MR. NASH’S QUESTIONS ON BUTTER SUBSIDY

Wanganui Chronicle, 16 May 1950, Page 5

MR. NASH’S QUESTIONS ON BUTTER SUBSIDY

Disaster For N.Z. If The Export Price Falls WELLINGTON, Last Night (PAI- - his talk to members of the Civil Service Institute,” said the former Finance Minister, Mr Nash, tonight, “The Prime Minister, Mr Holland, is reported to have said the subsidy system had to a large extent been an urge to inefficiency, for there was a feeling that if there were a loss the Government would make the loss good. “Does this apply to subsidies paid in the United Kingdom on butter and other foods?” asked Mr Nash. “If so, has Mr Holland considered the effect on the dairy farmers of New Zealand if the United Kingdom dropped the subsidy on butter. If this were done and an unsubsidised price was maintained for margarine and butter, it is probable that the open price for butter in competition with margarine would fall by one-third to one-half. "It is stated on reliable authority that the butter ration in the United Kingdom, even at the present price, is not being taken up. If the demand for our butter fell, as I believe it would if the subsidy was withdrawn," said Mr Nash, “what would its effect be on our whole economy? But for the safety clause in the bulk sale agreement, which provides that a reduction not greater than 7* per cent only could be made in any one year, the effect, I think, would be disastrous immediately. What would be the ultimate effect on rural land values and our primary industries? The price of one of our major primary exports (butter) is being maintained by subsidy. Has the subsidy, in this case," asked Mr Nash, “led to the inefficiency of our dairy industry? I am sure all our farmers and traders are anxious to know Mr Holland's answer.”