DEBATE ENDED

Ashburton Guardian, Volume 55, Issue 301, 3 October 1935, Page 6

DEBATE ENDED

GUARANTEED PRICE SCHEME. MR COATES GOES INTO FIGURES. (Per Press Association).

WELLINGTON, October 2. The Finance Debate in the House was brought to a close by the Rt. Hon. J. G. Coates, who replied to members remarks during the debate. He dealt with Labour’s guaranteed price scheme, and analysed the details for meeting the cost of the proposal presented to the electors iby Labour candidates in various parts of the country. In some cases, he said, it would be necessary

to double taxation. The proposal was an important one.and should not be dismissed in a few words, but the difficulty was to obtain details. New Zealand was largely dependent for her prosperity on the price her products realised, and those prices were cut almost in. half in a few months, and the whole economic structure of the Dominion was threatened.

Exchange Rate Defended. Mr Coates went on to outline the steps taken by the Government to meet the situation and held that the raising of the rate of exchange was the quickest method and one that meant the least change. The action was more successful than the Govei nment anticipated at the time, and the Government had been generally successful in bridging the gap between costs and prices, and once again New Zealand had a firm foundation on which to build. He thought that most members of the House realised in their hearts that -a good job had been done. Reverting to the guaranteed price scheme, Mr Coates said he had endeavoured to work out the cost of it, and the essential thing w*as the level at which prices were to be guaranteed. Based on Mr F. Langstone’s pamphlet he estimated at Is 3d per lb. The cost since 1928-29 would have been about £200,000,000. The exchange rate would have to go up 200 per cent, to meet that 'expenditure. If it- was not to be met by the exchange rate, it had to be met by taxation. The question was how far the Labour Party would rely on taxation to meet the deficiency. A third method was borrowing, but would it have been wise to borrow heavily in tho last four or five years? Another method was direct inflation. The question had been considered previously. The amount required to keep prices to the 1928-29 level was £136,000,000 without the exchange.

Trade Agreements. Referring to the remarks of Mr "YV. Nash regarding reciprocal trade agreements, Mr -Coates said there were more difficulties than Mr Nash anticipated. If Mr Nash made trade agreements with the several countries he probably had in mind, the next stop would be worse than the existing position, and it was a question whether New Zealand should willingly rush into that or whether she should wait until conditions settled. Mr Nash was hardly aware of the task that- lay ahead of him, and the question -of a quota- or an embargo could only lead quickly to the crash of the whole- system; and there was a definite doubt in the minds of those who- discussed trade treaties whether such treaties could he la'sting. Mi* Nash spoke of arranging a bilateral agreement with the United Kingdom, but the United Kingdom at present w,n,s not prepared to make bilateral agreements. He- referred to the meat no go ti atio £S*-iin d said it might become necessary tor Britain to put a levy on chilled beef, but there was nothing to. say that there“was to be a levy on other things, and so long as New Zealand played up to the arrangement of quantities they would continue indefinitely. He thought that the country was in a better position than it had been for some time past.