BREACH OF PRICE ORDER

Grey River Argus, 30 January 1946, Page 2

BREACH OF PRICE ORDER

WEST COAST SAWMILLERS Case at Greymouth Three West Coast sawmilling companies were charged in the Magistrate’s Court at Greymouth yesterday with breaches of the Control of Prices Emergency Regulations, 1939, before Mr A. A. McLachlan, S.M. The Court room presented an unusual spectacle for Greymouth, about forty representatives of various sawmilling concerns in the district being present. The Crown was represented by Mr F. A. Kitchingham, and the defendant companies by Mr C. S. Thomas, Christchurch, who took the charges as read, and pleaded guilty. The charges, which were laid under the Control of Prices Emergency Regulations, 1939, and amendments, 1944/174, were preferred by Eric James Stock, Price Tribunal Investigating Officer, Christchurch, against Butler Bros., Ltd., Ellerslie, Auckland; Stuart and Chapman, Ltd., Ross; and J. C. Malfroy and Co., Ltd., Hou Hou, in that each had sold amounts of timber totalling 19024 ft, 2113 ft, and 3869 ft, respectively, at a surcharge of Is 6d per 100 ft (board measure), which surcharge was in excess of the surcharge of 8d per 100 ft specified in an approval granted by the Price Tribunal on October 8, 1945. “The Department views the action of the defendant companies with some concern,’’ said Mr Kitchingham, in stating the case for the Crown. He stated that in May last year it had been arranged to make a survey of the sawmilling position throughout New Zealand, and the information gathered submitted to the Government for a review of prices charged for timber. An interim surcharge approval had been granted to meet the extra costs in labour, before the survey had been completed. In September, 1945, an increase of 2s per 100 feet had been approved by the Price Tribunal for North Island sawmillers, but this had not applied to the West Coast because the Department considered that the financial position on the West Coast area was not nearly so critical as that of the North Island. The surcharge had been granted on rimu timber, with the exception of building B grades. Included, was a surcharge of 8d to cover increased labour costs.

He added that since 1942, Southland and Otago had been linked with the North Island in respect to selling prices, but. the West Coast had not been included, and consequently had not received the same increases. Tn October of last year, the Minister of Internal Affairs (Mr D. G. Sullivan) had issued a press statement on the subject, and the West Coast Sawmillers’ Association, through its president. .Mr J. S. Robertson, had immediately made r/presentations to the Government in regard to an increase for the West Coast. Several communications had passed between the Department and the local association, in which the association was informed that to sell timber al a higher rate than prescribed bv the Price Tribunal was a violation of law.

“If adjustments in overcharges ar? to be made,” said Mr Kitchingham, “it would mean the re-handling of thousands of transactions.”

The quarterly output of timber from the West Coast was in the vicinity oC 14,000,000 feet, and this would involve the sum of £5OOO in overcharges. Th--defendant, companies had unlawfully made overcharges totalling £ll4O. For the Department, he asked that the maximum penalty of £5OO be imposed. SAWMILLERS’ CASE.

For the defence, Mr Thomas said that, the matter was not nearly as simple as Mr Kitchingham would have the Court believe, and that it was a question of principle involved. Prices for timber were first pegged in 1936, and since that time West Coast sawmillers had been forced to carry unnecessary burdens. Although they had felt, an injustice was being done, they had carried on during the war years, rather than retard New Zealand’s war effort. This was shown in lhe fact that it had never been necessary for the Government to issue a Price Order for the district, and that condition had existed up till 1945. From t.he commencement of the war up till last year, several increases had been approved to meet the extra cost of wages, but the only increase to cover the cost of production was 3d per 100 feet which was made in 1940. An application—which had the support of the Director of Forestry—had been made in 1945 for an increase of 8d to cover wages, and Is to cover extra costs. The application covering extra wages had been granted, but nothing had been allowed for increased costs of production, but the North Island, and parts of the South Island, had been allowed to increase their charges by Is 6d per 100 feet. This was grossly unfair, and amounted to a disgraceful discrimination against the West Coast. NO SATISFACTION. The Coast sawmillers had approached the appropriate Departments, but had received no satisfaction, and consequently had taken the only course open to them —of forcing the dispute into Court so that the facts couid be ventilated. Before taking this action, the Director of Forestry had been informed, and been asked to notify the Minister, and the millers had expressed willingness to confer with the Director of Forestry and the Minister.

He said that a survey of the industry for the whole of the Dominion is at present taking place, and the survey covering the North Island had resulted in the Director of Forestry intimating that he would support an increase of 4s Gd per 100 feet,, instead of (he .Is Gd already approved. "Sawmillers,” he continued, “are of the opinion that the fundamental cause of most of their difficulties is that the State Forest Service takes the view that its paramount duty is to depress prices in order to obtain cheap timber. They maintain that the main duty of Ihe Forest Service is to do all in its power to encourage production, by seeing that good prices and treatment are afforded the millers, and so keep the industry in a healthy condition.” In 1930, he said,, each mill on the West Coast operated as an independent unit. By 1932 the effect of the slump made it necessary for the West Coast Sawmillers’ Association to be formed, with the objective of assisting the industry through bad times, to stabilise prices, and to encourage mills to re-open to. give greater scope for employment for workers on the Coast. Only nine mills had been represented at the first meeting, and when the capacities of the mills were assessed

it was discovered that trade offering was less than 50 per cent, of their cutting capacity. To-day the Association represented 98 per cent, of the millers in the Grey and Westland counties. In 1936 a deputation of employers had waited on the Minister of Labour, to discuss the 40-hour week which was. then imminent, and the new award which was due. In the Minister’s opinioiij the proposals made were right in principle, and he gave his assurance that no imposition arising from increased costs would be made upon the industry. In August of that year, the Prevention of Profiteering Act was passed, under which the basic price was to be fixed from June 1, 1936. This meant that the prices obtained by West Coast sawmillers were still below pre-slump prices. They had been kept at a low level to encourage a deeply depressed industry, and to maintain employment, profit then being a secondary consideration. “To use a sporting, metaphor,’’ said Mr Thomas, “West Coast sawmillers started about 20 yards behind scratch.” The disastrous result to the millers of accepting the Minister’s assurance and not increasing prices, was that prices operating on June I,_ were those promulgated in May, 1935. Since July 7, 1936, eleven increases ranging from 2d to Is 5d per 100 ft, had been granted, and although those increases had been granted, the millers had maintained that they were inadequate, but in view of the war, had not pressed their claims. About this time the first strike of nual report of the State Forest Service and the comments of the Diiectoi of Forestry were warmly applauded by the whole industry,, and the Director followed his report by advising the Association that his Department was sponsoring an application to the Price Tribunal for an increase of Is per IUU feet on all sawmilling price lists throughout the Dominion, in support of which he had asked for up-to-date balance-sheets from a cross section ol the industry. It was understood by the millers that this would be an interim payment to assist them un i. the survey was completed, and a final decision reached. About htis time the first strike of employees occurred on the Coast, and following a second strike the Acting-Minister of Labour at a conference in Wellington at which it was agreed that wages for bushmen and other employees should be increased Is 6d and Is per day respectively. Immediate approval was o-iven to increase timber prices by 8d per 100 feet to cover the increase. As the last increase occurred after the Director of Forestry’s statement it was assumed by the millers that an increase of Is 8d would be given. At a later conference held in Wellington with the Prime Minister, Hon. W' Nash and Hon. D. G. Sullivan, it was agreed that a subsidy of Is would be paid by the Government NORTH ISLAND GETS INCREASE On October 4, to the amazement of the West Coast sawmillers, advice was received that the North Island had been granted a net increase ol 18.2 d to cover all costs, while the West Coast had been granted onlv Sd to cover the cost of wages. A meeting of protest was held, and a letter sent to the price tribunal stating the grievance. Mr Thomas stated that production figures for the Coast had reached its peak for the 1936-45 period in 1940, with a total output of 76,981,353 feet and had dropped to the lowest figure in the period in 1945, when only 56,754,429 feet had been produced. He said that time lag in obtaining decision from the department had also caused considerable inconvenience to the industry, and in one case nine months had elapsed before the finalising of an increase. In another case the industry had unfairly to carry a burden not carried by its price list from April; 1936, to July, 1937.

In regard to the balance-sheets submitted at the request, of the department last year, Mr Thomas said that until it was known in detail, the background of the balance-sheet, it was impossible to assess the true financial position of the firm concerned. On many sheets, prima facie, the return of capital was high but in almost every case, the balancesheet capital was nominal only, and very often a great deal more money was sunk into the venture than was disclosed. In some cases practically the whole of the assets were wasting assets and it had to be remembered that depreciation shown did not necessarily cover the true depreciation that is necessaiy to write off assets during the life of the undertaking. To show how unreliable balance-sheets can be by those not properly qualified to read them, he referred to.a letter from Hon. D. G. Sullivan to the Dominion Association dated January 3, 1946, in which it was stated that examination had been made of accounts by the Economic Stabilisation Committee, in collaboration with officers of the State Forest Service, and it had been understood in justification for sawmillers’ claims that an immediate interim increase should be granted in so far as North Island millers were concerned, nut the accounts of the West Coast Sawmillers showed a sufficiently satisfactory position to warrant deferring any actoin until the survey of the sawmillers’ accounts had been completed.

Mr Thomas added that the balancesheets sent forward by the West Coast covered the operations of less than half their mills.

Generally speaking there was an excellent relationship between the employer and employee on the West Coast, and the industry on a whole had made an excellent contribution to the war effort. He had the authority of Mr F. Turley, secretary of the union, to say that the union was whole-heartedly behind the sawmillers in their present complaint. One of the greatest problems in New Zealand to-day was the construction of soldiers’ homes, the main reason for the shortage of housing being the shortage of timber. Production had dropped alarmingly since 1940, and everything pointed at still further reduction this year. The sawmillers were carrying quite a lot of undeserved odium because of this state of affairs and this was what had to be remedied.

In concluding he said that the millers were not merely fractious but were genuinely disturbed. While not asking for the minimum penalty, he asked the Magistrate to consider the problem in the light that the point of issue was that there was a matter of principle at stake. "Justice must not only be done, but be seen to be done,” said the Magistrate. “The law stands between the Price Tribunal and the sawmiller in this case, but I cannot condone a breach of the law, and a conviction must be entered, justice

done accordingly.” He expressed the hope that the matter would be satisfactorily concluded, as delayed action was so often evident in such cases. Each of the defendant firms was convicted, Butler Bros. Ltd. being lined £lO and costs, and ordered to pay solicitor’s fee £2 2s. Each of the other defendants was fined £5 and costs and each ordered to pay solicitor’s fee £2 ■ 2s.