Inquiry On

Need Seen For

Fiji Retailing

Professor H. A. Turner, the British economist who in September sub mitted to the Fiji Government the results of a brief survey of wages, incomes and prices in the colony, commented in his report that the retail marketing situation in Fiji “seems to be an obvious case” for a form of public inquiry.

Following a request by the Fiji Government, Professor Turner was asked to do the survey by the UK Commonwealth Relations Office and Ministry for Overseas Development.

His terms of reference were to advise on the general level of wages and incomes and relativity between dif ferent grades in relation to economic development, and the methods which might be adopted for wage deter mination in relation to prices and economic needs.

He arrived on August 14 and sub mitted his report on September 17.

The Government asked for Pro fessor Turner because it suspected that recent wage increases indicated a trend which could not be supported by the colony’s economy.

In his report, Professor Turner said that it was most noticeable in Fiji that there appeared to be a strong price “ratchet”. Retail prices went up when there was a shortage

(Continued on p. 145)

local foodstuffs or when the ;d costs of imports increased, but did not come down (or did not : down as much) when local [y was restored or when import fell. Professor Turner produced iph to show this trend, i said that as a result of the hurricane in Fiji, the average of local foodstuffs rose 23 per between early 1964 and early , but it fell only six per cent, een 1965 and early 1966, and shown no further fall since, : from seasonal fluctations. t said the local merchandising tion might be a factor “in this omenon”, and added: i discussions and interviews,

many criticisms have been put to me of the Carpenter and Burns Philp groups, which have played a large role in the colony’s commercial evolution. It was suggested to me that they have a monoply power over local trade, that their profit margins are excessive, that they take large profits out of the colony while putting little back, that they are less efficient than they might be and that they discriminate against certain businesses or in favour of certain countries.

“I doubt very much whether this log of complaints is substantially justifiable. Quite clearly, for instance, a large part of the current industrial and agricultural development (as well as commercial investment) in the colony is being undertaken by members of these groups, and it seems that this is to some extent because intense competition from small traders in certain lines of busi ness is making them unprofitable for new investment in marketing.

“On the other hand, there are clearly understandings or agreements between the two groups as to profit margins in certain instances where this competition does not arise. I suspect rather that there is here a typical case of what economists call “obligopolistic competition”—i.e., a situation in which a market is dominated by two or three firms, no one of which dares cut prices in case this provokes cut-throat competitive warfare by the others, but in which the main firms raise prices together

in response to cost increases, and where competition takes the form not of price-cutting but of advertising, the rival acquisition of new busi nesses, etc.

“Such a situation may lead to a ‘ cost p i us ’ method of price-fixing which does not encourage efficiency, an( j re tail prices will in any case tend to he higher in these circumstances t h an under normal competition,

Public feelinQ

ruum, iceimy “i n any event, there is clearly so muc h public feeling on the marketj ng situation that it seems an obvious case for the type of formal public inquiry which is suggested in my concluding proposals, and which is already now being applied to wage disputes.” i n his concluding proposals, Pro feSsor Turner does not make a specific suggestion that an inquiry into the merchandising organisation be set up, but he leaves the matter to the government The companies referred to by Pro fessor Turner seem to be undisturbed by his remarks.

Chairman and managing director of W. R. Carpenter, Mr. C. H.

Carpenter, said at his Press con ference at Sydney in October (see p. 133) that Professor Turner had made it clear that he was quoting local talk, and Professor Turner himself “doubted very much whether this log of complaints is substantially justifiable”.

The companies’ attitude seems to be that if there is to be an inquiry they will worry about it when it happens.