LOAN FOR PUBLIC WORKS.

Press, Volume LXIX, Issue 20919, 28 July 1933, Page 18

LOAN FOR PUBLIC WORKS.

ADVISABILITY DEBATED. CHRISTCHURCH ACCOUNTANTS' VIEWS. The advisability of a substantial loan being raised for public and other reproductive works, the interest on which should be chargeable on the Unemployment Fund, was debated by members of the Christchurch branch of the New Zealand Society of Accountants last evening. Mr T. Auton presided over a large attendance, and the speakers were Messrs H. W. Armitage, H. R. Fountain, and J. Hargreaves (affirmative), and H. R. Best, J. M. Preston, and H. R. Lake (negative). The debate was a no-decision contest, and members joined in the discussion at the conclusion. Mr Armitage spoke in favour of the following motion: "That, subject to interest being charged on the Unemployment Fund, it would be a sound policy for the New Zealand Government to raise a substantial f loan for public and other reproductive works." Restoring Confidence. Mr Armitage said that exceptional steps had to be taken to meet the exceptional conditions of to-day. The Government had already taken steps that would have been considered impossible a few years ago. It had introduced a building subsidy scheme with the idea of giving men employment in their own particular trades, and to assist in bringing about that state of confidence necessary to a return to prosperity. The proposal to raise an internal loan, the interest on which was to be paid out of the unemployment funds, was on all fours with the subsidising of building out of the same fund. The stipulation that the loan be an internal one was made because it was intended that the loan should be spent in those activities which would have a greater proportion of labour cost than material cost. Loans on the London market were usually taken up for the special purpose of buying material in England or meeting interest payments. "A Government loan at 4 per cent, would bring money out of the banks, put it into circulation in the purchase of materials and the payment of wages, which would assist in bringing about the return of confidence. The money which would be spent in wages would go back into circulation immediately. Some of it would go back to the Government in unemployment tax and income tax. The amount of money paid in interest would, in all probability, be met by the reduction in general unemployment relief payments to the men who would be absorbed in this work and in industry generally," said Mr Armitage. Roads and Buildings. He suggested that the loan money should be speni on the immediate completion of the Waitaki hydroelectric works, the completion of concrete or bitumen main arterial roads throughout New Zealand, and the undertaking of public works such as school buildings, many of which had been sanctioned by the Government, but which had been held up by the financial difficulties. Much of this work would have to be done in the near future in any case. He said that the payment of current award rates to men engaged . in the work was desirable, and that the work should be done by private contract, which would ensure the efficient expenditure of the money. "The proposal to borrow more money does pot seem to me a way out of the difficulty. Rather does it seem to involve us deeper in the trouble," said Mr Best, who advanced the following reasons for his view that the proposition was an unsound one: (1) Already the total local body and Government indebtedness of New Zealand was £3OO a head of the population. (2) The loan would have to be compulsory, which was repugnant to a British community, and there would have to be a great deal of investigation into private affairs. (3) Eventually the money would have to be found by the banks, who would "tighten-up" more than ever. Permanent Remedy Wanted. Mr Best said that the rejection of the loan scheme necessarily involved the search for alternatives, and he urged the more thorough support of the "Buy British Goods" i and "Support Local Industry" policies. There had been too much re- J striction of purchasing power by ! persons whose incomes had not materially been reduced. It was j necessary, too, to look for new mar- i kets for Dominion products and new industries. i "The suggested scheme for borrowing is too temporary. It merely j bridges a gap," he said. 'We must reconstruct with permanent effect. | Artificial props are disturbing and costly, and divert attention from less spectacular but more lasting remedies. The problem before us to-day may not seem so difficult if it is attacked in a vigorous manner. We need to free the commerce and industry of the future, and not load up business with further overhead charges." Mr Best said that past experience had not been such as to encourage the belief that such loan money would be wisely spent. Finding Reproductive Work. Mr Fountain said that there were 75,000 registered unemployed in the country. A great deal of the work done under the No. 5 scheme was useless work—only found to give the men something to do. To increase and revive the building industry of the country was one of the first steps to an improvement of the position. "The standard of satisfaction has been lowered." said Mr Fountain, "and we find skilled tradesmen content to work at useless jobs, for which they are quite unsuitable, for 36s a week." He said that such a loan would stimulate private enterprise just as the building subsidy had done. The immediate completion of the Waitaki hydro-electric scheme would be directly reproductive. There were numerous sections of railway, the completion of which would also be of great value to the country. Hundreds of square miles of land in Canterbury could be made more reproductive by the institution of an irrigation system. "The public is looking for a safe and profitable investment, and it will be only too willing to release its money from the banks, where it is drawing a meagre 2 per cent," he said. "A Palliative." Mr Preston said that the raising of loans was only a palliative, not

a cure. To saddle . the burden of loans was kering with the proWett nevertheless had to be tf solutely for the sake of Mr Preston advanced toe__ that the causes of the I*** culties were maldistrib*y» efficient credit controL "J** low credit to be treated » » exchange aim _>u« the road to recovery,'* Mr Hargreaves ana ■*> spoke for the affirmative tive respectively, and a i cussion followed- 5