Government’s Attitude To Royalty Payments

Press, Volume XCVIII, Issue 28819, 13 February 1959, Page 8

Government’s Attitude To Royalty Payments

(New Zealand Press Association)

WELLINGTON, February 12. “My department cannot support proposals to pay royalties which would not result tn some clear advantage to the national economy." said die Minister of Industries and Commerce (Mr Holloway) to4ay. He was commenting on die fear expressed by the council of the Manufacturers*

Federation that the policy an-

nouneed by the Reserve Bank might affect the that might accrue from royalty agreements.

Mr Holloway said it was obvious the payment of royalties involved a payment of overseas funds and, accordingly, permission to make such payments for many years ahead required careful scrutiny by the Reserve Bank and the Department of Industries and Commerce.

“This is particularly so, because the amount of overseas payment has doubled over the last few years.” he said. He added that there were cases of unrealistic rates of royalty payments being asked for —as high as 20 per cent, of factory cost or up to 15 per cent, of retail price. “These instances are by no means usual, but they do illustrate the need for individual examination," he said. “Such high additions to cost are just not warranted.”

Reserve Bank policy merely indicated that there was an upper limit to which consideration could normally be given on royalty rates.

“We all want New Zealand not only to keep abreast; but, in some fields, to keep ahead of what is happening abroad. But my department cannot support proposals to pay royalties which would not result in some clear advantage to the national economy “I am glad there has been some public reference to royalty agreements, for if will bring to the attention of manufacturers contemplating an approach to an overseas principal on possible royalty payments that it might be wise to have preliminary discussions .with the department.”