SUBSIDIES RETAINED

Gisborne Herald, Volume LXXV, Issue 22572, 27 February 1948, Page 8

SUBSIDIES RETAINED

AUSTRALIAN DECISION PRICE STABILISATION CANBERRA, Feb. 23. The Federal Government has decided to continue the subsidies which it pays to keep down prices on many items. The Ministers had hoped to reduce the subsidies gradually without perceptible effect on local prices. The main items on which the Government pays a prices subsidy are tea. potatoes, coal, woollen goods, milk products (including butter and cheese), leather, textiles and some imported raw materials. The Prices Commissioner, Mr. McCarthy, in a strongly worded report submitted to a Cabinet sub-committee stated that the withdrawal of subsidies would have a disastrous effect on prices. He said that because of rising world prices it was impossible for the Government to carry out its policy of reducing subsidies. Other countries were heading for inflation, and unless Australia had price control and stabilisation it would have to go with those countries. Mr. McCarthy said that if the Government withdrew its subsidy on tea. for instance, the price would go immediately from 2/9 to 5/9 a lb. Mr. McCarthy declared that to keep proper control of prices the subsidy system should be extended to a number of other commodities which affect the cost of living.