, a system of economic and financial policy co-ordination was to emerge early in the 1950s and survive well into the 1960s. It would use a rather similar group of Cabinet Ministers and supporting Permanent Heads, but would avoid the weaknesses just mentioned.1

The Organisation for National Development played a brief but quite important part in easing the economy from war to peace. The surveys it initiated provided valuable background information, and its active participation in planning broadened and to some extent co-ordinated the thinking of a number of departments directly concerned with reorganisation of the economy in the transition period. Had it been a little less grandiose in its plans for co-ordination of the post-war economy, it may well have survived to assist in the period of economic recovery and development which followed.

Organisation for National Development designs for the post-war economy would have converted New Zealand's economic policy into a centrally co-ordinated detailed plan.2 Though the Labour Party has often been accused of being socialistic, it was not ready for this. In defence of OND one should recall that the most important of its responsibilities was to evolve a plan to maintain full employment. With the structure of the economy as it had been before the war, this may well have required very extensive detailed planning. But the economy had been substantially changed. Contrary to all expectations, over-employment rather than under-employment was to be the prevailing problem in the period of economic recovery and development.

1 See also pp. 5689.

2 See also pp. 52730. A stencilled OND report in 1944, entitled ‘Interim Report on Post-War Reconstruction and National Development’, included a chart which is particularly revealing. The chart has a footnote which reads:

‘This chart illustrates how coordination can be secured between Government and all other sections of the community. While the organisation provides a central office for research and pooling of ideas on reconstruction and national development, it does not restrict the implementation of industrial or other expansion usually carried out through the medium of private enterprise.’

However, the chart gives an impression, which no footnote can remove, of the highly co-ordinated and intensely detailed nature of the proposed planning.