PRICE CONTROLS

Otago Daily Times, Issue 26199, 9 July 1946, Page 6

PRICE CONTROLS

AIM OF NEW SYSTEM ATTEMPT TO REDUCE COSTS (Special) WELLINGTON, July 8. A new system of price control reported by the Price Tribunal to clothing manufacturers this week appears to carry into effect a vital section of the significant Walsh report on stabilisation. Under this new method of control an attempt will be made to stop the payment of unduly high wages and to foster low-cost factories. A complete change in the system of arriving at the permissible maximum prices is involved. It introduces the principle of an hourly rate to cover direct labour and factory overhead. Under such a system, it is hoped that the Government’s desired end—a cost reduction, including a retention of wages within reasonable limits—will be achieved. The Government’s intention to encourage low-cost essential units in industry and to cut out the payment of unduly high wages was clearly indicated by Mr F. P. Walsh, of the Economic Stabilisation Commission, when he told the national dairy conference last week that luxury industries were draining away labour from the essential ones by offering wages for which there was no authority under the law.

This move by the Price Tribunal supports comment published in the Daily Times when the Walsh report was first released—comment in which it was stated that the report foreshadowed an efficiency campaign in industry and a reasonable ceiling on wages.

The price control change may be regarded, too, as part of a campaign of luxury restriction and “ austerityliving ” which the Government considers vital to the post-war recovery of New Zealand’s economy. Mr Walsh in his report said that it was now necessary to rely on price control alone to remedy the war-time distortion of the structure of production, and that this meant a new price control policy. Price control policy should be designed, Mr Walsh said, to assist maximum production in efficient units. There must be more essential goods. Luxury lines must, therefore, be made less attractive to produce than essentials. As to how this could be done there might be room for discussion, One thing certain was that we could not continue with a system of price control which propped up the least efficient units. “I believe,” Mr Walsh said, “that it is better to influence the direction of production by a well-planned price control policy than by direct physical controls such as manpower and production controls, which are unpopular with employers and employees alike, and bring in their train a whole series of undesirable repercussions.” In other words, a worker will not be directed as in war-time by man-power officers to go to this or that job. If his employer canont adapt the factory to the new low-cost requirements then the venture will be gradually eliminated from the scene and both worker and employer obliged to move into one of the more efficient units within the industry, or seek new employment altogether. *