WHO PAYS THE DIFFERENCE?

Evening Post, Volume CXXIV, Issue 27, 31 July 1937, Page 8

WHO PAYS THE DIFFERENCE?

"Any undertaking by the Government to guarantee to any section of export producers security of a return for its product higher than that which is justified by the prices received on its world market is not possible without injustice being inflicted on some other form of production from which a direct subsidy might be taken, or on the general taxpayer of New Zealand who would be required to foot the bill in the interests of the particular product receiving the subsidy." The general accuracy of this statement, made by the president of the New Zealand Sheepowners' Federation, can scarcely be disputed. While it may be applied, with little variation, in condemnation of expedients such as high exchange designed to subsidise all exporters at the expense of importers and consumers, its particular application to the special guarantee given to a section of producers is much more striking. If the guarantee given exceeds the market return someone must pay the difference. It may be another section of producers or consumers, or it may be the taxpayers (in the long run the whole community) or the charge may, through inflation, be passed on to rentiers, wage-earners, and consumers. All these will try to secure compensation (following the farmers' present plea for a "compensated price"). Until they secure it, they will be suffering an injustice, and when they secure it the benefit to the guaranteed producers will be absorbed in the general advance of costs. Already we can see this process at work. Farmers complain that the guarantee is not high enough. As yet there has been no great outcry from the paying . people—because, they do not know who has to pay. Yet someone must. The Hon. P. Fraser said on Thursday, referring to the enhanced value of exports:The dairy farmer has benefited to an even greater extent than is revealed by this return, since the guaranteed price has been appreciablygreater than the overseas market price.

This can have but one meaning— that the farmer has received more than the market return; and it can have only one result—that the difference has to he made good. It is time, we think, that the public should have some definite information as to this result. Information cannot be final, we recognise, as there are still stocks to be sold. But a new guarantee season begins on Monday and, though the old guarantee is being continued in the meantime without prejudice, the Marketing Department must have begun to reckon its gains and losses. The latest Reserve Bank statement shows the advances in the Dairy Industry Account at £4,277,732. How much of this is covered by stocks yet to be sold and how much of it is the cost of the guaranteed price which "lias been appreciably greater than the overseas market price"? When a new price must soon be fixed, the public should be told this, and also how the price-difference is to be met.