COUNTRY'S ECONOMY

Evening Post, Volume CXXVII, Issue 91, 19 April 1939, Page 10

COUNTRY'S ECONOMY

NEED FOR STABILITY

DANGER OF PRICE SPIRAL

MR. NASH AGAINST INCREASES

The Minister said that the average price realised for butter in the United Kingdom last year was 117s 9d a cwt, and the average today wa? 114s. The average realised for season's butter was 11-is 3d. For the London equivalent of the guaranteed price they had t- obtain 124s a cwt for butter. The average price for cheese last year was 68s Bd. This season, owing to a large increase in the English output, prices had varied, and Canadian cheese was a factor. The best price realised for the season was 725. The last quotation was 60s a cwt. They had to realise 73s 6d a cwt to realise the sum they were paying out. A delegate: What's the average for clieese this season. Mr. Nash: 68s, or something like that. A voice: 65s 9d up to April 13. GOVERNMENT PAYMENT. The Minister then turned his attention to the Dairy Industry Account, and said that in the first year it was agreed that the Government should accept the responsibiliy for any deficit in the Account. "We have paid off that deficit that went out of the Consolidated Fund," he said. "It was £272,482. That was the year's realisation as compared with the pay-out of the first year in which the guaranteed price operated. We paid this out some time before March 31 of the present year."

"Even yet the figure for 1937-38 is riot completed," he said, "but it won't be many pounds away from a surplus of £555,000." This year there was a deficit of £870,249, but taking the figures up to April 13 it was slightly more than £1,000,000. "Taking 65s 9d as the average price for cheese, and 114s 3d as the average price for butter, so far, the deficit is just slightly over £1,000,000. That will mean, taking all the years together, and dismissing £272,000 as being the responsibility of the Government and last year's surplus of £550,000, we are at present £500,000 short of the price we have paid out. It will be a lot more than that when the season closes unless there are extraordinary circumstances coming in the next few months, and nobody can tell that." THE CURRENT PRICE. Dealing with the price for the current year, Mr. Nash said that he had discussed the question of price on several occasions with the chairman of the Dairy Board. "I have suggested to him, and now to you, that the best thing for the industry and for the Dominion is that the prices this year for butter and cheese should be so paid for next year," he said. There was a necessity, he said, for getting an element of stability inside the Dominion. He did not want to argue at the moment whether last year's price was right or wrong. He wanted to set out that there was a need inside a country like New Zealand when one had certain facilities in connection with betterment for everybody—he did not suggest that anyone would say that the farmer was worse off than in 1935 —for all sections of the community to be concerned.

When he had suggested the price to Mr. Hale (chairman of the Dairy Board) Mr. Hale had said, "What about the others?" He had said that he could not ask the dairy industry to accept the same price, but if he should, would the Minister give him an undertaking about the other sections of the community?

The Minister said that he replied that he could not give the guarantee asked, but he would go to the conference of the Federation of Labour and urge them to do what he was asking the dairy farmers to do.

"I have done that," said Mr. Nash. "I have been to the conference of the Federation of Labour. I hope the material will be published. I stressed the imperative need of getting a degree of stability for h year or two."

The Minister said that he had looked at the Dominion and had taken into account its imperative need, viewing sterling funds and the restriction of imports and commodities which the Dominion could normally do without, and ensuring that commodities that were essential should come in. He had also looked at it from the farmers' point of view and the need for the expansion of production—not only in the | expansion of commodities which v/e consumed ourselves. The expansion of production did something more than feed the people of the Old Land—it brought into being electrical equipment, railway lines and carriages, and other things that could not be brought into being if we had not goods to send away. TO STOP PRICE RISE. They were building up sterling funds and could not bring in a lot of things which previously had been brought in, and if purchasing power were extended in any way by paying higher prices to dairy farmers or higher wages to other workers, and particularly to those engaged on what were called non-produc-tive work —if the impact of that higher purchasing power were given to a smaller quantity of goods, then inevitably a price rise took place. If everybody determined to build up his income on a price-rising basis, a spiral would eventuate and a point be reached on which only one person would be sitting. A delegate: Aren't we on it now? Mr. Nash: We are not on any spiral just now. Production last year had gone down by a half per cent, jn value, but the

The necessity of securing an element of stability in New Zealand's economy for the next year or eighteen months was stressed by the Minister of Marketing (the Hon. W. Nash) when addressing the annual New Zealand Dairy Board conference today. Mr. Nash reviewed the position of the Dairy Industry Account, and said the present position was, taking all the years together, that the country was £500,000 short of the price that had been paid out. He suggested that the dairy industry should accept last year's guaranteed price for the current year as one way of bringing about the stability that was desired, and said that similar proposals had been placed by him before the recent conference of the New Zealand Federation of Labour.

The Minister stressed the danger of a cost "spiral arising. He also pointed out that the shipping* companies were seeking increased freight rates for the carriage of New Zealand produce Homewards, and said that the Government was not prepared to agree, though it was prepared to shoulder the responsibility of organising- waterfront work to bring- about lower charges. He did not want the dairy farmers to ask for greater sums out of the Consolidated Fund this year. Mr. Nash said that the revenue of the country was splendid, and he foreshadowed a Budget surplus "as good this year as in previous years.''

previous year it had gone up 17 per cent. INCREASED FREIGHTS SOUGHT. Another point that arose, said the Minister, was the question of freights. Ship owners were in New Zealand today and the Government had been discussing with them the fixing of freight contracts. "They want so much more by way of freight," he said. "Our answer is 'No; we will do so and so with regard to freights; we will take the responsibility of organising waterfront work whereby charges will be lower; we will do all we can, and we will give you all the pledges that we as the Government can do to say that conditions on the waterfront will be improved.' But they want more money and the ship owners want more money." The Minister said that the case he had made to the ship owners was the case he had made to the Federation of Labour and to Mr. Hale. If they did start fixing costs and did not add to the quantity they brought into being, difficulties that had been in evidence in the past years would arise. A delegate: Did you get a good hearing from the Labour Conference? Mr. Nash: Yes. He went on to say that it was difficult to put that proposition to people he had been helping for years to ask for more. He still believed that the farmer and others were entitled to get more out of the country than they were getting. He had had to go to people he had been helping to ask for more for years, and ask them not to ask for more.

A delegate: Were they satisfied? Mr. Nash replied that they had carried a vote of thanks and confidence in the Finance Minister of the country. The Federation of Labour had 180,000 affiliated members, and they had passed a vote of thank's, confidence, and appreciation for his statement, which would be published this week.

Taking that into account, he was certain, measuring up the needs of the farmers, and the justice due ttf workers in other sections, that it would be good to endeavour to get an element of stability for the next twelve or eighteen months, and it would be better for all if it were achieved by agreement.

The Minister referred to some matters arising out of herd testing, and said that whatever it was possible for the Government to do—and they would not have too much money this year because they were doing some things that had to be done —it would be done by! way of assistance. "Except for this,! I don't want you to come and ask for greater sums from the Consolidated Fund this year, although the revenue of the country is in a splendid condition," he said. "When the Budget figures are published, we will have as good a surplus as any in previous years." MORE PRODUCTION. Referring to wages, Mr. Nash said that there were a lot of men in the Dominion doing work for local bodies and he would like to see them producing something, either on the farm or in the factory. (Hear, hear.) The Government had not been idle, but the job was not easy, and if there was any procedure that could be brought into being to achieve that object, he would be glad to co-operate with the Minister of Agriculture and the Minister of Labour in doing something that would add to the productivity of the farm lands—whether dairy farms or not.

After the Minister had resumed his seat, a delegate rose and said that last year they were paying £4 10s in wages and this year it was £5 ss. Should the conference agree to a decision on something along the lines of the Minister's suggestion, and it was found that costs for 1939-40 were higher than those for 1938-39, would the Minister undertake to reimburse the industry for the added costs?

Mr. Nash: No, I could not give that undertaking. We are doing all we can to reduce costs in some of the major items.

He said he would be glad to look Into any claim that costs had gone up to an appreciable degree, but if import commodities went up, and the question was, Would the Government compensate everybody? (he answer was, No.