ASSURED PRICES

Dominion, Volume 29, Issue 182, 30 April 1936, Page 12

ASSURED PRICES

Balanced Economy For Producers STATE MARKETING Adequate Remuneration and Protection GOVERNMENT’S POLICY EXPLAINED Necessity for a balanced economy in New Zealand was stressed by the Minister of Finance, Hon, W. Nash, in opening the second reading debate on the Primary Products Marketing Bill before crowded galleries in the House of Representatives last night. Ho claimed that the Bill before the House with its provision for the payment of a guaranteed price to dairy producers would be a first step toward such a balance. Mr. Nash opened by thanking those who had given him extremely valuable help in preparing his proposals during the last lew months, particularly members of his own staff and of the staff of the Minister of Agriculture. He also paid a tribute to the co-operation he bad received from membws of the Dairy Board. He would not have been able to face the House witli his proposals had it not been for the assistance of men who had given the benefit of their knowledge and experience to work out what it was hoped would be the best policy for New Zealand and for the New Zealand dairy-farmer in particular. The Bill before the House, Mr. Nash continued, had potential associations with the Government’s credit policy, matters of overseas marketing, mortgages, land values and the ultimate aim of a balanced national economy. Mr. Nash submitted that during the last six years there had been 4 material reduction in the standard of living in New Zealand. This was measured by the reductions in imports of goods generally considered necessary for a decent standard of living. Figures showed that in 1933, as compared with 1929, the Dominion had imported 20 per cent, less sugar, 33 pel’ cent, less -fruit, 75 per cent, fewer motor-cars and 80 per cent, less cotton goods. Such a result could not have come about under a properly-balanced economy. Fluctuating Butterfat Prices. Tlie following prices for butterfat over a long period were quoted by the Minister: —1904-5, 91d.; 1913-14, 12(1.; 1917-18, 24}d.; 1920-21, 33d.; 1930-31, 12Jd.; 1934-35, 8.94 d. Those figures, he said, were sufficient to show fluctuations in prices. However, from 1911 to 1921 production in New Zealand increased from 300,000ewt. to 900,000 cwt. Although production increased threefold, the total returns were multiplied seven and a half times over in that 10-year period, and in the same time land values rose by* £133,000,000. During the next decade the total quantity more than doubled, but the actual cash received was £500,000 less. “Is It possible for the most competent manager of a producing agency to take those years and decide on a balanced economy when faced with fluctuations of that type?” Mr.-Nash asked. “The result of the decline in values between 1929 and 1934 is shown by the fact that 1'9.501 applications for relief have been handled by Mortgage Adjustment Commissions. All those applications have a tale of tragedy to tell. During the last six weeks I have received in my office 258 letters from people who, even with the adjustment provisions, are still in difficulties. “The whole position shows an ineptitude and lack of vision unparalleled in history. Unless we can see our way through the potential production of the Dominion and iho necessary consumption we shall fan miserably. We have failed so far. 1 am looping that With the step we are tailing to-night we shall be able to go some distance along the road.”

Mr. Nash said the Government could receive more from the Opposition by way of co-operation than by way of words. The Government did not want an outcry of carping criticism, which would handicap it outside the House. Opposition members: You are get-, ting nervous. Land Values for the People. Mr. Nash said that if land values improved because of the policy and activities of the Government then those enhanced values must go to the people and not to speculators. That was inevitably linked up with the procedure it was proposed to follow. New Zealand was one of the last countries . to take action in the way of control with a view to overcoming existing difficulties. Managed economies were already operative in many other countries. The Argentine, the United States of America, United Kingdom, Poland, Spain, Turkey, Sweden and Russia were countries in which there was operative some form of organisation for the control of the commodities they marketed. As an indication that farmers were unable to find a market for their products. Mr. Nash quoted a statement from a recent book by Sir John Orr. in which he stated that 22,500,000 of the 44,000,000 people in Britain were not getting enough to eat. Mr. Nash asked if there were a more startling indictment than that our farmers as well as those in other countries were in difficulties and could not find a market for their goods. A member of the British House of Commons had wanted to establish a war food plan 'so that the jwople of Britain would hav 0 enough to eat in war time, but why not do it now? II was obvious there was 11 shortage of food in Britain. Mr. 11. G. Dickie (Opposition, Patea) : They never consumed so much in the history of the country. New Zealand's Resources. Mr. Nash said it must have been pretty bad before. Sir John Orr had shown that the people of Britain were going short lo.the extent of 4200.000,000 in food values. “No other country in the world,” Mr. Nash continued, "has resources untapped to the degree New Zealand has, and yet our difficulty is not. to utilise our resources but to find a market when we have utilised them That is the origin of I he Bill, which is inextricably wrapped up with production. incomes and land mortgages,” Mr. Nash said this country would not progress to the extent it could unless it obtained the products of the soil, even at a price that was not payable. The future of this country depended for some time on the proper utilisation of its resources, and it was the duly of the State to see that the farmer re-

celved a decent price for the work he did.

The first step to take to ensure that tlie farmer received an adequate remuneration was to protect him from fluctuations, and the Government knew of no other way than to buy liis products. Tlie present legislation applied only to products ot the dairy industry, but it could bo extended to other products when that was. considered desirable. Too miirih of tlie ‘wealth of the country went to people who were clever, and the Government, wAs anxious to see that a larger return from the sale of the products went to the people who did the work. Control of Shipments. Dealing with the administrative clauses of the Bill, the Minister referred to the section which gave theMinister or the Department power to control shipping of produce. Hon. Sir Alfred Ransom (Opposition, Pahlatua) ; Is that intended to apply to other products? The Minister: No, not just now. Mr. W. J. Broadfoot (Opposition, Waitomo) : How do you propose to control shipping? The Minister: It has been done three or four times by the party with which the hon. member is associated. The Dairy Board, the Meat Board and other produce boards have taken steps at times to ensure that the goods they wish to export should go overseas. “The money to be paid out of the Dairy Industry Account,’’ said the Minister, "will be so paid out that we will have a bill of lading to certify that the goods are in the ship. . The price will then have been determined. The likely procedure between the Reserve Bank and the trading banks will be that the former will give cheques on the Dairy Industry Account to the banks that have been authorised by the dairy factories to collect the money.” Mr. Nash said he hoped the following day to go into the whole matter with the Dairy Conference. Sir Allred Ransom : "Will members of the Opposition be invited? Mr. Nash: If the Dairy Conference approves I am agreeable, but I think you have a good chance to make your case here. Account to be Kept Intact. “We propose to keep the Dairy Industry Account intact,” the Minister continued. "There might be a surplus some day, but otherwise to the extent that there is not enough credit built into the account by the sale of produce overseas there will be an overdraft at the Reserve Bank. If there is a credit we will leave it in the account unless there is some way in which it can be used for the benefit of the industry. We do not propose to take money from the account to balance other accounts.” The Bill embraced the marketing of all dairy, products, Mr. Nash continued, but it applied immediately only to butter and cheese. It woul be extended to other products as the Minister considered necessary or desirable. Au Opposition member Will chickens be included? The Minister: Yes, if you have any chickens F at have come home to roost. “From August 1, 1936, to July 31, 1937,’’ the Minister said, “the price to be paid will be determined after taking into consideration the price received for butter and cheese during the eight to 10 years elided on July 31, 1935. I think the dairy industry will get that information the day after the scheme comes into operation, so that it will not be possible for harmful speculation to be indulged in. No one knows what the price is. The Rt. Hon. J. G.- Coates (Opposition, Kaipara) : Does the Government know? The Minister: Yes, the Government knows most things. However, if the Opposition would have us add anything to the Bill that will make it more fair and just to the industry we will include it. The Minister emphasised the necessity for maintaining the stability of the industry, and for keeping a proper relation between butter and cheese. If that relation was not maintained the market would be spoiled for both. In endeavouring to provide a suitable standard of living for those engaged in the dairy industry, the Government would have to adjust the balance as between one section- of producers and another so that all farmers would get a fair share <af production. • Cost of Production. Mr. Coates: Will the honourable gentleman throw some light on clause B? Mr. Nash: Clause B provides that in fixing the prices consideration shall be paid to “the costs involved in the efficient production of dairy produce.” We have a number of reports, as the member for Kaipara knows, setting out, as far as it is possible to judge, the costs incurred in producing a pound of butter or a pound of cheese. Those costs are variable, but to the extent that they can be ascertained—and they are fairly well ascertained, although not 100 per cent, correct —they will be taken into account. In reply to a further interjection, the Minister said: “We will try to give the farmer what he is entitled to, and what he has never had, not even from a farmer’s government—decent prices for the work he does. If his wife has got to work—and I hope she won’t have to work—then the pride to be paid to him ought to contain a sum that will compensate her for her share of the work.” The explanatory note, said Mr. Nash, was to be found in clause 18, sub-clause 5. It would occasion, he thought, quite a lot of debate in the Ilotlse, because there were words in it that could be Interpreted in all manner of ways. It read: "Due regard having been paid to the several matters mentioned in subsection four thereof, the prices fixed in respect of any dairy produce exported after the thirty-first day of July, 1937, shall be such that any efficient producer engaged in the dairy industry under usual conditions and in normal conditions should be assured of a sufficient net return from his business to enable him to maintain himself and his family in a reasonable state of comfort.”

"The objective ot the Government will be to help and inspire tlie dairyfarmer Io produce the highest possible quality,” said tlie Minister. “We will arrange for a series of gradings to ensure that those who put their time and thought, into producing high quality prpduee will receive a sufiicient reward,

“I question—outside the fact that they have had food to eat—l question whether any section of the community has suffered more than the dairyfarmers if worry is the test. Many of them have seen their life-savings go overboard through this absurd system under which prices vary to the extent that 1 have mentioned. How far we will be able to remove those disabilities I don’t, know--the future only will tell—but if the farmer stays on his farm and is competent we will give him a guaranteed price for the produce he creates and free him from worry from a - monetary point of view.” ■ Reciprocal Agreements. Linked up with guaranteed prices was the question of reciprocal agreements with other .countries, said the

Minister. “This procedure can’t be carried out effectively unless we have goodwill between ourselves and the Old Country,” he said, adding that he hoped some day a Minister would go to Britain to negotiate an agreement first with the United Kingdom, then with the other countries within the British Commonwealth, and then with any oilier country that wanted the goods we produced. Plenty For All. “We are going the bard road. We want to find the even way,” said the Minister in concluding his speech. "We don’t think it is worth while continuing in its entirety tlie procedure that lias been followed through the years. We be’x’vc we can see through the element of darkness something better on the other side. The potential production of the world to-day is amazing. No oue ought to go, short of the things that are necessary 'for an ordinary decent life. There should be one qualification and one qualification only—willingness to do a share of the work that is necessary to build a world economy, a Dominion economy, and an individual economy. “We nre trying to build a national economy that will give individuals the rights to which they are entitled —one doer that every human 'being can shut to be inside with the sanctity of his own thoughts, one gate that every family may close, but a barrier round these snores-—no. We ask the people of the Old Country, when we have helped our own people to get the things they are entitled to, Io dome out 'here and live with us. There is plenty for all in this wonderful little country.” “A PIRATING BILL” Mr. Coates Criticises Labour Policy SOCIALIST IDEAL “The Bill to give effect to the Government’s policy of guaranteed prices lias been introduced under the title of the Primary Products Marketing Bill,” said the Rt. Hon. J. G. Coates (Opposition, Kaipara), who followed the Minister of Finance in the second reading debate. “Actually the Minister of Finance would have been well advised to pay more attention to alliteration and call his Bill the Primary Products Pirating Bill. The implications of the measure are such that it will mean political piracy on a stupendous scale.”

The proposals in the Bill, Mr. Coates continued, were not the proposals put before the electors last year. The famous pamphlet published by Mr Nash did not disclose anything nearly as drastic as the provisions -for bulk State purchase revealed in the Bill. The Labour Party might have received a mandate to pay a guaranteed price for dairy produce, but It certainly did not receive a mandate to take over the whole of the country’s produce. Mr. Nash had shown in his pamphlet that over a number of years butter had varied in price from 230/- to 64/- per cwt., and had attributed the variation to the activities of clever manipulators. The variation was simply the natural result of world fluctuations in supply and demand. Another point made by Mr. Nash was that guaranteed prices were in operation in other countries. It was true that some countries were guaranteeing returns to producers, but the general aim was to encourage the production of goods needed for home consumption and not for export. That was a vastly different matter. Mr. Nash had openly referred to the operations of the Canadian wheat pool as disastrous, and yet he was advocating the operation of a similar scheme for New Zealand dairy produce. “The Minister’s pamphlet has been varied to suit the purposes of the Bill,” Mr. Coates continued. “The Government has astutely , returned' to its original policy of bulk purchase. As far as the dairy industry is concerned, it is providing absolutely for the socialisation of production, distribution and exchange. This last is already provided for. Bulk Purchase and Barter. “The ultimate aim is bulk purchase and bulk barter, but the Government will not come out into the open and say so. The proposal to fix prices is only the thin edge of the wedge, but there is a maul the size, of a house behind it to drive it home. The whole scheme must lead to complete ownership of all products by the State itself. Did the Labour Party tell the country that it intended to socialise the Dominion? “I have in no way exaggerated the policy,” Mr. Coates added. “If members of the Government were really frank they would boldly declare their intentions, but their policy is being carefully masked. The Prime Minister and his colleagues say there is nothing to fear, and with the cooperation of the people we will reach our goal. What is that goal? It is nothing more nor less than straightout Socialism.” The taking over of ownership aud control of dairy produce, Mr. Coates said, meant that insurmountable barriers were being placed in the way of individual effort, tenacity and enterprise. The importance of exports was being entirely overlooked. The present receipts from that source were about £45,000,000 to £50,000,000 a year and nothing should be done which might interfere with that source. Another important point was that internal prices closely followed export prices. Dominion's Export Trade. Mr. Coates quoted figures to prove that per head of population New Zealand had an export trade far in excess of that of Great Britain or the United States, and further figures to show that domestic consumption in the Dominion was only a small fraction of primary products exported. Along with all its other schemes, Mr. Coates continued, the Government was putting forward the suggestion that an extension of secondary industries would mean loss dependence on primary production. That argument was fallacious from the start. New Zealand, isolated in a cor.ner of the Pacific, with only 1,600,00 of population, could not hope to use mass production methods for the local market aud that would have a marked bearing on costs. Wool exports and the imports of manufactured woollens provided a case In point, said Mr. Coates. In 1934 the Dominion exported raw wool to the value of £12.500.000 and imported various woollen articles Io an approximate value of £2.000,000. If all those imported materials had been manufactured in New Zealand wool of a value considerably less than £2,000.000 would have been used, and the bulk of wool production would still have remained for export.

New Zealand was third in the list of the principal wool exporting countries of I be world. It exported annually about 300.000,0001 b. weight, but I' nd only about 6,000,0001 b. in its own mills. If we manufactured all

our requirements from our own wool, we would only be utilising a portion of our total production. National Destiny. “'The national destiny of this country was ordained by those early pioneers who arrived from the Mother Country nearly a century ago,” said Mr. Coates. “They laid the foundations wisely anil well on the rock of sturdy independence. No blasting by legislation can disturb the security of that rock.” By deciding to fix a guaranteed price f.o.b. and. to announce it by Order-iu-Council at the start of next season, tlie Government was keeping the dairy industry in the dark. During the election campaign there had been much talk of a guaranteed price of 1/3 tier lb., but it appeared that the Government was hedging on that point and would not go beyond 1/1 per lb. If last year’s average price of 1/- was maintained, the cost to the Government of a guarantee of 1/3 would be £4,500,000. At. 1/1 per lb. the Government; would have to find a difference of £1,750,000. “In no sense can I possibly agree with this radical and untried experiment,” Mr. Coates said. “If the farmers of this country take my advice, they will have nothing to do with the Government’s proposals. They would be wise men to keep their future in tiieir own hands, to meet the world’s market and make the best of it. If the price to be fixed is to be 1/1, I would say that the world market warrants a better price. “I want to state very distinctly and very clearly that every member on this side of the House, as far as the forms of the House will permit, will oppose every' inch of the way this socialisation of the dairy industry.” INDEPENDENT’S VIEW Preferential Trade a Dream The view that the financial proposals advanced so far by the Government were not sufficient to carry out the provisions of the Bill was expressed by Mr. H. Atmore (Independent, Nelson), whose speech was along lines generally indicating support for the measure. Mr. Atmore claimed that Mr. Coates had not made oue constructive suggestion in his speech on the Bill. It had to be remembered, he said, that it was not only the farmer who suffered from the situation throughout the country, but the business man in the town as well. Reference had beep made to steps being taken to feed nations during wartime, and most of the present prosperity in industries such as the woollen industry was due to the imminence of war. But the Bill before the House represented a step which was being taken to feed the people in times of peace. “I insist that the money proposals of the Government are not adequate for carrying out the proposals under this measure,” Mr. Atmore stated, “but at tlie same time I am sure when the Government realises the position that it will take the necessary steps to provide adequate machinery.”

Mr. Atmore contended, when talking about the overseas trade ramifications involved in the marketing proposals, that preferential trade was now nothing but a dream impossible of fulfilment He reminded the House that the industry in Great Britain with* which New Zealand would compete was already subsidised to the extent of £40,000,000 a year. “New Zealand had the greatest production of foodstuffs per capita in the world, yet there was shortage of food in the homes. There was no shortage of wool for clothing, yet people had to wear second-hand clothes. Every man in the employment of the Government, every wage-earner under an award and even every pensioner had his “guaranteed price,” yet while the wealth of the country came from the land the man on the land could not be assured of a reasonable standard of living and a guaranteed return for his produce. There was something obviously wrong when the leader of a farmers’ party and a farmers’ Government laid it down that such a reasonable standard could not be guaranteed the farmer. WHEN OTHERS FAIL Duty of the State to Take Action PRIME MINISTER DEFENDS POLICY Regret that Mr. Coates had seen fit to warn the farmers not to accept the Primary Products Marketing Bill was expressed by the Prime Minister, Rt. Hon. M. J. Savage. He said Mr. Coates had advised the farmers not to accept the Bill if it became the law of the land. That was advice he would not care to give. Mr. Coates had also spoken of using all the forms of the House available in order to block the progress of the Bill, but he assured Mr. Coates and his friends that they would get tired of that before the Government did. Mr. Coates, said Mr. Savage, had used some fine sentiments about people coming here aud carving out a home. The trouble was that these homes had been carved out for someone else. Mr. Coates bad talked about individual liberty, but he wondered if he meant those working under stay orders enjoyed individual liberty. No one would call it individual liberty to have their standard of living allocated after working for a lifetime. Mr. Coates: How many are there in that position? - Mr. Savage: Not many, I hope. But the law is there aud the honourable gentleman knows there has not been much opportunity to give effect to it because of the decision of the electors last November.

The State, said .Mr. Savage, was quite entitled to come into the picture when other forms of organisation had failed. It, was quite fair to say that the form of administration of public affairs that was the order of the day when Mr. Coates and his government were in power had failed. Exchange of Goods. The Prime Minister said. Mr. Coates had stated that, only .18.5 per cent, of New Zealand’s butter was consumed in the country, and that, 81 per cent, was sent, overseas. “But for the goods we are sending overseas.” Mr. Savage continued, "we are taking goods from other countries, and we are consuming all we take front overseas in payment for our butter.’’ “The member for Kalpara said that this Bill was red socialism.” Mr. Savage added. “The price will be paid on a basis of the rates ruling over the last, eight to 10 years, and the farmers have been assured that they are not going to get. less than that. Wo are definite on that point. And let me

say to the mortgagee that his equity is at present resting on 87/- per cwt. for butter in New Zealand. “When this programme comes into operation- it will be substantially more than that, and it will be a guarantee. The mortgagee will know where he is. and so will the farmer. Yet the member for Kaipara says he can see red Socialism because the Government buys tlie total production, pays an economic price for it, and proceeds to sell it overseas. 1 do not care what colour it is. 1 call it ordinary common sense.” 'The Prime Minister said the farmer was entitled to an equitable share of the 1 total production of the country, and he could get it only when everyone else received an equitable share. The Government, had said that the guarantees to farmers must rest on guaranteed incomes for the rest, of the community. Would anyone deny that that was the right thing to do? The farmer could get a guaranteed payment for bis services only when others in the community had the ability to sustain that guarantee. Check On Exploitation. 'The Government was not entering into the business with the idea of making a profit out of the farmer, Mr. Savage said. Its job was to prevent exploitation. Mr. Coates had stated that the Government was creating a boom by its Reactionary legislation. If th* Bill, was going to destroy the manhood of New Zealand and break down the farmer, where was the basis of the boom? There was going to be a big draw, Mr. Coates had asserted, on New Zealand credits, because people would be wanting to bring goods from Great Britain to New Zealand. They could only bring the goods from London to New Zealand when the New Zealand people had the money, to buy them, and the sooner that happened the better for New Zealand, London and everybody else concerned. “My advice to the average farmer,” said Mr. Savage, “is to stick to the farm, because we want to help the man who works the land, and not the man who wants to sell it. “I have lived in the homes of tlie farmers of this country. I have lived with men and women who have spent their lives on their farms and were due to walk out. Well, the remainder of my days will be spent in trying to see that they are not going to walk out. It is a question of plain common sense. I am asking the farmers of New Zealand in the name of the Government and in the name of the whole of the people of this country to accept the provisions of this Bill and to take my assurance that we are not going to be associated with anything at all that is likely to be to their disadvantage. This is only a matter of meeting modern conditions by modem methods, and as leader of the Government and as a man I pledge myself to the farmers and to the people of this country.” The debate was interrupted by the adjournment at 10.30 p.m.

The Council adjourned until 2,30 this afternoon.