STATE ENTERPRISES

Dominion, Volume 27, Issue 188, 8 May 1934, Page 11

STATE ENTERPRISES

Private Undertakings Discouraged ‘‘THE LESSON OF THE YEARS” Dominion Special Service Ashburton, May 7. A close examination of various State enterprises in New,Zealand was made by Mr. A. O. Heany, secretary of the Associated Chambers of Commerce. in an address to-day to the Ashburton Chamber of Commerce. He said that the net result of State enterprise as a whole had been losses, debt burdens, and disillusionment, and claimed that failure of the State in past ventures was a conclusive argument against any further intervention or control in economic activities. “which should be left to the proven competence of private enterprise.” It was due very largely to political control that the railways were a heavy liability on the people, he said. The sum of £10,400,000 had been written off the capital account, and a deficiency in interest recoupments from the railways revenue of £1,570,000 in 1930-31, capitalised at 5 per cent.,-re-presented a loss bf railways capital of £31,400,000, or a total railways loss of £39,500,000. It was only now that the railways had been handed over to a board that any improvements had been effected. It was perhaps rather early to assess the effects of the transport control regulations, but they were distinctly unpromising, and illustrated that one evil begat another. Land Development. The National Expenditure Commission had pointed out that the history of State enterprise in land development was such that it appeared to becertain that losses ■ would accrue, and that it was questionable whether the national benefit by way of increased production would compensate for the additional charges that must be thrown on taxation. As for State undertakings in irrigation, water supply and drainage, only one out of the nine schemes that had been completed was paying its way. The State had now withdrawn from the kauri-gum business after sustaining heavy losses. It had accumulated losses of half a million on two. of its hydro-electric schemes, while in the coal-mining business, two of its three collieries were being operated at a loss. • The National Expenditure Commission had pointed out that there was a risk the State ’ Advances Office might pot always be able to pay to the Consolidated. Fund the full amount of interest on loan capital provided in terms of the State Advances Act. The interest outstanding last year was £1,400.000, having grown from £456,000 in two years. The commission had said that the dependency upon State lending institutions had been responsible for adding a considerable amount to the public debt of New Zealand, and that the time had arrived when the State should cease borrowing money for the purpose of lending It. Heavy Losses. In the tourist business the State had sustained very substantial losses over years. In shipping, it had accumulated heavy losses, and was continuing to operate the Maul Pomare despite expert advice to the contrary. As to State forestry, the question had been raised as to whether the return from exotic plantations would be sufficient to meet the capital cost, compound interest thereon, and annual maintenance costs until maturity. . The net profits of the Public . Trust Office in 1930-31 amounted to only £1525, notwithstanding the fact that the capital controlled by the office exceeded £36,000,000. ' The State Fire Office paid its way, but it was questionable whether it had given the people any real benefits. In the engineering business, it was notorious how the State had greatly exceeded estimates in many cases, and lavished borrowed money unproductively. More than £34.000,000 had been spent out of the Public Works Fund on national development, the bulk of which constituted a direct burden on taxation for interest and debt-redemp-tion charges, which bad' to be added to other public debt burdens.

Life insurance was recognised as a field more adapted for .successful State enterprise than almost any other. The State Life Office in New, Zealand started in 1809 with almost a clear field, and in 1893 it held “no less than 49 per cent., of the existing policies. When the office had to face the competition of private companies, however, it was another story, and to-day the State Office held only 25 per cent, of existing policies. “This, then, is the lesson of the years.” said Mr. Heany. “We find, broadly, that the net result of State enterprise, which was to give so many benefits to the people, is losses actual and potential, an inflated public deb! a heavily increased tax burden on the people, and injury to private trade. We have received a serious set-hack in our ideas as to what the State can do. We have no assurance th.nl the State will do better with anything else it may take up. and our course is plainly to view with the greatest suspicion any extension of the functions of Government. Private enterprise in New Zealand has for too long been disparaged and discouraged by State interference and regulation.”