THE PRIMARY PRODUCER

Manawatu Standard, Volume LIII, Issue 6, 5 December 1932, Page 2

THE PRIMARY PRODUCER

EFFECT OF HIGH LAND VALUES. At a meeting held in AVellington on Wednesday, at which Mr Edwin Salmond, President of the New Zealand Importers Federation presided, and attended by representatives of the Associated Chambers of Commerce, N.Z. Importers Federation, U.K. Manufacturers Association, N.Z. Manufacturers Federation, New Zealand Harbours Association, Canadian and British Traders Association of New Zealand, and the Commercial Travellers and AVarehousemen’s Association, the following Statement was approved : “After carefully considering the various proposals which have been advanced for relieving the position of the primary producer, it seems to us that the principal trouble lies in the high land values and over-capitalisa-tion which is common throughout New Zealand. With little probability of substantial improvements in the prices for primary products, it seems that costs of production have to be still further reduced. It is questionable, however, whether this is not being retarded by the various restrictive Acts that have been passed, such as the various Mortgagors’ Relief Acts. If the readjustment of values were left to the natural operation of economic law, unfettered and unrestricted, a quick and efficient re-adjustment of costs would eventuate, but it does not seem that this necessary re-adjustment will be brought about by postponing payments of both interest and principal on mortgages, which merely postpones the day of reckoning and maintains the high values of the boom period. “Admittedly this process will involve heavy and substantial losses, since values will have to be written down very heavily. Such losses appear inevitable, however, and, although they will have for-reaching ’ consequences for some investment and farm finance companies as well as for individuals and the Government, it would have the effect of placing primary industries on a sound basis, with the deadweight of the boom years shorn away. Many, we think, would be able to produce again at a small profit, and certainly the farmer would be in a position to take advantage of any price increases that might result from the Ottawa agreement. “A great deal of the over-capitalisa-tion of the farming industry has been caused by the extravagance of local bodies, whch have provided facilities far in excess of requirements. It is difficult to see how this matter can be efficiently tackled, but the Bank of New Zealand's proposal shows how much it means to and weighs down the farmer. The same position is true also, of course, of the cities, where the weight of rates is excessively heavy and crushing to trade and industry. AVe believe that this particular phase of the problem should be dealt with by the Local Bodies Commission which the Government proposes appointing. “The proposal of the Bank of New Zealand that the Government should pay farmers’ rates lor one year does not appear to us to offer any real relief, except to the local bodies. The Bank’s proposal in reality only relieves those who can afford to pay and gves no relief to those who cannot pay. ft seems to us inequitable and unsatisfactory, while the remission of land tax will only benefit the farmer to the extent of £515,000, the amount which it is estimated will be collected from this source during the current financial year. “Although there are grave objections to a bounty, it is to be preferred to an increase in the exchange rate, and if a natural process, unlettered by restrictive legislation, of reducing all values could be put into operation, it might be found necessary and advisable ior a bonus to be paid to hardship cases only. In that event, the bonus should be for specified objects and for a limited period. On no account should it be indiscriminately administered and it should be confined to those who really require it. It should not be possible, moreover for the bonus to be taken by creditors in payment of some debt already existing; the. bonus would have to be used exclusively for farm improvement and the increasing of production. “AVe realise that a stringent process of devaluaton is certain to inflict a certain amount of hardship and to adversely affect the Government’s finances, principally through its advances to settlers and others, but after taking into account the heavy losses which would result, we think that a natural re-adjustment is preferable and in the long run will give the greatest benefits to the Dominion. The principles pronounced are not without precedent in fact.”