STABILISATION PLAN

Otago Daily Times, Issue 25101, 17 December 1942, Page 4

STABILISATION PLAN

1 " "*** VARIOUS COMMENTS A FAVOURABLE RECEPTION Generally speaking, the stabilisation proposals to be instituted by the Government have been favourably received in Dunedin. A Daily Times reporter yesterday interviewed a number of, responsible members of local organisations, and their comments are appended. Danger of Inflation Mr C. E. Begg, president of the Dunedin Chamber of Commerce, stated that the proposals as appearing in the press could be fairly well followed, and he assumed that within the next day or two they would be further elucidated. It could be seen, however, that the details of the plan had been carefully worked out, and on the face of it the plan, in the present war conditions, was marked by many valuable proposals. The most important of these, to his mind, related to inflation, and the Government was to be congratulated on its effort to combat this very decided danger. Another important aspect of the proposals, Mr Begg said, concerned prices and the difficulty of estimating the effect of import prices on the prices in New Zealand of the manufactured article. For instance, an importation of some form of raw material might show a considerable advance on the

previous landed cost, and that wuld naturally affect the cost of the Article manufactured from the particular commodity. No doubt, however, the commission would pay full regard to this important point. He could only hope that the plan would prove entirely successful. Necessity for Saving “There .can be no doubt that the Government deserves congratulation Upon a comprehensive and apparently carefully conceived price stabilisation plan,” said Dr R. W Souter, professor of economics at the University of Otago. “ There is also no doubt that the Prime Minister has definitely increased its prospects of success by the clearness with which he has outlined the plan, and by his impressive appeal for public co-operation. “ Under peace-time conditions and over a long period of time a price stabilisation policy of this kind would be exposed to the traditional objection that it makes price relations unduly rigid, and that the same result could be better achieved by controlling the volume of credit. But under war conditions at any rate such objections are widely- agreed to be inadequate. The over-riding need to curb inflation justifies more stringent measures. “The comprehensiveness of wartime control, the heavy penalties for ‘ black market ’ operations, and the appeal in this connection by the Minister of Industries and Commerce should undoubtedly all help to make price stabilisation a practicable goal,” Dr Souter said. “It is, however, not only admitted but stressed that the present level of many incomes, compared with the available flow of consumers’ goods, is such that a strong and persisting tendency towards progressive price inflation already exists. Since the Stabilisation Commission has advisory functions and the Secretary of the Treasury is to be Director of Stabilisation, it seems important to suggest that the problem of promoting adequate saving by all sections of the community, both for war expenditure and for reconstruction purposes, should be systematically explored; and also that encouragement of gradual debt reduction wherever possible would operate in the same direction.” Three Years Too Late

Mr A. C. Leary, chairman of the Otago Council of Primary Production, said that provided the scheme could be administered efficiently and that it fell equitably on all sections of the community, he was satisfied it would prove of material benefit. As a matter of fact, he thought.that the plan should have been introduced three years ago. He saw great difficulties, however, in evolving a plan which wmuld prove equitable to farmers. For some three years past the prices of their principal commodities had been fixed, but there had been no attempt to stabilise farmers’ costs.

Mr Leary said he considered that some regard to the factor of increased costs should be given when the commission decided on what basis the farmer's present-day expenditures were to be stabilised, but no doubt the commission would give this point its serious consideration. Attitude of Farmers

Mr A. C. Cameron, a member of the Otago Provincial Council of the New Zealand Farmers’ Union and deputy chairman of the Primary Production Committeee, said that whilst he realised that some form of stabilisation was necessary, if inflation was to be prevented, there were many points which he would like to see clarified before offering a considered opinion. “Would the new scheme function any better than the marketing control of citrus fruit, potatoes, or eggs, for instance? ” he asked. “ I can only measure the success of the control of these commodities from the wholesale condemnation of the Government handling which I hear from the various fruiterers in the city, fruitgrowers, poultry farmers, and others, and one would imagine that if this new stabilisation plan is to be successful then the scheme will need to be worked very much mere effectively than anoears to be the case at present. I am unable to say just what the reaction of farmers will be and I agree with the remarks made in the editorial in the Otago Daily Times this morning to the effect that ‘ farmers will require clarification of a statement to the effect that ‘ the major items of farmers’ costs will be correspondingly held and costs of holding them will be debited to the appropriate accounts.’ ” Any scheme which fixed the price which, a farmer would receive for his commodity without taking into consideration his costs, and without ensuring him an assured market for his product would be doomed to failure, Mr Cameron said. If these difficulties could be ironed out to the satisfaction of farmers then undoubtedly they would be behind the Government in its introduction of this legislation. They would be the first to assist in the prevention of inflation. Retailers’ Association Mr L. A. Doolan, president of the Dunedin Retailers’ Association, stated that in his opinion the scheme appeared to be on the right lines. The vital point was whether the new policy could be put into full effect. “ The position next year,” Mr Doolan said, “ may be that firms will not have sufficient stocks to keep their staffs employed. At the present time some firms have already had to close down consequent on a lack of stocks.” Mr Doolan raised the point of the effect of stabilisation on the ensuring of supplies of standard, or actually stabilised lines of goods, such as footwear. clothing, and similar articles, to enable firms to retain their staffs. If that could be brought about he considered that stabilisation would prove of the greatest value.