Standard Wages Claim— Court Problem: Lack Of Information On Subsidies

Greymouth Evening Star, 13 August 1947, Page 2

Standard Wages Claim— Court Problem: Lack Of Information On Subsidies

(P.A.) WELLINGTON, August 12. The Court of Arbitration today heard further submissions on the Federation of Labour’s claim for a new standard wage pronouncement. This course was taken because of the announcement by the Minister of Finance (Mr AV. Nash) that some subsidies were to be withdrawn or reduced. The parties concerned had received a letter from Mr Nash, which gave more■ information about the Government’s intentions, but they considered there was'still insufficient information on which to base their submissions. Mr K. McL. Baxter, who appeared for the federation, rested on his previous claims but reserved the right to make a fresh application when the effect of the reduction in subsidies on the cost of living was known.

When the Court adjourned, Mr Justice Tyndall invited the parties’ representatives to discuss the matter further with him in chambers. ~ M

The following letter, dated August 11, from the Minister of Finance which had been received by the interested parties before the sitting was read by Mi’ Baxter::—

“J feel it will be helpful if further details of the above decision (about subsidies) are made known to you. The following table, therefore, sets out the items concerned, together with the respective amounts of subsidy to be cancelled, computed on the basis of the annual subsidy rate for 1947-48:—

Apples and pears (including cases and wraps) .. 241,000 Lemons .. .. 2,500 Oatmeal and rolled oats (including bags) .. 39,000 Sugar 945,000 Tea 500,000 Cheese .. • • 190,000 Bacon .. .. • • 250,000 Retail meat .. ■ • 1,100,000 Tobacco ... • • 500,000 Rail fares (other than ordinary suburban) .. 430,000 Total .. •• 4,197,500 “In regard to freight and fares, it is proposed to remove the present subsidy of 25 per cent, on sea freights and adjust freight rates accordingly. Rail freights are to be increased by 20 per cent, and rail fares by 15 per cent, (other than ordinary suburban f ci res) “The following are the appropriate subsidy savings on freights:— Sea freights (subsidy—annual basis) .. ■ • 800,000 Rail, .goods and other 1,905,000 Total .. • • 2,705,000 “Although the effects on the cost of living as the result of the withdrawal or reduction of subsidies will no doubt create a new, and perhaps far-reaching, problem,” Mr Baxter said, “it is impossible for us to make any estimate of the effects on prices likely to result from the withdrawal or reduction of the subsidies mentioned in the Minister’s statement until the following facts are known:— “(1) Amounts paid by way of subsidy and the present subsidy rates on each of the affected items. “(2) From which items all subsidy is to be lifted.

“(3) How much of the subsidy is to be withdrawn from the remaining items.

“(4) From what dates subsidies are to be withdrawn or reduced.

“(5) How much, if any, of the additional cost will industry be required to absorb.

“(G) By how much will the total increase in prices allowed by the Price Tribunal consequent upon the subsidy reduction exceed the total subsidies at present paid. “(7) What will be the effect of increased freights on the general price level.

"Completely Unpredictable" “This is completely unpredictable from the available information. The workers’ representatives have no alternative but to take the opportunity of affirming their intention of pressing for further wage adjustments if increases in the cost of living consequent upon the coming adjustments to subsidies should warrant them.” Mr Anderson said the Minister’s statement was a vague one. He did not say clearly what he was going to do oi’ when he was going to do it. It

was difficult to know what weight to give each item mentioned in the Minister’s letter in assessing the effect on the cost of living. Mr Anderson said the total subsidies mentioned were £6,900,000. Assuming that salary and wage workers carried the whole of that, a 4 per cent, increase on the wage scale of 1942 would be indicated. However, salary and wage workers would not carry the full amount. He estimated that 25 per cent, of New Zealand’s 1,784,000 people were not dependent on the Arbitration Court for salaries and wages. That reduced the £6,900,000 to £5,170,000. When all things were considered, the effect of the lifting of subsidies would probably not result in the need for more than a 2 per cent, increase on 1942 rates. Farmers’ Viewpoint

Speaking for Federated Farmers, Mr N. L. M. Martin said: “It is difficult to aicess exactly what will be the effect on the farming industry of the implementation of Mr Nash’s statement that farm subsidies, with minor exceptions, would be cancelled from agreed dates and compensatory adjustments would be made in the prices paid for the produce concerned. This will be so for the following reasons.

“(1) The Minister does not state what farm subsidies he intends cancelling, but it is presumed he intends cancelling those which are now paid out of the meat and dairy stabilisation accounts and the Consolidated Fund.

“(2) Nowhere in published Government accounts do there appear the exact amounts that are paid by way of farm subsidy out of the Consolidated Fund.

“(3) In the Minister’s letter to the Federated Farmers, dated August 11, 1947, appear the so-called consumer subsidies, and not the farm subsidies which he intends cancelling in agreement with the Meat, Dairy, and Wool Boards as stated in his published remarks on August 9, 1947. “It is clear that if farm subsidies are cancelled on articles which are now part of farmers’ costs of production and are now subject to subsidy, farmers’ costs of production will be increased. The Minister of Finance has stated that compensating price adjustments will be made in prices paid for the products concerned.

Meeting Increased Prices “The increased prices will have to come out of the meat and dairy stabilisation accounts, and the net effect will be that the farmer is worse off for two reasons: (1) the Government will no longer be contributing any amount by way of subsidy but of the Consolidated Fund; (2) the meat and dairy stabilisation accounts will be reduced each year by the amount which was normally paid by way of subsidy out of the Consolidated Fund. This will reduce the rate of the accumulation of balances in the meat and dairy stabilisation accounts.

Mr Martin said that in view of the financial crisis through which England was passing at present, it would not be in the interest of New Zealland to press for the higher prices for her produce which would be necessitated if farmers’ costs of production were pushed much higher. In fact, having regard to the economic position in England, the possibility of a fall in prices for New Zealand produce could not be disregarded.