STATE COAL MINES

Dominion, Volume 26, Issue 105, 27 January 1933, Page 7

STATE COAL MINES

An Analysis of Revenues PROFIT CLAIM QUESTIONED i '' . , The reaction of the ordinary taxpayer ( to the report on the working bf the State coal mines, recently presented to Parliament, is possibly one of satisfaction at the fact that a net protit of £3146 was made, despite bad trading conditions, says.a statement by the Associated Chambers of Commerce. What is not generally appreciated is that when extraneous revenue is disregarded there was-actually a substantial loss on the year’s working. The Minister of Mines (Hon. C. E. Macmillan) has made a public denial' of a statement that the State collieries are not returning a profit to the State. Nevertheless, on analysis, the profit on the State coal mines vanishes like a pricked bubble. Included in the latest accounts is the sum of £S4O2 for royal ties received on account of coal taken from Crown lands. One private company alone paid £3633 of these royalties—more than the profit shown on the State mines. ' Profit lias not Accrued. It is therefore clear that this “profit” has. not accrued from the State undertaking as a working proposition, but that there is actually a substantial loss on its working operations. The position can be shown as it is in the accounts only because heavy royalty payments made by competitive private.companies have been taken in as revenue 1 to the department, instead of being credited to the Consolidated Fund. In reply to this, it may be said that the State Department subsidises the most of workmen’s railway and bus fares, supplies coal to employees at reduced rates, and makes grants for street maintenance. This it does, but, on tlje other hand, the department pays no income tax, no rates, no royalties, and no heavy traffic fees. The whole basis provides no comparison whatever with private companies, which have to meet these charges and try to carry on business against a State competitor that is exempt from them. The National Expenditure Commission has pointed out that the State is losing a considerable sum by way of royalty in respect of’the State collieries, and it suggests that this and all State enterprises should bear the charges applicable to similar undertakings conducted by private enterprise. New South Wales Decision. A weighing-up of State trading in coal production in New Zealand is timely, in view of a recent decision of the New South Wales Government. The latter, declaring that the cost of producing coal from the State mine at Lithgow was 5/- a ton greater than at private collieries, resolved in July last to close down the mine altogether, and then decided that the mine be reopened but that In future it would be required to pay the same rates and taxes as all private mines, including municipal, Federal and State taxation. This Is a decision of the utmost importance. It recognises an inescapable principle of taxation, and it marks the turn of the tide of so-called progressive legislation that gave tax exemption to State trading departments, and still looked for taxation revenue from private concerns that had been made profitless in consequence. For the sake of fair trade, the relief of the general taxpaying community, and the employment of the people, the New Zealand Govern-

ment would usher in a new era if it followed the example of the New South Wales Government in subjecting the State coal mines to the same rates, taxes, and charges as are required of private, traders, and if it also placed every State and municipal trading department, as well as power boards, in the same position.