Nelson people count cost of subsidy removal

Press, 19 April 1979, Page 2

Nelson people count cost of subsidy removal

From

BARRY SIMPSON

Abandonment of the Nelson notional railway subsidy scheme in October, as announced by the Prime Minister (Mr Muldoon) on Tuesday, met with mixed reactions in Nelson yesterday. Spokesman for various companies were far from happy with the decision to scrap the scheme but had not yet got down to counting the actual cost. They appreciated that removal of the subsidy would mean additional freight costs, but how these were going to be dealt with would not be known until the figures started coming forward. “Very pleased,” was the comment of Mr A. K. Gellatly, manager of the Anchor Dorman Company’s shipping division. “We have had to live with this since it was introduced. The removal must help with our NelsonOnehunga service,” he said. Not only had his company to compete against the notional railway subsidy but also the 9 per cent south to north unit rate subsidy, said Mr Gellatly. The Railways Department was able to gain a large advantage over shipping by sea through this scheme, and it was not fair. The scheme could apply to all modes of transport, he said.

His company was still running one coastal ship, the Titoki — “the lifeline of Nelson” — said Mr Gellatly. This was the last coastal freighter running in New Zealand. In the last 10 years coastal shipping had dropped from as many as 20 vessels to one, he said, and the Titoki was the last of his company’s six ships. Mr Gellatly did not want to comment on the suggestion that his company might obtain another ship to operate between Nelson and Wellington, but he did say the company was looking for a suitable replacement for the Titoki. “The Titoki is inadequate for present day needs; that’s why we’re looking for a replacement,” he said. The vessel required would be one capable of carrying 1.5.0. containers, sea freighter and particularly the big 20-tonne freezing boxes. “There is quite a potential out of Nelson for these things,” said Mr Gellatly.

Another who is keen to see a rejuvenated shipping system through Port Nelson now that the subsidy is to be withdrawn, is Mr R. E. C. Harding, manager of the New Zealand Motor Corporation’s assembly factory at Nelson.

He suggested yesterday that one of the Cook Strait ferries could make at least one trip to Nelson each week to drop off and pick up freight. “We would certainly be a substantial customer,” he said, adding that his company had used the railways to the fullest extent.

As well as receiving “substantial” containers, the factory put out about 4000 units a year. The removal of the subsidy would certainly cost his company more. “It is an overhead and it must be reflected in the cost of the product,” he said. Removal of the subsidy would also affect the trading operations of the Nelson works of Waitaki-N.Z. Refrigerating, Ltd, said the manager (Mr T. W. John-; ston), but to what extent he was not yet sure. Mr M. F. Courtney, member of Parliament for Nelson, said he was “deeply shocked” at Mr Muldoon’s announcement.

“It will be a great cost to the Nelson district, its in-

dustries, and its people,” he said. “It will be yet another burden to be carried by the families of the region, because this is a user subsidy which will have to be passed on to the consumer. It is worth much more than S2M.” Removal of the subsidy would affect businesses and industry in the Nelson region. Businesses were running on a very fine margin at present and this sort of move could be just enough to topple a few, with subsequent higher unemployment, said Mr Courtney. Announcement of the subsidy’s removal was yet another case of a National Government breaking its promises, said Mr Courtney. He referred to a taped interview by Mr Muldoon in 1975, played over a talkback session on Radio Nelson yesterday morning. “On this recording, the Prime Minister clearly said that the notional railway subsidy would remain as long as there was a National Government,” said Mr Courtney. “This, of course, is a desperate move proving once again that the Government is in desperate straits. Before the election they gave away tax reductions and wage increases. Now, of course, we are paying the price.

“Now, we have to press the Government, as we have been doing unsuccessfully for some time, for recognition as a regional development area and try to bring assistance to our industries and encourage industries to the Nelsdn region through regional development incentives,” said Mr Courtney. “Government at its worst” was how Nelson’s Mayor (Mr R. A. McLennan) described the decision to end the notional railway subsidy, reports the Press Association.

“What really makes me mad is that this is continual political interference in the economic development of the country,”- he said. “There is no doubt that the notional freight subsidy killed off the Anchor Shipping Company and its coastal shipping services.

“What do you do when they then turn round and remove the subsidy? Alternative services and facilities do not grow overnight. It takes time for these things to come about and for people to get adjusted to the change. “The national rail subsidy has also been a great benefit to the Cook Strait ferries — which also have contributed to the death of coastal shipping.”

Mr McLennan said that while most provinces enjoyed regional development assistance. Nelson did not. It could be argued that it received this regional benefit through the notional rail subsidy “but obviously not any more, so from that point of view we are disadvantaged.”