MR NASH REPLIES

Otago Daily Times, Issue 27390, 16 May 1950, Page 4

MR NASH REPLIES

Subsidy On Butter

PA WELLINGTON, May 15. In his talk to. members of the Civil Service Institute, said the former Minister of Finance, Mr Nash, tonight, the Prime Minister, Mr Holland, was reported to have said the subsidy system had to a large -extent been an urge to inefficiency for there was a feeling that if there were a loss the Government would make the loss good. “Does this apply to the subsidies paid in the United Kingdom on butter and other foods? ” asked Mr Nash. “If so, has Mr Holland considered the effect o n the dairy farmers of New Zealand if the United Kingdom Government dropped the subsidy on butter. If this were done, and an unsubsidised price were maintained for margarine and butter, it is probable, that the open price for butter in competition with margarine would fall by onethird to one-half.- It is stated on reliable authority that the butter ration in the United Kingdom, even at the present price, is not being taken up. “If the demand for our butter fell, as I believe it would if the subsidy were withdrawn,” said Mr Nash, “what would its effect be on our whole economy? But for the safety clause in the bulk sale agreement which provides that a reduction not greater than 7£ per cent, only could be made in any one year, the effect, I think, would be disastrous immediately. What would be the ultimate effect on rural land values and our primary industries? The price of one of our major primary exports (butter) is being maintained by subsidy. _ Has the subsidy in this case led to inefficiency of our dairy industry? I am sure all our farmers and traders are anxious to know Mr Holland s answer,” he added.