COST OF LIVING

Dominion, Volume 16, Issue 157, 21 March 1923, Page 5

COST OF LIVING

THE PROPORTION OF RENT LABOUR’S MISCONCEPTION OF THE CASE (By “Onlooker.”) Labour’s misconception of the proportion of rent in the cost of living has again been illustrated by the opinion expressed before the Arbitration Court by Mr. A. L. Monteith, M.P., that housing should be set down at 255. per week, instead of' 15s. 3d.

There are two distinct factors in ■ the which are confused which such a. request is made. The first is the movement of a given wage in accordance with the movement in the cost of living; and the second, the sufficiency of the wage. The Government Statistician, when he made his computation from the household budgets collected, was not concerned with the guestion whether the wage was sufficient or insufficient. It was the function of the Court to determine the wage; it has been determined, and the neople have been living on it. The budgets showed that rent absorbed 20 per cent, in 1911, and, therefore,, a “weight” of 20 per cent, was given to the rent index number. But this does not mean that 20 per cent, of the wage is allowed for rent, as is alleged by Labour, because the component parts move differently.- The increase of rent, all the time it has been going up, has got its 20 per cent, in the combination, but 20 per cent, will not be always what is allowed for rent. AVhen one part goes up or down, it*, eats into the other proportions, while the wage remains the same. When tho component parts of a whole move in different directions, or in, varying distances, the percentage which each part formed of the whole is completely altered. But one cannot take the wage, and say that 20 per cent, is allowed for rent, for all the movements in the intervals have been computed and allowed for. It is a question, however, whether they should not be tested every now and then, to see whether the “weights” are in accordance with the consumption. Houses that are let for 255. a week,, as quoted by Mr. Monteith, are not common to the whole of the people. Half the people are housed in different from renting. “It is advisable to mention specially,” says the latest issue of the Year Book, .“that the index numbers in respect to rent indicate the movement in the average rentals of a large number of Houses, and that' they do not purport to convey any statement as to the price at which housing accommodation may be obtained from time to time. During the last two or three years, the exceptional demand for housing accommodation, accompanied by restrictive legislation against advancement of house-rents, has caused a wide disparity between the rentals of houses which have been let for some time and tho rents charged to tho new occupants of houses being relet. In so far as the number of relettings is relatively small, there has not~been the substantial advance in house-rents which might be gathered from an inspection of the prices charged for the occupancy of houses falling vacant. Latterly an insecurity of tenancy, which is due largely to the severe housing shortage and the statutory rent-restriction, has led to the purchase of an abnormal number of houses by persons formerly content to remain tenants. In the normal course of events, it is the newer and betterclass dwelling that has been purchased, tints leaving an unduly large proportion of older and lower-rented dwellings to be covered by the statistical inquiry. The effect of this is artificially to retard the rise of the houserent index.” Since 1914, rent has been taken out of the economic market and restricted with legislation; it is not, therefore, normal or free. Men bought houses because they could not get them for rent; and many are simply content to go on paying interest alone on the balance of' the purchase money for the reason that it is cheaper than taking the same house for the rent at which it was available. It might even be possible that, in the event of adversity, a certain number of houses would be surrendered, the holders being content to lose the original deposit, satisfied that they have had the value of their money. It is only necessary to add that the budgets of'l9ll showed .that the average paid for rent warranted a “weight” of 20 per cent., while the 1919 figure was set down as 13.07 per cent.