STABILISATION COSTS

Chronicle (Levin), 5 September 1946, Page 8

STABILISATION COSTS

-Press Association

Commission Throws Burden On Farmers

By Telegraph-

WELLINGTON, Sept. 4. A decision that the Government was entitled to ilebit to the Dairy Industry Stabilisation Account, the amount represented by subsidies and costs incurred in holding retail prices for butter and cheese in New Zealand, hos been made l)y a majority decision of the Special Commission of Inquiry whose report was tabled in the Ilouse of Kepresenta ti\ es today. The Chief Justice, Sir Michael Mvers, who was chairnian ot llie Commission, and Mr. .Justice Kennedy, signed the inajoritv report. The minority report was made by the otlier member of the Tribunal, Mr. Justice Johnston wlio disagreed with the major itv decision. The question arose out of the adininistration by the Goverinnent of its agreement with tlie Farmers Eederation for the payment of subsidies needed to keep down local prices of butter and c-heese.

In a general report by the tliree niem bers of the Commission, it was stated that the Commission had questioned tlnvalidity of the agreement. Subsequently the Commission was' informed that an undertaking had been given that in order to remove any question of the agreement being invaiid, tlie Goveriiment would, as soon as was reasonablv practicable, introduce legislation to val idate it. After reviewing at Jengtli the background of the agreement and tho effecl of stabilisation to keep down local prices of farm products, the majority report stated that it had been suggested that tlie annuaJ lump sum payinents n ade by the Governnmnt of the United Uingilom, were payinents that came within a clause in the agreement wliich states: "If any increase paid from overseas on anv prodnct is ]>aid for any general nafional purpose such as to maiutain sterling balances, to offset general import price increases or Gov- 1 ermnent expenditure in holding costs, that increase will be applied as follows: (1) If it includes compensation for any cost increase held by subsidy wliicli is charged against a stabilisation account a credit equivalent to the amount of tlie subsidy will bo made to the appropriate stabilisation account; (2) the balance of the payment will be credited us the Goverinnent determines. Tlie Commission held that it did not nppear that tliese lump sums payinents wire attrilmtable to any inciease in price of prodncts and the Conimissioii I'ound itself unable to say that those I nyments came within the provisions of Ihe ( lause quoted. In any event the Conimissioii ludd that Ihe point did not st-eiu ever lo have bo"n previously raised or to be within tlie tenns of its oider of reference. ''Our answer to Ihe question put to the Commission niay be summed up by sayi'ng that the Goverinnent is entitled, under agreement, to debit to tlie Dairy Indnstrv iSfabilisation Aeeoilnl, the

n.iiount. represented by both the subsidies and tlie cost allowancos, " states the majority decision. ' « .Mr. Justice Johnston, in his minority report, nnswered the question ]nit lo the Oominission in Ihe negative. When givmg his reasons for his decision, Mr. Johnston said a construction that throws on a primi'Vy producer the cost of meeting his own cost of ]iroduction out oi" purchase, money accumulated against a rainy day, undermines the whole plan of control set up by statute and it sliould not be adopled unless the iiitention to nutke the change is apparent from the whole of the agreement and expressed In clear and uiianibiguous

language. ''Quite apart from the statute, the normal way in wliich to meet increased costs of production is to increase the price. A construction that prevents this course being adopted, especiallv where it would relieve the otlier party to the agreement from his obligation to see that the price received does eover the producer 's costs of production, is oue to be avoided, " he adde.d. "No canpn of construcfion -1 1 •ani .aware of - chji v be! "gitejrl ; vyhicH sup'pbrts a cjaifti to fprce int'o the./agree | ment, a payment not ig character ' a subsidy, by expanding the ordinary -use of a tertrr used iu' the same connectipn in its ordinary sense. " ' ! 1