53

I.—lβ.

s. j. a. blow.]

74. You calculate that this £32,500 per annum if put out at interest on a 4-per-cent. basis would amount to nearly three millions in forty years? —Yes. 75. And you say, therefore, that you are paying nearly three millions of money for £650,000? —For a plant which originally cost that. 76. You have already said that you are not taking any collateral advantages into consideration : have you worked out what this £650,000 expended at the outset, would produce at compound interest in forty years?—l have not worked that out. [At this stage Mr. Blow handed in to the Committee an exhibit showing the steamer distances between New Zealand and Great Britain; between New Zealand and South Africa, India, and Argentina; and between Great Britain and the same countries. He also handed into the Committee a copy of the Parapara mineral lease, a copy of the Onakaka mineral lease, and Mr. Washbourn's lease.] The Chairman: Mr. Myers, have you seen this Bill as amended by Mr. Blow? Mr. Myers: In clause 3 Mr. Blow makes an addition: "The contract or contracts shall be in such form and contain such provisions and covenants as the Minister may consider necessary and may approve, and in particular shall include the following terms and conditions." I do not know that exception can be taken to that. But Mr. Blow then proceeds, in section 3, subsection (c), to want to insist that of the 65,000 tons upon which bonuses are to be paid at least half will consist of steel. In the same clause he also adds, " Provided, lastly, that no contribution whatever shall be payable in any year during which the total output of iron and steel is less than 50,000 tons." Something may happen in a particular year, a strike or any unforeseen occurrence, which may practically close down the works for a considerable portion of the year. In such an event, so long as the company has kept the works going as long as it could, I certainly think it should not be prevented from receiving its proportion or part of the subsidy. Mr. Sidey: Mr. Myers, if such a condition were attached so as to provide for special contingencies such as you suggest, would the company be agreeable to very considerably increase the suggested output over and above 65,000 tons? The-company, if it were not successful, could contract its works simply to qualify for the subsidy and confine its business to local markets. Mr. Myers: I should think the company would be perfectly willing to discuss a matter of that kind. I do not think there would be any difficulty on that score. Mr. Blow's alterations do not go far enough: if they are put in to protect the State something further should be put in to protect the company. In subsection (d) Mr. Blow puts in, "if and when required by the Minister." I see no objection to that. Then Mr. Blow adds these words at the end of subsection (d) : " such cost price and added percentage in no case to exceed the landed cost price of similar goods imported from Great Britain." This is the difficulty about that point. The words used by Mr. Blow, "landed cost price of similar goods imported from Great Britain," mean practically the same thing as wholesale London price; the insertion of those words would mean the price at which the New Zealand Government could buy similar goods on the London market. There is nothing to provide protection for the company; any large English or other manufacturers of those products might consider it advisable in their own interests, in order to do away with the new industry established in New Zealand, to undercut. There could be no doubt before long the competition of the newly established, industry in the Dominion would cause European and American manufacturers to use every effort to crush it, and it would undoubtedly be in their interests to offer their products at prices far below those quoted to purchasers in order to ruin the industry in New Zealand. I am afraid the words which Mr. Blow has added might have that effect. Witness: You would suggest " wholesale prices in London " 1 Mr. Myers: I suggest it is better to leave it as drawn, that the New Zealand Government shall have the right to purchase at cost price, plus 5 per cent. If the Dominion Government finds it can buy more cheaply it is open for it to do so. If the Act compels us to sell at prices not greater than London prices there is a direct incentive to these foreign and British manufacturers to dump and undercut us. Hon. Mr. McKenzie: The London prices will not be based on the prices the New Zealand Government purchases at in London ; they will be based on the recognized market prices in competition. Mr. Myers: That is a different matter. The words "such cost price and added percentage in no case to exceed the landed cost price of similar goods imported from Great, Britain " —that means this : that we must charge no more than the Government could land the goods at in New Zealand. The Chairman: You object to the local prices being taken as the standard? Mr. Myers: We would object to the price at which the New Zealand Government could purchase in London, because the people in foreign parts shipping to London and knowing of this Bill would say, " Well, we will be prepared to sell to the New Zealand Government in London at such prices as will crush the New Zealand industry." Mr. Sidey: Would you accept the current prices? Mr. Myers: I think that would be very much fairer. The Chairman: The Government is not being obliged to buy; it need not do so. Mr. Myers: It is quite competent for the Government to say it should buy at prices not exceeding the prices they can buy at in England, and it would be for the Ethelburga people to deal with that. Subsection (c) —" A right on the part of the Minister to cancel the contract at any time for breach or non-performance": that would mean that for the smallest breach, a trivial breach, of the contract the Minister would have the power to cancel, and that would be monstrous. Hon. Mr. McKenzie: The Minister must have the power for any serious breach as well.