Govt, Meat Board reach compromise

Press, 19 February 1987, Page 1

Govt, Meat Board reach compromise

PA Wellington The end is in sight to the six-month tussle between the Government and the Meat Board over the board’s stabilisation and reserve accounts.

After a meeting yesterday described by the office of the Minister of Finance, Mr Douglas, as fruitful, the board’s chairman, Mr Adam Begg, said a compromise deal should be finalised within the next week or so. The row centres on the Government’s claim to a $2OO million meat reserve account in return for its Budget-night promise last

year to write off the board’s debt in its stabilisation account.

The stabilisation debt, the result of price-smooth-ing schemes over the last three seasons, has grown to more than $1 billion, prompting the AuditorGeneral, Mr Brian Tyler, to write in his annual report last year that it was probably inevitable for the Government to assume responsibility for the debt because of its size.

The report said that if the Government had acted between 1982 and 1985 while the debt was being run up, the supple-

mentary minimum price scheme rather than the Meat Board would have borne the burden. The board has contended that the $2OO million reserve fund is a separate issue, and was effectively a trust fund containing surpluses earned by farmers from a bulk-purchase agreement with Britain after World War 11, and set aside “for a rainy day.” But Mr Douglas has insisted the fund is an asset of the board’s, and fair game for the Government in exchange for the “huge taxpayer-funded favour to

the industry” of writing off the stabilisation debt.

However, in September, 1985, Mr Douglas and the Minister of Agriculture, Mr Moyle, together granted permission for the board to use the reserve account as a capital contribution to its holding-company, Freesia Meats, set up to keep the board at “arm’s length” from the investment it wants to foster in further processing and overseas marketing opportunities. Freesia has been bn hold since the row over the reserve account developed, hamstringing the board from fostering the

market development role it has assumed since handing the physical marketing of meat back to meat companies in December, 1985. Mr Begg said he could not give details of the likely resolution of the row, but it now appears likely the board and the Government will agree to “divvy up” the reserve funds between them.

Mr Begg said the fact that the board had been accruing an interest bill of more than $lOO,OOO a day on the stabilisation debt while waiting for a resolution was balanced

by the interest the reserve account had earned. The debt was five times bigger, but most of it was at a very low interest rate through the Reserve Bank.

“Indeed, some of it should not be accruing interest at all at this stage as there was supposed to be a five-year rest,” he said.

“But that is not a concern at the moment ...

we had a meeting with the Ministers and as a result of that we are hopeful we will reach an amicable agreement with the Government in the near future.”