STABILISATION IN AUSTRALIA

Press, Volume LXXXIV, Issue 25427, 25 February 1948, Page 7

STABILISATION IN AUSTRALIA

Increased Cost Of Subsidies

PAYMENTS TO BE CONTINUED (N.Z. Press Association —Copyright) (Rec 10 p.m.) CANBERRA. Feb. 24. Subsidies under the Australian Commonwealth prices stabilisation scheme would .cost between £40.000,000 and £45,000.000, said the Prime Minister (Mr Chifley). This was between £10.000.000 and £15.000,000 in excess of the Budget estimate. The reasons for the increase were rising costs in the list of major goods subsidised, the rising price of wool used by local manufacturers for local consumption, and arrears of subsidies for the financial year 1946-47 which had still to be met.

The Australian Federal Government has decided to continue the subsidies which it pays to keep down the prices of many items. Ministers had hoped to reduce the subsidies gradually, without perceptible effect on local prices.

The main items-on which the Government pays a prices subsidy are tea. potatoes, coal, woollen goods, milk products (including butter and cheese), leather, textiles, and some imported raw materials.

The Prices Commissioner (Mr A. McCarthy) in a strongly-worded report submitted to a Cabinet sub-committee, stated that the withdrawal of subsidies would have a disastrous effect on* prices. He said that because of rising world prices it was impossible for the Government to carry out its policy of reducing subsidies.

Other countries were heading for inflation, and unless Australia had price control and stabilisation it would nave to go with those countries, said the report.

Mr McCarthy added that if the Government withdrew its subsidy on tea. for instance, the price would go immediately from 2s 9d to 5s 9d per lb. Mr McCarthy declared that to keep proper control of prices the subsidy system should be extended to a number of other commodities which affected the cost of living.