FARMING AFFAIRS

Bay of Plenty Beacon, Volume 11, Issue 13, 2 April 1947, Page 7

FARMING AFFAIRS

INCREASED CARTAGE RATES VIEWS OF FEDERATION The Goods Services Charges Tribunal is at present considering applications by the vai'ious carriers’ and road haulers’ organisations for increased cartage rates to cover the wage increases granted by the Arbitration Court under the Motor and Horse Drivers’ Award of December 24, 1946. Mr F. Phillips of Otorohanga represented Federated Farmers at the hearing by the Tribunal and opposed further increases in cartage rates. The farmers of New Zealand are large users of the various goods services operating in the Dominion. Any increase in cartage rates, therefore, is an increase in production costs, an increase not covered by automatic price increases for their products because of the rigidity of the operation of the stabilisation policy in relation to primary produce. Opposition to increases in rates, therefof-e, to be offered by the Federation on behalf of its members.

Apart from opposition in principle to the continued practice of spiralling costs, the Federation has argued for a long time that overall increased cartage rates can be rightly opposed on a number of specific grounds.

In 1946, for*' instance, the price of petrol which had been stabilised by the Motor Spirit Prices Regulations, 228.1942, was reduced by 3d per gallon. The price to transport operators who came under scale B of the regulations was, for example, reduced from 2/6id per gallon at main ports to 2/3id or 10 per cent. Farmers argue, therefore, that such a reduction of petrol should go a long way towards compensating the transport operators for the rise in wages costs.

Under the Tribunal’s assessment of transport operators’ costs, interest on capital is allowed at the rate of 6 per cent, per annum. But in addition to that guaranteed return on capital of 6 per cent., allowances are made by the Tribunal in assessing costs, for the wages of ownerdrivers at award rates, for the office salary of the owner and for the management and supervisive costs of the owner.

How many farmers in New Zealand receive a net return of 6 per cent, on capital invested? In the case of sheep farmers, for instance, it is doubtful if the average return is as much as 4 per cent, before making any allowance for the owners’ own wages and costs of management. In the case of the dairy fai’mer, under the guaranteed price structure, the- Government- assess interest on the producers’ capital investment of only 4 per cent.

To the farmers’ mind, the Tribunal’s allowance to transport operators of 6 per cent, on capital is out of proportion to that granted to farmers (the transport users) whose enterprise is infinitely more hazardous than that of carriers. There apears no logical reason why transport operators should be in a more privileged position than that of the people from whom they derive their business. Farmers contend that the State, in allowing such a distinction, is discriminating between one type of capital and another.

The present application by the carriers’ organisations is for an overall rate increase. Previously rates have been fixed by areas, either by the Licensing Authorities or by the Goods Service Charges Tribunal. Considerable variations in the increases granted the different areas since the rate was first fixed are to be seen in an analysis of them. By those variations it seems clear that both the Authorities and the Tribunal have recognised that operators’ costs and profits vary from area to area. By so doing they have also recognised the principle that flat rate overall increases should not be granted to operators cn masse, when particular operators or groups of operators in particular areas have shown that they have been capable, under existing schedules, of absolving increases out of profits. The Tribunal’s action in granting an overall increase of 4 per cent, as from August 1, 1945, was a departure from established principle and Federated Farmers is concerned lest the same practice be followed in future. It can be logically contended, the Federation believes, that no further increase in rates should be granted by the Tribunal without a thorough examination of all operators’ balance sheets and profit and loss accounts. Unless such a method is adopted, the efficiency of and the co-operation among operators will never be improved.