SYSTEM OPPOSED

Otago Daily Times, Issue 26775, 19 May 1948, Page 6

SYSTEM OPPOSED

LUMP SUM PAYMENTS

PRODUCE SALES TO BRITAIN

STATEMENT BY FEDERATED FARMERS

P.A. WELLINGTON. May 18. “In the present situation nobody could possibly imagine that Britain could pay New Zealand a compassionate allowance. Whatever was paid would be on account of produce sold to her,” says a statement issued by the Federated Farmers of New Zealand, expressing concern that the New Zealand finance authorities would again negotiate with British Treasury for lump sum payments to the Dominion in lieu of increased prices for primary produce. The statement, which was issued in accordance with a resolution of the Dominion council of the Federated Farmers, declares that the council also reaffirmed the Dominion conference resolution expressing opposition to the continuance of such payments by Britain, and directed that its attitude and expressions of opinion be notified to the chairman of the Meat Board and the chairman of the Dairy Products Marketing Commission, both of whom were at present in London negotiating next season’s produce price agreements. There was evidence that the Government intended to seek a continuance of the lump sum payment' method criticised by Mr W. E. Hale, chairman of the Dairy Board, at various ward conferences recently, says the statement. It was obvious, too, that such payments could be nothing else but part payment for New Zealand’s produce. It seemed likely, according to information received by the Federated Farmers, that negotiations would be conducted by New Zealand officials with the United Kingdom Treasury concerning lump sum payments possibly prior to the price negotiations, and without reference either to the marketing authorities in New Zealand or to the representatives of the producers at present in London, and even withofit the cognisance of the British Ministry of Food. That meant that a special agreement of the nature implied would be completed by the two Treasuries before the negotiations commenced regarding the price of New Zealand’s produce. Sterling Balances Frozen “An examination of Britain’s position shows that she is at present overcommitted in regard to her current sterling indebtedness to New Zealand,” continues the statement. “She is over-committed to such an extent that it has become necessary for her to freeze New Zealand’s sterling balances in London. The undertaking she has with the United States and the understanding she has with us are that New Zealand should take goods and services and make demands on sterling funds only to the extent of current transactions. That means in turn that New Zealand will not ask for any of the money accumulated in Britain. That being the case, it is unreasonable and illogical to suggest that lump sum payments would be made for any reason other than for what we supply Britain.” The reason given in 1944 for their payment was that New Zealand’s sterling position was so bad that it appeared as if, without Britvn’s assistance, New Zealand might not be‘able to maintain her payments. In effect, therefore, they were a compassionate grant. But then the situation changed. Britain had not been able to liquidate New Zealand’s sterling credits accruing, and since then they had accumulated steadily. In the present situation the actual reverse of 1944, no body could possibly imagine Britain could pay New Zealand a compassionate allowance. Whatever was paid would be on account of produce sold to her. When, therefore, the Ministry of Food negotiated the new contracts, the lump-sum payments—agreed on by prior arrangement—would have to be subtracted from the price paid for New Zealand’s produce and the unit figure based accordingly. No matter how those lump-sum payments were disguised, they would be made only as part of payment for our produce sold to Britain. Revealed in Budget Reviewing the 1944 arrangement, the federation’s statement says the lumpsum payments had been placed in the National Accounts. They had not been revealed until the Budget of last year. That brought out into the open a position which actually existed—the fact that the £4,000,000 a year was a credit to the Government of New Zealand. The simple position was that that £4,000,000 a year was broqght to New Zealand in the form of goods, that the money was paid out to the people of New Zealand by the Government, and that the £4,000,000 a year had been added to the National Funds. The stabilisation and pool accounts of the farming industry had also been paid out, and it had been possible to maintain the present extravagant rate of living in New Zealand only by the Government getting its hands on that money. The position of farmers in New Zealand had rapidly deteriorated because of the subtraction of that amount from the price they received for produce which, when added to the incomes of others, amounted to between £60,000,000 and £70,000,000. The people should now be beginning to realise what a subsidy the farmers of New Zealand had paid to them. As, however, that subsidy was built up, so did costs rise against the farmer. “It was little wonder, then, concluded the statement, “that the farmers are implacably opposed to any continuance of lump-sum payments. The principle and practice threatened to bring disaster to the nation’s whole economy if they continue. The farmers attitude is not a selfish one. The farmers are merely trying to put a brake on the headlong rush to disaster in which the country is now engaged.