HOW STATE SOCIALISM WORKS

Dominion, Volume 10, Issue 2966, 2 January 1917, Page 7

HOW STATE SOCIALISM WORKS

1 N.S.W. TRAWLING INDUSTRY REMARKABLE REVELATIONS Remarkable revelations regarding tho operation of tho State trawling industry in Now South Wales, states a. Sydney correspondent, are contained- in a report 1 just issued by the AuditorGeneral. Tho document is probably one of tho most condemnatory of departmental management—or mismanagement—ever issued in the history of the State. It demonstrates clearly and effectually reaeons why State Socialism can never 'hope to compete with private enterprise, and shows that tho task of the new Chief Secretary '■ in straightening out tho tanglo which has taken place in connection with the State trawling business is one which is likely to drive him to desperation. The State trawlers had been at work for just a year iu Juno last, and it is that period which Mr. Coghlan's report covers. In opening the Auditor-General says: "The development of a national resource such as , our fisheries is deserving of every encouragoniqnt, and as,tho trawling field here was'practically unexploited, there should bo a minimum of opposition to the State endeavouring to reap tho harvest. This industrial undertaking is therefore entitled to the sμpport of the community. There has been no condenination hy me of this enterprise, which, as a. practical experiment in a line of business requiring at the time of establishment moro capital and courage than could reasonably be expected from any ventures other'than a Government, deserves all aid and • assistance available. But at an early stage tne conduct of the business, as evidenced by tho accounts and tho almost hopeless chaos into which ' the organisation had. drifted," called for severe criticism, which it received. . . -'After .careful examination of the whole question, I must say that the loss acknowledged by the industry—£lo,9Bß on the twelve months ended June 30 last—is out of keeping with what might reasonably be expected of the business after all possible factors have been fully considered." -Mr.' Coghlan goes on to say that ho is therefore in entire agreement with the summations' of Mr. Gribben, his senior examiner, and attaches Mr.. Grihben's comment for perusal. Tho senior examiner narrates , remarkable occurrences. He sayg the accounts of the enterprise have been kept in-such a haphazard manner that thb balance-sheet is. in a most unsatisfac;tory condition. ' He alludes pointedly to the omission of certain vital details on' the credit side of the ledger in the trading account, and saysj:— "The need of such—the very basis it might be said of tho whole industry —is now manifest as proper trading accounts could not ba prepared, and it is impossible to ascertain where the leakages or losses mostly occur. Although this important item has been Drought '.under liis notice, it has not been deemed by the general manager to_ have merited consideration and therefore the position is that the cost per pound of fish cannot be determined. Jle absence of system in fixing the selling price of fish, etc., is lamentable, inevitably leading to pno result, and it is inconceivable that no proper attempt has been made, to obtain tho cost per lb. The general manager seemingly fixed a. selling price without any information'as to costs.... . . With such a condition of affairs the disastrous results of the first year's trading can readily be understood. ... The stock sheets furnished wore sadly deficient and valueless. As a result, estimated figures have at this late s.tage been assumed by tho general manager and inserted in tho trawling account. . . . Again it is found that no inventory apparently exists of tho original equipment, and at this stage a correct decision as to what is original equipment, additional, replacement or stock cannot be arrived at. . . '. Endless confusion has_ arisen, and it is impossible to strictly allocate or place, any reliance ou the receipt or issuo of stores.", 'Mr. Gribben goes on -to say that tho rate of depreciation—s per cent. —is not by any means adequate, and he points out that the vessels are very highly capitalised, having been given a book value of £13,389, when their cost, including Customs duty, was only about £10.515 each. Ho adds that tho loss for the year, £10,988, has 'been arrived at by means most favourable to the industry—that is, by adopting minimum rates of; depreciation, unreliable statements of stock, and several undercharges for services rendered. Ifl'r. Gribben points out that the loss is one of 19.5 per cent, on tho capital, which is £56,153. He concludes by stating that two features are worthy of comment iu taking the loss into consideration—an item of £1700 for salaries on account of administration, representing 5.92 por, cent., on sales, "a figure out of all proportion"; and secondly, wages and providoring, equivalent ■ to 44.17. per cent, of sales, , Thus, ho adds, practically 50 per cent., of the sales were .consumed. by these two items- of expenditure. Hβ summarises the position as follows:—Purchase and incidental expenses. 70.33 per cent, of receipts.'-' Wages and salaries, 49.79 per cent.. of receipts. Depreciation and interest, 15.54 per cent, of receipts.. 'Total expenditure,, J.35.C6 per cent, of receipts. ' . • Having quoted Mr. Gribben's report, the Auditor-General comments on tho fact that a public service inquiry board is in progress into tho management of the Stato trawling industry, and although tho board has not concluded tlio inquiry, and the general manager of the industry is in the box with his cross-examination not commenced, tho general manager has been awarded by tho board a salary of £GOO a year from July 1, 1915, his previous remuneration being at the rate of £360 a year from July 1, 1915, and £460 a year from September 1, 1915. Ho concludes—"l. am quite satisfied that under competent management the trawling industry should bo one eminently satisfactory to tho public, but whcn'l am confronted in my examination of tho accounts with manifest absences of successful management I am bound in duty to draw attention to them." • Attached to tho report is a minute by tho ox-Chief Seoretary for Cabinet. This comments oil another report by Mr. Gribben showing that doiiblo payments had been mado through there not being a propor system of bookkeeping; goods bad been ordcral without any endeavour to obtain quotes from various firms; rabbits wore purchased at double the prioo at which they could be obtained; over-payments had been made to tho original crews of tho trawlers; no stamp and potty cash accounts had boon kept; there had boon no proper check over tho amount of fish trawled and sold, and no proper supervision over shop employees. Tho minute says tho "bungling" was inexcusable, and adds:—"Tho fact is that Mr. Stead's (tho general manager's) ideas aro too largo; ho is to impulsive, too optimistic, and too extravagant." The, minute also states that Mr. Stead placed in charge of Stato fish shops men who had never in thoir lives served behind" a counter, and who had no knowledgo of business methods, simply becauso they wero relatives of his friends. The miuuto concludes by

stating that it is ;i. pity that tho Premier should trust always so implicitly tho -unsupported statements of Mr. Stead. What tho future of tho Stalo trawling industry iu New South Wales is to bo will bo settled by tho iiew'Govoniment. That it is'to ho carried on is signified by tho fact that £75,000 lius beon appropriated by tho Premier for its, future operation.