PRICE CONTROL DISCUSSED IN PARLIAMENT

Dominion, Volume 38, Issue 306, 25 September 1945, Page 8

PRICE CONTROL DISCUSSED IN PARLIAMENT

Textile Industry To Be Established ANOTHER DAY SPENT ON ESTIMATES Four classes of estimates of departmental expenditure representing a total vote of £1,847,434 were approved by the House of Representatives vesterday/ They were the votes for the Department of Industries and Commerce (£953,115), Linen Flax Development (£536,917), Iron and Steel Industry Account (£5466), and the Native Department (£351536). .... Most of the afternoon was occupied with discussion on the Hems in the votes for the Department of Industries and Commerce. Particular reference was made to the subsidy on the production of wheat, the price of bread and price fixation control. The Minister of Industries and Commerce, Mr. Sullivan, said that if price control and stabilization were to be withdrawn we would have to approach t.iat period with the greatest care or else the whole economy of the country would be thrown out of gear. During consideration of the vote for linen flax development the Minister announced plans for the development of a textile industry. Other subjects discussed during the evening were the prospects for the establishment of an iron and steel industry in New Zealand. ' The House rose at 10.30 p.m. till 2.30 p.m. today.

PRICE CONTROL NEEDED Money Factor And

Goods DISCUSSION IN HOUSE The danger of withdrawing price control and stabilization in the meantime was emphasized by the Minister of Industries and Commerce, Mr. SULLIVAN, during consideration of the estimates of the Department of Industries and Commerce. He said that w’ith the members of the armed forces drawing their gratuities and deferred pay, and payments being made to people who had invested in war loans, it was imperative to see that we had a. relationship between the money factor on the one hand and goods and services on the other so that there was some reasonable equilibrium before we thought of withdrawing price control or stabilization. Mr. GOOSMAN (N., Waikato) said members would note with some alarm the rise in the proposed expenditure for the Price Tribunal. Last year the suin of £46,000 was voted and over £55,000 was expended. This year the vote was over £66,000.’ This was another Socialist practice. His objection was to tlie practice of the tribunal in fixing prices upon factory costs under which au inefficient factory could get a higher price for a poorer article than an efficient factory could for a much better type of article. “I verified that, in the Public Accounts Committee,” added Mr. GOOSMAN, “and the head of the department said it w’as so. That is a serious state of affairs.” Mr. MACDONALD (N., Mataura) asked if the increase in- the staff of the Price Tribunal was due to extra, office staff or to the appointment of additional inspectors. He also inquired the qualifications of inspectors and whether they were instructed to be sympathetic or to incite shopkeepers to commit an offence. There had been the North Auckland case, and though two men had been found not guilty by the Court they had been discharged from their duties. Work of Tribunal. Mr. MURDOCH (N., Marsden) asked how loug it was proposed to keep the Price Tribunal going. Was it intended to retain it indefinitely? Mr. .SULLIVAN: Do you think it should be abolished? Mr. MURDOCH: A good deal of it, yes, Mr. SULLIVAN: You speak for your party, I take it. Mr. MURDOCH: The Minister cannot put words into my mouth, but I say a large part of the Price Tribunal should be abolished. Mr. THORN (L., Thames) said the Price Tribunal was to protect the public from being plundered by profiteers. Mr. Murdoch apparently wanted these people to be allowed to rob and plunder the public. It would be interesting if the Minister could give the number of convictions for breaches of price orders. Mr. SULLIVAN: 1438. Mr. THORN: That, indicates the extent of the robbery that would have taken place had the Tribunal not been operat111'Kir. BROADFOOT (N., Waitomo) asked why a prosecution was not taken in the place in which the storekeeper concerned lived. He cited the case of a storekeeper in Kawhia who had sold a tin of paint at sixpence over the fixed price. The prosecution had taken place in Hamilton, and rather than incur the expense of travelling 40 miles each way to that town the storekeeper had pleaded guilty. There was a Court in Kawhia. and the prosecution should have taken place there. It frequently happened that though a trader hud goods on his shelves .he could not sell them nor, coud the public obtain them because of the delay on the part of the tribunal in fixing the price for them. If price control were to continue it should be decentralized so that traders could get speedy action and the goods could be'Circulated to the public quickly. Mr. SULLIVAN said there was a fairly close 'co-ordination between the Price Tribunal and the Standards Institute. Offenders were always prosecuted in the court nearest their place of residence. Mr. BROADFOOT. Why was the man I mentioned not prosecuted in Kawhia. There is a court there.

Reply by Minister. Mr. SULLIVAN said that delay in fixing prices was usually due to some specific cause. Increases in wages made a heavy demand on work of the tribunal, for probably from all industries and services came demands for authorily Io increase price. They did not always f?et them. If industries could reasonably absorb increased wages they did not get price increases. At a rime of increased wages there came a flood of applications and the tribunal had to go eyes out to try ami keep up with them on special occasions of that kind. Decentralization would be quite good, but it would not be practicable for they could not have several tribunals fixing different prices in different parts of the Dominion. However, he had asked tor decentralization as far as possible without sacrificing thc.centr.il authority. Hie total number of inspectors was -17. It was not worth-while having a pricing system unless its decisions were given effect to. To have a price control system and not have it policed would be a waste of money and the whole thing would become a farce. The prosecution referred to by the member for Mataura concerned twq rationing inspectors and not officials ot the Price Tribunal. Mr. ALGIE (N., Itemuera) : The same church but a different new. Mr. SULLIVAN said the Price Tribunal had done a marvellously good job. A great deal of the additional expense was due to extra work <is a result of additional subsidization and costs. If we tinkered with price control and stabilization before tb«Tc was a great increase in the quantities of goods there would be difficulties for New Zealand. If we were going (o abolish price control <r stabilization wo had to approach flint period willi the or the economy of the country would be thrown out of gear and info chaos. There was 11,■ desire to relain any eonlrol.s unnecessarily. but there were dangers in the premature withdrawal of price control tend stabilization. . Ming HOWARD (L., Christchurch said that, women had JieeiLSd.ll£j!.t-

ed to prices. This had been made possible by price control. It was wanted for some time yet. Once the so-call. “smart” shops charged up to a third more than others—a premium on a fashionable name. Now the same article cost the same price whether in a small, struggling concern or a "smart shop. The Price Tribunal had made people price conscious. She wanted to see more co-operation between the Price Tribunal and the Standards Institute. lhere could be no effective standardization without the closest co-operation. Mas there any way by which manufacturers could be made to manufacture according to the standards set by the Standards Institute ? Mr. BOWDEN (N., Wellington 'West) agreed with the Minister, that the need was for increased quantities of goods. It was wise to point out that the Price Tribunal could have the opposite effect. It was recognised that in a particular trade a certain percentage was allowed. But under the Price Tribunal system a firm which, for instance, made an article at £l, was allowed 10 per cent., or 2/-, and another which made an article at o/was allowed the same margin. If t here was to be efficient industry then prices must be fixed over an industry. It was no encouragement to make an article at a lower price and then have the Price Tribunal reduce the ceiling while a less efficient concern produced au article at a higher price and still got the same margin. He believed that the officers of the Price Tribunal knew’ this, but. there was some organization behind . the tribunal which prevented such a policy being carried out. It was stated that the tribunal made certain recommendations in respect of the timber industry ; but was not the tribunal one which fixed prices. not merely made recommendations? He believed there was another organization to which the Price Tribunal had had to make representations. Mr. NORDMEYER, Minister of Health,, said that some shopkeepers deliberately fostered the idea that the price fixed by the tribunal was that which they had to charge. It was not; it was merely a maximum beyond which an article could not be sold. Mr. POLSON (N., Stratford) agreed with the members for Wellington West and Christchurch East that some standardization was wanted. Only a system of a standard price over an industry could avoid encouragement of inefficiency. He recognised that it would be some time before price control could be thrown overboard, but meantime it should be tapered off as rapidly as possible. The system of licensing had created "monopolies, though the Minister had not, he believed, sought this. The Minister, during the war, had to spread out the work in order to get it done. The Minister of Health had risen as the champion of price control, but if retailers did not sell at the maximum fixed by the tribunal then this body would consider it had fixed too high a coiling and reduce it accordingly. So it would continue till business became uneconomic. War conditions had made for much inefficiency.

Mr. HOLLAND, Leader of the Opposition, replied that the Minister of Internal Affairs had Jet down the Price Tribunal badly. Admittedly the tribunal had a difficult job,'but if members had something useful to contribute he was sure the tribunal members would be disappointed if they did not do so. It was only by pointing out errors that mistakes, could be rectified. What the tribunal fixed was an approved price; one not higher than it. was thought an article was worth after due consideration had been given to the position of the manufacturer. The tribunal operated against efficiency. Suppose a manufacturer by profit-sharing or staff bonuses reduced bis production costs by means of a greater output. Then the tribunal would cut down his selling price. He said that the Court of Arbitration made certain increases retrospective, but the tribunal would not give the manufacturer a higher price to compensate him for the extra production cost from the time wages were increased. Surely the Minister of Industries and Commerce did not approve of that. Today the man who reduced his costs was only cutting his own throat. The line to take was a price structure for a whole industry. so those engaged would know where they stood. A man without an overdraft naturally .had lesser costs, but because he was in a sound position he was penalized. The manufacturer with an overdraft had greater costs because he had to make allowance for this liability. lie was placed on a better footing than the man who was clear of overdraft costs. Mr. SULLIVAN, Minister of Industries and Commerce, said that to get a clear view they must go back to the start of price control. There were always price variations, and what the tribunal did was to stabilize (he price of articles at the price existing when stabilization was introduced. It made allowance, in due course for increased costs if it thought the industry concerned could not absorb them. One reason for varying prices’ when price control came in was that some manufacturers sold direct to retailers. thereby eliminating the wholesaler and his charges. In the majority of cases the tribunal fixed the maximum price only. In some cases, such no wheat. Hie priee was the actual one. For ceilings to be fixed for an entire industry over its average costs would mean that some of the units in the industry would not be able to carry on. In peacetime that was all right, hut not during the war. when with all sorts of shortages every firm had to be dealt with on a basis of its particular costs in order to keep production going. Otherwise the shortages would have been much greater. That did not mean that the wartime system had to continue in peace. Ho agreed that in some cases it had preserved inefficiency. but that had existed before price control, ft was possible to improve the system, bill they must not rush their fences. Duly when they got a reasonable quantity of costs could they resort to ceilings for an industry. 'l,'lien it would bo fairer to the public and industry and result on greater supplies.. If the tribunal had boon allowing wider margins than it should, then it had been slacking on the job.