boomerang

Booming dollar boomerang

By a staff writer

For those on both sides of the Aus tralian dollar line in the South Pacific, Australian Prime Minister Gough Whitlam’s December 23 7.05 per cent revaluation did nothing to buoy up traditional Christmas spirits—except in New Zealand.

Australian exporters glumly ab sorbed the second blow in quick succession to their South Pacific trade —the first being the Australian union boycott of “French” shipping in pro test against France’s nuclear tests over Mururoa.

Papua New Guinea and the Solo mons automatically went along with the revaluation—thus damaging their export prospects. New Hebrides busi ness houses and traders—while tem porarily deciding to maintain a FNHIOO to SAI parity—said they would have to treat the two currencies as separate if the official rate did not quickly return to near parity.

Die rest of the South Pacific nations got down to some serious thinking about alternative markets to Australia, something most had given only passing thought to in the many months of speculation that Australia’s government would finally decide its currency was undervalued.

The only real cheer in the Pacific south of the equator was in Welling ton where government and business circles rubbed hands in eager expec tation of a mini export boom, mainly in dairy products, at the expense of Australia.

For New Zealanders, as well as boosting trade prospects generally, it came as something of an indirect counter to damage to its image in French Pacific territories by its part in the boycott on French vessels.

There is some doubt as to whether many business circles in New Cale donia even heard about the revalua tion until after Christmas. One trader who did pick up the revaluation on the ABC before Christmas made calls to two banks after the holiday to dis cuss the consequences—and dis covered he was actually breaking the news to them.

While those nations not on the Australian dollar network at least have the option of seeking new marnot alrea dy found them—Papua New Guinea had no real recourse other than to appeal for

special aid from Australia to counter anticipated export and taxation revenue losses.

Hurting Papua New Guinea is the fact that most of its major export commodities—coffee, tea, copra, cocoa, rubber—are sold at world prices set in US dollars, sometimes in sterling. Consequently, though export quantities may be maintained or continue to rise, earnings will drop. This applies even to exports to Australia where transactions are based on prices fixed in US dollars.

The revaluation works two ways for Bougainville Copper: while many of

its contracts are in US dollars it will have its repayment burden eased on foreign loans obtained to get Panguna into production, With an allround drop or slowdown in export earnings—except in direct trade with Australia not governed by international prices—the PNG Gov ernment faces a substantial cutback in anticipated company taxation revenue. Not unexpectedly, it was quickly announced that a mini budget was in the offing to generate more revenue.

On a lesser scale, the Solomons, already caught in a tight money

Booming Dollar Boomerang

situation, faces similar problems to PNG—and has less chance, on past performances, of getting help from London as readily as Port Moresby can expect it from Canberra.

Business circles in the New Hebrides stressed that parity at 100:1 was being temporarily maintained to avoid hampering banking operations and causing inconvenience to the public by working with an impractical exchange rate.

The Association of Banks in the

New Hebrides stated its attitude in a five-point memorandum. It suggested that the long-term solution would be to introduce a currency to replace both the A$ and the FNH but as long as New Hebrides remained under dual sovereignty this would not be possible. Alternatively, a new British currency could be introduced to re place the AS—say the NHS. But this could be done only as long as a corn mon policy of support and guarantee for the two currencies was agreed

upon by the British and Fren monetary authorities.

The association felt that for t short term, the French Governme could modify the existing exchan rate between the New Hebrides fra and the French franc to bring the t\ currencies back to their former parii Australia stands to suffer most New Caledonia, although it can expe substantial damage to the progress has made in Fiji which has for lo: been traditionally orientated towa New Zealand.

In Noumea the 7.05 per cent i valuation could prove to be the stn which breaks something of a sen mental attachment with Austra, which even the chance of cheaper ii ports from elsewhere has not be able to wear down in the past.

The boycott last year by Austral! and New Zealand trade unions led local businessmen reconsidering th< sources of goods. And the January enlargement of the European Coi mon Market has substantially broa ened New Caledonia’s scope for dut free imports.

Noumea’s affection for Austral was summed up in a letter to t: editor in a local paper. The writ questioned the idea of New Caledor turning its back on a longtime frier He pointed out that Australia throug out the war years had fed Nt Caledonia when France had be: unable to offer any sustenance. Whi French wine had dried up, Austraj had willingly filled bottles sent frc Noumea. New Caledonia French h fought in the Australian Army.

“But,” said a confirmed Frenc Noumean-born ‘Aussiephile’, “busine is business.”

Businessmen in New Caledonia, said, had no national hang-ups. “Mi buy Italian chocolates at Christm: Dutch cheese and beer, even chewii gum; tools and beer from Germany He predicted that if there was : renewal of the Australian and N*' Zealand trade union boycott the swii would be from Australia to Nt Zealand for purely sound busine reasons. But if the boycott was i imposed, businessmen in Noumea ht made contingency plans to obts everything they wanted from otH sources —either from Common Mr ket countries or from North Ameriei “In some cases,” he said “prices mr be dearer but the people are willir to pay. The people—even the nesians—are fairly affluent.”

Australian revaluation and tras union boycotts don’t amount to muu in French Polynesia. Said one Frenn trader: “They have been importii; from the US and New Zealand fon

long time. They don’t take much any way from Australia.”

In Fiji the response was rapid. The Australian-owned Carpenter Group decided immediately to send a buying mission to New Zealand. Anticipating an overall price increase of about 10 per cent on most goods from Aus tralia—the consequence of increased import prices, freight, insurance and duty—it seemed that Carpenter’s was setting an example which could lead to a marked decrease in the 30 per cent Australia has of Fiji’s total im ports.

In New Zealand government offi cials were talking in terms of a $5 million boost in trade with Fiji, and as much as $l5 million with New Caledonia.

Despite the Australian gloom, news that Fiji’s merchants were claiming that the revaluation had caught New Zealand “closed down” for the holi days provoked a chuckle or two.

Fiji importers, impatient to re organise themselves, were critical that they were unable to obtain urgent sales information from New Zealand until the New Year got underway.

A couple of brighter spots for island nations: where traders continue to buy from Australia customs revenue will increase; and now the Australian tourist has a greater spend ing power in South Pacific nations excluding PNG and the Solomons and possibly the New Hebrides.

Airborne milk

The New Zealand Dairy Board is looking at the possibility of air freighting fresh milk to the Pacific Islands. A recent trial shipment of 36 gallons was sent to Noumea.

Should the possibility become a fact, chilled milk will be sent to Auckland twice weekly from Hamil ton for air-freighting under refrigera tion to Noumea. The milk would be available in New Caledonia super markets the next day.

The milk is packed in special one pint plastic sachets, which are light, hygienic and durable. They can take either homogenised or pasteurised milk, and may be stored indefinitely in a freezer.

The NZ Dairy Board believes New Caledonia in the initial stages could take up to 200 gallons of fresh milk a week. Other outlets in the Pacific which are being explored, are Tahiti, the New Hebrides, Western Samoa and American Samoa. • Air Pacific Ltd earned a record net profit of $266,249 in the year ended March 31. This was $108,244 more than in 1970-71. Revenue dur ing the year at $3,907,000, was 24.4 Per cent higher.

• In the first six months of last year the number of visitors to Fiji was 16 per cent higher than in the first six months of 1971. There were 78,455 staying visitors compared with 67,643.

June last year visitors numbered 12,606 —17.7 per cent more than in June, 1971. There were 4,507 Aus tralians (up by 0.5 per cent), 3,502 from New Zealand (up by 47.8 per cent), 2,312 Americans (up by 2.8 per cent) and 470 Canadians (down by 1.9 per cent).

The average intended length of stay per visitor was 9.4 days as against nine days in June, 1971.

• New Guinea coffee grower and processor, Graham Kingsford-Smith has bought a bottling company’

Glynn’s Cordials, at Coffs Harbour on the north coast of New South Wales. Graham served in the Navy during World War 11, but towards the end of the war became a war correspondent for the Sydney Mornl ng Herald > and later a correspondent *°r t " e London Daily Express. He worked m public relations for a major car maker > and in New Guinea, has served as a member of the Coffee Marketing Board, owned a tavern, and edited the Highlands Bulletin the Highlands Planters’ Association j( "rnal.