SUBSIDIES.

Taranaki Daily News, 10 September 1921, Page 4

SUBSIDIES.

The payment of. the butter subsidy has ended, and- Ibutter is now being sold at its market value. How dangerous it is to depart from the law of supply and demand is strikingly illustrated by the experience over • this subsidy. The Government was moved, to grant it as the result of considerable pressure by the urban consuming public at a time when the Imperial Government were jn the field .with an offer that was particularly satisfactory from the producers’ point of view. Towards the end of the season, however, the Home market slumped, and local consumers were obliged to pay more than the export parity. Had there been no subsidy consumers would perhaps have had to pay a high figure for their summer butter, but a mu'ch lower one in the winter, so that the public have in no way gained by the subsidy. There was no necessity for it, as the. great bulk of the public were receiving high wages, upstly based on the cost of living. The subsidy has had to be provided out of taxation, which, ,in turn, is passed on to the consumer, or, at least as much of it as can be. Price control of commodities is inherently' tinsound, as shown by the fact that the subsidised local price of butter has actually been higher than the export parity. The subsidy has cost the Government nearly a million sterling. Then there is the wheat subsidy, which is costing something like £12,500 a month. The experiment has thus proved a very costly one, and it is to be hoped there will be no further Government interference with the operation of the law of supply and. demand. ’