UNEMPLOYMENT.

Auckland Star, Volume LXI, Issue 191, 14 August 1930, Page 24

UNEMPLOYMENT.

CAUSES OF THE TROUBLE.

EFFECT OF LAND BOOM.

OVER-BUILDING IN CITIES

(By W. D. KEYS.)

It is remarkable to-day that amidst the endless confusion of finding causes and curses for unemployment in New Zealand no one to date has placed the true position re unemployment before the public. Firstly no real depression, has existed in our main primary industries from the year 1924 onwards. Fluctuations have occurred inevitably in the world parities of our principal primary exports, but the true position reveals a very healthy and normal period of advance and expansion in production generally, both in quantity and quality of our main primary exports.

Tho beginning of tho present unemployed situation in New Zealand traces back to several causes, the principal being a measure passed by the Reform Government of about 1924 to overcome lack of houses, etc., for workers and others in New Zealand. At this _ date legislation was passed, and is still in force, enabling the State to advance up to 95 per cent of the cost of erecting new homes for any applicant in New/ Zealand who applied within the province of the Advances to Workers' Act. This legislation, presumably well intentioned, was yet to act as a boomerang as regards the welfare of vast numbers of workers in all our big cities. Everyone can still recall to-day. the feverish boom in land and house values that followed this legislation—a boom only paralleled by the land boom of 1919 to 1922, following on vast amounts of State money being invested in land in New Zealand. Further this huge inflation in city values and enormous expenditure of capital providing new homes, and also buildings, was fed by a very large immigration influx —a policy fathered by tho Government of that time. This enormous influx of new population (somo 76,000) in about four years, swelled the demand for houses in tho cities, helped to expand the boom influence, and was largely responsible for another city boom —this one a sister boom in business areas—leading to a vast investment of private capital in real estate in cities. To understand what an enormous amount of national and private capital was absorbed in a few years by the cities of New Zealand on buildings alone, it is only necessary to quote the following figures as relating to Auckland and Wellington alone, These figures need correction, but I believe that in the five-year period, 1924 to 1928 inclusive, a total capital sum of at least £30,000,000 was invested in new buildings in two cities in New Zealand alone — namely Auckland and Wellington. These are figures issued for building permits only, and do not include tho further enormous sums of money which must have been sunk in the land required to build on—possibly another £10,000,000 to £15,000,000. Figures like these stagger and explain very largely the enormous drain on national capital this huge building boom in the cities has occasioned.

Tho natural result of this expenditure was to inflate to an enormous degree the demand for certain classes of labour, such as carpenters, bricklayers and all associated with the building industry, and also stimulated far beyond ordinary absorption- capacity other industries, both secondary and primary, such as saw-milling and brick making. But building activities in the two first named cities alone have diminished by over half the former total.

Adding to all this the loss of £2,250,000 in other city industries and businesses and certain primary industries, we could safely double the above number of unemployed as affected by this reduction in the building industry. This is an almost obvious deduction re unemployment, but- certain other serious national considerations are involved.

Tho primary industries, and expansive, have not made tho progress, or are on the sound economic basis they could have been. It may reasonably be stated that" if only half the huge amounts sunk in non-productive (largely) buildings in cities had been diverted to increasing primary - and secondary industry, New Zealand would have not merely had an unemployed problem, but a problem of not enough workers for our requirements. This is surely the most important consideration therefore to-day—to restore.employment opportunities through a national and private _ effort at increasing production, both primary and secondary, as early as possible. New Zealand has weathered two of the most.drastic economic convulsions in 10 years of all her history. The pendulum swung to the extreme in the years 1918 to. 1921, when huge sums of national capital were rushed into land purchases—thus inevitably causing or helping largely to create the disastrous rural land boom of those years. The pendulum again swung to an extreme when again huge sums of national capital were used to inflate or help to inflate the greatest building boom ever known in our history. . . To these two economic convulsions are traceable nearly all our economic ills in Zealand of to-day, and the last is certainly the chief cause of our unemployment problem in New Zealand at present.