Mr Elworthy defends decision

Press, 25 July 1986, Page 13

Mr Elworthy defends decision

Federated Farmers had two major points of difference with the moves to depress the value of the dollar which had been advocated by an exporters’ group, the federation’s president, Mr Peter Elworthy, has said. He explained to the annual conference in Wellington this week why the federation withdrew from the joint approach to the Government seeking a reduction in the value of the dollar in the interests of all exporters.

The withdrawal has been criticised by some farmers, including members of the meat and wool executive of North Canterbury. The provincial president, Mr Michael Murchison, raised at the Dominion conference what he called the federation’s inflexibility on this issue.

Mr Elworthy said Federated Farmers met with other exporting groups, including manufacturers and producer boards. The Dairy Board had commissioned a study of possible moves to depress the dollar value from Professor Bryan Philpott, of Victoria University, which had then

been put forward by the exporters in their approach to the Government.

After receiving its own advice on the Philpott analysis, the federation had isolated two major points of disagreement.

“We believe Professor Philpott discounted the effects for exporters of reductions in border protection,’’ said Mr Elworthy. "He also recommended a wages accord.” The federation’s policy was opposite in those two areas and it could not therefore whole-heartedly endorse the exporters’ approach to the Government.

“We were happy to go along with the concerns about the strong dollar but we couldn’t align ourselves publicly with a report which contained elements contrary to our policy.” Federated Farmers has pushed strongly for reduction of border protection and in this week’s conference firmed up this policy of “elimination of tariffs.”

Many at the conference were angry when the Prime Minister, Mr

Lange, dismissed the effects on farmers of tariff elimination as bringing only two per cent reduction in farm costs and possibly a higher dollar with more investor confidence in New Zealand. Several studies have shown the cost of border protection to farmers to be much higher than the Prime Minister was prepared to concede.

The federation has also called for free wage bargaining, without percentage benchmarks or wages accords.

Mr Murchison argued at the conference that the exporters’ group was mainly concerned with the strong dollar and because farmers were also badly affected the federation should have stayed associated with the! approach to the Government. “The federation has been too inflexible,” he said.

Mr Elworthy replied that the advice received by the federation was that the Philpott measures may in fact lift the exchange rate, rather than lower it. The conference later passed two remits dealing

with the exchange rate after hearing an address from the Governor of the Reserve Bank, Mr Spencer Russell, which was taken in committee. The conference reaffirmed support for the concept of a floating dollar.

It then passed a motion from Mr Oliver Grigg, of North Canterbury, which said: “The Government is urged to make sure that the floating exchange rate brings the dollar to the necessary level to stimulate the export sector.” Mr Elworthy had proposed on the first day of the conference that a long debate on the dollar policy be suspended until Mr Spencer Russell had spoken. The president commented on the amount of confusion about “management” of a floating dollar. Farmers generally seemed to want to hold to the principle of a float, in that they were against propping the dollar value up artificially, but could not agree on what management influences could be brought to bear to drive the dollar downwards and lift farmers’ prices.