The Press SATURDAY, AUGUST 21, 1948. BUDGET NOTES

Press, Volume LXXXIV, Issue 25579, 21 August 1948, Page 6

The Press SATURDAY, AUGUST 21, 1948. BUDGET NOTES

Insisting as he often does on the need for increased production to solve the Dominion’s problems, | monetary and material, Mr Nash in ’ the Financial Statement reviewed i the factors which have contributed to an inflationary condition and to a ! bad maldistribution of labour, aci centuating shortages; but he quite omitted to include measures of Government policy among them. What the Government has done and what it has neglected to do have both helped to make bad worse. Nor is there much evidence in the Financial Statement that the Government sees how to do better and means to do it. If Mr Nash really wants to man undermanned industries and increase production, he should not be flourishing a national development programme inflated from £24,000,000 last year to £33,000,000 this year. If he wants to hold inflation, he should -not be swelling spending power with so vast an outlay of borrowed capital; for the theory that borrowing it through the 3 per cent, tap loan drains it off the market is disposed of by the fact that it runs straight back again, and finds no more to buy and no better values than before. If Mr Nash is seriously interested in productivity, he should be studying the waste of manpower in unproductive administrative processes, public and private, especially in the public and private administration of controls. The British Board of Trade has just published reports on 11 industries, covered by the partial census of production in 1946. In 1946 they employed 858,000 workers, 10,000 more than in 1937; yet they had 5000 fewer output workers. The over-all increase was due to the adding of 15,000 administrative, technical, and clerical staff. The pre-war ratio of factory staff to office staff was 10G to 16; the 1946 ratio was 100 to 18, and it is not likely to have fallen since. The pre-war ratio was too high—much higher than American industry tolerates; the post-war ratio is disastrously too high in a country struggling for production. And, as the “ Manchester Guardian ”, observes, these 15,000 are “ the coun- “ terpart in industry to some of the “officials in Whitehall”. The Survey for 1947 projected a fall of 80,000 employees under the heading of Government service; in fact, the total rose by 14,000. Controls, controls: Whitehall cannot get on without more and more form-shufflers, industry cannot get on without more and more form-fillers. Is it a different story in Wellington? Sales Tax on Buses

Public transport authorities, many of which are now expanding or reshaping their undertakings, have made out so strong a case for relief from the burden of sales tax on their vehicles that it is surprising, and much to be regretted, that Mr Nash, in reducing the sales tax on trolley-bus and motor-bus chassis from 20 to 10 per cent., has gone less than half-way to meet their claims. Apparently there will be no reduction in tax on the coachwork of these buses, most of which is built and Assembled in New Zealand. In terms of national budgeting, the cost to the Consolidated Fund of this concession—an estimated £125,000 this year—is not heavy. A more open hand would have been justified not only by the practical value of the concession but because it is overdue. There was much . disappointment when the Government failed to include passenger buses in the sales tax concessions granted toward the end of 1946. Transport authorities may reasonably feel disappointment again. Christchurch has a special interest in this question because the Tramway Board’s modernisation plans call for £840,000 to be spent on motor-buses and £193,600 on trol-ley-buses by 1956. The burden of this tax on local authorities which are fighting a losing battle against rising costs was illustrated some months ago by a member of the Tramway Board, who said that 10 per cent, of the board’s annual revenue would be needed to pay the sales tax on its new buses. In common with other importers of vehicles, however, the board and its ratepayers will find much comfort in the exchange adjustment. Gold Duty

The gold duty should have been removed long ago. It has always been oppressive because it taxed production at the source instead of the profit made by the producer. Thus every mining concern, big or small, whether making a profit or a loss, well-established or struggling to get a footing, has had to pay a heavy impost on each ounce of gold won. It is true that remissions have been granted in special cases; but this has merely served to emphasise the inherent unsoundness of the tax in this form. Since 1940 the goldmining industry has declined in importance . and in productivity. Manpower shortages and high costs have prevented any significant measure of recovery since the war. The Government, by its developmental subsidies and other help to approved concerns, has recognised that the industry has a useful place in the country’s economy. Its future, as the Mines Department has emphasised, now depends mainly on the large-scale dredging of relatively low-grade ground; but the difficulties facing new enterprises. of this kind are extremely formidable. The removal of the gold duty will be a much-needed stimulus to production and to new development in an industry which can help materially and directly the exchange position of this country and of the sterling area.