TE AWAMUTU COURIER. Printed on Mondays, Wednesdays, and Fridays. FRIDAY, 17th OCTOBER, 1941. PERNICIOUS SUBSIDIES.

Te Awamutu Courier, Volume 63, Issue 4491, 17 October 1941, Page 4

TE AWAMUTU COURIER. Printed on Mondays, Wednesdays, and Fridays. FRIDAY, 17th OCTOBER, 1941. PERNICIOUS SUBSIDIES.

IT will have been noted that during recent weeks Mr W. J. Broadfoot has made a number of well-timed protests against the introduction by the Government of a pernicious system of subsidies to various industries, the underlying idea being to cushion the ever-increasing rise in prices. Judging, however, by the scant considera. tion given to the matter when the Supplementary Estimates were under construction by the House, it is to be feared that it is not realised so fully as it should be that the subsidy system merely serves as a cloak foi increased costs which eventually come back to the public in the form of increased taxes. Provision was made in the main Estimates for the payment of subsidies to the amount of £1,398,000. This vote was increased by more than £1,000,000 by provision on the Supplementary Estimates. It has become a settled feature of the Government’s policy that subsidies shall be paid wherever the payment of them may be supposed to effect a stabilisation of prices. In accordance with this policy the public has been informed that, if costs should increase in such a way as might disturb the arrangement which the Price Tribunal has made for the stabilisation of prices of a considerable number of essential commodities, the added charge will not be passed on to the consumer, but will be covered by the payment of subsidiesThe pursuance of a policy of this description is plainly designed to conceal from the consumer the fact that he is actually being required to meet the additional charges. Instead of directly paying an increased price for commodities, he is required to pay it indirectly. The State, which provides the subsidy, is simply the aggregation of individual consumers, and upon each one of them falls his proportion of the taxation that is necessary to cover the payment of the subsidy. When the taxpayer realises this he j should also realise that the statistics

concerning variations in the prices of commodities are to be received with

some reserve. It is not in respect of every commodity that the device can be employed that is being utilised in rhe case of tea to prevent a.n increase at the present tim'e in the price of that commodity. Under it an increase in the price will be deferred until a time when, through importations being obtainable at lower costs than are now ruling, a reduction in price might be normally expected. A statement by the Minister of Finance, in a letter to the Auckland Manufacturers’ Association, that increases will in a large number of cases be ** absorbed or set off against economies that could arise from rationalisation of the industry ” suggests that the Price Tribunal may attempt to apply this same device in the case of other commodities. It is an unusual plan, however, concerning which the public may prove somewhat resentful when the circumstances seem to it to favour a reduction in price. The whole policy of stabilisation of prices is fraught with difficulty, particularly if it is not related to a fixation of wages, but recourse to an artificial system of maintaining a country’s economy by means of the payment of subsidies on the production of commodities is objectionable in the respect that the effect of it is to create a wrong impression, to conceal increases in costs, and thus to deceive uninformed sections of the public.