STATE INTEREST IN STEEL

Press, Volume LXXIV, Issue 22344, 7 March 1938, Page 8

STATE INTEREST IN STEEL

£5,000,000 INDUSTRY WISDOM OF PROJECT QUESTIONED “TAXPAYERS HAVE REASON FOR CONCERN” “Businessmen and the general community must view with very great concern the provisions of the Steel Industry Bill, which was introduced into the House on Friday, and under which the Government proposes to establish an iron and steel industry in New Zealand as a State enterprise,” said Mr A. G. Lunn, president of the Associated Chambers of Commerce of New Zealand, in a statement yesterday in Christchurch.

“In the first place,” said Mr Lunn, “let it be understood that no one would be more pleased than we would at seeing an iron and steel industry strongly established in this country, provided—and this is the whole point—provided it is established upon an economic basis. So far the Dominion has been given nothing to show, in the circumstances that exist to-day, either that the industry can be, or that it will be, economically established. My association considers that a great deal more information on the project should be given to the people than has so far been given.

“The bill authorises the raising of funds to the enormous figure of £5,000,000, and these funds are to be based on the security of the public revenues. In other words, the taxpayer carries the risk on his own back. This is far from desirable. It it even necessary? Why is the Government not letting the risk be carried by private investors in the ordinary way, by allowing private enterprise to establish and operate the undertaking?

Report from London “The Minister for Industries and Commerce (the Hon. D. G. Sullivan) said in the House that the present proposals were based on a repent obtained from Messrs H. A. Brassert and Company, of London, this being an amendment to Brassert s oiigmal report supplied in 1935. Now. neither of these reports has been re--1 ed for public information, but it is the fact that the original repoii of Brassert and Company did not describe this industry as being essentially one for State enterprise; on the 'contrary, it envisaged comuany operation, working in close cooperation with the State. Has Brassert and Company changed its opinion in its amended report? Even u it has, that does not rule out a number of important questions which al "In the first place, what goes to make up the huge difference between the £3,000.000 .capita! cost which Brasserfs originally estimated, and the £5.000,000 which the Government now proposes to pul into the industry. This increase of two-thirds in the original estimate calls for a detailed explanation. Second, what information did the Minister for Finance give to Brasserfs when he was in England on which material Brasserfs amended their original report? Higher wages shorter working hours. increased freight, and other charges have now to be considered as factors which have entered very seriously into the question since the orginal report was compiled Can it be confidently anticipated that the industry can still he conducted economically in light orthe all-round higher working costs which now obtain? , “Third, did the Government tell Brassert and Company, for the purpose of the company's amended report that the recent iron and steel imports to New Zealand— imports which are actually of an abnormal charaeler— were the basis from which the output of tire proposed industry in New Zealand was to be computed, and did Brassert and Company, m it* amended report, base on these figures its opinion that the -industry could still be an economic one for New Zealand? If so, fhen it would appear that the iaxapavers, besides becoming involved in a £5.000.000 enterprise, are also being bound to a perpetuation of some measure of the present lavish and. unwise public works expendiluie —which plays no small part in the present large importations —to sustain the output of Urn proposed industryat as high a level as possible. Powers for Stale “The Minister says guardedly that ‘the production of iron and steel ’products which has been planned has been based on requirements of the Dominion for sheet, bar, and wire pro ducts, and rhal there is sufficient tonnage in these items to form an eco nomic base lor the industry. It is most important to know whether this estimate is based on the high imports for the last two years, or on the average of imports for. say. the last five or seven years, which is a very- different matter In other words, is the economic soundness of the enterprise dependent on a prosperity index, which gives the most favourable circumstances for its establishment, and what will be the position when conditions become less favourable? “The wide powers taken in the bill give all ihe necessary authority to the Government to use or sell their iron and steel products, and for carrying on industries ancillary to the industry. This is most far-reaching, and if it means that the Government, in addition to the production, is also to dominate the distribution of the product, then that should be clearly stated, so that the many large firms which have, at great expense and labour, built up the large iron and sleei business in this country, should know where they stand. “The taxpayers have every reason to be deeply concerned at the proposed investment of £5,000,000 of their money in such a project, conducted by the Stale. The function of government is to govern, and before embarking on such a huge undertaking, which should be left in the hands of private enterprise, it is only reasonable to ask that both reports by Brassert and Company be released by the Government for public information, and that the whole question be inquired into by a competent and representative committee, outside of Parliament, which should hear evidence, and report to Parliament in due course.’’