EXPORT INCOME AND PAR EXCHANGE

Grey River Argus, 4 September 1948, Page 5

EXPORT INCOME AND PAR EXCHANGE

Tax, Price And Other Cuts Wanted By Federated Farmers P.A. WELLINGTON, September 3. Some effects of the reduction of the New Zealand exchange rate to par with sterling were considered by the Dominion Council of Federated Farmers, who have issued the following statement:— "It was pointed • out that farmers’ income from wool is immediately reduced on the basis of last year’s prices for greasy wool by an average of 4d to 5d per lb. "The meat producers, whose reserve accounts were being built up by £8,000,000 last year, will, this year find these accounts only breaking even, or perhaps a little in the rod, if increases commensurate with increases in costs are paid, “Dairy farmers who, according to Mr. Nash in his broadcast speech on Sunday, August 22, are to receive 'the full cost of production,’ will, if (hat is paid, draw on their reserves to do so, and, unless costs are reduced, will, in a few years, in the event of falling prices, exhaust their reserve accounts, and will have to be supported from the Consolidated Fund.

“The seed producing industry,’ which is being painstakingly and successfully built up by farmers and the Department of Agriculture, has been heavily hit with a - cut of £500,000 on its last season’s export income of £2,500,000. This trade may now be lost. “The Council of Federated Farmers deplores both a lack of preparation foi’ the altering, of the exchange rate, and an unfair method adopted "in bringing about the change. It should be recognised that many people in the community will be called upon to bear losses which are totally unjustified, and which could have been avoided by the use of a different method of effecting the change, and spreading an adjustment over the community as a whole. "The back country sheep farmer, who works harder for a smaller return pei' hour than anyone else in the community, is called upon to stand a loss for the benefit of other sections. The Government I itself had professed to recognise the difficult position of the woolgrower in the back country, as evidenced by its suggestion that the cost of fertiliser used in the back country should be subsidised. Immediately following upon this the Government has now slashed the incomes of those back country farmers. ‘ "Bv virtue of the change in the exchange rate, the wool-grower is called upon to pay to the mortgagee, bv wav of interest, and to the Minister of Finance by way of taxation, and to other people who provide him .with service, in respect of his fixed cost, the proceeds of five bales of wool, where previously the service cost four bqles. MONEY FOR WHOM ?

"For the last few years, the danger of an over-supply of money in relation to the limited supply of goods, has’ been impressed on the community by members of the Government and by the Minister of Finance, in particular. This argument has been used to make the farmers agree to forego the payment to them of a portion of the proceeds from the sale of their produce. If, through the exchange revaluation, lower prices for imported goods do eventuate, pressure by purchasing power at present in the hands, of people on the goods and services available, will be considerably increased.

“The actions of the Government in appreciating our money without taking necessary corrective measures, is the greatest contributing factor to inflation so far as it .ignores completely all the Government’s previous preaching, and indicates that the /Minister of Finance is gambling on his ability, with the use of the exchange and import controls, to hold the position. It is also a gamble on the willingness of people not to use the purchasing power already in their possession which they cannot exercise at present. “There was a way in which the change in exchange could have been effected quite fairly, and without any injustice to any section of the community. A fair method, and the only equitable one, would have been to have frozen all money contracts, and to have re-issued new ones in terms of the re-valued currency. This would have spread the currency appreciation evenly over the whole community, and would have avoided hardships and difficulties which will undoubtedly accrue to many people, both in business and farming, and which, in fact, have now actually arisen from the alteration. CONCESSIONS WANTED “In view of the Government’s action, it should now be prepared, first, to reduce all taxation, including local body taxation,, by .20 per cent.; secondly, to reduce the charge for other Government services, such as those by the Railways and the Post Office by a similar amount; and, ported goods are actually reduced by an amount commensurate with the appreciation in value of oui’ money. “In view of the change, with the consequent increase in the real incomes of consumers of the Dominion, this Council demands that all consumers’ subsidies made at the expense of the farmer be terminated immediately, and that farmers be given the full proceeds from the sale of hides, pelts, and tallow, etc., used locally.”