‘Govt reckless’ -Reid Farmers

Press, 14 September 1988, Page 40

‘Govt reckless’ -Reid Farmers

Government policy is leading to the destruction of New Zealand’s productive base, Reid Farmers chairman, Mr Bob Hudson, says.

“Government continues to recklessly refuse to control its own expenditure and each year consumes an increasing share of the gross domestic product,” he said in the company’s annual report. “Many of the changes made by Government have been constructive and beneficial but are being negated by its refusal to reduce its own expenditure.”

“Government finances its excess expenditure by borrowing at high interest rates which in turn keeps the exchange rate artificially and ridiculously high.”

Mr Hudson said if prosperity and employment were to return it would be export-led. Government had to encourage producers, particularly exporters.

A united front was needed to tell the Government “to reduce its own expenditure and balance its own budget or perish.” Mr Hudson advised farmer clients to continue reducing expenditure in the hope the Government would follow the same advice. Reid’s directors had recommended a record rebate of 57 per cent (53 per cent previously). Discounts had also been made on many purchases, enabling the company to compete with discount

houses. Athough the company’s woolscour subsidiary throughput was 15 per cent down on the previous year, throughput of its triple dump press exceeded expectations and confirmed the investment decision. Reid’s wool division again produced record throughput with over 95,000 bales auctioned for $7l million. Several new wool dips were handled resulting in over 3000 bales of new business, Mr Hudson said. Record wool prices were achieved at consecutive sales. A line of 16.8 micron wool from Sunny Peaks Station sold for $3B a kg and a line of 15.7 micron wool from Mt Otakaike Station sold for $2lO a kg. In real estate, Mr Hudson said the rural property market was quite

active until the announcement of the new season’s meat schedule and the sharemarket crash. The urban property division’s turnover increased significantly during the year and commission earnings were up 38 per cent. The price of the average house sold increased to $82,000. Reid Farmers Finance had a difficult year with a small decline in aftertax profit, Mr Hudson said. As previously reported, the company made a taxpaid profit of $1,939,000 ($1,903,000). A dividend of 7.3 cps, or 30 per cent, is proposed, to be followed by a 2-for-l bonus issue. The directors also recommend doubling the authorised capital to $2O million by creating 40 million shares of 25c each.