A Stay-Put Budget For Farming Community

Press, Volume XCIX, Issue 29264, 23 July 1960, Page 9

A Stay-Put Budget For Farming Community

By H. E. GARRETT

T\TEW ZEALAND primary pro--11 ducers are in much the same position following the release of the Budget thia week. Their basic problem of consistently mounting costs and a weakened external price level for almost all of their products remains in much the same perspective following the Budget, but it must be agreed, and in this connexion congratulations should be offered to Mr Nordmeyer. that farmers could have been considerably worse off. As election budgets go, one must concede that the Minister has refrained from obvious handouts and the fillip given.to the national inflation by this budget has been considerably less than was expected in some quarters. However, as the very full employment policy persists in conjunction with a total projected capital works programme of £96.5m, internal costs cannot help but continue on their ever upward way.

The Problem The Minister himself highlights the problem when he referred to the advances in agricultural production of a near trebling of wheat, a 15 per cent, rise in wool, and a 12 per cent, rise in meat output in the last three years. He later made the point that with this substantial increase in agricultural output the export Income was roughly the same now as it was some four years ago. This is- precisely the problem of- the individual farmer whose substantial increases in output are being sold for the same total gross receipt, in conjunction with sharp advances in costs. That he is well aware of the national importance of total farming income was made evident by the remarks of the Minister when he associated a relaxation of import restrictions with the advance in the price of wool and total wool receipts from overseas. A more positive approach to the direct problems of production of the individual farmer would have been a welcome addition tc the Budget proposals. , For instance, a removal of the £3OO limitation of capital work as an income tax< deduction would surely be in the national interest during periods of difficulty with the balance of payments. It is pleasing to see that the Minister' is aware of the fundamental changes taking place in European marketing—the large grouping of European nations. In the E.E.C. and also the European tratto association which includes the United Kingdom. This movement can be described as the most important for many years

and could well have fundamental i repercussions on all of our prl- 1 mary producers and subsequently < on every New Zealander. The Minister had made reference to the coming conference of the > GAT.T. at Geneva in six weeks’ < time. In view of the movement ’ towards a common import-export i policy by - the two groupings of < important European nations, this < conference could be particularly ’ important to New Zealand. There < is little doubt that the situation i now looming up involves new re- i lationships without precedent in i trading conditions in the past This l will demand initiative and some 1 generosity involving reciprocal i concession* by ourselves. The removal of the amalgamation clause relating to husbands' and wives’ incomes opens up intriguing possibilities for some of the larger farmers. One feels that this could be used to considerable advantage in the reduction of in- ' come tax, although the regulation precluding the transference of 1 assets by gifts or trusts for this ' purpose removes the only easy • method of establishing the wife ' in a position to receive a sizeable income. No doubt the passage of 1 time will enable wives to be established in this position by legi- , timate methods where this pro- ; vision will apply usefully. Timber: The apparent removal i of this item from a liability to - income tax will prove of great ' assistance to a minority of

fanners. Just how useful it will be remains to be seen when details are available. The £MM in approved Government investments: This provision could be useful to farmers wealthy enough to be able to make outside investments. The receipt of at least acme income completely free of income tax will no doubt prove an attraction. One cannot help but feel that on a strictly moral basis this type of move by the Government is rather questionable, although the great need to accelerate savings to reducp the Inflationary trend la most apparent Death Duties: Where duties are paid in advance of death they are not to be counted as an addition to the total value of the estate. This, is a most useful provision for those in the possession of large Quantities of assets. No doubt it will lead to some very searching questions being asked of the medical profession as farmers will not relish the idea of the Government obtaining money on an interest-free basis over a long period of time. Special advances by banks: It appears that trading banks will issue in the near future a scheme for special advances for tractors and similar equipment. The inference is that this will be on a more generous basis than the customary hire-purchase. No

J doubt this news will bo received n with pleasure by farmers, but it is unlikely to<nake a major contribution. n Special depreciation: Xt la not , known how this will apply to o farmers’ operations. It could be Suite useful in the short run, but s no more than 100 per cent k depreciation can ever be claimed , this is unlikely to have much permanent usefulness. < While this Budget does nothing ■ to overcome the basic problem of c the narrowing margin of profit ■ in farming it Could have been d very much worse. Much could depend upon the success of the . negotiations at GA.T.T, in the * near future in the light cd the ’ new trading arrangements which T appear to be almost completed in the European area. Saddled as ’ we are with an almost inevitable „ annual increase in costs, the “ emphasis must be laid more and J more on marketing and overseas . prices. The only other salvation ’ is still further increases in effl- “ clency in production off the land. * As a result of both technical and scientific advances and the generous efforts of the farming com:t munity, very high levels of em--11 ciency have been attained in the e last few years. It should be res membered, however, that every ■- time efficiency is raised and outa put increased it becomes more e difficult to repeat the performo ance.