Subsidies A Charge On Dairy Account

Wanganui Chronicle, 5 September 1946, Page 5

Subsidies A Charge On Dairy Account

COMMISSION’S RULING ONE JUDGE DISAGREES (P.A.) Wellington, Sept. 4. A decision that the Government was entitled to debit to the Dairy Industry Stabilisation Account the amount represented by subsidies and costs incurred in the holding of retail prices for butter and cheese in New Zealand, has been made by a majority decision of the special Commission of Inquiry. The commission’s report was tabled in the House of Representatives to-day.

The then Chief Justice, Sir Michael Myers, who was chairman of the commission, and Mr. Justice Kennedy signed the majority report.

A minority report was made by the other member of the Tribunal, Mr. Justice Johnston, who disagreed with the majority decision.

The question arose out of administration by the Government of its agreement with the Farmers’ Federation for the payment of subsidies needed to keep down local prices of butter and cheese. In a general report by three members of the commission it was stated that the commission had questioned the validity of the agreement. Subsequently the commission was informed that the undertaking had been given that in order to remove any question of the agreement being invalid, the Government would, as soon as was reasonably practicable, introduce legislation to validate it.

After reviewing at length the background of the agreement and the effect of stabilisation to keep down local prices of farm products, the majority report stated that it had been suggested that annual lump sum payments made by the Government of the United Kingdom were payments that came within the clause in the agreement, which states: "If any increase paid from overseas on any product is paid for any general national purpose, such as to maintain sterling balances, to offset general import price increases or Government expenditure in holding costs, that increase will be applied as follows: (1) If it includes compensation for any cost increase held by subsidy, which is charged against a stabilisation account, a credit equivalent to the amount of the subsidy will be made to the appro-

priate stabilisation account; (2) the balance of the pay- • ment will he credited as the Government determines.”

The commission held that it did not appear that these lump sums payments were attributable to any increase in the price of the products, and the commission found itself unable to say that those payments came within the provisions of the clause quoted. In any event, the commission held that the point did not seem ever to have been previously raised, or to be within the terms of its order of reference.

"Our answer to the question put to the commission may be summed up by saying that the Government is entitled, under the agreement, to debit to the Dairy Industry Stabilisation Account the amount represented by both the subsidies and the cost allowances,” states the majority decision. Mr. Justice Johnston, in his minority report, answered the question put to the commission in the negative. When giving his reasons for his decision, Mr. Johnston said: "A construction that throws on the primary producer the cost of meeting his own cost of production out of the purchase money accumulated against a rainy day undermines the whole plan of control set up by the Statute, and it should not be adopted unless the intention to make the change is apparent from the whole agreement, and expressed in clear and unambiguous language, quite apart from the Statute. The normal way in which to meet increased costs of production is to increase the price. A construction that prevents this course being adopted. especially where it would relieve the other party to the agreement from his obligation Io see thal the price received does cover the producers’ costs of production, is one to be avoided. No canon of construction I am aware of can be cited which supports a claim to force into the agreement a payment, not in character a subsidy, by expanding the ordinary use of a term used in the same connection in its ordinary sense.”