SUBSIDIES FOR INDUSTRY

Southland Times, Issue 25505, 27 October 1944, Page 4

SUBSIDIES FOR INDUSTRY

PAYMENTS FROM WAR EXPENSES

“It is a better policy to pay something out of the War Expenses Account for the purpose of maintaining a stabilized price level for essential commodities and services than to allow the demand on a shortened supply to drive prices up,” said the Minister of Finance, Mr Nash, in an interview yesterday. Mr Nash was replying to questions about the Government’s policy in granting subsidies to industry out of the War Expenses Account. The Minister said that with ’ prices forced up increased costs would follow, with inevitable difficulties culminating in a slump, when prices would have to be brought back to normal levels. The British Government was at present paying more than £200,000,000 a year to keep prices at certain' levels. In the last war, when no subsidy scheme was in operation, bread rose from 3|d to 7d (in this war the price had remained unchanged), a 251 b bag of flour from 3/- to 7/6, oatmeal from 2d to s|d, a bag of sugar, from 8/6 to £l/10/4, butter from 1/21 to 2/22., 141 b of potatoes fom 1/- to 4/1, onions from l£d to 6j.d, a quarter of a ton of coal from 10/6 to 18/9, and gas from 5/- to 8/6 per 1000 feet. Those were examples of some of the commodities and services that increased in price in the last war because there was no subsidy scheme in _ operation. It was recognized in all English-speak-ing countries that it was better to pay subsidies to keep prices down than to let prices soar and take the consequences later. WARTIME RISE “The wartime prices index of essential commodities and services shows an overall increase of less than 14 per cent.,” said Mr Nash. “That does not mean, that many commodities have not advanced by more than 14 per cent. But taking usage into account, the evidence is conclusive that the overall increase is less than 14 per cent. The actual increase on food alone is less than 9 per cent.” Among the subsidy items, said Mr Nash, were payments to ensure the availability to farmers of many classes of equipment at the prices ruling on December 15, 1942. For instance, the price of fertilizer had been kept down irrespective of where it came from, also the prices of farm equipment and other essential items that went into production costs.

Referring to the subsidy being paid to clothing manufacturers,. Mr Nash said it was true that the prices of clothing, and boots in some cases, had gone beyond the limits intended by the Government. This was not because the wartime prices figures had not been adhered to, but because the goods were not available in quantities to meet the demand in accordance with the standards provided in the wartime prices index. To overcome this the Government decided to ensure that materials that were used in the production of many classes of clothing should be available to manufacturers at 1942 prices, on the understanding that the standards of clothing provided for in the wartime prices index were manufactured and sold to the public at prices ruling in December 1942. “It may be a little time before these goods are available in sufficient quantities to meet the full demand,” added the Minister, “but it is hoped to meet the demand at a reasonably early date. Whatever sum it is necessary to pay by way of subsidy to enable this policy to be carried out will be provided.”