WORLD’S BASIC INDUSTRY

Thames Star, Volume LXVI, Issue 19660, 16 March 1936, Page 3

WORLD’S BASIC INDUSTRY

IMPORTANCE OF MINING. How N.Z. Has Lagged. TAXATION BURDEN. EXAMPLE OF AUSTRALIA. “Help for the Mining Industry” is the subject of an article in the current issue of the “N.Z. Financial Times.” The writer states: — Alelal mining, in which gold is included, is the world’s basic industry. The exhaustion of old mines requires the discovery of new, and if discovery dfd not at least keep pace with the process of exhaustion jhe industrial interests of the world would rapidly decline. Although there are other minerals in New Zealand, we are concerned principally with gold, which is in the unique position of being in demand at a high price in every country. As an export industry, it is in an exceptionally favourable position, and should be in every way stimulated and assisted. This has been recognised in South Africa, Australia and Canada, but not in New Zealand. The industry has produced almost one hundred million pounds in New Zealand nad had an important influence on early settlement. In 1871 there were 71 mining companies at work in the Thames district alone, and in 1904 there were more than 200 dredges at work. In .1866 735,3760 zof gold were exported; last year less than 200,000uz. Between 1861 and 1931, the gold mining industry, being unable to pass on its increased working costs by increasing the price of' its product, was almost driven out of existence. It may be noted in this connection that of 61 companies operating in 1914, only 26 were still at work in 1930. It is estimated that it cost the industry more than one million pounds to meet the increase in working costs when gold sold at its pre-war value.

Britain’s departure from the gold standard in 1931, however, created conditions favourable to the industry and restored the economics to their old basis. Resuscitation began and gradually developed until ureas previously abandoned because, of high working costs and the low fixed price of gold, were investigated and capital raised to work them.

Unfair Taxation

When, in January, 1933. the exchange rate was lixed at 25 per cent, i! appeared that the industry Would he in the position, to recoup some of tilt 1 heavy losses it had experienced during the depressed period in the industry. I his expectation was shattered by the imposition of the gold -duty at 12/0' pen uz in February, 1933, the Minister lor Finance at the time (Rt. Hon.

J. G. Coates) stating, “Were it not for the present circumstances, the Government would not have hail recourse to this form of taxation. This is unfair taxation, and too great a burden for the industry to hear. It means that English capital will not come past Australia, where the incidence of taxation is so greatly in favour of that held. It the Waihi mine were in Australia, its taxation would be £40,000 less. The measures by which the Australian Government assists, the industry are as follow : (a) Guaranteed price for gold it the market price falls below a certain limit. (b) No export or production duty on gold. (c) No tax on the profits of gold mining companies or individuals. (d) Dividends from gold mining companies paid to shareholders are exempt from income tax and excluded from assessable income. (e) Special concessions in the writing down of wasting plant and assets. What a contrast with the hampering policy in New Zealand! Deputation to the Government. A fully representative deputation of the Gold Producers’ Association comprising practically all the delegates who attended the Dominion conference in Christchurch a fortnight ago, met the Prime Minister, tho Ministers for Finance and Mines, and of several other departments, under an arrangement specially made by the Hon. P. C. A\ ebb.

The deputation was concerned chielly with the remission of the gold duty, and many excellent speeches and logical arguments were made. Answering the deputation’s speeches, Hon. W. Nash fashioned his reply as if the Waihi Aline, the greatest mine in the Dominion and among the loading mines of the world, was a typical illustration of mining in New Zealand! Bui. the fact is that notwithstanding the increase in th(> price of gold, and the advantage of the exchange rate, taxation in both New Zealand and Great Britain has risen to such an extent that 75 per cent, of the advantages (if the increased price ot gold is being returned to the Governments hv way ot extra taxation, and the remaining 25 per cent, is eaten into by the increased costs ot extra duties, etc., so that the net advantage to the companies is infinitesimal.

It was noti' cahlr'dliat the Minis (Continued at foot of next column)

ter for Alines was not in agreement with his colleague, the Minister for Finance, and stonily presented his opinions, horn of prncii.nl experience, in opposition to the view ni a doctrinaire financier.