THE PRICE TRIBUNAL

Wanganui Chronicle, Volume 89, Issue 227, 25 September 1945, Page 5

THE PRICE TRIBUNAL

SHOULD IT CONTINUE? DEBATE IN THE HOUSE (P.A.) Parliament Bldgs., Sept. 24 The future of the Price Triounal was mentioned in the course of the debate on the estimates in the House of Representatives to-day. The Minister of Supply (Mr. Sullivan) agreed that a policy which had been essential in wartime need not continue in peace time. The present system had not created inefficiency but had, to some extent, preserved inefficiencies existing before price fixing was instituted. He thought it possible to improve the system. Mr W. S. Goosman (O?n.—-Waikato) sought a reason for t.ij increased expenditure covering Price Tribunal expenses. The amount expended in 1944-45 was £55,797 and £66,168 is estimated for 1945-56.

He criticised the method of price fixation, which, he said, was based on cost sheets of the industries concerned, but without actual inspection of the goods. He wanted to know why a greater price should be fixed for an inferior article made by an inefficient factory, than for a first class article made by an efficient factory. Mr. J. Thorn (Govt. -Thames) said it had been advocated that the Price Tribunal should be wiped out. Would the Minister give the number of persons prosecuted for breaches of Price Tribunal Prices? The Tribunal had been established to prevent people benig exploited. The Minister of Supply, Mr. Sullivan: A total of 1438 have been prosecuted.

Mr. W. J. Broadfoot (Opp.—Waitomo) contended that, where breaches were committed the offender should be prosecuted in his own or nearest town. He criticised the delay in fixing the prices of articles, and suggested that a system of decentralisation would get goods into circulation quicker.

Mr. W. T. Anderton (Govt.—Eden) said -there should be a closer co-op-eraiion between the Price Tribunal and the Standards Institute. No price should be fixed on an inferior article, but rather on a standard article. Boot manufacturers, he considered, should be made to manufacture a standard article, as laid down by the Standards Institute. The Minister (Mr. Sullivan) said he had been informed that there was a daily and close co-ordination between the Tribunal and the Institute. Replying to Mr. Broadfoot, he said offenders always were prosecuted in the court nearest the place of residence. The delay in the fixation of prices was due to circumstances normally arising from some specific cause. Decentralisation would be a good thing if practicable, but it was impracticable to have several Price Tribunals setting different prices in different parts of the Dominion. Mr. Sullivan said he had asked for decentralisation so far as it was possible to adopt. The increase in costs included subsidies and additional administration costs. It seemed, he said, that lhe Price Tribunal was unpopular with the Opposition. He warned those who advocated abolishment of the Price Tribunal that there would then be a grave danger of losing price control. If the Price Tribunal were to be abolished, we would have to approach that period with the greatest care, or else the whole economics of the country would be thrown into chaos, and out of gear. The Government would have to see there was a relationship between the money factor and goods and services, so that we would have some reasonable equilibrium before we thought of withdrawing price control and stabilisation. Miss M. Howard (Govt—Christchurch East) also urged closer liaison between the Standards Institute and the Price Tribunal, and organised publicising of standard specifications for various articles.

Mr. C. M. Bowden (Opp.—Wellington West) said the Price Tribunal's activities might sometimes have an effect opposite to that desired by all at the present time—increasing the amount of goods available. The Tribunal’s policy discouraged eftiiciency.

The Tribunal should be allowed to deal with an industry on an industry basis instead of dealing with individual units within the industry. Tribunal officers themselves recognised this, but, apparently, there was some outside organisation hampering the Tribunal from doing the job it should be doing.

The Minister of Health, Mr. Nordmeyer, stressed that the prices fixed by the Tribunal were maximum ones, and shopkeepers were misleading tne public *vhen they asserted they were unable to sell below the prices fixed by the Tribunal. That erroneous belief had been deliberately fostered in many quarters. Mr. W. J. Polson (Opp.—Stratford) said that if shopkeepers sold below the prices fixed by the Tribunal, many of them would soon be in the bankruptcy court.

The Leader of the Opposition, Mr. Holland, cited an instance of where two identical manufactured articles, coming from two different factories, were priced by the Tribunal at 32s 6d and 4*s 6d, respectively, because of a difference in costs. Such a system discouraged efficiency. The proper thing to do was to fix a price structure over an entire industry; otherwise the manuiacturerer who improved his output, thereby decreasing his costs, was penalised. If one manufacturer worked with an overdraft, his costs would oe higher than those of a competitor who had no overdraft, but. that, did not warrant the fixing of differ ent prices for their manufactures. The Minister, (Mr. Sullivan) said there had always been price differentiation. The Tribunal had stabilised the prices current when it began to operate and had allowed for subsequent cost increases which the industry could not absorb. In the case of wheat, the Tribunal’s fixed price was the actual price, but in nearly every other case its prices were maximum prices. Often goods were sold below those maximums, and that was entirely in order. However, in an overwhelming majority of instances the Tribunal’s prices became selling prices. If that were not so, it would suggest the Tribunal was not doing its job, and allowing too generous margins. Mr. Sullivan .aid the effect of fixing an industry price, as the Opposition had advocated, would be that a number of units with high costs would be unable to carry on.

“Tn peace time, I think that it is quilt) right,” said the Minister, “hut in wartime, with all the shortages the people have been going through, we had to deal with every firm on its merits, on the basis of its costs, if we were to keep them hi business.”

This course had been necessary to keep all units producing, otherwise, shortages would have been accentuated. It did not follow tha the policy which had been essential in wartime need continue in the same form in peace time. The Minister agreed we must aim at greater efficiency- The present, system had not ci rated inefficiency, but had, to some extent, preserved inefficiences existing before price fixing was instituted.

“I think it. is possible to improve the system, hut we must not rush our fences.” said Mr. Sullivan. “If we start, fixing ceiling prices, based on average costs, we will still have units

which cannot live in such a price structure, and shortages of goods would be accentuated. When we gel larger quantities of goods, we will feel reasonably safe to resort to industry ceiling prices, which, at tnat s age, would 1 think, be fairer to the firms concerned ana to the public.” lhe vole was passed before the tea adjournment at 5.30 n.m. Mr. T. L. MacDonald (Opp., Mataura > asked how many Price Tribunal inspectors had been appointed and the proportion of office staff? What were the conditions of inspectorial appointments and were shop-keepers incited to commit an offence? and what steps were token to investigate prices?