Farmers to Benefit From Exchange Rates On Increased Prices

Otago Daily Times, Issue 26848, 12 August 1948, Page 5

Farmers to Benefit From Exchange Rates On Increased Prices

Any deduction from the new scale of prices for primary product* of an amount equivalent to the sum represented by the present exchange rate between New Zealand and Britain would be a breach of the agreement between Federated Farmers and the Government, said the Minister of Finance, Mr Nash, in the House of Representatives to-day. This opinion was contained in a written answer to a question by seven Government members who had asked if the Minister would favourably consider making such a deduction and applying it to the partial repayment of the internal national debt and to subsidising various commodities on the local market.

Mr Nash said the Government considered the existing stabilisation arrangements had been and would continue to be of benefit to the farming industry, and, as previously announced, any balances were held for the benefit of the farming industry as a whole.

Opposition members expressed agreement with the reply and taxed the questioners with desiring to see the income of the farmers reduced by 25 per cent.

Mr E. B. Corbett (Oppn.. Egmontf said the Minister’s reply was very satisfactory, but the framers of the question had no appreciation of the injustices which their proposal contained. In fact, the question involved the confiscation of 25 per cent, of the farmers’ income. The members who asked the question overlooked the fact that the primary , producers were already paying a large amount in subsidies and those members also lacked appreciation of the point that the new agreement for new prices was based on the existing exchange rate and they had thought out something that was entirely divorced from the understanding of the primary producers. It was a fantastic proposal and he was pleased that the Government had so pointedly made a note of the fact that it would be a breach of the agreement.

WELLINGTON, Aug. 11.

The part that astonished him was that Mr P. Kearins (Waimarino), who was closely associated with the farming industry, should have appended his name to the question. Mr Corbett suggested that the member for Waimarino must have been gulled by some of his associates, and the question reflected the attitude of the “ Leftists ” towards the primary producers.

Mr F. Langstone (Govt., Roskill) said the question had nothing to do with the stabilisation funds. The exchange rate had been fixed at a time when the farmers were getting low prices. The farmers had been emphasising the burdens placed on them to maintain the rest of the people of New Zealand, but he thought the biggest single imposition was the exchange rate. As prices rose the exchange rate rose. This rate was a tax on the people for the benefit of the farmers to the extent of £25.000.000 a year.

When the rate of 15 per cent, was first imposed it meant a reduction of 15 per cent, on the incomes of all the people. At the same time, there had been a reduction in wages through a general order of the Arbitration Court.

Mr W. Sullivan (Oppn., Bay of Plenty) said an amazing question had been asked by seven Government members, six of them belonging to city constituencies. The questioners were not prepared to tackle the exchange rate question on a flat basis, but had sought out one section of the community. The Government had set up an Aid to Britain Committee headed by Mr F. P. Walsh, and there had been appeals for the farmers to do more while other people were doing less and less. He thought the question was a ridiculous one. and it showed how dangerous it would be for any country to have a set of theorists like the seven members concerned in charge of its affairs. Mr Sullivan said the proposal would reduce the country’s exports as well as its imports. The farmers had already been deprived of £35.000.000 in New Zealand currency of their own money, and the effort to take away 25 per cent of their income would be injurious to the whole economy of the country.