BURDEN OF TAXES

Dominion, Volume 30, Issue 189, 7 May 1937, Page 12

BURDEN OF TAXES

Flourmilling Industry Badly Hit STATE INTERFERENCE “Government Now Owns Half the Business” Dominion Special Service. Auckland, May 6. The statement that the heavy taxation now imposed meant that the Government now owned slightly more than half of the shareholders’ business was made by the chairman of the Northern Roller Milling Company, Ltd., Mr. J. A. t Peacock, in his address at the annual meeting to-day. After referring to what he described as the “disastrous effect” of Government interference in the wheat and flour industry, Mr. Peacock said that if the position were not met it meant that the Government was knowingly pledged to confiscation. The Northern Roller Milling Co., said Mr. Peacock, had served the Auckland province effectively for the past 36 years, and its products and service to the community were recognised and its reputation was established. The needs of the public had been met and no exaggerated profits had been made for shareholders, whoso return on their capital for many years remained at 7 per cent., which in a commercial concern of such a character was but moderate. But the position had now entirely altered. In February, 1936, the Government took over the milling interests from the growing of grain to the disposal of the flour, and fixed a price for the service of conversion of wheat into flour. “The result of this interference,” Mr. Peacbck said, “has been disastrous to this company and milling interests generally.” He referred to the company’s- do cisiou in 1929 to provide for expansion of the business and the needs of the community to adopt a five-year plan of development. This had just been completed when the Government stepped in. At this time 34,000 tons of flour were being .handled by the company, and there v. U- facilities to increase this amount to 38,000 tons. The Governiiient scheme arbitrarily reduced the output to 27,000 tons, and fixed the price allegedly to show a reasonable profit. Government Owns Half, “The figures that I have to put before you show what that means,” said Mr. Peacock. “From £11,793 of profit made in the twelve mouths, £5527 goes in income tax. In addition, £1233 was paid in land tax, which makes the total amount paid to the Government by way of taxation £6760, leaving the shareholders £6266, so that, without responsibility or financial obligation, the Government to-day owns slightly more than half your business. From profits there is a negligible return on shareholders’ capital. "The directors feel that this cannot be the intention of the Government. It is for this reason that a dividend of 4 per cent, for the past twelve months has been recommended from the accumulated profits. That this cannot be continued is indicated in the report that you have received. Unless profits are made iu the ordinary course of trading, no further dividends can be expected.

“Wo have had the assurance of the Prime Minister in and out of season that no interest in the connnuuity would be injured, yet this company has been arbitrarily divorced from its customers, whom it has served and lielped for more than a third of a century, and it has been left with no possibility of meeting its obligations to shareholders to give them some return on the capital that they have invested. “The directors examined carefully the question of efficiency. Experts were engaged. The reports were briefly to the effect that there was no mill quite as efficient in New Zealand, and it was the equal of any in Australia. So the question resolves itself into this, that for the past twelve months the company has been the victim of the Government’s scheme to regulate the industry from the growth of wheat to the sale of flour to the public, either as bread or for household purposes.” High Standard of Flour. Mr. Peacock also said the Northern Roller Milling Company had prided itself on the high standard of its flour Under Government control, it could no; be said that it had been possible, in spite of every effort, to maintain quality. A large amount of last year’s harvest sprouted in the stook. and insistence that this wheat should be gristed resulted in the mixture consisting largely of unsound wheat. Extraction of flour, instead of being about 73 per cent., fell below 70 per cent., and for the whole year just equalled that figure. No doubt some mills _ got a higher extraction, and the inferior article they produced was paid for by the Government at the same price. There was one price irrespective of the quality of the flour. No allowance was made for the inferior grain supplied. This year the position was no better. The Wheat Committee was warned as far back as December that the crop would be inadequate, and that Australian wheat would require to he imported. but no attention was paid. An unusually wet summer in Canterbury this season had resulted in an exceptionally high moisture content, the average being about 16.5 per cent., and rising as high as 19 per cent. It was quite impossible to ship this wheat or even store it with safety. The result had been that, instead of having four or live months’ supply of graifi in the granaries, which was usual at this time of the year, the northern mills were reduced last month to an amount equal to a fortnight’s gristing. The mills had been gristing any grain that could be secured without regard to quality or any other factors. These were facts, and no contradiction or specious argument could alter or detract from them one iota. Two Courses Open. “Tiie statement as to the mills’ efficiency is beyond question,” Mr. Peacock continued, “but is open to Government investigation. “If the position is not met, it means that (lie Government is knowingly pledged to confiscation. There can be no other conclusion. Since the in-

auguration of State control no opportunity has been neglected to impress on the Minister in charge of the industry that the position into which this mill has been forced is untenable. "There appear to be two courses open to the Government, either to fix a price that will "How the mill to function at a reasonable profit, or to take it over at what was the current price of shares at the time that the affairs of the company passed virtually from the control of the management to a State department, as was done with the Reserve Bank of New Zealand. Either course is open, and, I feel, will be acceptable to shareholders.” During the 36 years that the company had been in business, Mr. Peacock concluded, it had had uniformly harmonious relations with its employees. During the 10 years preceding Government intervention approximately £300,000 bad been paid away in wages.