Reasonably happy with Budget

Press, 11 July 1980, Page 16

Reasonably happy with Budget

Farming ■ leaders in Canterbury seem to be reasonably happy with last week’s Budget. At least they were relieved that there was no tinkering with the over-all support for agriculture.

But with the massive increase in fertiliser charges announced, almost at the same time as the Budget, which means that superphosphate has risen by about $3O per tonne since April, there was some feeling that the fertiliser subsidies now needed reviewing, and in the light of ever increasing costs a need was also seen for a reduction in taxation and supplementary minimum prices that would ensure farmers of at least a reasonable return.

Anyone with any knowledge of the current economic situation of the country would have been naive in the extreme if they , had expected glad tidings of great joy in the Budget, said the president of North Canterbury Federated Farmers, Mr A. L. Mulholland.

Farmers would have to be contented with the fact that concessions in respect of fertiliser had been maintained and that the vote to the Noxious Plants Council had been in-

creased. The latter was very pleasing as he believed that this was one of the most worthwhile incentives to agriculture..

Mr Mulholland said it also appeared that there would now be a greater degree of flexibility in Rural Bank interest rates, and the advance by one year of the new limit for death duties was also welcomed although new valuations had already eroded part of this advantage.

The Minister of Finance had commented that farmers had had good return., over the last two years, which was reasonably true for meat, wool and dairy farmers, but was certainly not true for the arable sector. Serious problems of liquidity were prevalent in this group. The increase in the price of diesel from 17c to 48c per litre in two years coupled with the rise in the price of superphosphate from $37 per tonne to the new price of $93 had created major problems in that industry, as had the 80 per cent increase in plant and machinery costs in the same period.

While the increase in the basic price of wheat from $l4O to $167 per tonne was the best increase growers had ever received at the one time, it had come at the same time as all these cost in-

creases and had therefore been largely nullified.

On the other hand the retention of the 20 per cent investment allowance was welcomed although one had first to have an income to get any benefit. Looking at the Budget figures on development and industry of 51420 M, Mr Mulholland said that estimates for agriculture at. S24IM looked rather modest. One would, of course, have to agree that the largest share at SSOOM should all go to fuel and power, because this must be an area of great concern. However, he added that he did not see any significant emphasis on research, into farm-based energy. . . . Mr Mulholland said he viewed with concern the figure of 52500 M for social services and just wondered how long the economy could sustain such a high proportion of the country's income being spent in this area.

When one looked at the projected figures for borrowing in the next fiscal year, one could not help but be dismayed at the prospect of servicing these debts. This debt servicing had to be financed largely from the overseas earnings of the primary sector. With the uncertainty of New Zealand’s future in

the E.E.C. market place and other areas of political instability where this country’s ability to sell could be placed in jeopardy, there was certainly no room for complacency. The president of MidCanterbury Federated Farmers, Mr R. S. Mackenzie, said ’he welcomed the stated aim of-the Budget to contain and counter inflation, but in that context found disturbing the Budget deficit of $1260M. He also welcomed the Government’s moves towards a more open economy with less regulation, licensing and other restraints on innovation and enterprise and more internal and international competition. For the farming industry, which depended on overseas prices for the bulk of its income and earned nearly three quarters of New Zealand’s overseas funds, any other policy would be disastrous.

The Government’s decision to maintain its support for agriculture at about the present level would be welcomed by farmers, although it should be pointed out that this represented a reduction of about 18 per cent in real terms.

Farmers would await with interest the announcement of the level to

be set for supplementary minimum prices for meat and wool. The decision to raise the exemption limit for estate duties to the full amount from April, 1981, would also he welcomed as a necessary adjustment to keep pace with inflation, and it was to be hoped that similar adjustments would be made when necessary in subsequent years. The Government’s decision to raise the cost of postage by 40 per cent from October 1. followng another rise of 40 per cent nine months ago, would affect everyone but would bear rather harshly on the rural community. If the substantial profit earned bv the Post Office last year came largely from telecommunication, at the very legst a rise in the cost of postage should be accompanied by a reduction in telephone rentals and toll charges. “A Budget lacking in sensation” was the description of the new president of South Canterbury Federated Farmers, Mr M. O. Westaway. But he said it was obvious that further minibudgets would eventuate during the year. Farmers were relieved that the over-all scale of support for agriculture had been maintained at the present level. Taxation incentives and fertiliser subsidies remained the same and they were assured of the supplementary minimum price scheme for the next year. They also welcomed the greater flexibility in . setting interest rates on Rural Bank loans. But with inflation at 18 per cent and costs eroding the productivity of farming, more stimulus would be needed to maintain production. It was to be hoped that this would be recognised when setting the supplementary minimum prices for the next season. Taxation should be re-, duced and it should be. indexed to the rate of inflation. High taxation was becoming a disincentive to increased production. With the massive increase in fertiliser prices due to the increased cost of imported materials the present level of subsidies needed reviewing for the benefit of farmers and industries serving the farming community.The arable farmer still - remained the neglected sector of farming, he said.