Minister gives details of National decision on producer-board interest

Press, 24 June 1985, Page 2

Minister gives details of National decision on producer-board interest

PA Wellington The Minister of Finance, Mr Douglas, has produced more details of a decision by the previous Government to make producer boards pay commercial rates of interest on farm price stabilisation accounts. The Labour Government has suggested to producer boards that stabilisation funding through the Reserve Bank should be abolished — a move attacked ’by the Opposition. Mr Douglas said on Tuesday that the former Prime Minister, Sir Robert Muldoon, had been involved in making decisions to phase out advances to producer boards at concessional rates of interest. Mr Douglas said that on June 26 last year, just before the snap election, Sir Robert announced that agreements reached with the Meat, Wool, and Dairy Boards included the provision that “commercial rates of interest will be paid or charged on the boards’ stabilisation accounts.” Mr Douglas said it was pointless for the Opposition now to try to disown “the

clear direction its Government took in imposing commercial interest charges on producer stabilisation accounts.” The Leader of the Opposition, Mr McLay, said last Thursday that the Government’s intention to end stabilisation producer board Reserve Bank funding was “putting the boot” into farmers. Mr McLay said that if that happened, farmers would have to raise additional funds either through stock and station agents or banks to tide them over the period until they were paid. “They will be raising that money in a market where interest rates are already in excess of 20 per cent and penalty interest rates are now in excess of 30 per cent,” he said. But reports on Thursday said that when Mr McLay was shown Sir Robert’s June, 1984, statement he said the reference to “commercial rates” did not mean they would be run to the levels now applying. The Meat Board rates had been pegged at 10 per cent which were about the rates applying under Sir Robert’s

interest controls. However, Mr Douglas said Opposition suggestions that the present Government intended to take steps that could ruin agriculture were total nonsense. The crucial step had been taken by the previous Government, he said, and that was one of the relatively few areas in which the Labour Government had agreed with its predecessor. Mr Douglas said the boards Would continue to have guaranteed access to funds on a preferred basis.

But it was undesirable to arrange those facilities so that the board’s drawings reduced the effectiveness of the management of financial liquidity in the economy. National’s spokesman on agriculture, Mr lan McLean, criticised Federated Farmers for not supporting continued Government funding for the stabilisation of sheepmeat prices. He described the meat and wool conference’s rejection last Thursday of a remit calling for the continued stabilisation of prices through the Reserve Bank as extraordinary.