I.—17.

[W. Gr. MCDONALD.

32

probably take £1 or £1 ss. off the price of flour, and that would ease the situation all round. The basis at present is fixed in the vicinity of 6s. f.o.b. all the year round. Do you think there is anything better than the present sliding scale ?—No, I do not. Have you considered the question of a subsidy instead of the sliding scale ? —Yes. That is too difficult, in my opinion. The administrative difficulties are enormous ; and, furthermore, that is too much Government control. I believe in having as little Government control as possible. A subsidy would mean too much Government control. There is no Government control in this sliding scale at all, except to see that the thing is working right. You consider that the chief risk in getting our wheat-supplies from Australia is that there might be a stoppage through strikes ? —Yes. Mr. Macpherson.] Did I understand you to say, Mr. McDonald, that you took charge of the wheat in 1918 ?- —Yes. I established the office in Christchurcli on the Ist January, 1918 ; but ! had reported on the matter in 1916 and 1917. You were advising the Wheat Board at that time ? —Yes. I happened to be a member of it? —Yes, that is so. Also you will remember qiiite definitely the difficulties we had in regard to the prices in Australia and here ? —Yes. You will remember on one particular occasion that the Wheat Board practically took the bit in its teeth as against the desire of the Government, and purchased a very large quantity of wheat on the ground that, according to the Board's private information, there would be a very high rise in the price of wheat in Australia, and we saved expense to the country to the extent of 2s. 3d. a bushel ? —Are you referring to Mr. Arthur Shirtcliffe's purchase, or are you referring to something that occurred before I came into office ? I am merely raising the point to show what may happen at any moment in connection with Australian wheat. We had private advice that there would probably be a, very important rise in price, and we acted against the instructions of the Government; and, fortunately, we were able to save the country 2s. 3d. a bushel.—That was not in my time But you must have had similar difficulties, more or less, while you were in control ? —Yes, we had difficulties, as I have explained in my statement. On one occasion, as I have stated, after consultation with Mr. Nosworthy we turned down one offer at a critical period, and just managed to scrape through. The Chairman.] In that case the difficulty began with Australia ? —Yes, taking advantage of our necessity. Mr. Macpherson.'] You no doubt also found during your period of administration a very wide range in the samples and quality of the wheat ? —Yes. You found a wide disparity in the samples and quality of the wheat ? —Yes. Now you say that conditions to-day are easier so far as the farmers are concerned in connection with the growing of wheat ?—Yes. Is that your opinion ?—Yes. I think it is easier to get the wheat grown to-day than it was when we had a shortage of men here during the war period. Are you aware that during the past seven years, at any rate, the cost of wages has risen considerably ?—Yes. And other costs ? —Yes. I have not any experience myself, but I will take that as correct. You are of opinion that the present system is the most practical one ?—Yes. Are you not also satisfied in your own mind that Australia has failed in uniformity, as regards the growing of wheat, during the last seven or eight years ?—Yes, I think that is so. More than we have known in our history ?—Yes. There is often a failure in some of the districts in Australia ; but if there is a failure in one district it is sometimes compensated by extra grain in other districts. If there is a failure in New South Wales, for instance, that may be compensated by an extra lot of grain in Western Australia ; and so on. I know that Australia has been subject to big fluctuations during the last few years. Notwithstanding that weather conditions have certainly been more favourable during the last seven or eight years in Australia ? —Yes. It is quite reasonable to suppose, then, when they get back to the average conditions of weather, that the fluctuations in quantity, quality, and price of wheat in Australia will be a good deal more varied than they have been during the last four or five years ? —That is probable. The Chairman.] I think you made the statement that if free-trade were brought in wheat-growing would be abolished ? —lf I said " abolished," that was going too far. What I want to say is this : if there were free-trade in wheat to-day there would still be grown in New Zealand from 100,000 to 150,000 acres of wheat. In any case ?—Yes ; under any conditions at all. You stated that the present policy is what you call a " mildly protectionist policy " ?—Yes. Is that the policy of stabilizing the price of flour at £13 10s. plus £3 10s. ? —Yes. It does not seem to me to be too high, as affecting the price of bread. Compare the price of bread in New Zealand with Sydney. You suggested just now that if the sliding scale were reduced the price of flour might be reduced ? —Oh, yes, it would be. The basis would be reduced. You will hardly express an opinion as to whether the present rate is a fair rate or not ?- — Well, no ; that is a matter for calculation. But what Ido want to impress upon you is that, in my opinion, the scheme is right, provided the basis is right. The basis of 6s. a bushel f.o.b. to the farmer to-day may be too high ; that is a matter for calculation. The object of the scheme is to get the wheat grown in New Zealand. And then you also have to consider the straight-out psychological effect on the farmer.