AFTER THE "GUARANTEE."

Auckland Star, Volume LXVII, Issue 103, 2 May 1936, Page 8

AFTER THE "GUARANTEE."

The Minister of Finance met the Dairy Conference on Thursday and answered, with commendable candour, a series of pertinent questions relating to the Primary Products Marketing Bill. - He sought, and was promised, the co-operation of the industry, and he offered to give proper consideration to suggestions for the improvement of the Bill. Despite the Minister's explanations, the financial procedure proposed remains vague, and in so far as it is clear its implications are disturbing. The Minister told the conference that if there were a deficit between • the guaranteed price and the market price, that would be the responsibility of .the Government, and there would be no liability on the producer. If, there were a surplus, the question of what should be done with it would be discussed with the industry. If this is the intention the scheme differs in one most important respect from the anticipations of its nature. In the event of a surplus the producers will undoubtedly demand a large share of it. Their pressure upon the Government, especially if it should chance to be an election year, will be difficult to resist. In effect, the intention seems to be to allow the producers to "have it both ways." The consequence to be feared is that the Dairy Industry Account will never —even assuming a surplus —be sufficiently strong to meet a deficit without help from the public funds. Unless the Government is strong enough to resist the pressure, the scheme will function largely on a year-to-year basis.

The method by which the Government proposes to meet deficits in the Dairy Industry Account remains unrevealed. No legal limits are imposed upon the powers of the Reserve Bank to provide accommodation, but there are practical limits, which wotild be reached if the Government had the ill-luck to. encounter a series of "bad years' on the export market. The deficit might then become so great that the Government, however good its intentions, would be unable to-.stop at the "moderate inflation" of which Mr. v Nash spoke in the debate on the Reserve Bank Amendment Bill. These possibilities cannot be regarded by anyone as fantastic or remotej they axe inherent in the scheme.