BUTTER SUBSIDY

Evening Star, Issue 17483, 14 October 1920, Page 9

BUTTER SUBSIDY

, MORE TAXATION COMING. PRIME MINISTER GIVES HINTS.(From Oxm Parliamentary Reporter.} WELLINGTON, October 13. “ Poor Minister of Finance,” exclaimed *hc Hon.. Mr Massey, when the chairman )f the Butler Prices Committee informed file House, when presenting their 'report, 'hat to carry out the recommendation to jrovide butter at 2s 3d retail it would to necessary for the Minister of Finance find £600,000. The report was in these terms:— -

In view of the fact that no restriction has-been placed on the price of wool and otiier products of the Dominion, the committee are of opinion that the dairy farmers .are entitled to the fall benefit of the market prices for butter. They recommend that a sufficient quantity of butter, to be taken from the whole of the Dominion’s supply, be requisitioned for supply to tbe population at 2s 6d per lb, f.0.b,, this being tho amount of the Imperial Government’s offer. Having carefully considered the price to be charged the consumer, the committee recommend that the retail price be fixed up to March 31, 1921, at 2s 3d per lb for cash, and 2s 5d booked. Hie estimated cost of fixing the price on this basis is £500,000. The committee’do not recommend an export tax on butter. Having considered the question of the’ introduction of margarine, the committee resolved to make no recommendation.

Mr Nash said he would like to give the Finance Minister a little credit. At-first the Minister was not prepared to go so far, but he seemed to have the happy knack of doing things, and he would leave him to say where the money was coming from. Personally, he would have liked to see the price fixed at 2s; but after the statement made by tho Minister pf Finance in respect to the financial position it was no use going any further, and he felt that they had got more than was mticipated.

The Prime Minister took an early opportunity of dealing with the financial aspect of the position. He pointed out that it cost the British Government £70,000,000 per annum to keep down the prices of bread, and he noticed that the Australian Prime Minister calculated that it cost £20,000 a day to keep down the price of sugar in the Commonwealth. The committee’s proposal was the lesser evil. Evervone knew that when the price of bread went up at the beginning of the war there was an outcry, which he thought was justified. The wheat producers were not allowed a free market, and the result was to discourage wheat-growing. Consequently, up to the present we had not been able to produce enough wheat for our own requirements. Mr Fraser: They went slow. Mr Massey: No; they produced other commodities which were just as profitable. There is the law of supply and demand, which cannot be interfered with continually without suppliers being seriously affected, and if we interfered with the market price of butter, in half a dozen more years, instead of producing- for expert, -we would be importing. Coming to die subsidy suggestion, Mr. Massey dellared it to be the only alternative. ’I know the difficulties of financing the proposal fr.e remarked). The poor old Consolidated Fund has been given an enormous burden to carry, and the burden is increasing. I had looked forward to a decrease in taxation, however slight, at the end of the financial year, but I am afraid the prospects of decrease are becoming smaller by degrees and beautifully less. I think I shall have to ask the assistance of the House to find this money; but I don’t think I. had better follow this point further. I don’t want to create alarm by saying I am going to increase taxation ; it will be taxation which cannot be passed on, and will he paid by only a few people I promised to consult the head of the Treasury as to whether it will be possible to find £600,000, and where it can be found. We have to find 6d per lb by way of subsidy. Every penny of • subsidy costs £IOO,OOO. The Prime Minister added that the arrangement for the Imperial butter purchase ended on March 31, but he did not say that the subsidy could end then. He could not ask members of the House to increase taxation generally, because every time taxation went up it increased the Cost of Living. Mr Mastpjs; put it on death duties.

Mr Forbes ; Put it on beer, (laughter.) Mr Massey: I don’t know that beer can stand very much mere. I am trying to place the proposed increase in the direction where it will not be felt by the general public, and I will take the House into my confidence later, because I must have legislation on the proposal. Mr Masters; Dead men cannot pass it on. Mr Massey: You cannot depend on dead men. Life is uncertain; so is death. SUBSIDY ALTERNATIVES. EXPORT OR LAND TAX. [From Ode Paeliamentaev Reporter.] WELLINGTON, October 13. Before coming to the conclusion that the Consolidated Revenue shall bear the Mst of reducing the local price of butter, ihe Select Committee considered the other alternatives, which were mentioned by Mr Nash, their chairman. When . presenting the report he said that the committee had considered the question of the introduction of margarine. They.found that in England, whereas the original consumption of margarine was 197,000 tons, compared with 240,000 tons of butter annually, the position had reversed itself last year, when 130,000 tons of butter and 350.000 tons of margarine were used. The committee were not suggesting the use of margarine, but it might be introduced under State control, with 15 per cent, of added butter, for cooking purposes. Members: No, no, Mr Sullivan: Not while we produce 50.000 tons of butter. Mr Nash; You would not know the difference. Dr Thacker: Margarine has no vitamines, and butter has. The Prime .Minister dealt wth the export tax suggestion. Anyone who knew anythng of political economy realised, he said, that in a country depending for pros- . parity on export it would .be worse than follv to attempt anything which discoura.ged production. Asother factor was that there were 4,500 soldiers on dairy farms, keen placed there snee the end of the - war. Were they mot entitled to the full value of their product? Another proposal was to let the market find its own level. This would have been an unwise thing, and he thought interference was necessary There was only one altermatire: the subsidy. The Ltadcr of the Opposition declared that the existing problem was due absolutely to the Government’s want of foresight in failing to, set up a stabilisation fupM out of the high profits made by those who had sold butter lands.. Mr Massey: Absolute nonsense. Mr Wolford: “I expected you to say that.” He went on to declare that the raid which had to be made on the Consolidated Fund was due to the Government’s bankrupts in ideas. The Hon._ pr Pomare; What about the National Government? Mr 'Wilford said that party questions were kept out of the National Cabinet, and_ each Minister looked after his own affairs. It was an economically unsound policy to take grants from public funds but there was no alternative. He was not suggesting to tax a man who had held his land since 1915, but if he gold it at a profit some part should have been taken by the State. , Mr, M’Combs, who followed, while subscribing to the subsidy method, suggested Slite a different method of raising money, e stated that he. had unsuccessfully endeavored to get the committee to adopt the following proposal: —That the retail Bocg .of butter, cash oyer the counter, .be

Is 9d per lb; booked, or booked and delivered, Is lOd per lb; and that an equalisation fund be created by a levy of 5 jber cent, addition to the Land and Income Tax, and an increase in Stamp and Death Duties calculated to produce the equiva-lent-of 5 per cent, on the total Stamp and Death Duties. He remarked that the Labor Party felt that the most hard-work-ing and deserving portion of the community should not bo singled out for special treatment when other producers were not interfered with. Under his proposal the farmers would receive full price for their butter, tbe consumer would get it cheaper, and those who could afford to pay would be called on to do so. He read carefullycompiled tables showing the butter levy which could be- produced by lus method. The tax on land valued at £2,500 would bo 16s 4d; of the value of £5,500 it would be £1 19s 3d; of £IO,OOO, £4 0s 2d; of £50,000, £39 11s; of £IOO,OOO, £127 18s 77d. The 5 per cent, levy on income taxes would produce: On £SOO income, nil; £SOO income, 12s 6d; £BOO income, £2 2s 2d ; £I,OOO income, £5 10s 8d ; £2,000 income, £l2 9s 6d; £4,000 income, £46.

Another opportunity of discussing the butter report wll be afforded to-morrow, but the Prime Minister informed the House that the system proposed will operate at once.