The Waikato Times With which iS incorporated The Waikato Argus. MONDAY, OCTOBER 18, 1920. THE BUTTER SUBSIDY

Waikato Times, Volume 93, Issue 14494, 18 October 1920, Page 4

The Waikato Times With which iS incorporated The Waikato Argus. MONDAY, OCTOBER 18, 1920. THE BUTTER SUBSIDY

The conclusion which has been reached by the Butter Committee ami accepted by the Government, is one which may please the unthinking, but is the despair of all those who know the inevitable end of such policy? It is a mere postponement of the difficulty instead of facing it with the knowledge that it will be a greater difficulty when flic time comes for settlement. Mi- Massey makes im secret of the fact that he thinks ii wrong, hut then j| has in .-Mm,- way become Ii uslom for politicians hi do what they think should not Im- dmie. H c says he win cast annul for wealthy peoplp upon whom In place the extra taxation, 1 mit in spite of the cynicism of the avowal it is nut really done, fur the go.id reason that it is impossible to do it. The whole business is an example of the difficulties that arise from taking a course which appears In lie popular at the time, although it is known lo be unjust. The had system of making fanners sell butler al less than its value has been started, and now there is nol enough courage in the .Ministry In stop il. Toe system is likely In spread. When a general election is to he held we shall find candidates who will promise to pursue the same course in the matter of hoots and drapery, while another will J trump it witli free picture shows, and free conveyance to and from them. Mr Massey will not care to go so far as this, hut he cannot resist such proposals on their merils. and will suffer by comparison with somebody who will make bigger promises. Bread and circuses brought Home to grief, and we are repealing the process with bultov, while 'he picture sh.>\vs for nothing will enme later. We do nut object lo the cheapening of butter from any want of sympathy with large numbers who suffer from high prices, for we recognise that the times are hard for very many. The j

action of the Government, however, will not lower general prices, but on the contrary will raise them. One of the chief causes of high prices is the existing heavy taxation. It has been pointed out that this is passed on to customers In the price of goods. We have argued this on many occasions for some years past, and note with pleasure that the fact is being generally recognised. The extra taxation which the butter subsidy will involve will cause an additional screw upwards to prices. This will be blamed to a variety of causes, and being spread over all classes of goods it escapes any special notice, but nevertheless it operates continuously. The only method of avoiding this is to make the receiver of the dividend pay the tax, but so far from doing this the changes made in this year's Act are all in the other'direction. In order to meet the convenience of the Department the taxation is collected it the fount, and as a result the greater part of it is placed on the price of goods and becomes indirect taxation. In Hie present instance the saving in the price of butter will be lost in the increased prices of other goods. This is on one side of the question, while on the other is the increased consumption which arises from a reduced price. It is probable that butter will follow the course of meat and wool, and that there will be a drop In price. It will be interesting to see whether there will still be a demand for a subsidy, and whether the Consolidated Fund or the customer will have the benefit of the lower price. When we begin to put sanity in these matters on one side It is hard to say where the process will end. While w e continue and extend our system of taxation in order to provide cheap butter, it is noticeable that in Great Britain they have taken the opposite course and have dropped price control of all goods except sugar. It may be argued that this is a socialist country, and that it is wise for us to pursue a course which other people eschew, but certainly nobody suspected the present Government of any intention tn carry socialism any further than it already existed. The unavoidable changes in wages have been great; they were, we think, generally justified, and something more might have been done in the matter of increasing old age pensions, and similar allowances. There has, however, been no system whatever in the course which has been pursued. The wages of railwaymen were delayed in the adjustment, and an attempt was made to pay them an increase which was not proportionate to what others were getting. This was, at least, economy, if the object was not a particularly suitable one, but when we come to butter, economy is forgotten anil Mr Massey agrees to a subsidy of £OOO,OOO, the greater part of which will go to people who are perfectly capable of paying for what they want.

Mr Massey is scornful about an export tax, which no one would certainly support on its merits. An export tax would, however, be preferable to this policy of subsidies, which is based on neither principle nor method. It would certainly do something to hinder production, but not much, and certainly nothing which can compare with the handicap created by the inflated value of land. The land would be cultivated, and the produce which could not be sold locally would be exported. The revenue would thus benefit instead of losing. In the present peculiar condition of the world's market there is a strong argument in favour of a moderate export tax. It would do something to lowor prices, and it would enable the Government to close down the departments which subsidise butter and fix the price of wheat, which gives us cheap and insufficient coal, supplemented by shipments from overseas at twice the price. The aim the Government should set before themselves is the abolition of these controls and interferences with trade. For that purpose an export lax would have a good effect, an' it is too late to reject it on the ground that it is economically unsound. Economic science is so consistently ignored that an appeal to it sounds absurd. The Government has taken in hand the control of wiicat, butter, hides, coal and sugar, and looking at the results which have been attained, it is to be hoped that they will not carry their interference any further. Neither the revenue nor the consumer have so far any cause for congratulation on what has already boon done.