Restraints on prices

Press, Volume CXIV, Issue 33514, 20 April 1974, Page 2

Restraints on prices

The new system of price control would simplify present procedures while still maintaining I • control over practically? all goods and services, and applying further profit restraints in new areas, said Mr Watt. )i i 1 he new system would ve- , place the Stabilisation of j Pnces Regulations brought,, down in November last year) and due to expire on June 30.:) "As pan of the new system') I of control the Government , has already announced, the; maximum retail price scheme.) will apply to a wide range of? goods, manufactured from'! July 1 next, particularly to? important foodstuffs and grocery tines.” Mr Watt said.? The list of goods would be 1 extended from time to time.;

In addition, the Commerce Bill has been introduced and its provisions on profiteering will increase considerably the control which can be exer- • cised over this undesirable 'practice. "Prosecutions covering a range of pricing matters have ; increased, and the Government has directed that this tougher approach should continue.” Many companies, however, ihad absorbed a considerable •proportion of their increased costs, some even in excess of their legal obligation, the Minister said. “The new system will continue to have different categories of goods and services. •Those goods and services which will be subject to full price control procedures (category A), will require approval before prices can be raised. REGULAR CHECKS “The number of goods and services in category A will be reduced but provision will : be made for additions where a closer review of profitability i is needed. "Other goods and services • will, in general, be in category B. These will be subject i to regular checks to ensure 'compliance with the price control rules.” ; Larger firms would be re-; Iquired to file financial ac-| i counts and profit results, said [Mr Watt. “Price increases by these; [companies will be subject to! notification and approval pro- [ •cedures.” COST RECOVERY Employers would be able i ! to recover the costs of any) general wage increase made i .by the Government or the •Industrial Commission. “However, employers must [absorb the cost of any addi-i t onal increase up to I the ■'.“•quarter of the general • adistment referred to earlier.”, said Mr Watt. This applied whether the i

(increase was negotiated, or granted by the commission.

"Increases in excess of this, which are granted by the commission, will be recoverable in prices,” Mr Watt added.

As well the cost of any faster move to equal pay than the minimum stipulated •by the Equal Pay Act, would •be required to be absorbed unless approved by the Industrial Commission. PROFIT LIMITS

"As a general rule the prices of any line of goods will not be permitted to be increased more frequently than at six-monthly intervals,” Mr Watt said.

"The profits of those who provide category B goods and services will be limited.” Mr Watt said that any individual trader’s profit, before tax, measured as a proportion of turnover, should not exceed the average of the last four years. Remedies and , penalties would ensure comIpliance. I “The return on share)holders’ funds will continue )tv be the main criterion for ; category A items,” he said: | but regard might also be had to the relationship between ) taxable profit and turnover. I Percentage distribution [margins would be frozen, or • where deemed justified, rej duced, and kept under review.