N.Z. PRICE CONTROL

Evening Post, Volume CXXVI, Issue 135, 5 December 1938, Page 11

N.Z. PRICE CONTROL

TEST STILL TO COME

MR. SPENCE'S VIEWS

REPORT TO N.S.W. GOVERNMENT

(From "The Post's" Representative.)

SYDNEY, November 25

The opinion that administrative control of prices and industry could not be altogether free from the suspicion of political influence was expressed by the Auditor-General, Mr. James Spence, in his report on the New Zealand system of controlling commodity and other prices. Mr. Spence, who made an investigation on behalf of the New South Wales Government, which is contemplating machinery for investigation of prices here, said: "The impression formed is that the control of prices and industry in New Zealand can create many difficulties for a Government and that the real test of its effectiveness and value is tstill to come. The establishment and maintenance of the machinery of price control so that it may be available for use when required are valuable as a check on price increases, but if the objective is the control of prices only, the machinery should be used mainly to regulate the prices of necessaries, and put into motion only when it has been demonstrated that Government intervention is advisable in the public interest." Mr. Spence said that it appeared to be generally accepted that, while the success claimed in the annual reports of the Department of Industries and Commerce was probably overestimated, the activities on the Department served as a brake on increasing prices, but, as might be expected, they did not prevent increases being made where justified by rising costs. Under the influence of higher wages, shorter hours, and more liberal working conditions generally, both costs and prices undoubtedly had risen. The machinery for the exr elusive purchase and sale of wheat and flour through the Wheat Committee, designed to implement the arrangement of a "guaranteed price" to the farmer for his wheat, had worked effectively and efficiently, but opinion among millers was divided as to the effect on the milling industry. Strong opinions had been expressed for and against the arrangement under which milling competition had been eliminated and the miller had become a gristling agent for the Wheat Committee. Competently administered, the system should reduce selling and distribution costs, and, unleses the full benefit of the saving was given to the wheat grower in his guaranteed price, it should keep down the price of flour.

Endeavours to rationalise industry and stabilise prices through the Bureau of Industry had not advanced far enough to demonstrate their permanent value. "I found," said Mr. Spence, "that the power to declare an industry a 'controlled industry,' bringing it under the licensing provision of the Industrial Efficiency Act—and so preventing any newcomers entering the industry except with the permission of the Bureau of Industry—was universally condemned by the commercial community in principle. In most cases, however, the Government has been moved to exercise this power by those members of an industry who considered they would gain advantages in the restriction of competition, and in the good will that attaches to a licence. In such cases principles are readily subordinated to self-interest."