RISING COSTS

Manawatu Standard, Volume LVII, Issue 206, 31 July 1937, Page 7

RISING COSTS

FARMERS’ PROBLEMS. MR H. D. ACLAND’S VIEWS. WELLINGTON, July 29. Remarking that the fortunate increase in primary producers’ income in the last year had enabled the country to meet the extra charges which had been imposed on industry since the present Administration took office, Mr H. D. Acland, president, expressed the' fear, in speaking at the meeting of the New Zealand Sheepowners’ Federation, in Wellington to-day, that the rising costs would bring difficulties in their train and that the cold wind of depression might blow TJtopian theories away. Rising costs might delay recovery.

The enormous increase in money received into New Zealand on account of exports during the year, compared with the average since 1930-31, had made it possible to meet for the year, at least, the extra charges imposed on all industry, and particularly those producing for export, resulting from the alteration of policy under the present Government, he said. When it was' proposed to revert to the 1931. wages schedule the federation’s executive had pointed out the inability of certain classes of sheep country to continue production at 1931 levels of costs, with the average for avool realising only 50 per cent, of the average figure over the pre-slump period, but it was not successful in obtaining any concession under that head, and the industry had to meet the increased costs under the law, both with regard to labour and taxation. Hoav long it would continue to do so Avould appear to depend on hoAV long its income from the sale of exports approximated to its present level.

“OPTIMISTIC'SPENDING. ” “It has been the experience of almost every country in recent years that the freezing winds of economic depression will bIoAV Utopian theories and laws to ribbons; and during such periods the necessary in order to maintain a measure of social equilibrium have had willy-nilly to be made on a basis calculated to meet the altered conditions,” said Mr Acland. “We in New Zealand have had to do this during the slump period, and it is to be hoped that the present policy of optimistic spending, Avhich has only been made possible by the almost sensational rise in overseas prices received for our exports, will not be unduly prolonged; if it should be, there would appear to be grave risk of our being faced with a repetition of our experience during the years of the slump. ,“I should like to stress the point that increased spending poAver does not necessarily mean increased purchasing poAver. There is a great difference between them, as I have repeatedly pointed out; Avhen Avholesale prices have to be raised to met increased costs imposed on industry by Government edict, or court aAvards, or other causes, the increased spending power represented in the raised Avages to the workers receiving them, is almost always accompanied, in the long run, by reduced purchasing power due to the increase in retail prices to the consumer being in almost every case greater than the individual extra money wage paid, so that Aidien the Avage earner ceases to be a seller of his .‘ labour, and becomes a consumer of the product of that labour, he in many cases will fail to balance out in real wealth purchased (that is, commodities and other requirements) against the increase in money Avage he has received.” “All could support the Government in its aim to increase purchasing power provided the facts of the case were not lost sight of, the principles of which Avere ‘an increase of purchasing poAver cannot be created by shortening working hours and paying increased Avages for less Avork done.’ and ‘that statute IaAV and regulation of industry by Government edict may alter the distribution of the (xisting wealth within a country, but noAvherc has it been shown possible to create wealth' by these means.’ ” “It Avould appear that the greatest care will be necessary in the carrying out of the Government’s policy.of redistribution to prevent detrimental effects to that class of the community in whose interests the redistribution is being made,” said Mr Acland. “Under existing conditions there appears to be a danger that this may be the ultimate result, as the natural tendency will be toward the creation of tAvo separate Neiv Zealands —a town New Zealand and a country New Zealand —the first starving the second by virtue' of the dis-equilibrium as betAveen returns for services rendered in the one case, as against those in. the other. In short, in a country such as ours, whose exports arei almost exclusively primary products, it will be apparent that if carried past the balancing point of equity, the policy of lighter \A‘ork and shorter hours in towns can be made possible as a continuing policy only by harder work and longer hours on the land.”

GUARANTEED PRICE. It would appear that the most that could he done toward securing to exporters of primary produce sufficient .to coyer costs' of production within New Zenlnncf, while at the same time ensuring a sufficient profit to the farmer to enable him to Jive in comfort and continue production was that which the Government had . already done for the dairy industry, that was, the pooling of the product for marketing purposes, and the fixing of a price based on an average taken over a period of years of prices paid for the particular product overseas. If more than that was attempted in the interests of any one branch of farming production it must be obvious that any price paid above that received overseas must be found by the general taxpayer. “I feel convinced that any undertaking by the Government to guarantee to any section of export producers security of a return for its produce higher than that which is justified by the prices received on its world market is not possible without injustice being inflicted on some other form of production from which a direct subsidy might be taken or on the general taxpayer in New Zealand, who would be required to foot the bill in the interests of the particular product receiving the subsidy. There is also a very grave danger that the British farmer might deeply resent any suggestion of a subsidised surplus product being dumped on the British BETTER TO REDUCE COSTS. *‘To my mind, a more equitable approach would be to reduce the costs of production by way of reduced charges, interest, land values, taxa tion, etc., to the point justified by. the average return for the particular product over a reasonable period of ye ‘ l ‘Therc is a need for care in expenditure during boom periods, and a

need for corporate and individual reserves to be set aside during periods of prosperity so that, should slump conditions have to be met, industry generallj 7 may he enabled to carry on business with the least possible disturbance and hardship to those immediately concerned, and also to the community in general. If taxation is taken to the limit of ability to pay in boom periods, it will not be possible to meet periods of slackness and provide means adequately to face business responsibilities when prices fall. JJ Mr Acland urged the federation to divorce itself entirely from any question of party politics, so that it might at all times he free to approach whatever Government was in office and honestly criticise legislation affecting the industry without regard to any party political issue.