"HANDLE" PRICES

Evening Post, Volume CXL, Issue 52, 30 August 1945, Page 8

"HANDLE" PRICES

TRIBUNAL'S ANSWERS

INCREASE'S PASSED ON

Echoes of the "beer strike" of August and September, 1939, were heard at yesterday afternoon's sitting of the Royal Commission on Licensing, when Mr. H. L. Wise, a member of the Price Tribunal, was cross-examined at length on the deliberations of the tribunal when the price of beer was raised from 5d a handle to 7d.

Mr. Wise explained to Mr. R. Hardie Boys, representing the New Zealand Alliance, that when the beer tax was raised in 1939 by 6d and then by 3d, the whole of the increase was passed on by the brewers to the retailers on August 11. Ten days later it was reported that the increase "would be investigated by the Price Tribunal."

Mr. Hardie Boys: Was the public asked to give evidence?

Mr. Wise: No, because there was not sufficient time to do so.

Mr. Hardie Boys: In addition to passing on the 9d, the trade also stopped the house shout. To what extent did the tribunal find the house shout had been eliminated before its decision allowing. 7d to be charged for a 12-ounce handle? —There was some considerable tendency in that direction at that time.

The fact is, to put it bluntly, that when the 6d tax went on, one of the consequence was the virtual elimination of the house shout?— Yes, I understand so.

Replying to further questions, Mr. Wise said he was not aware that as soon as the price went to 7d for a 12----ounce handle, that type of container practically disappeared from hotels. The tribunal's order wai that a customer must be supplied with a 12----ounce handle of draught beer on demand. The ability of the brewers and the licensed victuallers to absorb the tax increase and a further increase from 5 per cent, to 20 per cent, in sales tax had been investigated by the tribunal before the order was made. Witness considered that the brewers and licensed victuallers had not passed on all of their increased costs to the consumer. Mr. Hardie Boys challenged that opinion.

Referring to the selling by hotels of 10-ounce glasses and smaller for 7d, Mr. Wise said that had been a customary trade practice and it was not the policy of the tribunal to interfere with trade practices when making orders.

Mr. Justice Smith (chairman): It is a question of whether a substantially fair adjustment of prices has been made.

When Mr. Hardie Boys asked whether the decrease in beer duty in 1934, which was not passed on to the public, had been taken into account by the tribunal, Mr. Wise replied that the tribunal was not then in existence and did not take into account situations preceding its establishment. Whatever percentage profit had been made at the outbreak of war, the tribunal allowed that percentage to remain unless there were some circumstances which prompted it to vary that policy. Mr. Hardie Boys mentioned an Auckland hotel where all 12-ounce handles were served, according to evidence before the commirsion. A profit of £3000 had been made there on an investment of £8000, the furniture being worth £1300 and the manager being paid £650 a year. Under those circumstances, would it not be reasonable for all publicans to sell a 10-ounce handle at 6d?

Mr. Wise said it would not be fair to judge the financial position of all hotels in the Dominion on that one hotel; it might inflict a grave hard; ship on other hotels. Resuming his cross-examination of Mr. Wise this morning, Mr. Hardie Boys, appearing for the New Zealand Alliance, elicited the statement that no increase whatsoever had been allowed the licensed trade throughout the country in respect of increased wages and materials costs which had risen sharply during the war. The witness said that in September, 1939, the wholesale total cost of whisky to the retailer was 10s 5d a bottle, overproof, in Auckland for standard brands. In June, 1942, when the Tribunal allowed an increase in price to lOd a nip with 42 nips to the bottle, the price was 16s l_d a bottle. The retail price provided for a return to the retailer of 35s a bottle, but if sold by the bottle the profit was 2s. "PARAMOUNT CONSIDERATION." If any attempt had been made by the Price Tribunal to have regard to the various sizes of containers for beer in hotels in arriving at the prices to be allowed, it would have had to allow hotels to charge the working man more than 7d for a 12oz handle," said Mr. Wise in reply to Mr. P. B. Cooke, K.C. (for the licensed trade). The Tribunal's policy was to see that a man could be sure of getting a drink of a certain quality at no more than a certain fixed price. The interests of the public had teen the paramount consideration. Asked by Mr.-E. C. M. Robinson, a member of the Commission, what would be the position of a person charged Is 6d for half a pound of butter, which was the pound price, the witness said a prosecution should follow if there were sufficient evidence. Did charging 7d for, say, a 6oz glass of beer appear right, then? asked Mr. Robinson. "Yes, taking into account the overall position," replied Mr. Wise. Mr. Robinson: Could not the Price Tribunal have allowed, say, 4d for six ounces of beer?—lt's the over-all position that has to be taken into account. Mr. Robinson: You have not answered my question.—Yes, it could have been done, but it would have altered the handle price. IIS IT A FARCE? Is it not a farce to fix prices without fixing quantities per price?—lt's not always practicable during wartime. It may be practicable alter the war. Mr. Justice Smith (chairman) said the matter of the costless increase in revenue to breweries as a result of the reduction in alcoholic strength was a very important matter in relation to the price of beer to the consumer. The witness said he could assure the Commission that that had been taken into consideration. Mr. Robinson mentioned that in a group of hotels for which he quoted the individual figures, the good will paid varied from £15,000 to £53,000, totalling £154,000 out of a total price of £196,000. Did the witness know of any other trade where such good wills were paid? Witness: I am not aware of any. The Price Tribunal would not allow good will to be passed on as an item for costs. • Mr. Robinson: Then the Tribunal deducts good will from capital costs? Witness: Not deducts. But if an applicant asked for allowance for good will, it would not be allowed by the Tribunal. The witness did not agree that profit increments quoted—one of an Auckland firm from £64,000 in 1939 to £105 : 000 in 1944—were necessarily excessive. The turnover might have increased very considerably. To Mr. P. Coyle, another member, the witness said the Tribunal did not consider it a crime for a business to make profits. If it had thought the licensed trade was exploiting the public, the Tribunal would have stopped that. "NOT AN EVASION." To Rev. J. T. Mackay, the witness said he did not consider it an evasion of the Tribunal's order that hotels should sell less than 12 ounces of beer for 7d. ■ One would need to know what quantities of each sized glass were sold in order to fix a price varying according to sizes, he said. Asked by Mr. J. P. Ruth whether he thought people who drank smaller glasses should pay 7d a glass, witness said they had their remedy—to ask for a 12-ounce handle. He would not agree that there was general resentment among the workers about beer prices, for the workers could get a 12-ounce handle for 7d. Mr. Ruth: Suppose they don t want 12 ounces? Suppose half a dozen men went into a bar together and wanted a lound. Do you think it fair that they should have to pay 7d for mediums if they don't want handles? Witness: It is not a question of fairness. It is a question of the overall position and of doing justice to . the people as a whole. To his Honour, the witness said that

thp consumer should pay the additional tax or part of it in order that the revenue would be obtained. The trade was required to carry as much of it as was reasonable.

His Honour asked if the object in view in fixing the price was so that a certain volume of sales would be achieved with a relative volume of revenue. The witness replied that a consideration had been to avoid an undue reduction in sales, and therefore in revenue.

His Honour: Did you take into account that there may be some social advantage in wartime in having smaller sales? —Witness: No.

Your object was to ensure a sufficient volume of sales, so that the Government would get the revenue? —And to see that the public would be getting a fair run.

Did you take into account the previous custom of the various-sized glasses for the same price?— Yes. It had been a practice to charge the same for. say, a medium as for a handle.

"It is very extraordinary," remarked his Honour. "In no other sort of trade would that be allowed."

Witness said he had found no case in New Zealand where the English system of different standard prices for a pint and a half-pint applied.