DANGEROUS EXPERIMENT

Evening Star, Issue 22327, 1 May 1936, Page 13

DANGEROUS EXPERIMENT

SIR A. RANSOM ON GUARANTEES DISASTROUS END PREDICTED [From Our Parliamentary Reporter.] WELLINGTON, April 30. The Opposition guns were turned on guaranteed prices when the debate on the Primary Products Marketing Bill was resumed in the House to-night, and further estimates were made of the guarantee price and cost. The Government’s chief defender was the Minister ot Agriculture. Commencing the debate, Sir A. Hanson, who inferred to the complete absence of financial details from the speech of the Minister of Finance, and to the remarkable fact that it was an accountant who held the Finance portfolio, and not the Minister of Agriculture who was piloting the Products Marketing Bill, asked the House to remember what the former Government did in guaranteeing a minimum price of a penny per lb to fruitgrowers, who, if the fruit realised more, got the surplus. The same applied to the tobacco growers, who were guaranteed one shilling per lb, and the recent shipment fetched far more, and the growers would get the full results. The Government, he added, might dragoon the dairy producers into accepting its price, hut it would not succeed in dragooning Tooley Street, and he could imagine the amusement of our competitors when they realised how we were antagonising trade interests in Britain. The price was to be based on the average of the last eight or 10 years. If the basis was eight years, the average was 12.76 d; if nine years, 13.03 d; if 10, 13.59 while cheese averages were—eight years 13.62 d, nine 13.88 d, 10 14.77 J per lb. This period included three or four years of slump conditions. The Government’s high wage policy must increase farming and transport costs, so it was doubtful if the farmer would get an}' benefit. The scheme also raised the question of control over production, which, if imposed, meant that there would be no incentive to farmers to improve their methods. He estimated, on the basis of a dairy factory’s balance sheet this season, that the average payout would be about lOd.

Opposition Members: More than that,

Sir A. Ransom, replying, said this was the balance sheet figure, and he suggested that if the Government fixed the price at 1s 2d, and the average was 10d, it would mean a subsidy of seven millions a year; or, on a guarantee of Is I£d, a subsidy of £5,125,000.

The Minister proposed to raise his finance from the State Bank by overdraft on the security of the country’s credit, and already the Government’s programme would involve an expenditure of 30 millions annually, though there was no evidence that the Minister of Finance was going to pay one penny of interest or make provision for redemption of the principal. All other lending institutions went to the Associated Banks, who derived their money from depositors who received interest, but the Government had a bank of its own.

“ What an example to set the people of the Dominion,” exclaimed Sir A. Ransom, who asked the Minister of Lands what ho would think of Crown tenants who went to him and said: “ The Government does not pay its debts; why should we?” The Bill was a dangerous experiment, revolutionary in character. The principles underlying it were unsound, and the scheme probably would end in disaster, with heavy loss to those it intended to help.^ “What an imagination he has,’’ said the Hon. W. Lee Martin, Minister of Agriculture, who followed. He could not understand a gentlemen in a responsible position suggesting that the Government was going to repudiate its responsibilities. Sir A. Ransom; What are they going to do P

Mr Martin: Live up to their responsibilities.

The Minister went on to quote Opposition speakers’ references to the former Government helping the farmers to the extent of £13,600,000, and declared that, as 50 per cent, were bankrupt, it was better to adopt a new scheme which would be less expensive.

As for the probable price to be fixed, he considered that the previous speaker had excluded from his estimate 25 to 30 per cent, of the realisations, as the season had not ended. He agreed that the Minister had not disclosed the price. “We are not placing our affairs in the hands of the sharp crowd.”

“The dairy farmer,” he continued, “ has been the scapegoat long enough. He has been in the hands of speculators and manipulators who worked the whole business in their own interest, but now he will have security.” As for the suggestion that the farmers expected a minimum, not a fixed price, the Minister declared that such a suggestion was never made by Labour speakers. They guaranteed that, given a mandate, they would introduce a Bill which would gaurantee a price to the farmer, which was being done. Just a little matter of simple arithmetic to work out the guaranteed price, was the opinion of Mr Dickie (Patea). The average over eight years was a little over Is a lb for butter and Is 1-Jcl for cheese. Throw in another, penny for luck, and there was the total. He estimated this season’s prospects were Is for butter and Is OJd for cheese, and if the Government gave an extra penny over the average, would the producers, he asked, grasp at this offer with all the restrictions attached to it? He did not think tho dairy farmers would rush it, because they were losing control of their market, losing touch with the people who had handled their produce for half a century, and imperilling the goodwill of the business people in England. If the price was fixed there was certainty and no speculation; but if there was doubt, speculation was encouraged. But once the butter passed from the New Zealand agents’ hands what could prevent the purchaser passing it on at a profit, even without taking delivery. It looked as if the farmer would get an extra penny, which would be absorbed in extra costs owing to the Government’s expensive high wages programme. Mr Lee: We had better hurry up with the guarantee. Air Dickie: Artificial prosperity is coming, and. whether financed by costless credit or not, someone ultimately has to pay.