BUILDING SUBSIDY

Auckland Star, Volume LXV, Issue 26, 31 January 1934, Page 10

BUILDING SUBSIDY

MOST PRODUCTIVE.

EXPENDITURE OF BOARD. MINISTER'S STATEMENT. "There appears at the present time to be a fairly general demand for fuller and more detailed information in regard to the operations of the Unemployment Board's Xo. 10 building subsidy scheme," says the Hon. A. Hamilton in a statement. "Already very full details have been supplied to the public as to the total value of works approved, of the anticipated cost to the board by way of subsidies, and of the value to the industry from an employment poit of view as the work proceeds. Tlic board cannot, nor has it any desire, to object to criticism being levelled against the practice of paying subsidies to the building industry. *It is an unusual procedure and ariy thoughtful examination is helpful. It "is Jiot very clever criticism, however, to make the bare statement as though it ■were a fact, that all buildings being subsidised would have gone on whether they had been subsidised or not, whilst to suggest that money expended in this direction would have been available for increased relief payments indicates very loose thinking.

Position Last Year. "It is useful just now, in view of recent criticism levelled against scheme 10, to look back and observe the unemployment position as it was at the early part of last year, when the scheme was reintroduced. The ' building industry — the largest of our secondary industries from the point of view of employment — was practically at a standstill. In selecting the building industry for special consideration, the Unemployment Board ■realised that practically no other industry offered the same need or facilities for stimulation by way of a subsidy. The percentage of the total money spent in wages both direct and indirect is greater in the building industry than in any other majo? industry in New Zealand. The total value of permits in the larger towns where statistics are collected, for the month of April reached the zero figure of £76,000. That was the lowest monthly value of permits since the collection'of building statistics was commenced in 1922, and is in sharp contrast to the monthly average value of permits issued between 1920, and 1929, which stood at £750,000, whilst on two occasions durin"- that period, the monthly totals exceeded £1,000,000. Helped no doubt by the collapse of the building industry the unemployed registration figures were increasing at an abnormal rate. It was freely and confidently anticipated by many of those now criticising the board for subsidising buildings that the unemployment figures would reach 100,000 before'the winter came on. "The Unemployment Board had the position to face and decided to reintroduce the No. 10 subs : dy scheme. 3y making the scheme wider in its application than was the case when it was attempted the previous year, and by providing for a shorter working week on subsidised work, the board set out to stimulate the building industry, and, if fit all possible', to counteract the abnormal increase in unemployment figures. Registration Figures Fell.

"It is significant that when the scheme had-operated for one month only the steady abnormal rise which was taking place in unemployment figures was arrested. The following analysis of registration figures will enable a proper appreciation of the effects of this scheme on the unemployment position: The registration figures for tho month of May, 1933 (the month preceding the operation of scheme 10), increased by 1336 over the previous month, against a corresponding increase for the same period in 1032 of 790. During the month of June, 1933, the first month of operation for scheme 10, the increase of registration figures was 350 only, corresponding with an increase of 1495 in June, 1932.' In July, with the scheme scarcely under way, 'the effects of the scheme were beginning to be felt. Whereas in 1932 during the month of July the registrations at labour bureaux increased by 495, in 1933 they decreased by 419. Taking another month for comparison when the scheme might be said to be properly under way—the month of October —the registrations decreased by 4599, as against. a , decrease of 17G4 for the corresponding month of 1932; and, at the end of December, 1933, the figures of registered unemployed remaining on the book .at the employment bureaux were less than at December 31, 1932, by 4189 r and despite the fact that the 1033 year commenced with the registrations at 7000 above those of January, 1932. How Scheme Operates.'

"To allege that the using of funds for subsidies under the No. 10 scheme has resulted in a necessity for cutting allocations under scheme No. a is not correct. It wbuld appear more likely that had it not been for the operation of the No. 10 scheme it m,ay-haye -been necessary ;• to further reduce present allocations or to. increase taxation. To give one illustration typical of others showing how scheme 10 operates should suffice to dispose, of the idea that subsidies on buildings have reduced the money available for scheme 5. Take a city building, subsidised under the scheme which gave employment to 40 men, all of whom were previously on relief Under scheme 5. The cost of subsidy—approximate figures only—for these men was £50 per week, the wages bill for the same men was round about £150 per week. The weekly overall expenditure on this building, including the wages paid, averaged £450. Of this latter amount it is reliably estimated that, in addition to the direct jjvages paid, £200 per week was paid in gndircct wages. f "It is important to note here in this being an , actual case, that fthe subsidy amounted to slightly less jrthan would have been required to pay jrelief rates under scheme 5 to the same "-men. By expending the money in this fway the 40 men, instead- of relief rates |of pay, were in receipt of standard Irates. In addition, they created einsployment for other workers at standard jrates and, more important still, all-the

I -men were employed in their normal un- | "dertakings. That illustration indicates s -clearly the advantages of the No. 10 I .scheme. The Unemployment Board is 'convinced 'tha:t no other expenditure of u the board's funds has been bo producJ tive of advantages to the employment * position as the expenditure under No. 10 scheme. It is not to be measured only » by the reduction that has taken place I in registrations. I "Tie '■ total value ;of applications approved is £5,494,000; the maximum " subsidy on these works, assuming they are all gone on with and that all esti- ! mates as to cost prove reliable, would i involve £.300,000 in subsidies from the } fund, .but direct and indirect employ - • ment involving over £4,000,000 in Wages, » whilst. the tax upon these wages will s^^^o^^tQ;y APPEQ^mately.,£2op J 0p0,.... ; .