WHOSE MONEY?

Auckland Star, Volume LXXVI, Issue 95, 23 April 1945, Page 3

WHOSE MONEY?

£28,000,000 PAYMENT AGREEMENT REACHED Complete agreement has been reached by a joint committee representing the Meat and Dairy Boards concerning tne lump sum payments made by trie British Government to the New Zealand Government. This was arrived at at the Dairy Board's ward conference at Whangarei today, by the chairman, Mr. W. E. «ale, who said that the agreement followed lengthy discussions by the joint committee with the Economic Stabilisation Commission. Last August it was announced that the United Kingdom Government had agreed to pay the New Zealand Government a lump sum of £12,000,000 "as compensation to meet the abnormal increase in prices of New Zealand imports from the United Kingdom from 1939 to the present," and- a further lump sum of £4,000,000 a year for four years "to cover the disparity in prices." The Meat and Dairy Boards have acknowledged that these payments were not make "in respect of produce sold." "Not a Fayment for Produce" After the record of agreement reached between joint committee and the Government had been read to the conference to-day, Mr. Hale dealt with it in detail. "Why were these lump sums paid, and who do they belong to?" said Mr. Hale. "In other words, are they part of the price paid for our produce by the United Kingdom? That was the major job which the board's Dominion conference asked us to decide." The committee had found this to be a very involved issue, he continued, and it was only after a complete examination of all the State documents that they had satisfied themselves on the point. It had been necessary to divide the lump sum payments into two sections— ttte £12,000,000 payable prior to August 1, 1944, and the four annual payments of £4,000,000. •'Definite proof was given to us, Mr. Hale' said, "that the £12,000,000 was not a payment for produce sold by us to the United Kingdom, but was paid partly towards meeting general stabilisation costs, in New Zealand, and partly towards strengthening sterling funds. In other words, the United Kingdom Government recognised that the New Zealand Government's policy of stabilisation, through the payment of subsidies, had prevented certain costs from rising. This in turn meant that the price which the United Kingdom paid us for produce was lower than if no subsidies had been paid in New Zealand and costs had been allowed to rise freely."

The fact that this had directly benefited the United Kingdom had been emphasised by Sir John Anderson, Chancellor of the Exchequer, who, in a carefully worded statement in the House of Commons made it clear that the £4,000,000 annual payments were made because of the benefit that the United Kingdom received from the New Zealand price stabilisation policy. He had not oeen so clear on the £12,000,000, and so the joint committee took special care to examine all State documents on the latter payment. "As a result," said Mr. Hale, "the committee is satisfied that it was paid for a twoI fold purpose—namely, partly to strengthen the sterling position (upset by the disparity in importexport price levels), and partly to meet actual general stabilisation costs.

"The position was mucn clearer about the four annual payments of £4,000,000, and in the opinion of the committee these were clearly paid towards meeting the annual costs of general stabilisation in New Zealand. The committee also examined the subsidies being charged against these payments of £4,000,000 and were satisfied that, in the four-year period, these general stabilisation subsidies will more than equal the £4,000,000 payments. "If the committee had not been satisfied on this : jint we would have maintained that producers were entitled to say that part of the lump sums was being paid in resjject of prices for produce sold. Great concern has been expressed already in many quarters about this method of lump sum payment. We are of opinion that it cannot be justified under normal trade conditions. The agreement with the United Kingdom deals with a situation which is quite abnormal and under present arrangements—where part of our costs under stabilisation is carried by the State —this lump sum method of payment cannot be avoided." Price Increases for Producers Dealing in detail with the agreement, "Mr. Hale said that the resolution from the board's Dominion conference, under which the joint committee had been set up, asked that the whole of the price increase on the sale of produce should be credited to the Dairy Industry Stabilisation Account, and this had been agreed to by the Government. The principle on which debits could be made to the respective industry stabilisation accounts was contained in the Farmers' Federation stabilisation agreement, and the findings reached were in line with that agreement. "The joint committee made is clear to the Government," said Mr. Hale, "that any break away from stabilisation in New Zealand would send costs spiralling, and could easily wipe out any credits in the industry's stabilisation account. The basis of agreement with the Government therefore provides that increases in costs arising before March 1, 1945, and above the level existing on December 15, 1942, can be charged to the dairy industry stabilisation account, but with certain limited exceptions the Government cannot debit the industry with increased costs arising from an., present action in allowing wage increases in New Zealand. "The most important point In connection with the agreement," concluded Mr. Hale, "is that increases which occur after March 1, 1945, will be strictly limited to a few specific exceptions which were debitabie. These would have been incurred if there had been no break in the plan to hold costs and prices undei stabilisation. In other words, the increases in wages which are new being granted or which may be granted in the future as a result of the change in Government policy, and the recent statement by tlie Arbitration Court, will not be carried by the dairy industry stabilisation account. This is 'a very roal protection to the industry.' '