Decision Against Freight Subsidy

Press, Volume CVII, Issue 31383, 31 May 1967, Page 3

Decision Against Freight Subsidy

(New Zealand Press Association)

WELLINGTON, May 30.

The Government had decided that to subsidise the north-bound movement of South Island freight would not provide a meaningful solution to the problems of regional development, the Minister of Industries and Commerce (Mr Marshall) said today.

The Government had arrived at this conclusion only after very careful consideration of a departmental survey entitled, “An Examination Of Freight Costs Incurred By South Island Manufacturers,” he said.

The survey was made at the request of the Canterbury Manufacturers’ Association.

Mr Marshall said the purpose of the report was to obtain an indication of the freight-cost disadvantages suffered by South Island manufacturers when selling on the national market. Mr Marshall said that in achieving this limited objective the exercise had been of value. A wider view of the position would entail consideration of many other factors. “The incidence of taxation, for example, would reduce, in most cases by half, the freight-cost disadvantage. Further freight costs are not necessarily the major determinant of factory locations. A number of other factors, for example land, building, labour and inventory costs, are also important considerations," he said.

The Minister said problems of development were not confined to the South Island. The increasing concentration of population and industrial ac-

tivity should be considered in a national context. “The reasons for the growing imbalance amongst re-

gions and between metropolitan areas and provincial towns are complex and well entrenched. “The situation cannot be changed overnight and no single measure provides the key to a long-term solution. In these circumstances, the introduction of a subsidy on South Island freight rates would represent a piecemeal and limited approach,” he said.