LUMP SUM PAYMENTS

Bay of Plenty Beacon, Volume 8, Issue 78, 5 June 1945, Page 6

LUMP SUM PAYMENTS

VIEWS OF PRIMARY PRODUCERS DAIRY HOARD CHAIRMAN'S STATEMENT

A lull explanation of the findings of tlu> Joint Committee of the Meat and Dairy Hoards concerning the lump sum payments made by the British Government to the New Zealand Government was given at the Dairy Board's Ward Conference at Whakatane by the Chairman of the Dairv Board Mr W. E. Hale 1 ? who said that after lengthy discussion with the Economic Stabilisation Commission complete agreement had been readied on this issue.

After the Record of Agreement reached between the Joint Committee and the Government had been read out, Mr Hale dealt with it in detail. "Why were these lump sums paid, and who do they belong to?'" said Mr Hale. "In other words arc they part of the price paid lor our produce by the United Kingdom? That was the major job which the Board's Dominion Conference asked us to decide." The committee had found this to be a verv involved issue he continu--7 ed, and it was only after a complete examination of all the State documents that they had satisfied themselves on the point. It had been necessary to divide the lump sum payments into two sections the £12 000 000 pavable prior to August 1, 1944, on the one hand and the Jour annual payments of £4,000,000 on the other. "Definite proof was given to us that the £12 000,000 was not a payment for produce sold by us to the United Kingdom," continued Mr Hale, '"but was paid partly towards meeting general stabilisation costs in New Zealand and partly towards strengthening sterling l'unds. In other words the United Kingdom 7 Government recognised that the New Zealand Government's policy of .stabilisation, through the payment of subsidies, had prevented certain costs from rising. This in turn meant that the price which the United Kingdom paid us lor produce was lower than if no subsidies had been paid in New Zealand and costs had been allowed to rise freely." . The fact that this had directly benefited the United Kingdom had been emphasised by Sir John AnderChancellor of the Exchequer, who in a carefullv worded state-

merit in the House of Commons made it clear that the annual payments were made because of the benefit that the United Kingdom -rcccivcd from the New Zealand price stabilisation policy. He had not been .so clear on the and so the Joint Committee took special care to examine all State documents on the latter payment. '"As a result,"' said Mr Haie, "the committee are satisfied that it was paid for a twofold purpose—namely, partly to strengthen the .sterling position (upset by the disparity in import-export price levels) ? and partly to meet actual general stabilisation costs. "The position was much clcarer about the four annual payments of 000, and in the opinion of the committee these were clearly paid towards meeting the annual costs of general stabilisation in New Zealand. The committee also examined the .subsidies being charged against these payments of and were satisfied that ) in the four year period, these general stabilisation .subsidies will more than equal the £4 000 000 payments.

"If the committee had not been satisfied on this ' point we would have maintained that producers \}ei'e entitled to say that part of the lump sums was being paid in respect ol' prices for produce sold. Cu'eat concern has been expressed aiready in many quarters about this method of lump sum payment. We are of opinion that it cannot be juslilied under noimal trade conditions. The agreement with the United Kingdom deals with a situation which is quite abnormal and under present arrangements—where part of our costs under stabilisation is carried by the State —this lump sum method of payment cannot be avoided. Dealing in detail with the agreement reached Mr llale said that the resolution from the Board's Dominion Conference, under whk'h the Joint Committee had been .set up

asked that the whole of the price increase on the sale of produce should lx: credited to the Dairy Industry Stabilisation Account, and this had been agreed to by the Government. The principle on which debits could be made to the respective In-, dustry Stabilisation Account was contained in the Farmers' Federation Stabilisation Agreement and J the findings reached were in line with that agreement. "'The Joint Committee made it clear to the Government." said Mr Hale ''that a:<v break away from stabilisation in New Zealand would send costs spiralling. ami could easily wipe out any credits in the. Industry's- Stabilisation Account. The basis of agreement with the Government therefore provides that increases in costs arising before March I 1945 ■ 1 i, and above the level existing on December 1.1 1942, can be charged to the Dairy Industry Stabilisation Account but with certain limited exceptions tiie Government cannot debit the industry with increased costs arising from any present action in allowing wage increases in Netv Zealanjd. "The most important point in connection with the Agreement" concluded Mr Hale "is that increases 2 which occur after March t J'J to * ♦ will be strictly limited to a few specific exceptions which were debitablc. These would have been incurred if there had been no break in the plan to hold costs and prices under stabilisation. In other words, the increases in Avages Avhich are now being granted or which may be granted in the future as, a result of the change in Government policy and the recent statement by the Arbitration Court, will not be -car-i ried by the Dairy Industry Stabilisation Account. This is a very real protection to tlie industry.''