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Wednesday, 15 May 1957

Sir ARTHUR FADDEN (McPherson) (Treasurer) . - by leave - I wish to make a brief statement concerning the Tariff Board report on flax fibre which has just been tabled by my colleague, the Minister for Air (Mr. Osborne). This report contains references to interest on Commonwealth advances to the Flax Production Commission, which, in their context, might give the impression that the commission's costs of production is increased by the interest charge. Such an impression would be incorrect, and I should like, therefore, to inform honorable members of the correct position.

Under financial arrangements approved by me, the flax commission is not charged any interest, as we normally understand it; on Commonwealth advances. The commission is required to pay interest only out of realized profits, and then at a rate determined by the Treasurer following a recommendation by the commission. The effect of these arrangements is that a determination of the flax commission's liability for interest is for all practical purposes the same as a declaration of a dividend by a public company. The commission is, of: course, expected to endeavour to earn a. profit sufficient to enable it- to make a payment in the nature of a dividend. Because the flax commission has not yet reached the stage of profitable operation, I have: approved that no interest at all should be: payable for the period from the commission's inception on 1st November, 1954, to: the close of the financial year ended 30th. June, 1956.

Honorable members will appreciate that if any interest becomes payable in future by the flax commission, it would be payable as an allocation of profits and would not, as the references in the Tariff Board' report might imply, be an element in cost of production.

Ordered that the report be printed.

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